10-QPeriod: Q1 FY2017

IMPERIAL OIL LTD Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 3, 2017For Securities:IMO

Summary

Imperial Oil Limited's first quarter 2017 results show a significant turnaround from the prior year, reporting a net income of $333 million ($0.39 per diluted share) compared to a net loss of $101 million in the first quarter of 2016. This improvement was driven by higher crude oil realizations, particularly in the Upstream segment, which saw its net loss narrow substantially. The company also demonstrated improved operational cash flow, generating $354 million compared to $49 million in the same period last year. This was supported by increased proceeds from asset sales and reduced additions to property, plant, and equipment. While financing activities used cash, largely due to dividend payments, the company maintained a strong cash position, ending the quarter with $672 million.

Key Highlights

  • 1Reported a net income of $333 million for Q1 2017, a significant improvement from a net loss of $101 million in Q1 2016.
  • 2Earnings per diluted share were $0.39 in Q1 2017, compared to $(0.12) in Q1 2016.
  • 3Cash flow from operating activities increased substantially to $354 million from $49 million in the prior year's first quarter.
  • 4The Upstream segment's net loss narrowed significantly to $86 million from $448 million, driven by higher crude oil realizations.
  • 5The Downstream segment reported net income of $380 million, up from $320 million, boosted by a gain on property sale.
  • 6The company's cash balance increased to $672 million as of March 31, 2017, from $155 million at the end of Q1 2016.
  • 7Dividends paid per common share increased to $0.15 in Q1 2017 from $0.14 in Q1 2016.

Frequently Asked Questions

The primary driver for the improved financial performance was the significant increase in crude oil realizations, particularly in the Upstream segment. Higher benchmark prices for WTI and WCS, coupled with a narrower price differential between them, led to substantially higher revenue and a reduced net loss for the segment.

The company's cash flow from operating activities saw a substantial increase, rising to $354 million in the first quarter of 2017 from $49 million in the same period of 2016. This improvement was supported by higher earnings and proceeds from asset sales, leading to a stronger cash balance of $672 million at the end of the quarter.

The Upstream segment's performance is expected to benefit from improved commodity prices and the ongoing development of its Cold Lake and Kearl operations, despite some production challenges. The Downstream segment continues to benefit from refinery operations and product sales, with a focus on long-term supply agreements. The Chemical segment remains a stable contributor to earnings.

While the company had an approved normal course issuer bid allowing it to repurchase up to 1,000,000 shares, there were no share repurchases reported during the first quarter of 2017. The company indicated it would continue to evaluate its share repurchase program in the context of its overall capital activities.