10-QPeriod: Q3 FY2018

IMPERIAL OIL LTD Quarterly Report for Q3 Ended Sep 30, 2018

Filed November 7, 2018For Securities:IMO

Summary

Imperial Oil Ltd. reported strong financial results for the nine months and third quarter ending September 29, 2018, driven by increased crude oil realizations and improved operational performance across its segments. Net income for the nine months was C$1.461 billion, a significant increase from C$627 million in the prior year period, with diluted earnings per share rising to C$1.79 from C$0.74. The Upstream segment benefited from higher Canadian crude oil prices and increased production from Kearl, while the Downstream segment saw improved margins. The company also continued its robust capital allocation strategy, returning value to shareholders through increased dividends and substantial share repurchases. While facing some operational challenges like a power disruption at Syncrude, Imperial demonstrated resilience and strategic execution.

Key Highlights

  • 1Net income for the nine months ended September 30, 2018, was C$1.461 billion, a substantial increase from C$627 million in the same period of 2017.
  • 2Diluted earnings per share for the nine months increased to C$1.79 from C$0.74 in the prior year.
  • 3Upstream segment performance was boosted by higher Canadian crude oil realizations and increased production volumes at Kearl.
  • 4Downstream segment earnings saw significant improvement due to stronger refining margins.
  • 5The company significantly increased its share repurchase program, buying back approximately C$1.561 billion in shares during the first nine months of 2018.
  • 6Total dividends paid in the first nine months of 2018 increased to C$421 million, with a per share dividend of C$0.51, up from C$0.46 in the prior year.
  • 7A non-cash impairment charge of C$46 million was recorded related to the Government of Ontario's revocation of its cap and trade regulation.

Frequently Asked Questions

The primary driver was significantly higher Canadian crude oil realizations, benefiting the Upstream segment, coupled with improved refining margins in the Downstream segment. Increased production volumes from Kearl also contributed positively.

Imperial Oil actively returned capital to shareholders through an increased dividend payout and a substantial share repurchase program. They purchased approximately C$1.561 billion in shares during the first nine months of 2018, demonstrating a commitment to shareholder value.

Yes, there was a site-wide power disruption at Syncrude in June 2018, which led to a complete shutdown of processing units and impacted production. Production was progressively restored throughout the third quarter.

The revocation of Ontario's cap and trade legislation resulted in a non-cash impairment charge of C$46 million related to the company's carbon emission program credits. Additionally, this led to a reclassification of approximately C$570 million of carbon emission obligations from long-term to current liabilities.