How many shares can Imperial Oil repurchase under the new NCIB?

Up to 26,791,840 shares, equal to 5% of the 535,836,803 common shares outstanding as of June 15, 2024. That maximum is reduced by any shares purchased from ExxonMobil under the program.

When does the new buyback program run?

It begins June 29, 2024 and ends on June 28, 2025, or earlier if the maximum allowable number of shares is purchased.

Will ExxonMobil sell shares to Imperial Oil under this program?

ExxonMobil has said it intends to participate, as it did in prior years, so it can maintain its proportionate ownership of about 69.6%. It has set up an automatic share disposition plan to facilitate those sales.

Why does the company buy back shares during blackout periods?

Imperial has set up an automatic share purchase plan with its broker. Before a blackout period, it may instruct the broker to buy under parameters it sets, which allows repurchases when it would otherwise be restricted. The plan has been pre-cleared by the TSX.

How does this buyback relate to the company's prior programs?

It continues the previous NCIB, which was completed on October 19, 2023. That program bought the maximum 29,207,635 shares, including 8,879,143 on the open market and 20,328,492 from ExxonMobil, at a total cost of about $2.3 billion and an average of $78.75 per share.

IMO 8-K: Regulation FD — Jun 24, 2024

01—Abstract

Summary

Summary of the 8-K filed June 24, 2024. Cited figures are marked; the original filing is the authoritative source.

Imperial Oil Limited (TSX/NYSE American: IMO) disclosed on June 24, 2024 that the Toronto Stock Exchange has given final acceptance to a new one-year normal course issuer bid (NCIB).

The company may repurchase up to 5%^a of its 535,836,803 common shares outstanding as of June 15, 2024, a maximum of 26,791,840 shares. The program runs from June 29, 2024 to June 28, 2025, or until the maximum is bought back. The maximum is reduced by any shares bought from majority shareholder ExxonMobil, which intends to sell shares to Imperial to keep its stake at roughly 69.6%.

For investors, the announcement signals management's view that the company has balance sheet strength, low capital requirements and strong cash generation, and that it has the capacity to return surplus cash to shareholders. The NCIB is positioned as a flexible, tax-efficient way to distribute liquidity to shareholders who choose to sell, and it will also offset dilution from restricted stock unit issuances. The program is a continuation of the prior buyback that ended October 19, 2023, when Imperial bought 29,207,635 shares for about $2.3 billion^b at an average of $78.75 per share.

The filing is a routine renewal rather than a change in strategy. Its key practical details are the daily purchase limit of 254,907 shares (25%^c of the six-month average daily volume of 1,019,629 shares, excluding ExxonMobil's purchases) and the automatic share purchase plan, which lets Imperial buy during blackout periods. The filing does not state a dollar budget for the new program, so the actual cash commitment will depend on the share price and how much of the authorization is used.

02—Key points

Key Highlights

New one-year NCIB approved by the TSX, allowing repurchase of up to 5% of outstanding shares (maximum 26,791,840 shares) from June 29, 2024 to June 28, 2025.
Program count is reduced by any shares bought from ExxonMobil, which intends to participate to keep its ownership at about 69.6%.
Daily purchase limit for non-ExxonMobil holders is 254,907 shares, or 25% of the average daily trading volume of 1,019,629 shares over the prior six months.
Automatic share purchase plan with its designated broker allows buybacks during regulatory restrictions and self-imposed blackout periods, effective June 29, 2024.
Management cites balance sheet strength, low capital requirements and strong cash generation as the basis for returning cash to shareholders.
Repurchased shares will be cancelled, and the program is also intended to offset dilution from restricted stock unit plan issuances.
The prior NCIB ended October 19, 2023, with 29,207,635 shares bought for about $2.3 billion at an average of $78.75 per share.

03—Questions

Frequently Asked Questions

How many shares can Imperial Oil repurchase under the new NCIB?
Up to 26,791,840 shares, equal to 5% of the 535,836,803 common shares outstanding as of June 15, 2024. That maximum is reduced by any shares purchased from ExxonMobil under the program.
When does the new buyback program run?
It begins June 29, 2024 and ends on June 28, 2025, or earlier if the maximum allowable number of shares is purchased.
Will ExxonMobil sell shares to Imperial Oil under this program?
ExxonMobil has said it intends to participate, as it did in prior years, so it can maintain its proportionate ownership of about 69.6%. It has set up an automatic share disposition plan to facilitate those sales.
Why does the company buy back shares during blackout periods?
Imperial has set up an automatic share purchase plan with its broker. Before a blackout period, it may instruct the broker to buy under parameters it sets, which allows repurchases when it would otherwise be restricted. The plan has been pre-cleared by the TSX.
How does this buyback relate to the company's prior programs?
It continues the previous NCIB, which was completed on October 19, 2023. That program bought the maximum 29,207,635 shares, including 8,879,143 on the open market and 20,328,492 from ExxonMobil, at a total cost of about $2.3 billion and an average of $78.75 per share.

04—Continue

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