Update from Imperial Oil; $ 1 billion decrease in spending

Imperial Oil today provided an update on its business and forecast in response to market conditions attributable to the COVID-19 pandemic and declining product prices basic.

“The current COVID-19 pandemic, as well as the business environment, including commodity prices, pose many challenges for our industry,” said Brad Corson, Chairman, President and CEO of Imperial Oil. . Imperial Oil’s integrated business model, portfolio of high quality assets and strong balance sheet provide valuable stability during this time, and we are taking steps to relax our plans to respond to market conditions by reducing our capital expenditures and operating costs. “

The Company’s priority remains the health and safety of its employees, business partners and customers, as well as the communities in which it operates. In response to the risks posed by the COVID-19 pandemic, Imperial Oil activated its existing pandemic surveillance and response plans. The company has emergency and security protocols in place to mitigate the risks associated with a large number of scenarios, including those related to COVID-19.

“As we continue to contend with these challenging conditions, I am extremely proud of the dedication and hard work of Imperial Oil employees across the country to keep operations safe and reliable, while ensuring their well-being and that of their colleagues, families, communities and our clients, ”continued Mr. Corson.

Although Imperial is in a period of the cycle when its capital spending is lower, the company has carefully assessed its plans for 2020 and identified opportunities to cut short-term spending while continuing to focus on on low-capital-intensive projects with the greatest potential to create value. The spending will focus on ensuring the safe and reliable operation of Imperial Oil’s assets and the continuation of key growth-related projects at a pace that takes into account the challenges posed by COVID-19 and the business environment. These deferrals resulted in an update of the planned capital spending for 2020, which was reduced by $ 500 million (30%), thus falling from a range of 1,

In addition to this decrease in capital spending, Imperial has identified opportunities to reduce operating costs by $ 500 million from 2019 levels. As part of this exercise, the company identified efficiency factors, efficiency and a pacing element related to the fallout from COVID-19 while ensuring safe and reliable operations.

As Imperial continues to assess the impact of COVID-19, the extent of the rotation that was planned at the Sarnia facility in the second quarter has been reduced as the rotation of a coking unit in the Syncrude plant was postponed to the third quarter. The company continues to assess other rotation activities in its segments. More generally, the impact of COVID-19 and the current business environment on demand is expected to have negative effects on upstream production, the use of downstream refineries, and short-term product sales of Imperial. While the magnitude of these impacts is uncertain, our scenario-based planning approach allows us to

Imperial has demonstrated a longstanding commitment to shareholder performance, as evidenced by over a century of uninterrupted dividend payouts and 25 consecutive years of dividend growth. The actions Imperial Oil is taking are aimed at preserving the strength of its balance sheet, while allowing it to continue to pay dividends to shareholders and to generate long-term value from its operations. Imperial Oil currently has a normal course repurchase program on the Toronto Stock Exchange, which is scheduled to expire on June 26, 2020. Given the current situation in the industry, Imperial is suspending repurchases of shares. shares under the program as of 1 st April 2020.

Imperial continues to be well positioned to meet the challenges of the current business environment; it has one of the best debt ratios and credit ratings in the Canadian industry, over $ 1.7 billion in cash at the end of fiscal 2019, low working capital and integration of its value chain.

“While falling demand and increasing supply are a particularly difficult combination, Imperial has been able to withstand market volatility over the years,” says Corson. We have flexible plans that allow us to respond to future market conditions and we remain focused on maximizing long-term shareholder value, regardless of the business environment in which we operate. “