Imperial reports third quarter 2020 financial and operating results
Imperial Oil Limited (TSX, NYSEAM: IMO):
Net income for the quarter was $ 3 million, up sharply from the second quarter
The previously announced capital and expenditure reduction targets were exceeded.
Annual production and manufacturing expenses decreased by $ 813 million compared to same period in 2019
Annual capital spending in 2020 is expected to be approximately $ 900 million
Cash flow from operating activities was $ 875 million
Cash amount was $ 817 million at quarter end, up $ 584 million from second quarter
The quarterly dividend was kept at $ 0.22 per share
Third trimester
Nine months
in millions of Canadian dollars, unless otherwise indicated
2020
2019
∆
2020
2019
∆
Net income (loss) (US GAAP)
3
424
-421
(711)
1,929
-2 640
Net earnings (loss) per common share – after dilution (in dollars)
–
0.56
-0.56
(0.97)
2.51
-3.48
Capital and exploration expenses
141
442
-301
679
1,400
-721
Imperial Oil reported an estimated profit of $ 3 million in the third quarter of 2020, an increase of $ 529 million from the previous quarter. The second quarter 2020 results included the favorable impact of $ 281 million related to the reversal of non-cash inventory revaluation charge. During the quarter, despite significant maintenance activities and two weeks of service disruption of a third party pipeline supplying diluents to Kearl; improving market conditions and attention to reducing costs and improving operational efficiency allowed the company to make a profit in a difficult environment.
“The third quarter results continue to demonstrate the positive effects of rigorous management vis-à-vis current and capital spending, as well as the resilience of Imperial,” said Brad Corson, Chairman of the Board. , President and CEO. “The company generated $ 875 million in operating cash flow in the third quarter, further strengthening Imperial’s balance sheet and helping cover capital expenditures and the payment of quarterly dividends. “
Production and manufacturing expenses totaled $ 1,246 million in the third quarter, a reduction of $ 355 million from the third quarter of 2019. Annual production and manufacturing expenses of $ 4,098 million decreased By $ 813 million from the previous year, Imperial was able to exceed the annual spending reduction target of $ 500 million. Capital spending of $ 679 million for the first nine months of the year is down more than 50% from the same period in 2019 and is significantly below the guidelines announced in March. “With these reductions in spending and capital in virtually every aspect of Imperial’s business,
Upstream production for the third quarter averaged 365,000 barrels of crude oil equivalent per day, compared to 347,000 barrels per day in the second quarter of 2020. During the quarter, the company moved ahead and extended a planned overhaul at Kearl and decommissioned a third-party pipeline supplying diluents to the site for two weeks. During the pipeline outage, site maintenance activities were moved forward to reduce the impact of scheduled maintenance for the remainder of the year. Despite the impacts of the disruption, Kearl’s total gross production was 189,000 barrels per day in the third quarter, or approximately 41,000 gross barrels per day, virtually unchanged from the second quarter of 2020. Production at the site was quickly restored and set a new production record in 15 days, reaching average gross production rates of around 310,000 barrels per day for the remainder of the quarter. Thanks to this good performance, Imperial is maintaining its forecast of annual gross production of 220,000 barrels per day for 2020.
In the downstream sector, the average flow was 341,000 barrels per day and the utilization rate of 81% in the third quarter, against 278,000 barrels per day and 66% in the second quarter of 2020. Sales of petroleum products for the third quarter quarter amounted to 449,000 barrels per day, up from 357,000 barrels per day in the second quarter of 2020, following increased demand for petroleum products.
“The completion of major overhaul activities, the recently achieved excellent return on assets and the significant reduction in expenses have allowed Imperial to gain significant momentum as we approach year-end. We are well positioned to perform well in the fourth quarter, ”said Mr. Corson.
Third Quarter Highlights
Net income was $ 3 million or $ 0.00 per share, on a diluted basis, compared to $ 424 million or $ 0.56 per share in the third quarter of 2019, due to lower realized prices in the downstream sector and lower margins, partially offset by lower production and manufacturing expenses.
Cash flow from operating activities was $ 875 million compared to $ 1,376 million for the corresponding period of 2019.
Capital expenditures and exploration costs totaled $ 141 million , compared to $ 442 million in the third quarter of 2019, due to the company’s continued efforts to reduce capital. Capital spending in 2020 is now expected to be around $ 900 million, lower than the company’s previously set guidelines of between $ 1.1 billion and $ 1.2 billion.
Dividends paid totaled $ 162 million or $ 0.22 per share, compared to $ 169 million or $ 0.22 per share in the third quarter of 2019.
Production averaged 365,000 barrels of crude oil equivalent per day, compared to 407,000 barrels per day for the same period in 2019. Production was mostly impacted by the disruption of a pipeline. third party and planned overhaul at Kearl. Production was up from 347,000 barrels of crude oil equivalent per day in the second quarter of 2020.
Total gross bitumen production at the Kearl site averaged 189,000 barrels per day (Imperial’s share of 134,000 barrels) versus 224,000 barrels per day (Imperial’s share of amounting to 159,000 barrels) during the third quarter of 2019, due to the advancement and extension of a planned on-site overhaul and the outage of a third-party pipeline. Production remained relatively stable relative to gross bitumen production of 190,000 barrels per day (Imperial’s share of 135,000) during the second quarter of 2020.
Average gross bitumen production at the Cold Lake site was 131,000 barrels per day, compared to 142,000 barrels per day for the same period in 2019, primarily due to continued steam management. Production was up from 123,000 barrels per day in the second quarter of 2020, primarily due to reduced scheduled maintenance activities.
The company’s share of gross production from Syncrude was 67,000 barrels per day, essentially corresponding to 69,000 barrels per day for the same period in 2019. Production was up from 50,000 barrels per day of the second quarter of 2020, mainly due to the increase in demand, partially offset by the revision schedule which has been revised.
Average refinery throughput was 341,000 barrels per day compared to 363,000 barrels per day in the third quarter of 2019. The capacity utilization rate was 81%, compared to 86% in the third quarter of 2019. La The decrease in throughput was due to weak market demand, partially offset by the reduction in scheduled maintenance. Throughput has increased significantly from 278,000 barrels per day in the second quarter of 2020, due to higher product demand.
The cogeneration Strathcona refinery became operational on 1 st October , after the end of the quarter. The new unit provides about 41 megawatts of power, or about 75 to 80% of the refinery’s needs. It is expected to increase the energy efficiency of the facility and help reduce the province’s greenhouse gas emissions by approximately 112,000 tonnes per year, which is equivalent to removing nearly 24,000 vehicles from the road.
Sales of petroleum products were 449,000 barrels per day, compared to 488,000 barrels per day in the third quarter of 2019, due to lower demand due to the COVID-19 pandemic. Sales of petroleum products increased from 357,000 barrels per day in the second quarter of 2020 due to increased demand.
Chemicals segment profits were $ 27 million in the quarter compared to $ 38 million in the third quarter of 2019 due to lower margins.
Imperial is celebrating 140 years of promoting technology and innovation to responsibly develop and deliver Canada’s energy resources. On September 8, 1880, sixteen oil refiners in Ontario created the Imperial Oil Company. In the years that followed, the company opened Canada’s first gas station, the industry’s first petroleum research center, and was responsible for creating the “three stars” of the NHL. Today, Imperial is one of Canada’s largest integrated oil companies, with significant production, refining and marketing activities. In particular, it is a leader in the retail market, with more than 2,000 Esso and Mobil stations across the country.
Comparison of the third quarters of 2020 and 2019
The company reported net income of $ 3 million, or $ 0.00 per share on a diluted basis, in the third quarter of 2020, compared to net income of $ 424 million, or $ 0.56 per share, for the same period in 2019.
The upstream segment recorded a net loss of $ 74 million in the third quarter of 2020, compared to a net profit of $ 209 million for the same period in 2019. Results were negatively affected by lower prices achieved of approximately $ 490 million and by volumes of approximately $ 110 million lower. These items were partially offset by lower royalties of approximately $ 150 million and lower operating expenses of approximately $ 130 million.
The average price of West Texas Intermediate (WTI) was US $ 40.93 per barrel in the third quarter of 2020, compared to US $ 56.44 per barrel in the corresponding quarter of 2019. Western Canada Select (WCS) s’ averages US $ 31.81 per barrel and US $ 44.21 per barrel for the same time periods. The differential between WTI and WCS averaged around US $ 9 per barrel in the third quarter of 2020, compared to around US $ 12 for the same period in 2019.
The Canadian dollar averaged US $ 0.75 in the third quarter of 2020, down US $ 0.01 from the third quarter of 2019.
The average price that Imperial received in Canadian dollars for bitumen declined during the quarter, primarily due to the decrease in WCS. The average price obtained for bitumen was $ 35.95 per barrel in the third quarter of 2020, compared to the affected $ 51.12 per barrel in the third quarter of 2019. The average price the company received in Canadian dollars for synthetic crude generally declined in accordance with WTI, adjusted for changes in exchange rates and transportation costs. The hit price for synthetic crude oil averaged $ 50.79 per barrel in the third quarter of 2020, compared to $ 77.27 per barrel in the corresponding period of 2019.
Total gross bitumen production at Kearl averaged 189,000 barrels per day in the third quarter (Imperial’s share was 134,000 barrels), compared to 224,000 barrels per day (Imperial’s share was 134,000 barrels). Imperial (159,000 barrels) in the third quarter of 2019. Lower production is due to the progress and extension of a planned on-site overhaul as well as the outage of a third-party pipeline .
Cold Lake’s average gross bitumen production was 131,000 barrels per day in the third quarter, compared to 142,000 barrels per day for the same period of 2019. The decrease in production is mainly due to the production schedule associated with steam management.
The company’s share of gross production from Syncrude was 67,000 barrels per day, compared to 69,000 barrels per day in the third quarter of 2019.
The downstream segment recorded net income of $ 77 million in the third quarter of 2020, compared to net income of $ 221 million for the same period in 2019. Results were negatively impacted by lower margins at ‘about $ 230 million and by sales volumes of about $ 70 million lower. These items were offset by a decrease in operating expenses of approximately $ 70 million and an improvement in reliability of approximately $ 50 million, mainly related to the absence of the incident at the Sarnia fractionation tower. occurred in April 2019.
Average refinery throughput was 341,000 barrels per day compared to 363,000 barrels per day in the third quarter of 2019. The capacity utilization rate was 81%, compared to 86% in the third quarter of 2019. La Lower throughput is attributable to weak market demand, partially offset by reduced scheduled maintenance.
Sales of petroleum products stood at 449,000 barrels per day, compared to 488,000 barrels per day in the third quarter of 2019. The decline in sales of petroleum products is mainly due to reduced demand due to the pandemic of COVID-19.
Net income for the Chemicals segment was $ 27 million in the third quarter, compared to $ 38 million in the corresponding quarter of 2019.
Corporate and other expenses were $ 27 million in the third quarter, compared to $ 44 million for the corresponding period of 2019.
Cash flow used in operating activities was $ 875 million in the third quarter, compared to cash flow of $ 1,376 million generated by operating activities for the same period of 2019, mainly reflecting the drop in prices obtained in the upstream sector and the drop in margins in the downstream sector.
Investing activities used free cash flow of $ 125 million in the third quarter, compared to $ 413 million for the same period in 2019, mainly reflecting a reduction in acquisitions of property, plant and equipment
Cash flow used in financing activities was $ 166 million in the third quarter compared to $ 519 million in the third quarter of 2019. Dividends paid in the third quarter of 2020 amounted to $ 162 million. The dividend per share paid in the third quarter was $ 0.22, corresponding to $ 0.22 for the same period of 2019. The company did not buy any shares during the third quarter. In the third quarter of 2019, the company repurchased approximately 9.8 million shares for $ 343 million, which includes shares repurchased from Exxon Mobil Corporation.
The company’s cash balance was $ 817 million as at September 30, 2020, compared to $ 1,531 million at the end of the third quarter of 2019.
Highlights of the first nine months
The net loss amounted to $ 711 million, compared to net income of $ 1,929 million in 2019.
Net loss per share on a diluted basis was $ 0.97, compared to net income per common share of $ 2.51 in 2019.
Cash flow from operating activities was $ 482 million, compared to $ 3,405 million in 2019.
Capital expenditures and exploration costs totaled $ 679 million, compared to $ 1,400 million in 2019.
The average equivalent crude oil production was 377,000 barrels per day, compared to 398,000 barrels per day in 2019.
The average refinery throughput was 334,000 barrels per day, compared to 363,000 barrels per day in 2019.
Sales of petroleum products were 423,000 barrels per day, up from 481,000 barrels per day in 2019.
Year-to-date dividend per share totaled $ 0.66, up from $ 0.63 per share in 2019.
Imperial paid out $ 762 million to shareholders in the form of dividends and share purchases.
Comparison of the first nine months of 2020 and 2019
Net loss for the first nine months of 2020 was $ 711 million or $ 0.97 per share on a diluted basis, compared to net income of $ 1,929 million or $ 2.51 per share for the first nine months of 2019. Results for the current year include the favorable impact of approximately $ 90 million after tax associated with the Canada Emergency Wage Subsidy (CUS), which includes the pro rata portion of Imperial in a joint venture. Full-year 2019 results reflect the favorable impact of $ 662 million related to the reduction in the Alberta corporate tax rate.
The upstream segment recorded a net loss of $ 1,126 million in the first nine months of the year, compared to net income of $ 1,252 million in the same period of 2019. Results were impacted. negative of a price decrease of approximately $ 2,330 million, the absence of a favorable effect of $ 689 million associated with the reduction in the Alberta corporate tax rate in 2019 and a drop in volumes of approximately $ 300 million. These items were partially offset by lower royalties of approximately $ 460 million, lower operating expenses of approximately $ 320 million,
The average price per barrel of West Texas Intermediate was US $ 38.10 for the first nine months of 2020, compared to US $ 57.10 for the corresponding period of 2019. The average price of Western Canada Select was averaged at US $ 24.72 per barrel and US $ 45.32 per barrel for the same periods. The spread between WTI and WCS widened to around US $ 13 per barrel on average for the first nine months of 2020, from around US $ 12 per barrel in the same period in 2019.
The Canadian dollar was worth an average of US $ 0.74 in the first nine months of 2020, down US $ 0.01 from the same period in 2019.
The average price that Imperial received in Canadian dollars for bitumen declined in the first nine months of 2020, primarily due to the decline in WCS. The price received for bitumen averaged $ 22.24 per barrel, compared to $ 52.44 per barrel during the same period in 2019. The average price the company received in Canadian dollars for synthetic crude oil Decreased overall in line with WTI in the first nine months of 2020, adjusted for changes in exchange rates and freight charges. The hit price for synthetic crude oil averaged $ 49.06 per barrel, compared to $ 74.59 per barrel in the corresponding period of 2019.
Total gross average bitumen production at Kearl was 202,000 barrels per day in the first nine months of 2020 (Imperial’s share of 143,000 barrels), compared to 204,000 barrels per day (the Imperial’s share of 145,000 barrels) for the same period in 2019. The decrease in production is mainly due to the addition of additional crushing facilities in 2020 partially offset by the fact that production in the short term was balanced against demand with the advancement and extension of planned overhaul activities and the outage of a third-party pipeline, partially offset by the addition of additional crushing facilities in 2020.
Average gross bitumen production at Cold Lake was 131,000 barrels per day in the first nine months of 2020, compared to 141,000 barrels per day in the corresponding period of 2019. Lower production is mainly due to timing. production associated with steam management.
During the first nine months of 2020, the company’s share of gross production from Syncrude averaged 63,000 barrels per day, compared to 76,000 barrels per day for the corresponding period of 2019. The Lower production is mainly due to the fact that short-term production has been balanced against demand.
Downstream net income was $ 447 million compared to $ 736 million for the same period in 2019. Results were negatively impacted by lower margins of approximately $ 460 million and volumes about $ 220 million lower in sales. These items were partially offset by a reliability improvement of $ 200 million, mainly due to the absence of the Sarnia fractionation tower incident in April 2019, by a decrease in operating expenses of $ 140 million. and by a decrease in review costs of $ 70 million primarily related to the reduction in review activities during the year.
The average refinery throughput was 334,000 barrels per day during the first nine months of 2020, compared to 363,000 barrels during the same period in 2019. The capacity utilization rate was 79%, compared to 86% for the same period in 2019. The decrease in throughput is mainly attributable to the reduction in demand due to the COVID-19 pandemic, partially offset by the absence of repercussions related to the incident in the tower. Sarnia split in April 2019.
Sales of petroleum products were 423,000 barrels per day in the first nine months of 2020, compared to 481,000 barrels per day for the corresponding period in 2019. The decline in sales of petroleum products is mainly due to the reduction in demand due to the COVID-19 pandemic.
Net income for the Chemicals segment was $ 55 million for the first nine months of 2020, compared to $ 110 million for the corresponding period of 2019. Results were impacted by lower margins at about $ 60 million.
Corporate accounts showed a balance of $ 87 million for the first nine months of 2020, compared to a balance of $ 169 million for the corresponding period of 2019, largely attributable to changes in compensation costs at basis of actions.
Cash flow from operating activities was $ 482 million in the first nine months of 2020, compared to $ 3,405 million recorded in the same period of 2019, mainly reflecting the decrease prices obtained in the upstream sector and the unfavorable effects on working capital.
Investing activities used free cash flow of $ 605 million in the first nine months of 2020, compared to $ 1,305 million for the same period in 2019, mainly reflecting a reduction in acquisitions of property, plant and equipment .
Cash flow used in financing activities was $ 778 million in the first nine months of 2020, compared to $ 1,557 million in the corresponding period of 2019. Dividends paid in the first nine months of 2020 amounted to $ 488 million. The dividend per share paid in the first nine months of 2020 was $ 0.66, up from $ 0.60 for the corresponding period of 2019. In the first nine months of 2020, the company, in the As part of its stock purchase program, purchased approximately 9.8 million shares for $ 274 million. In the first nine months of 2019, the company purchased approximately 29.6 million shares for $ 1,072 million.
Key financial and operating data follows.
Economic conditions
At the start of 2020, two major disruptive effects were felt on the balance between supply and demand for oil and petrochemicals. On the demand side, the COVID-19 pandemic has spread rapidly in Canada and around the world, severely slowing trade and consumption activities, and drastically reducing local and global demand for crude oil, natural gas and petroleum products. This drop in demand coincided with the announcement of an increase in production in some of the major oil-producing countries, which pushed up inventories and plummeted prices for crude oil, natural gas and commodities. oil tankers. During the second and third trimester, the effects of COVID-19 continued to adversely affect major global economies and demand for the company’s products, and market conditions remained highly uncertain. In Canada, business and consumer activity recovered somewhat, but compared to previous periods, remained less significant due to the pandemic. Despite steps taken by major oil-producing countries to reduce short-term oversupply and improving credit market conditions, which have provided sufficient liquidity to creditworthy companies, it is increasingly likely that the adverse economic effects will persist, to some extent, until 2021. Commercial and consumer activity recovered somewhat, but compared to previous periods remained less significant due to the pandemic. Despite steps taken by major oil-producing countries to reduce short-term oversupply and improving credit market conditions, which have provided sufficient liquidity to creditworthy companies, it is increasingly likely that the adverse economic effects will persist, to some extent, until 2021. Commercial and consumer activity recovered somewhat, but compared to previous periods remained less significant due to the pandemic. Despite steps taken by major oil-producing countries to reduce short-term oversupply and improving credit market conditions, which have provided sufficient liquidity to creditworthy companies, it is increasingly likely that the adverse economic effects will persist, to some extent, until 2021.
At the end of March, the company announced that it would significantly reduce its capital and operating expenses for 2020. Capital and exploration expenses in 2020 are now expected to be around $ 900 million. dollars, which is less than the company’s previously established guidelines of between $ 1.1 billion and $ 1.2 billion. In addition, annual production and manufacturing expenses were down $ 813 million from the previous year, helping the company to exceed the annual expense reduction target of $ 500 million.
The company has moved ahead and extended overhaul and maintenance activities planned for the second and third quarters in order to reduce the workforce on site and achieve a better balance between production and demand. Overhaul activities at Kearl and Syncrude were completed during the third quarter. Refining capacity utilization rates and petroleum product sales were reduced throughout the second quarter of 2020, but improved in the third quarter as demand for the products increased. Despite the signs of economic recovery, there is great uncertainty over the duration and severity of the decline in demand resulting from COVID-19 and the current business environment,
The company looked at reducing its short-term expenses, the impact of production in the short term, and expected price levels in the short term to determine whether these measures pose a risk of impairment to its assets at long term. Despite the difficult short-term environment, the company’s perspective on the fundamentals of long-term supply and demand has not changed significantly. However, the company continues to assess its strategic plans and long-term pricing outlook, taking into account current and future economic and industry conditions, as well as continuing market uncertainty, as part of its process. annual planning, which is to be reviewed by the board in the fourth quarter.
As disclosed in Imperial’s 2019 Form 10-K, low crude oil and natural gas prices may impact the company’s proven reserves estimates as mentioned under Commission Rules United States Securities (SEC). The year-to-date average price Imperial received for crude oil has had a significant impact on the price decline since the end of the first quarter. Much like the downward revisions to proved reserves of bitumen at the end of 2016 that resulted from low prices, if average prices remain at current levels, under the SEC definition of proved reserves, certain volumes considered as proven reserves at the end of 2019,
In the second quarter of 2020, the Canadian federal and provincial governments launched plans and programs to support businesses and economic activities in the face of the disruptive effects of the COVID-19 pandemic. The Government of Canada introduced the Canada Emergency Wage Subsidy (CWS) as part of its economic response plan to respond to COVID-19, and recently announced its intention to extend the CWS until June 2021 The company has received wage subsidies under this program and, if eligible, it intends to continue to apply. In addition, the Government of Alberta has announced its stimulus package, which takes into account a proposal to accelerate the reduction of the Alberta corporate tax rate,st July 2020, when it was previously reduced to 8% from 1 st January 2022. The proposed change in the corporate tax rate is not expected to have a material impact on the financial statements of the company.
The company has taken measures, in accordance with federal and provincial guidelines and restrictions, to limit the spread of COVID-19 among employees, contractors and the wider community, as well as to continue operating activities to ensure to its customers a reliable supply of products since it is a supplier of essential services. The company has excellent business continuity plans, which have been deployed with the aim of minimizing the effects of COVID-19 on staff productivity.
Forward-looking statements
Statements in this report that relate to future situations or events, including forecasts, objectives, expectations, estimates and business plans, are forward-looking statements. Forward-looking statements can be characterized by terms such as believe, anticipate, intend, propose, plan, aim, aim, project, forecast, target, estimate, expect, strategy, outlook, schedule, future, continue , probable, power, duty, will, and other similar terms referring to future periods. The forward-looking statements in this report refer to, among other things, planned capital expenditures for the year 2020 of approximately $ 900 million; on-going spending and capital controls and the resilience of the company; reductions in spending and capital demonstrating the ability to adapt to market conditions without compromising long-term value and production goals; the impact that proper maintenance activities during the outage at Kearl have on reducing scheduled maintenance activities for the remainder of the year; the expected production at Kearl for the whole of 2020; being in a good position to perform well in the fourth quarter; the impact of the Strathcona cogeneration unit on energy production, energy efficiency and reduction of greenhouse gas emissions; market uncertainty and the magnitude of the current effects of the COVID-19 pandemic on economic activity; previously announced spending reduction targets; the company’s vision on the fundamentals of long-term supply and demand; the implications of future reductions in long-term price prospects, including the depreciation of long-lived assets; the impact of a prolonged decline in oil and natural gas prices on proved reserves under SEC rules, including the possible downward revision of proved reserves of bitumen; intend to continue to apply for the Canada Emergency Wage Subsidy; the cumulative effect of the Alberta government’s accelerated corporate tax rate reduction; and the impact of measures taken in response to COVID-19. the implications of future reductions in long-term price prospects, including the depreciation of long-lived assets; the impact of a prolonged decline in oil and natural gas prices on proved reserves under SEC rules, including the possible downward revision of proved reserves of bitumen; intend to continue to apply for the Canada Emergency Wage Subsidy; the cumulative effect of the Alberta government’s accelerated corporate tax rate reduction; and the impact of measures taken in response to COVID-19. the implications of future reductions in long-term price prospects, including the depreciation of long-lived assets; the impact of a prolonged decline in oil and natural gas prices on proved reserves under SEC rules, including the possible downward revision of proved reserves of bitumen; intend to continue to apply for the Canada Emergency Wage Subsidy; the cumulative effect of the Alberta government’s accelerated corporate tax rate reduction; and the impact of measures taken in response to COVID-19. including the possible downward revision of proved bitumen reserves; intend to continue to apply for the Canada Emergency Wage Subsidy; the cumulative effect of the Alberta government’s accelerated corporate tax rate reduction; and the impact of measures taken in response to COVID-19. including the possible downward revision of proved bitumen reserves; intend to continue to apply for the Canada Emergency Wage Subsidy; the cumulative effect of the Alberta government’s accelerated corporate tax rate reduction; and the impact of measures taken in response to COVID-19.
Forward-looking statements are based on the Company’s current expectations, estimates, projections and assumptions at the time the statements are made. Actual future financial and operating results, including expectations and assumptions regarding demand growth and the mix of energy sources; commodity prices, exchange rates and general market conditions; the rates, growth and composition of production; the plans, schedule, costs, technical evaluations and capacities of projects, as well as the company’s ability to effectively execute these plans and operate its assets; the evolution of COVID-19 and its impact on Imperial’s ability to operate its assets, including the potential closure of facilities due to COVID-19 outbreaks; the company’s ability to effectively execute its business continuity plans and conduct its pandemic response activities; the company’s ability to save money and adapt maintenance work; the performance of third party service providers, including the supply of diluents by pipeline to Kearl; the adoption and impact of new facilities or technologies, in particular on reducing the intensity of greenhouse gas emissions; utilization of refining capacity and product sales; applicable laws and government policies, including production reduction and restrictions in response to COVID-19; sources of funding and capital structure, including the ability to issue long-term debt;
These factors include global, regional or local variations in the supply of and demand for crude oil, natural gas, and petroleum and petrochemical products and the resulting implications for prices, spreads and margins, including measures taken by foreign governments with respect to supply levels and prices and the effects of COVID-19 on demand; general economic conditions; availability and allocation of capital; exchange rates; transport to access markets; political or regulatory events, including changes in laws or government policies such as tax laws, production reduction and measures taken in response to COVID-19; the availability and performance of third-party service providers, particularly in light of COVID-19 restrictions; effective disaster management and preparedness, including business continuity plans in response to COVID-19; environmental risks inherent in oil and gas exploration activities and related production and activities; environmental regulations, including climate change and greenhouse gas regulations and changes to those regulations; unforeseen technical or operational difficulties; project management and schedules and the completion of such projects on schedule; obtaining timely regulatory and third party approvals; the results of research programs and new technologies, and the ability to commercialize new technologies at a competitive price; operational risks and hazards; cybersecurity incidents, including increased reliance on remote working arrangements and the deployment of business continuity plans due to COVID-19; and the other factors referred to in the risk factors in item 1A and item 7 of the MD&A on the financial condition and results of operations of Imperial Oil Limited of the most recent annual report on the form 10-K and subsequent interim reports on Form 10-Q. cybersecurity incidents, including increased reliance on remote working arrangements and the deployment of business continuity plans due to COVID-19; and the other factors referred to in the risk factors in item 1A and item 7 of the MD&A on the financial condition and results of operations of Imperial Oil Limited in the most recent annual report on the form 10-K and subsequent interim reports on Form 10-Q. cybersecurity incidents, including increased reliance on remote working arrangements and the deployment of business continuity plans due to COVID-19; and the other factors referred to in the risk factors in item 1A and item 7 of the MD&A on the financial condition and results of operations of Imperial Oil Limited of the most recent annual report on the form 10-K and subsequent interim reports on Form 10-Q.
Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, which are sometimes similar to those of other oil and gas companies, sometimes exclusive to Imperial Oil Limited. Imperial Oil’s actual results may differ materially from implicit or explicit results depending on forward-looking statements, and readers are cautioned not to place blind reliance on them. Imperial Oil does not undertake to publish an update of any revision of the forward-looking statements contained herein, except as required by law.
In this press release, all dollar amounts are expressed in Canadian dollars, unless otherwise indicated. This news release should be read in conjunction with Imperial’s most recent Form 10-K. Due to rounding, figures may not add to total shown.
The term “project” as used in this report can refer to a whole range of different activities and does not necessarily have the same meaning as given to it in government payment transparency reports. .
Annex I
Third trimester
Nine months
in millions of Canadian dollars, unless otherwise indicated
2020
2019
2020
2019
Net income (loss) (US GAAP)
Total revenue and other revenue
5 955
8,736
16 355
25,979
Total of expenses
5 952
8,182
17,300
24,298
Profit (loss) before tax
3
554
(945)
1,681
Income taxes
–
130
(234)
(248)
Net profit (loss)
3
424
(711)
1,929
Net earnings (loss) per common share (in dollars)
–
0.56
(0.97)
2.51
Net earnings (loss) per common share
– taking into account a dilution (in dollars)
–
0.56
(0.97)
2.51
Other financial data
Gain (loss) on sale of assets, after tax
10
25
25
31
Total assets at September 30
39,382
41,907
Total liabilities at September 30
5 189
5,161
Equity at September 30
22,792
24 965
Capital employed at September 30
28,009
30 150
Dividends declared on common shares
Total
161
166
485
482
Per common share (in dollars)
0.22
0.22
0.66
0.63
Millions of ordinary shares outstanding
As of September 30
734.1
752.9
Medium – taking into account dilution
736.3
760.3
735.7
770.0
Annex II
Third trimester
Nine months
in millions of Canadian dollars
2020
2019
2020
2019
Cash and cash equivalents at the end of the period
817
1,531
817
1,531
Net profit (loss)
3
424
(711)
1,929
Adjustments relating to non-cash items:
Depreciation and depletion
409
419
1275
1,201
Impairment of intangible assets
–
–
20
–
(Gain) loss on sale of assets
(11)
(28)
(28)
(34)
Deferred income taxes and others
(11)
116
(210)
(359)
Changes in operating assets and liabilities:
485
445
136
668
Cash flow from operating activities
875
1376
482
3,405
Cash flow from investing activities
(125)
(413)
(605)
(1,305)
Products associated with the sale of assets
19
30
68
66
Cash flow from financing activities
(166)
(519)
(778)
(1,557)
Annex III
Third trimester
Nine months
in millions of Canadian dollars
2020
2019
2020
2019
Net income (loss) (US GAAP)
Upstream sector
(74)
209
(1,126)
1,252
Downstream sector
77
221
447
736
Chemical products
27
38
55
110
Non-sectoral and other accounts
(27)
(44)
(87)
(169)
Net profit (loss)
3
424
(711)
1,929
Products and other income
Upstream sector
2 303
3 105
5 857
10,000
Downstream sector
4,406
6 612
12,523
19,425
Chemical products
268
298
727
935
Eliminations / Non-sector accounts and others
(1,022)
(1,279)
(2 752)
(4 381)
Products and other income
5 955
8,736
16 355
25,979
Purchases of crude oil and products
Upstream sector
1,176
1376
3,338
4 764
Downstream sector
3 322
5 142
8,987
15,062
Chemical products
157
167
416
531
Eliminations
(1,021)
(1,286)
(2,766)
(4,401)
Purchases of crude oil and products
3,634
5 399
9 975
15 956
Production and manufacturing expenses
Upstream sector
863
1,087
2 855
3 414
Downstream sector
335
460
1,086
1315
Chemical products
48
54
157
182
Eliminations
–
–
–
–
Production and manufacturing expenses
1,246
1,601
4,098
4 911
Capital and exploration expenses
Upstream sector
78
302
454
975
Downstream sector
50
124
177
364
Chemical products
4
4
15
27
Non-sectoral and other accounts
9
12
33
34
Capital and exploration expenses
141
442
679
1,400
Exploration costs charged to profit included above
2
4
6
42
Annex IV
Operational data
Third trimester
Nine months
2020
2019
2020
2019
Gross production of crude oil and natural gas liquids (NGLs)
(in thousands of barrels per day)
Kearl
134
159
143
145
Cold lake
131
142
131
141
Syncrude
67
69
63
76
Classic
8
13
12
12
Total crude oil production
340
383
349
374
LGN put on sale
1
2
2
1
Total crude oil and NGL production
341
385
351
375
Gross natural gas production (in millions of cubic feet per day)
144
132
158
138
Gross oil equivalent production (a)
365
407
377
398
(in thousands of barrels of oil equivalent per day)
Net production of crude oil and NGLs (in thousands of barrels per day)
Kearl
133
154
140
139
Cold lake
119
110
125
113
Syncrude
67
60
63
66
Classic
6
13
10
13
Total crude oil production
325
337
338
331
LGN put on sale
3
1
2
2
Total crude oil and NGL production
328
338
340
333
Net natural gas production (in millions of cubic feet per day)
145
131
151
137
Net oil equivalent production (a)
352
360
365
356
(in thousands of barrels of oil equivalent per day)
Kearl Cutback Sales (in thousands of barrels per day)
192
226
204
200
Cold Lake Cutback Sales (thousands of barrels per day)
167
181
178
186
NGL sales (in thousands of barrels per day)
1
5
2
6
Average selling prices (in Canadian dollars)
Bitumen (barrel)
35.95
51.12
22.24
52.44
Synthetic oil (per barrel)
50.79
77.27
49.06
74.59
Conventional crude oil (per barrel)
29.45
53.90
30.10
54.79
LGN (per barrel)
18.91
14.96
13.06
23.72
Natural gas (thousand cubic feet)
1.79
1.36
1.72
2.06
Refinery throughput (in thousands of barrels per day)
341
363
334
363
Use of refining capacity (in percentage)
81
86
79
86
Sales of petroleum products (in thousands of barrels per day)
Gasoline
241
259
217
250
Heating oil, diesel fuel and jet fuel
137
164
147
169
Heavy fuel oil
26
25
19
24
Lubricating oils and other products
45
40
40
38
Net sales of petroleum products
449
488
423
481
Sales of petrochemicals (in thousands of tonnes)
197
194
573
579
Gas converted to oil equivalent at the rate of six million cubic feet per thousand barrels.
Annex V
Net profit (loss) by
Net income (loss) (US GAAP)
ordinary share – diluted earnings (a)
in millions of Canadian dollars
canadian dollars
2016
First trimester
(101)
(0.12)
Second trimester
(181)
(0.21)
Third trimester
1,003
1.18
Fourth trimester
1,444
1.70
Exercise
2 165
2.55
2017
First trimester
333
0.39
Second trimester
(77)
(0.09)
Third trimester
371
0.44
Fourth trimester
(137)
(0.16)
Exercise
490
0.58
2018
First trimester
516
0.62
Second trimester
196
0.24
Third trimester
749
0.94
Fourth trimester
853
1.08
Exercise
2,314
2.86
2019
First trimester
293
0.38
Second trimester
1212
1.57
Third trimester
424
0.56
Fourth trimester
271
0.36
Exercise
2,200
2.88
2020
First trimester
(188)
(0.25)
Second trimester
(526)
(0.72)
Third trimester
3
–
Exercise
(711)
(0.97)
(at)
Calculated using the average number of shares outstanding during each period. The sum of the quarters presented may not correspond to the total for the year.
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