☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission file number 0-12014
IMPERIAL OIL LIMITED
(Exact name of registrant as specified in its charter)
Canada
98-0017682
(State or other jurisdiction
(I.R.S. Employer
of incorporation or organization)
Identification No.)
505 Quarry Park Boulevard S.E.Calgary, Alberta, Canada
T2C 5N1
(Address of principal executive offices)
(Postal Code)
1-800-567-3776
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol
Name of each exchange on
which registered
None
None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act of 1934.
Large accelerated filer
☑
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act of 1934). Yes ☐ No ☑
The number of common shares outstanding, as of June 30, 2024 was 535,836,803.
In this report, all dollar amounts are expressed in Canadian dollars unless otherwise stated. This report should be read in conjunction with the company’s annual report on Form 10-K for the year ended December 31, 2023. Note that numbers may not add due to rounding.
The term “project” as used in this report can refer to a variety of different activities and does not necessarily have the same meaning as in any government payment transparency reports.
In this report, unless the context otherwise indicates, reference to “the company” or “Imperial” includes Imperial Oil Limited and its subsidiaries.
2
IMPERIAL OIL LIMITED
PART I. FINANCIAL INFORMATION
Item 1. Financial statements
Consolidated statement of income (U.S. GAAP, unaudited)
Second Quarter
Six Months
to June 30
millions of Canadian dollars
2024
2023
2024
2023
Revenues and other income
Revenues (a)
13,348
11,764
25,597
23,821
Investment and other income (note 3)
35
55
69
119
Total revenues and other income
13,383
11,819
25,666
23,940
Expenses
Exploration
1
1
2
2
Purchases of crude oil and products (b)
8,856
7,856
16,562
15,334
Production and manufacturing (c)
1,689
1,785
3,353
3,541
Selling and general (c)
221
206
467
392
Federal excise tax and fuel charge
656
598
1,247
1,127
Depreciation and depletion
456
453
946
943
Non-service pension and postretirement benefit
1
20
2
40
Financing (d)(note 5)
14
16
26
32
Total expenses
11,894
10,935
22,605
21,411
Income (loss) before income taxes
1,489
884
3,061
2,529
Income taxes
356
209
733
606
Net income (loss)
1,133
675
2,328
1,923
Per share information (Canadian dollars)
Net income (loss) per common share - basic (note 9)
2.11
1.16
4.34
3.29
Net income (loss) per common share - diluted (note 9)
2.11
1.15
4.34
3.29
(a) Amounts from related parties included in revenues.
2,946
3,556
5,675
6,692
(b) Amounts to related parties included in purchases of crude oil and products.
838
964
1,823
2,042
(c) Amounts to related parties included in production and manufacturing, and selling
and general expenses.
135
125
285
260
(d) Amounts to related parties included in financing.
43
41
87
80
The information in the notes to consolidated financial statements is an integral part of these statements.
3
IMPERIAL OIL LIMITED
Consolidated statement of comprehensive income (U.S. GAAP, unaudited)
Second Quarter
Six Months
to June 30
millions of Canadian dollars
2024
2023
2024
2023
Net income (loss)
1,133
675
2,328
1,923
Other comprehensive income (loss), net of income taxes
Amortization of postretirement benefits liability adjustment
included in net benefit costs
13
10
25
20
Total other comprehensive income (loss)
13
10
29
41
Comprehensive income (loss)
1,146
685
2,357
1,964
The information in the notes to consolidated financial statements is an integral part of these statements.
4
IMPERIAL OIL LIMITED
Consolidated balance sheet (U.S. GAAP, unaudited)
As at
Jun 30
As at
Dec 31
millions of Canadian dollars
2024
2023
Assets
Current assets
Cash and cash equivalents
2,020
864
Accounts receivable - net (a)
6,070
4,482
Inventories of crude oil and products
1,889
1,944
Materials, supplies and prepaid expenses
1,017
1,008
Total current assets
10,996
8,298
Investments and long-term receivables (b)
1,076
1,062
Property, plant and equipment,
57,134
56,200
less accumulated depreciation and depletion
(26,291)
(25,365)
Property, plant and equipment, net
30,843
30,835
Goodwill
166
166
Other assets, including intangibles - net
1,054
838
Total assets
44,135
41,199
Liabilities
Current liabilities
Notes and loans payable
118
121
Accounts payable and accrued liabilities (a)(note 7)
7,665
6,231
Income taxes payable
90
251
Total current liabilities
7,873
6,603
Long-term debt (c)(note 6)
4,001
4,011
Other long-term obligations (note 7)
3,943
3,851
Deferred income tax liabilities
4,382
4,512
Total liabilities
20,199
18,977
Shareholders’ equity
Common shares at stated value (d)(note 9)
992
992
Earnings reinvested
23,592
21,907
Accumulated other comprehensive income (loss) (note 10)
(648)
(677)
Total shareholders’ equity
23,936
22,222
Total liabilities and shareholders’ equity
44,135
41,199
(a)
Accounts receivable - net included net amounts receivable from related parties.
1,344
1,048
(b)
Investments and long-term receivables included amounts from related parties.
269
283
(c)
Long-term debt included amounts to related parties.
3,447
3,447
(d)
Number of common shares authorized (millions).
1,100
1,100
Number of common shares outstanding (millions).
536
536
The information in the notes to consolidated financial statements is an integral part of these statements.
5
IMPERIAL OIL LIMITED
Consolidated statement of shareholders’ equity (U.S. GAAP, unaudited)
Second Quarter
Six Months
to June 30
millions of Canadian dollars
2024
2023
2024
2023
Common shares at stated value (note 9)
At beginning of period
992
1,079
992
1,079
Share purchases at stated value
—
—
—
—
At end of period
992
1,079
992
1,079
Earnings reinvested
At beginning of period
22,781
22,837
21,907
21,846
Net income (loss) for the period
1,133
675
2,328
1,923
Share purchases in excess of stated value
—
—
—
—
Dividends declared
(322)
(292)
(643)
(549)
At end of period
23,592
23,220
23,592
23,220
Accumulated other comprehensive income (loss) (note 10)
At beginning of period
(661)
(481)
(677)
(512)
Other comprehensive income (loss)
13
10
29
41
At end of period
(648)
(471)
(648)
(471)
Shareholders’ equity at end of period
23,936
23,828
23,936
23,828
The information in the notes to consolidated financial statements is an integral part of these statements.
6
IMPERIAL OIL LIMITED
Consolidated statement of cash flows (U.S. GAAP, unaudited)
Second Quarter
Six Months
to June 30
millions of Canadian dollars
2024
2023
2024
2023
Operating activities
Net income (loss)
1,133
675
2,328
1,923
Adjustments for non-cash items:
Depreciation and depletion
456
453
946
943
(Gain) loss on asset sales (note 3)
(1)
(13)
(3)
(22)
Deferred income taxes and other
(75)
(15)
(239)
(71)
Changes in operating assets and liabilities:
Accounts receivable
(866)
(302)
(1,588)
134
Inventories, materials, supplies and prepaid expenses
246
420
50
(59)
Income taxes payable
73
(321)
(161)
(2,398)
Accounts payable and accrued liabilities
668
(48)
1,375
(303)
All other items - net (b)
(5)
36
(3)
(83)
Cash flows from (used in) operating activities
1,629
885
2,705
64
Investing activities
Additions to property, plant and equipment
(461)
(499)
(958)
(928)
Proceeds from asset sales (note 3)
3
9
7
23
Loans to equity companies - net
2
1
14
2
Cash flows from (used in) investing activities
(456)
(489)
(937)
(903)
Financing activities
Finance lease obligations - reduction (note 6)
(8)
(6)
(13)
(11)
Dividends paid
(321)
(257)
(599)
(523)
Common shares purchased (note 9)
—
—
—
—
Cash flows from (used in) financing activities
(329)
(263)
(612)
(534)
Increase (decrease) in cash and cash equivalents
844
133
1,156
(1,373)
Cash and cash equivalents at beginning of period
1,176
2,243
864
3,749
Cash and cash equivalents at end of period (a)
2,020
2,376
2,020
2,376
(a) Cash equivalents are all highly liquid securities with maturity of three months or less.
(b) Includes contributions to registered pension plans.
(38)
(44)
(75)
(86)
Income taxes (paid) refunded.
(434)
(557)
(1,134)
(3,189)
Interest (paid), net of capitalization.
(15)
(16)
(26)
(37)
The information in the notes to consolidated financial statements is an integral part of these statements.
7
IMPERIAL OIL LIMITED
Notes to consolidated financial statements (unaudited)
1. Basis of financial statement preparation
These unaudited consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (GAAP) and follow the same accounting policies and methods of computation as, and should be read in conjunction with, the most recent annual consolidated financial statements filed with the U.S. Securities and Exchange Commission (SEC) in the company’s 2023 annual report on Form 10-K. In the opinion of the company, the information furnished herein reflects all known accruals and adjustments necessary for a fair statement of the results for the periods reported herein. All such adjustments are of a normal recurring nature.
The company’s exploration and production activities are accounted for under the “successful efforts” method.
The results for the six months ended June 30, 2024, are not necessarily indicative of the operations to be expected for the full year.
All amounts are in Canadian dollars unless otherwise indicated.
8
IMPERIAL OIL LIMITED
2. Business segments
Second Quarter
Upstream
Downstream
Chemical
millions of Canadian dollars
2024
2023
2024
2023
2024
2023
Revenues and other income
Revenues (a) (b)
29
61
12,986
11,355
333
348
Intersegment sales
4,522
3,519
1,639
1,365
85
89
Investment and other income (note 3)
1
10
9
15
—
—
4,552
3,590
14,634
12,735
418
437
Expenses
Exploration
1
1
—
—
—
—
Purchases of crude oil and products
1,900
1,432
12,944
11,133
256
263
Production and manufacturing
1,203
1,256
435
475
48
54
Selling and general
—
—
171
160
23
22
Federal excise tax and fuel charge
—
—
655
597
1
1
Depreciation and depletion
396
398
46
44
4
4
Non-service pension and postretirement benefit
—
—
—
—
—
—
Financing (note 5)
1
—
—
—
—
—
Total expenses
3,501
3,087
14,251
12,409
332
344
Income (loss) before income taxes
1,051
503
383
326
86
93
Income tax expense (benefit)
252
119
89
76
21
22
Net income (loss)
799
384
294
250
65
71
Cash flows from (used in) operating activities
1,162
573
384
228
74
55
Capital and exploration expenditures (c)
267
303
149
152
3
5
Second Quarter
Corporate and other
Eliminations
Consolidated
millions of Canadian dollars
2024
2023
2024
2023
2024
2023
Revenues and other income
Revenues (a) (b)
—
—
—
—
13,348
11,764
Intersegment sales
—
—
(6,246)
(4,973)
—
—
Investment and other income (note 3)
25
30
—
—
35
55
25
30
(6,246)
(4,973)
13,383
11,819
Expenses
Exploration
—
—
—
—
1
1
Purchases of crude oil and products
—
—
(6,244)
(4,972)
8,856
7,856
Production and manufacturing
3
—
—
—
1,689
1,785
Selling and general
29
25
(2)
(1)
221
206
Federal excise tax and fuel charge
—
—
—
—
656
598
Depreciation and depletion
10
7
—
—
456
453
Non-service pension and postretirement benefit
1
20
—
—
1
20
Financing (note 5)
13
16
—
—
14
16
Total expenses
56
68
(6,246)
(4,973)
11,894
10,935
Income (loss) before income taxes
(31)
(38)
—
—
1,489
884
Income tax expense (benefit)
(6)
(8)
—
—
356
209
Net income (loss)
(25)
(30)
—
—
1,133
675
Cash flows from (used in) operating activities
9
29
—
—
1,629
885
Capital and exploration expenditures (c)
43
33
—
—
462
493
9
IMPERIAL OIL LIMITED
(a)Includes export sales to the United States of $2,632 million (2023 - $2,034 million).
(b)Revenues include both revenue within the scope of ASC 606 and outside the scope of ASC 606. Trade receivables in "Accounts receivable – net" reported on the Consolidated balance sheet include both receivables within the scope of ASC 606 and outside the scope of ASC 606. Revenue and receivables outside the scope of ASC 606 primarily relate to physically settled commodity contracts accounted for as derivatives. Contractual terms, credit quality and type of customer are generally similar between contracts within the scope of ASC 606 and those outside it.
Revenues
Second Quarter
millions of Canadian dollars
2024
2023
Revenue from contracts with customers
10,782
10,922
Revenue outside the scope of ASC 606
2,566
842
Total
13,348
11,764
(c)Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to finance leases, additional investments and acquisitions and the company’s share of similar costs for equity companies. CAPEX excludes the purchase of carbon emission credits.
10
IMPERIAL OIL LIMITED
Six Months to June 30
Upstream
Downstream
Chemical
millions of Canadian dollars
2024
2023
2024
2023
2024
2023
Revenues and other income
Revenues (a) (b)
71
137
24,865
22,994
661
690
Intersegment sales
8,644
7,141
3,387
3,188
175
180
Investment and other income (note 3)
5
12
21
35
1
—
8,720
7,290
28,273
26,217
837
870
Expenses
Exploration
2
2
—
—
—
—
Purchases of crude oil and products
3,713
2,975
24,535
22,329
516
537
Production and manufacturing
2,391
2,543
856
886
101
112
Selling and general
—
—
333
317
49
48
Federal excise tax and fuel charge
—
—
1,245
1,125
2
2
Depreciation and depletion
828
832
91
89
8
8
Non-service pension and postretirement benefit
—
—
—
—
—
—
Financing (note 5)
2
—
—
—
—
—
Total expenses
6,936
6,352
27,060
24,746
676
707
Income (loss) before income taxes
1,784
938
1,213
1,471
161
163
Income tax expense (benefit)
427
224
288
351
39
39
Net income (loss)
1,357
714
925
1,120
122
124
Cash flows from (used in) operating activities
2,053
175
391
(191)
71
23
Capital and exploration expenditures(c)
557
624
302
226
8
9
Total assets as at June 30
28,505
28,603
12,016
9,629
503
482
Six Months to June 30
Corporate and other
Eliminations
Consolidated
millions of Canadian dollars
2024
2023
2024
2023
2024
2023
Revenues and other income
Revenues (a) (b)
—
—
—
—
25,597
23,821
Intersegment sales
—
—
(12,206)
(10,509)
—
—
Investment and other income (note 3)
42
72
—
—
69
119
42
72
(12,206)
(10,509)
25,666
23,940
Expenses
Exploration
—
—
—
—
2
2
Purchases of crude oil and products
—
—
(12,202)
(10,507)
16,562
15,334
Production and manufacturing
5
—
—
—
3,353
3,541
Selling and general
89
29
(4)
(2)
467
392
Federal excise tax and fuel charge
—
—
—
—
1,247
1,127
Depreciation and depletion
19
14
—
—
946
943
Non-service pension and postretirement benefit
2
40
—
—
2
40
Financing (note 5)
24
32
—
—
26
32
Total expenses
139
115
(12,206)
(10,509)
22,605
21,411
Income (loss) before income taxes
(97)
(43)
—
—
3,061
2,529
Income tax expense (benefit)
(21)
(8)
—
—
733
606
Net income (loss)
(76)
(35)
—
—
2,328
1,923
Cash flows from (used in) operating activities
190
57
—
—
2,705
64
Capital and exploration expenditures (c)
91
63
—
—
958
922
Total assets as at June 30
3,528
3,915
(417)
(503)
44,135
42,126
11
IMPERIAL OIL LIMITED
(a)Includes export sales to the United States of $5,010 million (2023 - $4,409 million).
(b)Revenues include both revenue within the scope of ASC 606 and outside the scope of ASC 606. Trade receivables in "Accounts receivable – net" reported on the Consolidated balance sheet include both receivables within the scope of ASC 606 and outside the scope of ASC 606. Revenue and receivables outside the scope of ASC 606 primarily relate to physically settled commodity contracts accounted for as derivatives. Contractual terms, credit quality and type of customer are generally similar between contracts within the scope of ASC 606 and those outside it.
Revenues
Six Months
to June 30
millions of Canadian dollars
2024
2023
Revenue from contracts with customers
20,511
21,442
Revenue outside the scope of ASC 606
5,086
2,379
Total
25,597
23,821
(c)Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to finance leases, additional investments and acquisitions and the company’s share of similar costs for equity companies. CAPEX excludes the purchase of carbon emission credits.
12
IMPERIAL OIL LIMITED
3. Investment and other income
Investment and other income included gains and losses on asset sales as follows:
Second Quarter
Six Months
to June 30
millions of Canadian dollars
2024
2023
2024
2023
Proceeds from asset sales
3
9
7
23
Book value of asset sales
2
(4)
4
1
Gain (loss) on asset sales, before tax
1
13
3
22
Gain (loss) on asset sales, after tax
1
10
3
18
4. Employee retirement benefits
The components of net benefit cost were as follows:
Second Quarter
Six Months
to June 30
millions of Canadian dollars
2024
2023
2024
2023
Pension benefits:
Service cost
46
40
92
81
Interest cost
92
93
183
186
Expected return on plan assets
(114)
(93)
(227)
(186)
Amortization of prior service cost
7
4
14
8
Amortization of actuarial loss (gain)
12
11
24
22
Net benefit cost
43
55
86
111
Other postretirement benefits:
Service cost
3
3
7
6
Interest cost
6
7
12
14
Amortization of actuarial loss (gain)
(2)
(2)
(4)
(4)
Net benefit cost
7
8
15
16
5. Financing costs
Second Quarter
Six Months
to June 30
millions of Canadian dollars
2024
2023
2024
2023
Debt-related interest
52
49
104
95
Capitalized interest
(39)
(33)
(80)
(63)
Net interest expense
13
16
24
32
Other interest
1
—
2
—
Total financing
14
16
26
32
13
IMPERIAL OIL LIMITED
6. Long-term debt
As at
Jun 30
As at
Dec 31
millions of Canadian dollars
2024
2023
Long-term debt
3,447
3,447
Finance leases
554
564
Total long-term debt
4,001
4,011
In June 2024, the company extended the maturity date of its existing long-term, variable-rate, Canadian dollar loan from ExxonMobil to June 30, 2035. All other terms and conditions remain unchanged.
7. Other long-term obligations
As at
Jun 30
As at
Dec 31
millions of Canadian dollars
2024
2023
Employee retirement benefits (a)
932
954
Asset retirement obligations and other environmental liabilities (b)
2,590
2,564
Share-based incentive compensation liabilities
144
90
Operating lease liability (c)
153
111
Other obligations
124
132
Total other long-term obligations
3,943
3,851
(a)Total recorded employee retirement benefits obligations also included $62 million in current liabilities (2023 - $62 million).
(b)Total asset retirement obligations and other environmental liabilities also included $221 million in current liabilities (2023 - $235 million).
(c)Total operating lease liability also included $102 million in current liabilities (2023 - $87 million). In addition to the total operating lease liability, undiscounted commitments for leases not yet commenced totalled $62 million (2023 - $54 million).
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IMPERIAL OIL LIMITED
8. Financial and derivative instruments
Financial instruments
The fair value of the company’s financial instruments is determined by reference to various market data and other appropriate valuation techniques. There are no material differences between the fair value of the company’s financial instruments and the recorded carrying value. At June 30, 2024 and December 31, 2023, the fair value of long-term debt ($3,447 million, excluding finance lease obligations) was primarily a level 2 measurement.
Derivative instruments
The company’s size, strong capital structure and the complementary nature of its business segments reduce the company’s enterprise-wide risk from changes in commodity prices, currency rates and interest rates. In addition, the company uses commodity-based contracts, including derivatives, to manage commodity price risk and to generate returns from trading. Commodity contracts held for trading purposes are presented in the Consolidated statement of income on a net basis in the line "Revenues" and in the Consolidated statement of cash flows in "Cash flows from (used in) operating activities". The company’s commodity derivatives are not accounted for under hedge accounting.
Credit risk associated with the company’s derivative position is mitigated by several factors, including the use of derivative clearing exchanges and the quality of and financial limits placed on derivative counterparties. The company maintains a system of controls that includes the authorization, reporting and monitoring of derivative activity.
The net notional long/(short) position of derivative instruments was:
As at
Jun 30
As at Dec 31
thousands of barrels
2024
2023
Crude
10,620
(4,450)
Products
(1,880)
(490)
Realized and unrealized gain/(loss) on derivative instruments recognized in the Consolidated statement of income is included in the following lines on a before-tax basis:
Second Quarter
Six Months
to June 30
millions of Canadian dollars
2024
2023
2024
2023
Revenues
11
10
(13)
(13)
15
IMPERIAL OIL LIMITED
The estimated fair value of derivative instruments, and the related hierarchy level for the fair value measurement were as follows:
At June 30, 2024
millions of Canadian dollars
Fair value
Effect of counterparty netting
Effect of collateral netting
Net carrying value
Level 1
Level 2
Level 3
Total
Assets
Derivative assets (a)
58
41
—
99
(58)
—
41
Liabilities
Derivative liabilities (b)
58
33
—
91
(58)
—
33
(a)Included in the Consolidated balance sheet line: “Materials, supplies and prepaid expenses”, “Accounts receivable - net” and “Other assets, including intangibles - net”.
(b)Included in the Consolidated balance sheet line: “Accounts payable and accrued liabilities” and “Other long-term obligations”.
At December 31, 2023
millions of Canadian dollars
Fair value
Effect of counterparty netting
Effect of collateral netting
Net carrying value
Level 1
Level 2
Level 3
Total
Assets
Derivative assets (a)
28
18
—
46
(16)
(12)
18
Liabilities
Derivative liabilities (b)
16
31
—
47
(16)
—
31
(a)Included in the Consolidated balance sheet line: “Materials, supplies and prepaid expenses”, “Accounts receivable - net” and “Other assets, including intangibles - net”.
(b)Included in the Consolidated balance sheet line: “Accounts payable and accrued liabilities” and “Other long-term obligations”.
At June 30, 2024 and December 31, 2023, the company had $17 million and $24 million, respectively, of collateral under a master netting arrangement not offset against the derivatives on the Consolidated balance sheet in “Accounts receivable - net”, primarily related to initial margin requirements.
16
IMPERIAL OIL LIMITED
9. Common shares
As at
Jun 30
As at
Dec 31
thousands of shares
2024
2023
Authorized
1,100,000
1,100,000
Outstanding
535,837
535,837
The current 12-month normal course issuer bid program came into effect June 29, 2024 under which Imperial will continue its existing share purchase program. The program enables the company to purchase up to a maximum of 26,791,840 common shares (5 percent of the total shares on June 15, 2024) which includes shares purchased under the normal course issuer bid from Exxon Mobil Corporation. As in the past, Exxon Mobil Corporation has advised the company that it intends to participate to maintain its ownership percentage at approximately 69.6 percent. Imperial plans to accelerate its share purchases under the normal course issuer bid program, and anticipates repurchasing all remaining allowable shares prior to year end. Purchase plans may be modified at any time without prior notice.
The excess of the purchase cost over the stated value of shares purchased has been recorded as a distribution of earnings reinvested.
The company’s common share activities are summarized below:
Thousands of shares
Millions of dollars
Balance as at December 31, 2022
584,153
1,079
Purchases at stated value
(48,316)
(87)
Balance as at December 31, 2023
535,837
992
Purchases at stated value
—
—
Balance as at June 30, 2024
535,837
992
The following table provides the calculation of basic and diluted earnings per common share and the dividends declared by the company on its outstanding common shares:
Second Quarter
Six Months
to June 30
2024
2023
2024
2023
Net income (loss) per common share – basic
Net income (loss) (millions of Canadian dollars)
1,133
675
2,328
1,923
Weighted-average number of common shares outstanding (millions of shares)
535.8
584.2
535.8
584.2
Net income (loss) per common share (dollars)
2.11
1.16
4.34
3.29
Net income (loss) per common share – diluted
Net income (loss) (millions of Canadian dollars)
1,133
675
2,328
1,923
Weighted-average number of common shares outstanding (millions of shares)
535.8
584.2
535.8
584.2
Effect of employee share-based awards (millions of shares)
1.2
1.1
1.2
1.1
Weighted-average number of common shares outstanding,
assuming dilution (millions of shares)
537.0
585.3
537.0
585.3
Net income (loss) per common share (dollars)
2.11
1.15
4.34
3.29
Dividends per common share – declared (dollars)
0.60
0.50
1.20
0.94
17
IMPERIAL OIL LIMITED
10. Other comprehensive income (loss) information
Changes in accumulated other comprehensive income (loss):
millions of Canadian dollars
2024
2023
Balance at January 1
(677)
(512)
Postretirement benefits liability adjustment:
Current period change excluding amounts reclassified
from accumulated other comprehensive income
4
21
Amounts reclassified from accumulated other comprehensive income
25
20
Balance at June 30
(648)
(471)
Amounts reclassified out of accumulated other comprehensive income (loss) - before-tax income (expense):
Second Quarter
Six Months
to June 30
millions of Canadian dollars
2024
2023
2024
2023
Amortization of postretirement benefits liability adjustment
included in net benefit cost (a)
(17)
(13)
(34)
(26)
(a) This accumulated other comprehensive income component is included in the computation of net benefit cost (note 4).
Income tax expense (credit) for components of other comprehensive income (loss):
Amortization of postretirement benefits liability adjustment
included in net benefit cost
4
3
9
6
Total
3
3
9
13
18
IMPERIAL OIL LIMITED
Item 2. Management’s discussion and analysis of financial condition and results of operations
Non-GAAP financial measures and other specified financial measures
Certain measures included in this document are not prescribed by U.S. Generally Accepted Accounting Principles (GAAP). These measures constitute "non-GAAP financial measures" under Securities and Exchange Commission Regulation G and Item 10(e) of Regulation S-K, and "specified financial measures" under National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure of the Canadian Securities Administrators.
Reconciliation of these non-GAAP financial measures to the most comparable GAAP measure, and other information required by these regulations, have been provided. Non-GAAP financial measures and specified financial measures are not standardized financial measures under GAAP and do not have a standardized definition. As such, these measures may not be directly comparable to measures presented by other companies, and should not be considered a substitute for GAAP financial measures.
Net income (loss) excluding identified items
Net income (loss) excluding identified items is a non-GAAP financial measure that is total net income (loss) excluding individually significant non-operational events with an absolute corporate total earnings impact of at least $100 million in a given quarter. The net income (loss) impact of an identified item for an individual segment in a given quarter may be less than $100 million when the item impacts several segments or several periods. The most directly comparable financial measure that is disclosed in the financial statements is "Net income (loss)" within the company’s Consolidated statement of income. Management uses these figures to improve comparability of the underlying business across multiple periods by isolating and removing significant non-operational events from business results. The company believes this view provides investors increased transparency into business results and trends, and provides investors with a view of the business as seen through the eyes of management. Net income (loss) excluding identified items is not meant to be viewed in isolation or as a substitute for net income (loss) as prepared in accordance with U.S. GAAP. All identified items are presented on an after-tax basis.
Reconciliation of net income (loss) excluding identified items
There were no identified items in the second quarter or year-to-date 2024 and 2023 periods.
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IMPERIAL OIL LIMITED
Recent business environment
In the first half of 2024, the price of crude oil remained relatively flat compared to the fourth quarter of 2023. The Canadian WTI/WCS spread continued to narrow in the second quarter, primarily due to additional pipeline capacity coming online.Refining margins fell as increasing supply more than met growing demand and geopolitical trade-flow disruptions lessened.
Operating results
Second quarter 2024 vs. second quarter 2023
Second Quarter
millions of Canadian dollars, unless noted
2024
2023
Net income (loss) (U.S. GAAP)
1,133
675
Net income (loss) per common share, assuming dilution (dollars)
2.11
1.15
Upstream
Net income (loss) factor analysis
millions of Canadian dollars
Price – Average bitumen realizations increased by $14.38 per barrel, primarily driven by higher marker prices and the narrowing of the WTI/WCS spread. Synthetic crude oil realizations increased by $10.64 per barrel, generally in line with WTI.
Volumes – Higher volumes were primarily driven by higher mine fleet productivity and optimized turnaround at Kearl, production and steam cycle timing and GRP1 production at Cold Lake.
Royalty – Higher royalties were primarily driven by improved commodity prices.
Marker prices and average realizations
Second Quarter
Canadian dollars, unless noted
2024
2023
West Texas Intermediate (US$ per barrel)
80.63
73.56
Western Canada Select (US$ per barrel)
67.03
58.49
WTI/WCS Spread (US$ per barrel)
13.60
15.07
Bitumen (per barrel)
83.02
68.64
Synthetic crude oil (per barrel)
111.56
100.92
Average foreign exchange rate (US$)
0.73
0.74
20
IMPERIAL OIL LIMITED
Production
Second Quarter
thousands of barrels per day
2024
2023
Kearl (Imperial's share)
181
154
Cold Lake
147
132
Syncrude (a)
66
66
Kearl total gross production (thousands of barrels per day)
255
217
(a)In the second quarter of 2024, Syncrude gross production included about 2 thousand barrels per day of bitumen and other products (2023 - 0 thousand barrels per day) that were exported to the operator's facilities using an existing interconnect pipeline.
Higher production at Kearl was primarily driven by higher mine fleet productivity and optimized turnaround.
Higher production at Cold Lake was primarily driven by production and steam cycle timing, and GRP1 production.
Other – Primarily due to lower turnaround impacts of about $140 million.
Refinery utilization and petroleum product sales
Second Quarter
thousands of barrels per day, unless noted
2024
2023
Refinery throughput
387
388
Refinery capacity utilization (percent)
89
90
Petroleum product sales
470
475
Refinery throughput in the second quarter of 2024 reflects the impact of turnaround activities at the Sarnia and Strathcona refineries. Refinery throughput in the second quarter of 2023 reflected the impact of turnaround activities at the Strathcona refinery.
Chemicals
Net income (loss) factor analysis
millions of Canadian dollars
21
IMPERIAL OIL LIMITED
Corporate and other
Second Quarter
millions of Canadian dollars
2024
2023
Net income (loss) (U.S. GAAP)
(25)
(30)
Liquidity and capital resources
Second Quarter
millions of Canadian dollars
2024
2023
Cash flows from (used in):
Operating activities
1,629
885
Investing activities
(456)
(489)
Financing activities
(329)
(263)
Increase (decrease) in cash and cash equivalents
844
133
Cash and cash equivalents at period end
2,020
2,376
Cash flows from operating activities primarily reflect higher Upstream realizations and volumes, and favourable working capital impacts.
Cash flows used in investing activities primarily reflect lower additions to property, plant and equipment.
Cash flows used in financing activities primarily reflect:
Second Quarter
millions of Canadian dollars, unless noted
2024
2023
Dividends paid
321
257
Per share dividend paid (dollars)
0.60
0.44
Share repurchases (a)
—
—
Number of shares purchased (millions) (a)
—
—
(a)The company did not purchase any shares during the second quarter of 2024 and 2023.
On June 24, 2024, the company announced by news release that it had received final approval from the Toronto Stock Exchange for a new normal course issuer bid and will continue its existing share purchase program. Shareholders may obtain a copy of the Notice of Intention to Make a Normal Course Issuer Bid approved by the TSX without charge by contacting the company. The program enables the company to purchase up to a maximum of 26,791,840 common shares during the period June 29, 2024 to June 28, 2025. This maximum includes shares purchased under the normal course issuer bid from Exxon Mobil Corporation. As in the past, Exxon Mobil Corporation has advised the company that it intends to participate to maintain its ownership percentage at approximately 69.6 percent. The program will end should the company purchase the maximum allowable number of shares or otherwise on June 28, 2025. Imperial plans to accelerate its share purchases under the normal course issuer bid program, and anticipates repurchasing all remaining allowable shares prior to year end. Purchase plans may be modified at any time without prior notice.
In June 2024, the company extended the maturity date of its existing long-term, variable-rate, Canadian dollar loan from ExxonMobil to June 30, 2035. All other terms and conditions remain unchanged.
22
IMPERIAL OIL LIMITED
Six months 2024 vs. six months 2023
Six Months
millions of Canadian dollars, unless noted
2024
2023
Net income (loss) (U.S. GAAP)
2,328
1,923
Net income (loss) per common share, assuming dilution (dollars)
4.34
3.29
Upstream
Net income (loss) factor analysis
millions of Canadian dollars
Price – Average bitumen realizations increased by $15.76 per barrel, primarily driven by higher marker prices and the narrowing WTI/WCS spread. Synthetic crude oil realizations increased by $0.37 per barrel, primarily driven by higher WTI, partly offset by a weaker Synthetic/WTI spread.
Volumes – Higher volumes were primarily driven by higher mine fleet productivity and optimized turnaround at Kearl, production and steam cycle timing and GRP1 production at Cold Lake.
Royalty – Higher royalties were primarily driven by improved commodity prices.
Other – Includes lower operating expenses of about $120 million, primarily from lower energy prices, partially offset by lower electricity sales at Cold Lake due to lower prices.
Marker prices and average realizations
Six Months
Canadian dollars, unless noted
2024
2023
West Texas Intermediate (US$ per barrel)
78.77
74.77
Western Canada Select (US$ per barrel)
62.34
54.92
WTI/WCS Spread (US$ per barrel)
16.43
19.85
Bitumen (per barrel)
74.70
58.94
Synthetic crude oil (per barrel)
102.10
101.73
Average foreign exchange rate (US$)
0.74
0.74
23
IMPERIAL OIL LIMITED
Production
Six Months
thousands of barrels per day
2024
2023
Kearl (Imperial's share)
189
169
Cold Lake
144
137
Syncrude (a)
70
71
Kearl total gross production (thousands of barrels per day)
266
238
(a)In 2024, Syncrude gross production included about 1 thousand barrels per day of bitumen and other products (2023 - 1 thousand barrels per day) that were exported to the operator's facilities using an existing interconnect pipeline.
Higher production at Kearl was primarily driven by higher mine fleet productivity and optimized turnaround.
Other – Primarily due to lower turnaround impacts of about $150 million.
Refinery utilization and petroleum product sales
Six Months
thousands of barrels per day, unless noted
2024
2023
Refinery throughput
397
403
Refinery capacity utilization (percent)
92
93
Petroleum product sales
460
465
Refinery throughput in 2024 reflects the impact of turnaround activities at the Sarnia and Strathcona refineries. Refinery throughput in 2023 reflected the impact of turnaround activities at the Strathcona refinery.
Chemicals
Net income (loss) factor analysis
millions of Canadian dollars
24
IMPERIAL OIL LIMITED
Corporate and other
Six Months
millions of Canadian dollars
2024
2023
Net income (loss) (U.S. GAAP)
(76)
(35)
Liquidity and capital resources
Six Months
millions of Canadian dollars
2024
2023
Cash flows from (used in):
Operating activities
2,705
64
Investing activities
(937)
(903)
Financing activities
(612)
(534)
Increase (decrease) in cash and cash equivalents
1,156
(1,373)
Cash flows from operating activities primarily reflect the absence of unfavourable working capital impacts mainly related to an income tax catch-up payment of $2.1 billion in the prior year.
Cash flows used in investing activities primarily reflect higher additions to property, plant and equipment.
Cash flows used in financing activities primarily reflect:
Six Months
millions of Canadian dollars, unless noted
2024
2023
Dividends paid
599
523
Per share dividend paid (dollars)
1.10
0.88
Share repurchases (a)
—
—
Number of shares purchased (millions) (a)
—
—
(a)The company did not purchase any shares during the six months ended June 30, 2024 and 2023.
Contractual obligations
As previously communicated, in the first quarter of 2024, the company entered into a long-term purchase agreement with a third party for about $2 billion. It has no material impact on the 2024 and 2025 obligations disclosed in Imperial's 2023 annual report on Form 10-K. The company does not believe that the additional obligation will have a material effect on Imperial's operations, financial condition or financial statements.
25
IMPERIAL OIL LIMITED
Forward-looking statements
Statements of future events or conditions in this report, including projections, targets, expectations, estimates, and business plans are forward-looking statements. Forward-looking statements can be identified by words such as believe, anticipate, intend, propose, plan, goal, seek, project, predict, target, estimate, expect, strategy, outlook, schedule, future, continue, likely, may, should, will and similar references to future periods. Forward-looking statements in this release include, but are not limited to, references to the company’s purchases under the normal course issuer bid and plans to accelerate completion prior to year end; the use of derivative instruments and effectiveness of risk mitigation; and the company’s belief that the commitment related to the long-term purchase agreement will not have a material effect on the company’s operations, financial condition or financial statements.
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 concerning future energy demand, supply and mix; production rates, growth and mix across various assets; for shareholder returns, assumptions such as cash flow forecasts, financing sources and capital structure, participation of the company’s majority shareholder and the results of periodic and ongoing evaluation of alternate uses of capital; project plans, timing, costs, technical evaluations and capacities and the company’s ability to effectively execute on these plans and operate its assets, including the Cold Lake Grand Rapids Phase 1 project, the Strathcona renewable diesel project and the Leming SAGD redevelopment project; capital and environmental expenditures; the ability to offset any ongoing inflationary pressures; applicable laws and government policies, including with respect to climate change, greenhouse gas emissions reductions and low carbon fuels; cash generation, financing sources and capital structure, such as dividends and shareholder returns, including the timing and amounts of share repurchases; and commodity prices, foreign exchange rates and general market conditions, could differ materially depending on a number of factors.
These factors include global, regional or local changes in supply and demand for oil, natural gas, and petroleum and petrochemical products and resulting price, differential and margin impacts, including foreign government action with respect to supply levels and prices, and the occurrence of wars; political or regulatory events, including changes in law or government policy, applicable royalty rates, and tax laws; third-party opposition to company and service provider operations, projects and infrastructure; failure, delay or uncertainty regarding supportive policy and market development for the adoption of emerging lower emission energy technologies and other technologies that support emissions reductions; the receipt, in a timely manner, of regulatory and third-party approvals, including for new technologies that will help the company meet its lower emissions goals; availability and allocation of capital; project management and schedules and timely completion of projects; unanticipated technical or operational difficulties; availability and performance of third-party service providers; environmental risks inherent in oil and gas exploration and production activities; environmental regulation, including climate change and greenhouse gas regulation and changes to such regulation; management effectiveness and disaster response preparedness; operational hazards and risks; cybersecurity incidents; currency exchange rates; general economic conditions, including inflation and the occurrence and duration of economic recessions or downturns; and other factors discussed in Item 1A risk factors and Item 7 management’s discussion and analysis of financial condition and results of operations of Imperial’s most recent annual report on Form 10-K.
Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, some that are similar to other oil and gas companies and some that are unique to Imperial. Imperial’s actual results may differ materially from those expressed or implied by its forward-looking statements and readers are cautioned not to place undue reliance on them. Imperial undertakes no obligation to update any forward-looking statements contained herein, except as required by applicable law.
The term "project" as used in this report can refer to a variety of different activities and does not necessarily have the same meaning as in any government payment transparency reports.
26
IMPERIAL OIL LIMITED
Item 3. Quantitative and qualitative disclosures about market risk
Information about market risks for the six months ended June 30, 2024, does not differ materially from that discussed on page 34 of the company’s annual report on Form 10-K for the year ended December 31, 2023.
Item 4. Controls and procedures
As indicated in the certifications in Exhibit 31 of this report, the company’s principal executive officer and principal financial officer have evaluated the company’s disclosure controls and procedures as of June 30, 2024. Based on that evaluation, these officers have concluded that the company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to them in a manner that allows for timely decisions regarding required disclosures and are effective in ensuring that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. There has not been any change in the company’s internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.
27
IMPERIAL OIL LIMITED
PART II. OTHER INFORMATION
Item 1. Legal proceedings
Imperial has elected to use a $1 million (U.S. dollars) threshold for disclosing environmental proceedings.
Item 2. Unregistered sales of equity securities and use of proceeds
Issuer purchases of equity securities
Total number of
shares purchased
Average price paid
per share
(Canadian dollars)
Total number of
shares purchased
as part of publicly
announced plans
or programs
Maximum number of shares that may yet be purchased under the plans or programs (a) (b)
April 2024
(April 1 - April 30)
—
—
—
—
May 2024
(May 1 - May 31)
—
—
—
—
June 2024
(June 1 - June 30)
—
—
—
—
(a)On June 27, 2023, the company announced by news release that it had received final approval from the Toronto Stock Exchange for a new normal course issuer bid and to continue its existing share purchase program. The program enabled the company to purchase up to a maximum of 29,207,635 common shares during the period June 29, 2023 to June 28, 2024. This maximum included shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of, the normal course issuer bid. As in the past, Exxon Mobil Corporation advised the company that it intended to participate to maintain its ownership percentage at approximately 69.6 percent. The program ended on October 19, 2023 as a result of the company purchasing the maximum allowable number of shares under the program.
(b)On June 24, 2024, the company announced by news release that it had received final approval from the Toronto Stock Exchange for a new normal course issuer bid and will continue its existing share purchase program. Shareholders may obtain a copy of the Notice of Intention to Make a Normal Course Issuer Bid approved by the TSX without charge by contacting the company. The program enables the company to purchase up to a maximum of 26,791,840 common shares during the period June 29, 2024 to June 28, 2025. This maximum includes shares purchased under the normal course issuer bid from Exxon Mobil Corporation. As in the past, Exxon Mobil Corporation has advised the company that it intends to participate to maintain its ownership percentage at approximately 69.6 percent. The program will end should the company purchase the maximum allowable number of shares or otherwise on June 28, 2025. Imperial plans to accelerate its share purchases under the normal course issuer bid program, and anticipates repurchasing all remaining allowable shares prior to year end. Purchase plans may be modified at any time without prior notice.
The company will continue to evaluate its share purchase program in the context of its overall capital activities. Purchase plans may be modified at any time without prior notice.
Item 5. Other information
During the three months ended June 30, 2024, none of the company's directors or officers adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.
28
IMPERIAL OIL LIMITED
Item 6. Exhibits
(31.1) Certification by the principal executive officer of the company pursuant to Rule 13a-14(a).
(31.2) Certification by the principal financial officer of the company pursuant to Rule 13a-14(a).
(32.1) Certification by the chief executive officer of the company pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350.
(32.2) Certification by the chief financial officer of the company pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350.
(101) Interactive Data Files (formatted as Inline XBRL).
(104) Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
29
IMPERIAL OIL LIMITED
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Imperial Oil Limited
(Registrant)
Date:
August 5, 2024
/s/ Daniel E. Lyons
(Signature)
Daniel E. Lyons
Senior vice-president, finance and administration, and controller
