Enhanced Investments - Financial Portal

Published: 2022-05-04


	IMPERIAL OIL LIMITED



Consolidated statement of income (U.S. GAAP, unaudited)

				Three Months
						to March 31
millions of Canadian dollars					2022	2021
Revenues and other income
			Revenues (a)		12,657	6,992
			Investment and other income (note 3)	29	6
Total revenues and other income					12,686	6,998

Expenses
			Exploration	2	2
			Purchases of crude oil and products (b)		8,350	3,887
			Production and manufacturing (c)		1,659	1,485
			Selling and general (c)	225	189
			Federal excise tax and fuel charge	479	404
			Depreciation and depletion	426	494
			Non-service pension and postretirement benefit	4	11
			Financing (d) (note 5)	7	14
Total expenses					11,152	6,486

Income (loss) before income taxes					1,534	512

Income taxes				361	120

Net income (loss)					1,173	392

Per share information (Canadian dollars)
Net income (loss) per common share - basic (note 9)					1.75	0.53
Net income (loss) per common share - diluted (note 9)					1.75	0.53
(a)			Amounts from related parties included in revenues.		3,959	1,508
(b)			Amounts to related parties included in purchases of crude oil and products.	650	515
(c) Amounts to related parties included in production and manufacturing,
				118	116
			and selling and general expenses.
(d) Amounts to related parties included in financing (note 5).				4	11
The information in the notes to consolidated financial statements is an integral part of these statements.

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	IMPERIAL OIL LIMITED


							Consolidated statement of comprehensive income (U.S. GAAP, unaudited)

					Three Months
							to March 31
millions of Canadian dollars						2022	2021
Net income (loss)						1,173	392

Other comprehensive income (loss), net of income taxes
			Postretirement benefits liability adjustment (excluding amortization)		24	54

			Amortization of postretirement benefits liability adjustment
				included in net benefit costs		21	33
Total other comprehensive income (loss)					45	87

Comprehensive income (loss)						1,218	479
The information in the notes to consolidated financial statements is an integral part of these statements.

		3


	IMPERIAL OIL LIMITED



Consolidated balance sheet (U.S. GAAP, unaudited)

				As at		As at
				Mar 31 Dec 31
millions of Canadian dollars				2022		2021
Assets
Current assets
			Cash	3,149		2,153
			Accounts receivable - net (a)	5,413		3,869
			Inventories of crude oil and products	1,374		1,102
			Materials, supplies and prepaid expenses	782	689
Total current assets				10,718		7,813
Investments and long-term receivables (b)				754	757
Property, plant and equipment,				56,925		56,762
			less accumulated depreciation and depletion	(25,818)		(25,522)
Property, plant and equipment, net				31,107		31,240
Goodwill				166	166
Other assets, including intangibles - net				1,065	806
Total assets				43,810		40,782

Liabilities
Current liabilities
			Notes and loans payable	122	122
			Accounts payable and accrued liabilities (a) (note 7)	7,364		5,184
			Income taxes payable	1,165	248
Total current liabilities				8,651		5,554
Long-term debt (c) (note 6)				5,049		5,054
Other long-term obligations (note 7)				3,426		3,897
Deferred income tax liabilities				4,408		4,542
Total liabilities				21,534		19,047

Shareholders' equity
Common shares at stated value (d) (note 9)				1,237		1,252
Earnings reinvested				22,171		21,660
Accumulated other comprehensive income (loss) (note 10)				(1,132)		(1,177)
Total shareholders' equity				22,276		21,735

Total liabilities and shareholders' equity				43,810		40,782
(a)			Accounts receivable - net included net amounts receivable from related parties of $1,632 million (2021 - $1,031 million).
(b)			Investments and long-term receivables included amounts from related parties of $297 million (2021 - $298 million).
(c)			Long-term debt included amounts to related parties of $4,447 million (2021 - $4,447 million).
(d)			Number of common shares authorized and outstanding were 1,100 million and 669 million, respectively (2021 - 1,100 million and 678 million, respectively).
The information in the notes to consolidated financial statements is an integral part of these statements.
Approved by the directors May 4, 2022 /s/ Bradley W. Corson
							/s/ Daniel E. Lyons
Chairman, president and
							Senior vice-president,
chief executive officer							finance and administration, and controller

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	IMPERIAL OIL LIMITED


Consolidated statement of shareholders' equity (U.S. GAAP, unaudited)

			Three Months
			to March 31
millions of Canadian dollars					2022	2021
Common shares at stated value (note 9)
At beginning of period					1,252	1,357
Share purchases at stated value			(15)	-
At end of period					1,237	1,357

Earnings reinvested
At beginning of period			21,660	22,050
Net income (loss) for the period					1,173	392
Share purchases in excess of stated value					(434)	-
Dividends declared					(228)	(161)
At end of period			22,171	22,281

Accumulated other comprehensive income (loss) (note 10)
At beginning of period			(1,177)	(1,989)
Other comprehensive income (loss)			45			87
At end of period			(1,132)	(1,902)

Shareholders' equity at end of period			22,276	21,736
The information in the notes to consolidated financial statements is an integral part of these statements.

		5


	IMPERIAL OIL LIMITED



Consolidated statement of cash flows (U.S. GAAP, unaudited)

				Three Months
Inflow (outflow)					to March 31
millions of Canadian dollars					2022	2021
Operating activities
Net income (loss)					1,173	392
Adjustments for non-cash items:
			Depreciation and depletion	426	494
			(Gain) loss on asset sales (note 3)	(20)	(3)
			Deferred income taxes and other		(331)	60
Changes in operating assets and liabilities:
			Accounts receivable		(1,544)	(469)
			Inventories, materials, supplies and prepaid expenses		(364)	(159)
			Income taxes payable	459	21
			Accounts payable and accrued liabilities		2,144	584
All other items - net (b)				(29)	125
Cash flows from (used in) operating activities					1,914	1,045

Investing activities
Additions to property, plant and equipment					(304)	(167)
Proceeds from asset sales (note 3)				24	7
Loans to equity companies - net				1	13
Cash flows from (used in) investing activities					(279)	(147)

Financing activities
Short-term debt - net				-	(36)
Reduction in finance lease obligations (note 6)				(5)	(4)
Dividends paid					(185)	(162)
Common shares purchased (note 9)					(449)	-
Cash flows from (used in) financing activities					(639)	(202)

Increase (decrease) in cash				996	696
Cash at beginning of period					2,153	771
Cash at end of period (a)					3,149	1,467
(a)			Cash is composed of cash in bank and cash equivalents at cost. Cash equivalents are all highly liquid securities with maturity of three months or less when purchased.
(b)			Included contributions to registered pension plans.	(50)	(28)

Income taxes (paid) refunded.					(223)	1
Interest (paid), net of capitalization.				(12)	(13)
The information in the notes to consolidated financial statements is an integral part of these statements.

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	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 2021 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 three months ended March 31, 2022, are not necessarily indicative of the operations to be expected for the full year. All amounts are in Canadian dollars unless otherwise indicated.

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	IMPERIAL OIL LIMITED


2. Business segments

Three Months to March 31		Upstream				Downstream				Chemical
millions of Canadian dollars		2022								2021	2022	2021	2022	2021
Revenues and other income
			Revenues (a)	99								2,142	12,191	4,527		367	323
			Intersegment sales	4,431								1,351	1,833	773	104	53
			Investment and other income (note 3)	4			-	21	5	-	-
					4,534								3,493	14,045	5,305		471	376
Expenses
			Exploration	2			2	-	-	-	-
			Purchases of crude oil and products	1,890								1,834	12,512	4,020		315	209
			Production and manufacturing	1,249								1,109	356	326	54	50
			Selling and general	-			-	147	133	23	25
			Federal excise tax and fuel charge	-			-	479	404	-	-
			Depreciation and depletion	373			445	41	39	5	4
			Non-service pension and postretirement benefit
		-			-	-	-	-	-
			Financing (note 5)	-			1	-	-	-	-
Total expenses		3,514								3,391	13,535	4,922		397	288
Income (loss) before income taxes		1,020			102	510	383	74	88
Income tax expense (benefit)		238			23	121	91	18	21
Net income (loss)		782			79	389	292	56	67
Cash flows from (used in) operating activities		1,447			531	375	462	67	62
Capital and exploration expenditures (b)		222			85	68	68	1	2
Total assets as at March 31		29,182								31,754	10,179	4,909		501	462


Three Months to March 31				Corporate and other	Eliminations			Consolidated
millions of Canadian dollars		2022								2021	2022	2021	2022	2021
Revenues and other income
			Revenues (a)	-			-	-	-	12,657	6,992
			Intersegment sales	-			-	(6,368)	(2,177)		-	-
			Investment and other income (note 3)	4			1	-	-	29	6
					4			1	(6,368)	(2,177)	12,686	6,998
Expenses
			Exploration	-			-	-	-	2	2
			Purchases of crude oil and products	-			-	(6,367)	(2,176)			8,350	3,887
			Production and manufacturing	-			-	-	-		1,659	1,485
			Selling and general	56			32	(1)	(1)	225	189
			Federal excise tax and fuel charge	-			-	-	-	479	404
			Depreciation and depletion	7			6	-	-	426	494
			Non-service pension and postretirement benefit
		4			11	-	-	4	11
			Financing (note 5)	7			13	-	-	7	14
Total expenses		74			62	(6,368)	(2,177)	11,152	6,486
Income (loss) before income taxes		(70)			(61)	-	-		1,534	512
Income tax expense (benefit)		(16)			(15)	-	-	361	120
Net income (loss)		(54)			(46)	-	-		1,173	392
Cash flows from (used in) operating activities		25			(10)	-	-		1,914	1,045
Capital and exploration expenditures (b)		5			8	-	-	296	163
Total assets as at March 31		4,136								2,346	(188)	(464)	43,810	39,007

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	IMPERIAL OIL LIMITED


(a) Included export sales to the United States of $2,504 million (2021 - $1,569 million). (b) Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions
to finance leases, additional investments and acquisition			s and the company’s share of similar costs for equity companies. CAPEX
excludes the purchase of carbon emission credits.

		9


	IMPERIAL OIL LIMITED


3. Investment and other income

Investment and other income included gains and losses on asset sales as follows:
					Three Months
						to March 31
millions of Canadian dollars					2022	2021
Proceeds from asset sales				24	7
Book value of asset sales				4	4
Gain (loss) on asset sales, before tax				20	3
Gain (loss) on asset sales, after tax				16	2

4. Employee retirement benefits

The components of net benefit cost were as follows:
					Three Months
							to March 31
millions of Canadian dollars					2022	2021
Pension benefits:
			Service cost	70	81
			Interest cost	73	68
			Expected return on plan assets		(103)	(107)
			Amortization of prior service cost	4	4
			Amortization of actuarial loss (gain)	22	36
			Net benefit cost	66	82

Other postretirement benefits:
			Service cost	6	7
			Interest cost	6	6
			Amortization of actuarial loss (gain)	2	4
			Net benefit cost	14	17
5. Financing costs
				Three Months
						to March 31
millions of Canadian dollars					2022	2021
Debt-related interest				12	21
Capitalized interest				(5)	(8)
Net interest expense				7	13
Other interest				-	1
Total financing				7	14


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	IMPERIAL OIL LIMITED


6. Long-term debt
			As at	As at
				Mar 31	Dec 31
millions of Canadian dollars			2022			2021
Long-term debt			4,447			4,447
Finance leases			602			607
Total long-term debt			5,049			5,054
7. Other long-term obligations
			As at	As at
				Mar 31	Dec 31
millions of Canadian dollars			2022			2021
Employee retirement benefits (a)			1,326			1,362
Asset retirement obligations and other environmental liabilities (b)			1,713			1,713
Share-based incentive compensation liabilities			111			79
Operating lease liability (c)			138			147
Other obligations			138			596
Total other long-term obligations			3,426			3,897
(a) Total recorded employee retirement benefits obligations also included $56 million in current liabilities (2021 - $56 million). (b) Total asset retirement obligations and other environmental liabilities also included $102 million in current liabilities (2021 - $102
million).
(c) Total operating lease liability also included $95 million in current liabilities (2021 - $102 million).						In addition to the total operating
lease liability, additional undiscounted commitments for leases not yet commenced totalled $0 million (2021 - $5 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 March 31, 2022 and December 31, 2021, the fair value of long-term debt ($4,447 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 the Upstream, Downstream
and Chemical businesses reduce the				company’s enterprise-wide risk from changes in commodity prices and
currency exchange rates. In addition, the company uses commodity-based contracts, including derivative instruments 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”. The company does not designate derivative instruments as a hedge for hedge accounting purposes.

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	As at
								Mar 31	Dec 31
thousands of barrels								2022	2021
Crude								(620)	7,390
Products								(70)	(560)

Realized and unrealized gain or (loss) on derivative instruments recognized in the Consolidated statement of income is included in the following lines on a before-tax basis:

											Three Months
							First Quarter			to March 31
millions of Canadian dollars						2022						2021	2022	2021
Revenues							37			1	37	-
Purchases of crude oil and products							-			-	-	(14)
Total							37			1	37	(14)



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IMPERIAL OIL LIMITED

The estimated fair value of derivative instruments, and the related hierarchy level for the fair value measurement is as follows:

At March 31, 2022

millions of Canadian dollars

Fair value

Effect of

Net

counterparty collateral carrying

Level 1

Level 2

Level 3

Total

netting

value

Assets

Derivative assets (a)

(59)

Liabilities

Derivative liabilities (b)

(59)

(4)

(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, 2021

millions of Canadian dollars

Fair value

Effect of

Net

counterparty collateral carrying

Level 1

Level 2

Level 3

Total

netting

value

Assets

Derivative assets (a)

(31)

Liabilities

Derivative liabilities (b)

(31)

(7)

(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 March 31, 2022 and December 31, 2021, the company had $47 million and $6 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.


	IMPERIAL OIL LIMITED


9. Common shares
			As of	As of
				Mar 31	Dec 31
thousands of shares			2022	2021
Authorized			1,100,000	1,100,000
Common shares outstanding			669,144	678,080
The most recent 12-month normal course issuer bid program came into effect June 29, 2021, under which Imperial continued its existing share purchase program. The program enabled the company to purchase up to a maximum of 35,583,671 common shares (5 percent of the total shares on June 15, 2021) which 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 completed on January 31, 2022 as a result of the company purchasing the maximum allowable number of shares under the program.

On April 29, 2022 the company announced its intention to launch a substantial issuer bid pursuant to which the company will offer to purchase for cancellation up to $2,500,000,000 of its common shares. The substantial issuer bid will be made through a modified Dutch auction, with a tender price range to be determined by the company at the time of commencement of the offer. Shares may also be tendered by way of a proportionate tender, which will result in a shareholder maintaining their proportionate share ownership. ExxonMobil has advised Imperial that it intends to make a proportionate tender in connection with the offer in order to maintain its proportionate share ownership at approximately 69.6 percent following completion of the offer. Nothing in this report shall constitute an offer to purchase or a solicitation of an offer to sell any shares.

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	Millions of
			shares	dollars
Balance as at December 31, 2020			734,077	1,357
Issued under employee share-based awards			7	-
Purchases at stated value			(56,004)	(105)
Balance as at December 31, 2021			678,080	1,252
Issued under employee share-based awards			-	-
Purchases at stated value			(8,936)	(15)
Balance as at March 31, 2022			669,144	1,237

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	IMPERIAL OIL LIMITED



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:
					Three Months
						to March 31
						2022	2021
Net income (loss) per common share - basic
Net income (loss) (millions of Canadian dollars)					1,173	392
Weighted average number of common shares outstanding (millions of shares)					670.5	734.1
Net income (loss) per common share (dollars)					1.75	0.53

Net income (loss) per common share - diluted
Net income (loss) (millions of Canadian dollars)					1,173	392
Weighted average number of common shares outstanding (millions of shares)					670.5	734.1
Effect of employee share-based awards (millions of shares)				1.4	1.6
Weighted average number of common shares outstanding,
			assuming dilution (millions of shares)		671.9	735.7
Net income (loss) per common share (dollars)					1.75	0.53

Dividends per common share - declared (dollars)					0.34	0.22

		15


	IMPERIAL OIL LIMITED


10. Other comprehensive income (loss) information

Changes in accumulated other comprehensive income (loss):

millions of Canadian dollars					2022	2021
Balance at January 1				(1,177)	(1,989)
Postretirement benefits liability adjustment:
			Current period change excluding amounts reclassified
						from accumulated other comprehensive income	24	54
			Amounts reclassified from accumulated other comprehensive income	21	33
Balance at March 31				(1,132)	(1,902)

Amounts reclassified out of accumulated other comprehensive income (loss) - before tax income (expense):

					Three Months
						to March 31
millions of Canadian dollars					2022	2021
Amortization of postretirement benefits liability adjustment
			included in net benefit cost (a)	(28)	(44)
(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):

					Three Months
						to March 31
millions of Canadian dollars					2022	2021
Postretirement benefits liability adjustments:
			Postretirement benefits liability adjustment (excluding amortization)	8	17
			Amortization of postretirement benefits liability adjustment
						included in net benefit cost	7	11
Total				15	28

		16

Enhanced Investments, Inc.
329 South Oyster Bay Road #2085
Plainview, NY 11803
team@eninvs.com

Important disclosures

Performance results were prepared by Enhanced Investments, and have not been compiled, reviewed or audited by an independent accountant. Performance estimates are subject to future adjustment and revision. Investors should be aware that a loss of investment is possible. Account holdings are for illustrative purposes only and are not investment recommendations. Additional information, including (i) the calculation methodology; and (ii) a list showing the contribution of each holding to the portfolio’s performance during the time period will be provided upon request.
All statements made via social media sites sponsored or maintained by Enhanced Investments and its affiliates are for informational purposes only and do not constitute a comprehensive description of Enhanced Investments' investment advisory services.
Certain investments are not suitable for all investors. Before investing, consider your investment objectives and applicable fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Information provided by Enhanced Investments is for informational and general educational purposes only and is not investment or financial advice.

Nothing on this website should be considered an offer, solicitation of an offer, or advice to buy or sell securities.
Past performance is no guarantee of future results. Any historical returns, expected returns [or probability projections] are hypothetical in nature and may not reflect actual future performance.
All the strategies assume investments in equity invstrumenta only and are more relevant for "agressive investment profile". Eastern European flagship strategy assumes using up to 20% leverage of total portfolio. GlobalCommodities and US Growth strategy currently assume no leverage.
Results for the Enhanced Investments strategies as compared to the performance of Illustrative Benchmarks is for informational purposes only. Our investment program does not mirror that of the Illustrative Benchmarks and the volatility may be materially different from the volatility of Illustrative Benchmarks. Reference or comparison to an Illustrative Benchmark does not imply that strategies of Enhanced Investments will be constructed in the same way as the Illustrative Benchmark or achieve returns, volatility, or other results similar to those of the Illustrative Benchmark. The S&P 500 is an unmanaged market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance.
Performance results were prepared by Enhanced Investments, and have not been compiled, reviewed or audited by an independent accountant. Performance estimates are subject to future adjustment and revision. Investors should be aware that a loss of investment is possible. Account holdings are for illustrative purposes only and are not investment recommendations. Additional information, including (i) the calculation methodology; and (ii) a list showing the contribution of each holding to the portfolio’s performance during the time period will be provided upon request.
All statements made via social media sites sponsored or maintained by Enhanced Investments and its affiliates are for informational purposes only and do not constitute a comprehensive description of Enhanced Investments' investment advisory services.
Certain investments are not suitable for all investors. Before investing, consider your investment objectives and applicable fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Information provided by Enhanced Investments is for informational and general educational purposes only and is not investment or financial advice.