Imperial Oil announces second quarter financial and operating results
CALGARY, July 31 /CNW/ - Imperial Oil today announced that net income for
the second quarter of 2008 was a record $1,148 million or $1.28 a share,
compared with $712 million or $0.76 a share for the same period last year. Net
income for the first six months of 2008 was $1,829 million or $2.03 a share,
versus $1,486 million or $1.57 a share for the first half of 2007.
Earnings in the second quarter were higher than the same quarter of 2007
as higher Upstream earnings were partially offset by lower Downstream
earnings. In the Upstream, higher crude oil and natural gas commodity prices
were partially offset by the negative impacts of lower conventional volumes
from expected reservoir decline, higher royalties, a stronger Canadian dollar,
and higher energy and maintenance costs. Lower Downstream earnings were
primarily due to the negative impacts of lower overall industry refining
margins and a stronger Canadian dollar, partially offset by a gain from asset
divestment.
Operating revenues were $8,618 million in the second quarter, compared
with $6,299 million in the corresponding period last year. Capital and
exploration expenditures were $308 million in the second quarter, compared
with $200 million during the same quarter of 2007. For the first half of 2008,
the amount was $608 million, versus $416 million in the same period a year
ago. During the first half of 2008, the company repurchased about 22 million
shares for $1,196 million. At June 30, 2008, the company's balance of cash and
marketable securities was $1,295 million, compared with $1,208 million at the
end of 2007.
"Our operations and reliability improved in the quarter and included
successful completion of planned turnarounds in the Upstream and Downstream
businesses," said Bruce March, Imperial's chief executive officer. "We
continue to focus on our high quality portfolio of company growth projects and
have received federal authorization for the Kearl oil sands project to
proceed," March added.
Imperial Oil is one of Canada's largest corporations and a leading member
of the country's petroleum industry. It is one of the country's largest
producers of crude oil and natural gas, is the largest petroleum refiner, and
has a leading market share in petroleum products sold through a coast-to-coast
supply network that includes about 1,900 service stations.
Highlights/Items of Interest
Kearl oil sands project update
In June, the Kearl project was granted a key federal authorization under
the Fisheries Act. This cleared the way for site preparation work to proceed
at the project site, located in Northern Alberta.
Sale of Rainbow Pipeline in Northern Alberta completed
In April, Imperial and co-owners entered into an agreement to sell
Rainbow Pipe Line Company Ltd. (Rainbow), in which the company held a
one-third equity interest, subject to closing conditions and regulatory
approvals. The transaction was completed on May 28, 2008. Imperial's gain on
the sale of Rainbow was $187 million.
Share repurchase program to continue
In June, Imperial received approval from the Toronto Stock Exchange for a
new normal course issuer bid(*) and will continue its existing share-purchase
program. The company will be permitted to repurchase up to five percent of the
current outstanding common shares, or about 44 million shares, during the next
12 months. As in the past, Exxon Mobil Corporation will participate in the
program in order to maintain its ownership percentage at 69.6 percent.
(*)Any party may obtain, without charge, a copy of the notice of
intention to make a normal course issuer bid filed with the Toronto Stock
Exchange on June 23, 2008 on www.sedar.com or by contacting Imperial Oil,
attention Vice-President, General Counsel and Corporate Secretary, at 237
4th Avenue S.W., Calgary, Alberta, Canada T2P 3M9.
IMPERIAL OIL LIMITED
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FINANCIAL HIGHLIGHTS (unaudited)
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Six months
Second quarter to June 30
2008 2007 2008 2007
------------------ ------------------
Net income (U.S. GAAP, millions
of dollars)
Upstream 938 460 1,588 1,023
Downstream 239 314 269 512
Chemical 10 22 34 50
Corporate and other (39) (84) (62) (99)
------------------ ------------------
Net income (U.S. GAAP) 1,148 712 1,829 1,486
------------------ ------------------
Cash flow from operating
activities 1,456 1,125 1,754 1,400
Capital and exploration
expenditures 308 200 608 416
Per-share information (dollars)
Net income - basic 1.29 0.76 2.05 1.58
Net income - diluted 1.28 0.76 2.03 1.57
Dividends 0.09 0.09 0.18 0.17
Share prices - close at June 30
Toronto Stock Exchange
(Canadian dollars) 56.16 49.59
American Stock Exchange
(U.S. dollars) 55.07 46.34
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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OPERATING RESULTS
-----------------
The company's net income for the second quarter of 2008 was a record
$1,148 million or $1.28 a share on a diluted basis, compared with $712 million
or $0.76 a share for the same period last year. Net income for the first six
months of 2008 was $1,829 million or $2.03 a share on a diluted basis, versus
$1,486 million or $1.57 a share for the first half of 2007.
Earnings in the second quarter were higher than the same quarter of 2007
as higher Upstream earnings were partially offset by lower Downstream
earnings. In the Upstream, higher crude oil and natural gas commodity prices
were partially offset by the negative impacts of lower conventional volumes
from expected reservoir decline, higher royalties, a stronger Canadian dollar,
and higher energy and maintenance costs. Lower Downstream earnings were
primarily due to the negative impacts of lower overall industry refining
margins and a stronger Canadian dollar, partially offset by a gain from asset
divestment.
For the first six months, earnings increased primarily due to higher
crude oil and natural gas commodity prices. Improved upstream realizations
were partially offset by the negative impacts of lower overall industry
refining margins, lower upstream conventional and Syncrude volumes, higher
royalties and a stronger Canadian dollar.
Upstream
Net income from Upstream in the second quarter was a record $938 million,
$478 million higher than the same period in 2007. Increased earnings were
primarily due to higher crude oil and natural gas commodity prices totaling
about $950 million. Improved realizations were partially offset by the
negative impacts of higher royalties of about $170 million, lower conventional
volumes from expected reservoir decline of about $160 million and a stronger
Canadian dollar of about $70 million. Earnings were also negatively impacted
by higher energy and Syncrude maintenance costs totaling about $70 million.
Net income for the first six months was $1,588 million versus $1,023
million during the same period last year. Crude oil and natural gas commodity
prices were stronger by about $1,550 million compared to the first six months
of 2007. Their positive impact on earnings was partially offset by lower
conventional volumes of about $280 million and lower Syncrude volumes of about
$60 million. Earnings were also negatively impacted by higher royalties of
about $270 million, a stronger Canadian dollar of about $180 million, higher
energy, Syncrude maintenance, and other production costs totaling about
$120 million and lower gains from asset divestments of about $90 million.
Gross production of Cold Lake heavy oil averaged 144 thousand barrels a
day during the second quarter, versus 150 thousand barrels in the same quarter
last year. Lower production was due to the cyclic nature of production at Cold
Lake and higher planned maintenance activities in the quarter. For the first
six months, gross production was 149 thousand barrels a day this year,
compared with 148 thousand barrels in the same period of 2007.
The company's share of Syncrude's gross production in the second quarter
was 66 thousand barrels a day, the same as in the second quarter of 2007. The
planned maintenance of a coker unit was successfully completed in the second
quarter of 2008. During 2008, the company's share of gross production from
Syncrude averaged 66 thousand barrels a day, down from 70 thousand barrels in
2007. Lower volumes were due primarily to unplanned shutdowns in the first
quarter of 2008.
In the second quarter, gross production of conventional crude oil
averaged 26 thousand barrels a day, down from 29 thousand barrels during the
same period in 2007. For the six months of 2008, gross production of
conventional crude oil averaged 27 thousand barrels a day, compared with 30
thousand barrels in 2007. Natural reservoir decline in the Western Canadian
Basin was the main reason for the reduced production.
Gross production of natural gas liquids (NGLs) available for sale was 10
thousand barrels a day in the second quarter, down from 18 thousand barrels in
the same quarter last year. During the first six months of 2008, gross
production of NGLs available for sale decreased to 11 thousand barrels a day,
from 18 thousand barrels in 2007. The lower production volumes in the second
quarter and the first six months of 2008 were mainly due to the expected
decline in production from the gas cap at Wizard Lake.
Gross production of natural gas during the second quarter of 2008
decreased to 310 million cubic feet a day from 492 million cubic feet in the
same period last year. In the first half of the year, gross production was 318
million cubic feet a day, down from 508 million in the first six months of
2007. The lower production volume was primarily due to decline, as expected,
in production from the gas cap at Wizard Lake, which is largely complete.
In June, the Federal Department of Fisheries reissued a permit that
allows the Kearl oil sands project to continue with project site preparation
activities. This followed the Federal government's approval of the amended
Joint Review Panel report on the Kearl oil sands project's environmental
impact.
Downstream
Net income from Downstream was $239 million in the second quarter of
2008, compared with $314 million in the same period a year ago and included a
gain of $187 million from the sale of the company's equity investment in
Rainbow Pipe Line Co. Ltd. Second quarter 2008 earnings were negatively
impacted by lower overall industry refining margins of about $220 million and
a stronger Canadian dollar of about $25 million when compared to the same
period in 2007. Planned refinery maintenance activities, primarily at the
Sarnia refinery, were successfully completed in the quarter.
Six-month net income was $269 million compared with $512 million in 2007.
Earnings decreased primarily due to lower overall industry refining margins of
about $365 million and the negative impact of a stronger Canadian dollar of
about $40 million. These factors were partially offset by a gain of $187
million from the sale of Rainbow.
Chemical
Net income from Chemical was $10 million in the second quarter, compared
with $22 million in the same quarter last year. Six-month net income was
$34 million, compared with $50 million in 2007. Lower earnings in the second
quarter and for the year were primarily due to lower margins for intermediate
and other chemical products partially offset by higher margins for
polyethylene products.
Corporate and other
Net income from Corporate and other was negative $39 million in the
second quarter, compared with negative $84 million in the same period of 2007.
For the six months of 2008, net income was negative $62 million, versus
negative $99 million last year. Favourable earnings effects in the second
quarter and the first six months of 2008 were primarily due to lower
share-based compensation charges.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Cash flow from operating activities was $1,456 million during the second
quarter of 2008, $331 million higher than the same period last year.
Year-to-date cash flow from operating activities was $1,754 million, an
increase of $354 million from the first half of 2007. Higher cash flow in the
second quarter and the six months of 2008 were primarily due to higher
earnings.
Investing activities used net cash of $65 million in the second quarter
and $312 million in the first half of 2008, compared to $168 million and
$187 million in the corresponding periods in 2007. Capital and exploration
expenditures were $308 million in the second quarter, compared with $200
million during the same quarter of 2007, and $608 million in the first half,
compared with $416 million in the first half of 2007. For the Upstream
segment, capital and exploration expenditures included ongoing development
drilling at Cold Lake to maintain and expand production capacity, advancing
the Kearl oil sands project, investments in facilities improvement at Syncrude
and drilling at conventional fields in Western Canada. The Downstream
segment's capital expenditures were focused mainly on reducing air emissions
and improving refinery reliability and utilization. Proceeds from asset sales
were $228 million in the second quarter and $241 million in the first half of
2008 compared with $17 million and $186 million in the corresponding periods
of 2007.
In June, the company received approval from the Toronto Stock Exchange
for a new normal course issuer bid and will continue its existing
share-purchase program that expired on June 24, 2008. The new share-purchase
program enables the company to repurchase up to about 44 million shares during
the period from June 25, 2008, to June 24, 2009. During the first half of
2008, the company repurchased about 22 million shares for $1,196 million.
Cash dividends of $163 million were paid in the first six months of 2008
compared with dividends of $152 million in the same period of 2007. Per-share
dividends declared in the first two quarters of 2008 totaled $0.18, up from
$0.17 in the same period of 2007.
The above factors led to an increase in the company's balance of cash and
marketable securities to $1,295 million at June 30, 2008, from $1,208 million
at the end of 2007.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
-----------------------------------------------------------
Information about market risks for the six months ended June 30, 2008
does not differ materially from that discussed on page 33 in the company's
annual report to shareholders for the year ended December 31, 2007 and interim
report to shareholders for the quarter ended March 31, 2008 except for the
following:
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Earnings sensitivity (a)
millions of dollars after tax
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Ten cents decrease (increase) in the value of the
Canadian dollar versus the U.S. dollar + (-) 710
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The sensitivity of net income to changes in the Canadian dollar versus
the U.S. dollar increased from the first quarter 2008 by about $15 million
(after tax) for each one-cent difference. This was primarily due to the
increase in crude oil prices.
(a) The amount quoted to illustrate the impact of the sensitivity
represents a change of about 10 percent in the value of the commodity at
the end of the second quarter 2008. The sensitivity calculation shows the
impact on annual net income that results from a change in one factor,
after tax and royalties and holding all other factors constant. While the
sensitivity is applicable under current conditions, it may not apply
proportionately to larger fluctuations.
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This report may contain forward-looking information. Actual results could
differ materially due to market conditions, changes in law or government
policy, changes in operating conditions and costs, changes in project
schedules, operating performance, demand for oil and gas, commercial
negotiations or other technical and economic factors.
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IMPERIAL OIL LIMITED
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CONSOLIDATED STATEMENT OF INCOME
(U.S. GAAP, unaudited) Six months
Second quarter to June 30
millions of Canadian dollars 2008 2007 2008 2007
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REVENUES AND OTHER INCOME
Operating revenues(a)(b) 8,618 6,299 15,849 12,066
Investment and other income(4) 241 40 273 207
------------------ ------------------
TOTAL REVENUES AND OTHER INCOME 8,859 6,339 16,122 12,273
------------------ ------------------
EXPENSES
Exploration 17 43 57 71
Purchases of crude oil and
products(c) 5,312 3,470 9,808 6,623
Production and
manufacturing(5)(d) 1,114 888 2,091 1,734
Selling and general(5) 324 385 619 671
Federal excise tax(a) 328 324 640 629
Depreciation and depletion 181 198 362 387
Financing costs(6)(e) - 11 (3) 23
------------------ ------------------
TOTAL EXPENSES 7,276 5,319 13,574 10,138
------------------ ------------------
INCOME BEFORE INCOME TAXES 1,583 1,020 2,548 2,135
INCOME TAXES 435 308 719 649
------------------ ------------------
NET INCOME(3) 1,148 712 1,829 1,486
------------------ ------------------
NET INCOME PER COMMON SHARE
- BASIC (dollars)(8) 1.29 0.76 2.05 1.58
NET INCOME PER COMMON SHARE
- DILUTED (dollars)(8) 1.28 0.76 2.03 1.57
DIVIDENDS PER COMMON SHARE (dollars) 0.09 0.09 0.18 0.17
(a) Federal excise tax included in
operating revenues 328 324 640 629
(b) Amounts from related parties
included in operating revenues 628 407 1,219 846
(c) Amounts to related parties
included in purchases of
crude oil and products 1,250 837 2,509 1,491
(d) Amounts to related parties
included in production and
manufacturing expenses 43 50 90 93
(e) Amounts to related parties
included in financing costs (1) 8 (1) 17
The notes to the financial statements are an integral part of these
financial statements.
IMPERIAL OIL LIMITED
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CONSOLIDATED STATEMENT OF CASH FLOWS
(U.S. GAAP, unaudited) Six months
inflow/(outflow) Second quarter to June 30
millions of Canadian dollars 2008 2007 2008 2007
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OPERATING ACTIVITIES
Net income 1,148 712 1,829 1,486
Adjustment for non-cash items:
Depreciation and depletion 181 198 362 387
(Gain)/loss on asset sales(4) (221) (8) (232) (101)
Deferred income taxes and other (177) (20) (242) 51
Changes in operating assets
and liabilities:
Accounts receivable (366) (116) (764) (232)
Inventories and prepaids 103 71 (469) (198)
Income taxes payable 370 16 359 (408)
Accounts payable 479 210 1,063 480
All other items - net(a) (61) 62 (152) (65)
------------------ ------------------
CASH FROM (USED IN) OPERATING
ACTIVITIES 1,456 1,125 1,754 1,400
------------------ ------------------
INVESTING ACTIVITIES
Additions to property, plant and
equipment and intangibles (291) (184) (551) (372)
Proceeds from asset sales 228 17 241 186
Loans to equity company (2) (1) (2) (1)
------------------ ------------------
CASH FROM (USED IN) INVESTING
ACTIVITIES (65) (168) (312) (187)
------------------ ------------------
FINANCING ACTIVITIES
Short-term debt - net - 405 - 405
Repayment of long-term debt - (654) - (654)
Long-term debt issued - 250 - 250
Reduction in capitalized
lease obligations (1) - (2) (1)
Issuance of common shares under
stock option plan 2 7 6 9
Common shares purchased(8) (606) (622) (1,196) (1,191)
Dividends paid (81) (76) (163) (152)
------------------ ------------------
CASH FROM (USED IN) FINANCING
ACTIVITIES (686) (690) (1,355) (1,334)
------------------ ------------------
INCREASE (DECREASE) IN CASH 705 267 87 (121)
CASH AT BEGINNING OF PERIOD 590 1,770 1,208 2,158
------------------ ------------------
CASH AT END OF PERIOD 1,295 2,037 1,295 2,037
------------------ ------------------
(a) Includes contribution to
registered pension plans (6) (6) (153) (153)
The notes to the financial statements are an integral part of these
financial statements.
IMPERIAL OIL LIMITED
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CONSOLIDATED BALANCE SHEET
(U.S. GAAP, unaudited) As at As at
June 30 Dec.31
millions of Canadian dollars 2008 2007
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ASSETS
Current assets
Cash 1,295 1,208
Accounts receivable, less estimated
doubtful accounts 2,898 2,132
Inventories of crude oil and products 865 566
Materials, supplies and prepaid expenses 298 128
Deferred income tax assets 944 660
------------------
Total current assets 6,300 4,694
Long-term receivables, investments and other
long-term assets 860 766
Property, plant and equipment,
less accumulated depreciation and depletion 23,423 22,962
Property, plant and equipment, net 12,677 12,401
------------------
10,746 10,561
Goodwill 204 204
Other intangible assets, net 61 62
------------------
TOTAL ASSETS 18,171 16,287
------------------
LIABILITIES
Current liabilities
Short-term debt 105 105
Accounts payable and accrued liabilities(7)(a) 4,398 3,335
Income taxes payable 1,857 1,498
Current portion of capitalized lease obligations 3 3
------------------
Total current liabilities 6,363 4,941
Capitalized lease obligations 36 38
Other long-term obligations(7) 1,946 1,914
Deferred income tax liabilities 1,488 1,471
------------------
TOTAL LIABILITIES 9,833 8,364
SHAREHOLDERS' EQUITY
Common shares at stated value(8)(b) 1,568 1,600
Earnings reinvested(9) 7,581 7,071
Accumulated other comprehensive income(10) (811) (748)
------------------
TOTAL SHAREHOLDERS' EQUITY 8,338 7,923
------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 18,171 16,287
------------------
(a) Accounts payable and accrued liabilities include amounts to related
parties of $453 million (2007 - $260 million).
(b) Number of common shares outstanding was 882 million
(2007 - 903 million).
The notes to the financial statements are an integral part of these
financial statements.
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Approved by the directors July 31, 2008
Chairman, president and Senior vice-president,
chief executive officer finance and administration, and treasurer
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IMPERIAL OIL LIMITED
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
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1. Basis of financial statement presentation
These unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles of the United
States of America 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. In the opinion of the
management, the information furnished herein reflects all known accruals
and adjustments necessary for a fair presentation of the financial
position of the company as at June 30, 2008, and December 31, 2007, and
the results of operations and changes in cash flows for the six months
ending June 30, 2008 and 2007. All such adjustments are of a normal
recurring nature. The company's exploration and production activities are
accounted for under the "successful efforts" method. Certain
reclassifications to the prior year have been made to conform to the 2008
presentation.
The results for the six months ending June 30, 2008, are not necessarily
indicative of the operations to be expected for the full year.
All amounts are in Canadian dollars unless otherwise indicated.
2. Accounting changes
Uncertainty in income taxes
As of January 1, 2007, the company adopted the Financial Accounting
Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for
Uncertainty in Income Taxes". The cumulative adjustment for the
accounting change reported in the first quarter of 2007 was an after-tax
gain of $14 million.
Fair value measurements
Effective January 1, 2008, the company adopted the Financial Accounting
Standards Board's (FASB) Statement No. 157 (SFAS 157), "Fair Value
Measurements" for financial assets and liabilities that are measured at
fair value and nonfinancial assets and liabilities that are remeasured at
fair value on a recurring basis. SFAS 157 defines fair value, establishes
a framework for measuring fair value when an entity is required to use a
fair value measure for recognition or disclosure purposes and expands the
disclosures about fair value measurements. The initial application of
SFAS 157 had no impact on the company's financial statements.
On January 1, 2009, the company will adopt SFAS 157 for nonfinancial
assets and liabilities that are not remeasured at fair value on a
recurring basis. The application of SFAS 157 to the company's
nonfinancial assets and liabilities will mostly be limited to the
recognition and measurement of nonmonetary exchange transactions, asset
retirement obligations and asset impairments. The company does not expect
the adoption to have a material impact on the company's financial
statements.
3. Business Segments
Second quarter Upstream Downstream Chemical
millions of dollars 2008 2007 2008 2007 2008 2007
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REVENUES AND OTHER INCOME
External sales(a) 1,836 1,210 6,401 4,764 381 325
Intersegment sales 1,554 832 892 551 141 91
Investment and other
income 5 5 228 14 - -
------------------------------------------------
3,395 2,047 7,521 5,329 522 416
------------------------------------------------
EXPENSES
Exploration(b) 17 43 - - - -
Purchases of crude oil
and products 1,261 706 6,209 3,921 429 317
Production and
manufacturing 675 527 382 313 57 48
Selling and general 1 2 243 244 19 17
Federal excise tax - - 328 324 - -
Depreciation and
depletion 118 134 59 60 3 2
Financing costs - 1 (1) 1 - -
------------------------------------------------
TOTAL EXPENSES 2,072 1,413 7,220 4,863 508 384
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INCOME BEFORE
INCOME TAXES 1,323 634 301 466 14 32
INCOME TAXES 385 174 62 152 4 10
------------------------------------------------
NET INCOME 938 460 239 314 10 22
------------------------------------------------
Export sales to the
United States 915 547 368 280 230 185
Cash flows from (used
in) operating activities 1,054 675 417 491 18 (7)
CAPEX(b) 241 140 63 48 2 3
Corporate
Second quarter and Other Eliminations Consolidated
millions of dollars 2008 2007 2008 2007 2008 2007
-------------------------------------------------------------------------
REVENUES AND OTHER INCOME
External sales(a) - - - - 8,618 6,299
Intersegment sales - - (2,587) (1,474) - -
Investment and other income 8 21 - - 241 40
------------------------------------------------
8 21 (2,587) (1,474) 8,859 6,339
------------------------------------------------
EXPENSES
Exploration(b) - - - - 17 43
Purchases of crude oil
and products - - (2,587) (1,474) 5,312 3,470
Production and
manufacturing - - - - 1,114 888
Selling and general 61 122 - - 324 385
Federal excise tax - - - - 328 324
Depreciation and depletion 1 2 - - 181 198
Financing costs 1 9 - - - 11
------------------------------------------------
TOTAL EXPENSES 63 133 (2,587) (1,474) 7,276 5,319
------------------------------------------------
INCOME BEFORE INCOME TAXES (55) (112) - - 1,583 1,020
INCOME TAXES (16) (28) - - 435 308
------------------------------------------------
NET INCOME (39) (84) - - 1,148 712
------------------------------------------------
Export sales to the
United States - - - - 1,513 1,012
Cash flows from (used in)
operating activities (33) (34) - - 1,456 1,125
CAPEX(b) 2 9 - - 308 200
(a) Includes crude oil sales made by Downstream in order to optimize
refining operations.
(b) Capital and exploration expenditures (CAPEX) include exploration
expenses, additions to property, plant, equipment and intangibles and
additions to capital leases.
Six months to June 30 Upstream Downstream Chemical
millions of dollars 2008 2007 2008 2007 2008 2007
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REVENUES AND OTHER INCOME
External sales(a) 3,285 2,349 11,830 9,082 734 635
Intersegment sales 2,846 1,750 1,671 1,057 242 173
Investment and other
income 9 140 242 24 1 -
------------------------------------------------
6,140 4,239 13,743 10,163 977 808
------------------------------------------------
EXPENSES
Exploration(b) 57 71 - - - -
Purchases of crude oil
and products 2,346 1,424 11,443 7,578 778 601
Production and
manufacturing 1,256 1,036 728 604 107 94
Selling and general 3 4 476 477 37 35
Federal excise tax - - 640 629 - -
Depreciation and
depletion 235 258 118 121 6 5
Financing costs - 3 (5) 1 - -
------------------------------------------------
TOTAL EXPENSES 3,897 2,796 13,400 9,410 928 735
------------------------------------------------
INCOME BEFORE
INCOME TAXES 2,243 1,443 343 753 49 73
INCOME TAXES 655 420 74 241 15 23
------------------------------------------------
NET INCOME 1,588 1,023 269 512 34 50
------------------------------------------------
Export sales to the
United States 1,651 1,022 593 502 451 364
Cash flows from (used in)
operating activities 1,541 942 243 472 10 (59)
CAPEX(b) 505 311 95 83 4 6
Total assets as at
June 30 9,018 7,880 7,909 6,795 535 515
Capital employed as at
June 30 4,924 4,220 3,121 3,424 236 344
Corporate
Six months to June 30 and Other Eliminations Consolidated
millions of dollars 2008 2007 2008 2007 2008 2007
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REVENUES AND OTHER INCOME
External sales(a) - - - - 15,849 12,066
Intersegment sales - - (4,759) (2,980) - -
Investment and other
income 21 43 - - 273 207
------------------------------------------------
21 43 (4,759) (2,980) 16,122 12,273
------------------------------------------------
EXPENSES
Exploration(b) - - - - 57 71
Purchases of crude oil
and products - - (4,759) (2,980) 9,808 6,623
Production and
manufacturing - - - - 2,091 1,734
Selling and general 103 155 - - 619 671
Federal excise tax - - - - 640 629
Depreciation and depletion 3 3 - - 362 387
Financing costs 2 19 - - (3) 23
------------------------------------------------
TOTAL EXPENSES 108 177 (4,759) (2,980) 13,574 10,138
------------------------------------------------
INCOME BEFORE INCOME TAXES (87) (134) - - 2,548 2,135
INCOME TAXES (25) (35) - - 719 649
------------------------------------------------
NET INCOME (62) (99) - - 1,829 1,486
------------------------------------------------
Export sales to the
United States - - - - 2,695 1,888
Cash flows from (used in)
operating activities (40) 45 - - 1,754 1,400
CAPEX(b) 4 16 - - 608 416
Total assets as at
June 30 1,335 2,069 (626) (308) 18,171 16,951
Capital employed as at
June 30 243 1,075 - - 8,524 9,063
(a) Includes crude oil sales made by Downstream in order to optimize
refining operations.
(b) Capital and exploration expenditures (CAPEX) include exploration
expenses, additions to property, plant, equipment and intangibles and
additions to capital leases.
4. Investment and other income
Investment and other income includes gains and losses on asset sales as
follows:
Six months
Second quarter to June 30
millions of dollars 2008 2007 2008 2007
-------------------------------------------------------------------------
Proceeds from asset sales 228 17 241 186
Book value of assets sold 7 9 9 47
------------------ ------------------
Gain/(loss) on asset sales,
before tax(a) 221 8 232 139
------------------ ------------------
Gain/(loss) on asset sales,
after tax(a) 192 8 201 101
------------------ ------------------
(a) Second quarter of 2008 included a gain of $219 million ($187 million,
after tax) from the sale of Rainbow Pipe Line Co. Ltd., an equity
company.
5. Employee retirement benefits
The components of net benefit cost included in production and
manufacturing and selling and general expenses in the consolidated
statement of income are as follows:
Six months
Second quarter to June 30
millions of dollars 2008 2007 2008 2007
-------------------------------------------------------------------------
Pension benefits:
Current service cost 23 25 47 50
Interest cost 70 62 136 123
Expected return on plan assets (83) (82) (165) (164)
Amortization of prior service cost 4 5 9 10
Recognized actuarial loss 26 19 46 38
------------------ ------------------
Net benefit cost 40 29 73 57
------------------ ------------------
Other post-retirement benefits:
Current service cost 2 2 3 3
Interest cost 6 6 12 12
Recognized actuarial loss 2 1 3 3
------------------ ------------------
Net benefit cost 10 9 18 18
------------------ ------------------
6. Financing costs
Six months
Second quarter to June 30
millions of dollars 2008 2007 2008 2007
-------------------------------------------------------------------------
Debt related interest 2 17 4 33
Capitalized interest (2) (9) (4) (16)
------------------ ------------------
Net interest expense - 8 - 17
Other interest - 3 (3) 6
------------------ ------------------
Total financing costs - 11 (3) 23
------------------ ------------------
7. Other long-term obligations
As at As at
June 30 Dec.31
millions of dollars 2008 2007
-------------------------------------------------------------------------
Employee retirement benefits(a) 907 954
Asset retirement obligations and other
environmental liabilities(b) 521 522
Share-based incentive compensation liabilities 287 210
Other obligations 231 228
-------- --------
Total other long-term obligations 1,946 1,914
-------- --------
(a) Total recorded employee retirement benefits obligations also include
$59 million in current liabilities (December 31, 2007 - $59 million).
(b) Total asset retirement obligations and other environmental
liabilities also include $74 million in current liabilities
(December 31, 2007 - $74 million).
8. Common shares
As at As at
June 30 Dec.31
thousands of shares 2008 2007
-------------------------------------------------------------------------
Authorized 1,100,000 1,100,000
Common shares outstanding 882,073 903,263
From 1995 through 2007, the company purchased shares under thirteen
12-month normal course issuer bid share repurchase programs, as well as
an auction tender. On June 25, 2008, another 12-month normal course
issuer bid program was implemented with an allowable purchase of
44.2 million shares (five percent of the total on June 24, 2008), less
any shares purchased by the employee savings plan and company pension
fund. The results of these activities are as shown below:
millions of
Year Shares Dollars
-------------------------------------------------------------------------
1995 - 2006 795.6 10,453
2007 - Second quarter 13.0 622
- Full year 50.5 2,358
2008 - Second quarter 10.6 606
- Year-to-date 21.6 1,196
Cumulative purchases to date 867.7 14,007
Exxon Mobil Corporation's participation in the above share repurchase
maintained its ownership interest in Imperial at 69.6 percent.
The excess of the purchase cost over the stated value of shares purchased
has been recorded as a distribution of earnings reinvested.
The following table provides the calculation of net income per common
share:
Six months
Second quarter to June 30
2008 2007 2008 2007
-------------------------------------------------------------------------
Net income per common share - basic
Net income (millions of dollars) 1,148 712 1,829 1,486
Weighted average number of common
shares outstanding (millions
of shares) 888.1 934.1 893.9 941.4
Net income per common share
(dollars) 1.29 0.76 2.05 1.58
Net income per common share
- diluted
Net income (millions of dollars) 1,148 712 1,829 1,486
Weighted average number of
common shares outstanding
(millions of shares) 888.1 934.1 893.9 941.4
Effect of employee share-based
awards (millions of shares) 6.5 5.8 6.4 5.8
------------------ ------------------
Weighted average number of
common shares outstanding,
assuming dilution
(millions of shares) 894.6 939.9 900.3 947.2
Net income per common share
(dollars) 1.28 0.76 2.03 1.57
9. Earnings reinvested
Six months
Second quarter to June 30
millions of dollars 2008 2007 2008 2007
-------------------------------------------------------------------------
Earnings reinvested at
beginning of period 7,100 6,630 7,071 6,462
Cumulative effect of accounting
change(2) - - - 14
Net income for the period 1,148 712 1,829 1,486
Share purchases in excess of
stated value (587) (599) (1,158) (1,144)
Dividends (80) (84) (161) (159)
------------------ ------------------
Earnings reinvested at end of
period 7,581 6,659 7,581 6,659
------------------ ------------------
10. Comprehensive income
Six months
Second quarter to June 30
millions of dollars 2008 2007 2008 2007
-------------------------------------------------------------------------
Net income 1,148 712 1,829 1,486
Post-retirement benefit liability
adjustment (excluding
amortization) (105) - (105) (28)
Amortization of post retirement
benefit liability adjustment
included in net periodic
benefit costs 23 18 42 35
------------------ ------------------
Other comprehensive income
(net of income taxes) (82) 18 (63) 7
------------------ ------------------
Total comprehensive income 1,066 730 1,766 1,493
------------------ ------------------
-------------------------------------------------------------------------
OPERATING STATISTICS
(unaudited)
Six months
Second quarter to June 30
2008 2007 2008 2007
-------------------------------------------------------------------------
GROSS CRUDE OIL AND NGL PRODUCTION
(thousands of barrels a day)
Cold Lake 144 150 149 148
Syncrude 66 66 66 70
Conventional 26 29 27 30
------------------ ------------------
Total crude oil production 236 245 242 248
Natural gas liquids (NGLs)
available for sale 10 18 11 18
------------------ ------------------
Total crude oil and NGL production 246 263 253 266
------------------ ------------------
NET CRUDE OIL AND NGL PRODUCTION
(thousands of barrels a day)
Cold Lake 118 128 125 125
Syncrude 56 57 57 60
Conventional 19 23 19 22
------------------ ------------------
Total crude oil production 193 208 201 207
Natural gas liquids (NGLs)
available for sale 10 13 9 14
------------------ ------------------
Total crude oil and NGL production 203 221 210 221
------------------ ------------------
COLD LAKE BLEND SALES (thousands
of barrels a day) 191 196 197 195
NGL SALES (thousands of barrels a day) 7 15 12 22
NATURAL GAS (millions of cubic
feet a day)
Production (gross) 310 492 318 508
Production (net) 251 434 256 446
Sales 279 442 287 460
AVERAGE REALIZATIONS AND PRICES
(Canadian dollars)
Conventional crude oil
realizations (a barrel) 118.88 67.73 106.01 64.94
NGL realizations (a barrel) 69.26 46.70 61.79 44.71
Natural gas realizations
(a thousand cubic feet) 10.35 7.61 9.15 7.68
Par crude oil price at Edmonton
(a barrel) 127.07 73.71 112.94 70.79
Heavy crude oil at Hardisty
(Bow River, a barrel) 104.15 51.39 90.90 51.36
TOTAL REFINERY THROUGHPUT
(thousands of barrels a day) 451 410 438 425
REFINERY CAPACITY UTILIZATION
(percent) 90 82 87 85
PETROLEUM PRODUCTS SALES
(millions of litres a day)
Gasolines 32.6 33.8 31.9 32.0
Heating, diesel and jet fuels 22.9 23.9 24.6 26.1
Heavy fuel oils 4.4 4.8 4.5 4.4
Lube oils and other products 7.4 7.7 6.7 6.7
------------------ ------------------
Net petroleum products sales 67.3 70.2 67.7 69.2
------------------ ------------------
PETROCHEMICAL SALES
(thousands of tonnes a day) 3.1 3.0 3.1 3.0
-------------------------------------------------------------------------
-------------------------------------------------------------------------
SHARE OWNERSHIP, TRADING AND PERFORMANCE
(unaudited)
Six months
Second quarter to June 30
2008 2007 2008 2007
-------------------------------------------------------------------------
RETURN ON AVERAGE CAPITAL EMPLOYED(a)
(rolling 4 quarters, percent) 41.6 34.9
RETURN ON AVERAGE SHAREHOLDERS' EQUITY
(rolling 4 quarters, percent) 44.2 41.7
INTEREST COVERAGE RATIO - EARNINGS BASIS
(rolling 4 quarters, times covered) 146.2 64.6
SHARE OWNERSHIP
Outstanding shares (thousands)
Monthly weighted average 888,116 934,121 893,926 941,436
At June 30 882,073 926,946
Number of shareholders
At June 30 13,182 13,286
SHARE PRICES
Toronto Stock Exchange
(Canadian dollars)
High 62.54 54.70 62.54 54.70
Low 52.41 41.77 45.80 37.40
Close at June 30 56.16 49.59
American Stock Exchange
(U.S. dollars)(b)
High 63.08 50.35 63.08 50.35
Low 51.24 36.90 44.30 31.87
Close at June 30 55.07 46.34
(a) Return on capital employed is net income excluding the after-tax cost
of financing divided by the average rolling four quarters' capital
employed.
(b) Share price presented is based on consolidated U.S. market data.
-------------------------------------------------------------------------
For further information: Investor relations: Dee Brandes, (403)
237-4537; Media relations: Gordon Wong, (403) 237-2710
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