Imperial announces estimated first quarter financial and operating results

For the three months ended March 31, 2014

CALGARY, May 1, 2014 /CNW/ -

         
        First quarter
(millions of dollars, unless noted)       2014     2013     %
                     
Net income (U.S. GAAP)       946     798     19
Net income per common share                    
  - assuming dilution (dollars)       1.11     0.94     19
                     
Capital and exploration expenditures       1,234     2,976     (59)

Rich Kruger, Chairman, President and Chief Executive Officer, commented:

Imperial's strong results in the first quarter underscore the competitiveness of our business model, which includes full value chain integration from upstream to refining to fuels marketing and chemicals. We focused on base business fundamentals, including safety, operational integrity, reliability and profitability. Execution continued on our upstream growth strategy, concentrated on Kearl production ramp up and expansion and the Cold Lake Nabiye project.

Earnings in the first quarter were $946 million, or $1.11 per share, up 19 percent from the same period in 2013.

Gross production averaged 330,000 oil-equivalent barrels per day, up 46,000 barrels versus 2013, primarily due to production from Kearl. Kearl production averaged 70,000 barrels per day (50,000 barrels Imperial's share) in the quarter, as progress continued towards stabilizing production at the targeted rate of 110,000 barrels per day (78,000 barrels Imperial's share). Refinery throughput averaged 378,000 barrels per day, up from 357,000 barrels in 2013, adjusted for the Dartmouth refinery shutdown. Our focus on reliability resulted in refinery capacity utilization of 90 percent, up five percent compared to the first quarter of 2013. In addition, petroleum product sales of 476,000 barrels per day were achieved, up 12 percent versus a year ago.

First quarter capital and exploration expenditures totalled $1,234 million. Investments were primarily associated with upstream growth projects, most notably the Kearl expansion and Cold Lake Nabiye projects, which were 81 and 76 percent complete, respectively, at the end of the quarter. First quarter capital and exploration expenditures were fully funded from available cash and cash flow from operations.

Consistent with the company's long-standing practice of reviewing its asset portfolio, a sale agreement for several western Canadian conventional oil and gas assets was signed. The $855 million transaction is expected to close in the second quarter of 2014.

Imperial unveiled a refreshed corporate brand and identity, which reflect the company's heritage, ongoing growth and future potential. A continued commitment to innovation, our history of operational excellence and the highest standards are embodied in the new identity. Our high standards will continue to drive decisions across all areas of our business.


After more than a century, Imperial continues to be an industry leader in applying technology and innovation to responsibly develop Canada's energy resources. As Canada's largest petroleum refiner, a major producer of crude oil and natural gas, a key petrochemical producer and a leading fuels marketer from coast to coast, our company remains committed to the highest standards across all areas of our business.

First quarter highlights

  • Net income totalled $946 million or $1.11 per share on a diluted basis, up 19 percent from $798 million or $0.94 per share for the first quarter of 2013.

  • Production averaged 330,000 gross oil-equivalent barrels per day, up 46,000 barrels versus 2013, mainly due to production from Kearl, which started up in the second quarter of 2013. Cold Lake volumes were down 10 percent, primarily due to the cyclic nature of steaming and associated production, along with the impact of several unplanned third-party power outages.

  • Refinery throughput averaged 378,000 barrels per day, up from 357,000 barrels, adjusted for the Dartmouth refinery shutdown, in the first quarter of 2013. Refinery capacity utilization increased to 90 percent, up five percent compared to the first quarter of 2013.

  • Petroleum product sales increased 50,000 barrels per day to 476,000 barrels in the first quarter, consistent with the company's strategy to grow sales in profitable Canadian markets.

  • Cash generated from operating activities was $1,085 million, an increase of $488 million from the first quarter of 2013, primarily due to higher earnings and working capital effects.

  • Capital and exploration expenditures of $1,234 million were primarily directed at the Kearl expansion and Cold Lake Nabiye upstream growth projects. Expenditures were funded from available cash and current period cash flow from operations.

  • Kearl bitumen production continued to increase, averaging 70,000 barrels per day (50,000 barrels Imperial's share) during the quarter, up from 52,000 barrels (37,000 barrels Imperial's share) during the fourth quarter of 2013. Progress continued towards stabilizing production at the targeted rate of 110,000 barrels per day (78,000 barrels Imperial's share). Kearl production has been successfully marketed and processed at more than 20 refineries to date.

  • Kearl expansion project progressed well and was 81 percent complete at the end of the quarter. The project is tracking ahead of schedule, relative to its originally planned late 2015 startup. It is expected to ultimately produce 110,000 barrels per day gross (78,000 barrels Imperial's share).

  • Cold Lake Nabiye project progress improved. The project was 76 percent complete at the end of the quarter as steps were successfully taken to improve contractor productivity and mitigate harsh winter conditions. Target startup remains year-end 2014 with ultimate production of 40,000 barrels per day.

  • Market access continued to expand. Additional steps were taken to maximize the value of equity production and lower refinery feedstock costs by accessing advantaged crudes. With existing pipeline optimizations and expanded rail offloading capabilities, our refineries are now able to fully process price-advantaged mid-continent crudes. In addition, construction of the Edmonton rail loading terminal, which will enhance crude market access, progressed as planned.

  • Conventional oil and gas assets sale agreement executed. On March 17, Imperial announced it reached an agreement to sell its interest in western Canadian assets located in Boundary Lake, Cynthia/West Pembina, and Rocky Mountain House to Whitecap Resources Inc. for approximately $855 million. The transaction is expected to close in the second quarter of 2014.

  • Corporate brand and identity refreshed. The new identity builds on the company's heritage with a dynamic representation of the former three-star design, symbolizing high standards and integrity as well as its forward momentum and bright future. Premium fuel and lubricant products will continue to be marketed to customers nationwide under the Esso and Mobil 1 brands.

First quarter 2014 vs. first quarter 2013

The company's net income for the first quarter of 2014 was $946 million or $1.11 per share on a diluted basis, compared with $798 million or $0.94 per share for the same period last year.

Upstream net income in the first quarter was $452 million, $152 million higher than the same period of 2013. Earnings increased primarily due to higher liquids realizations of about $200 million, along with the impact of Kearl production and higher Syncrude volumes totalling $90 million. Earnings were also higher by about $85 million due to the impact of a weaker Canadian dollar. These factors were partially offset by higher royalty costs of about $115 million, lower Cold Lake volumes of about $65 million and higher energy costs of about $40 million.

The company's average realizations from the sales of synthetic crude oil increased 11 percent in the first quarter of 2014 versus the first quarter of 2013.  The increased realizations reflected increases in West Texas Intermediate (WTI) crude oil benchmark price, which was up about five percent, and the impact of a weaker Canadian dollar. The company's average bitumen realizations in Canadian dollars in the first quarter were $65.19 per barrel versus $43.63 per barrel in the first quarter of 2013 as the price spread between light crude oil and bitumen narrowed. The company's average realizations on natural gas sales of $6.56 per thousand cubic feet in the first quarter of 2014 were higher by $3.06 per thousand cubic feet versus the same period in 2013.

Gross production of Cold Lake bitumen averaged 147,000 barrels per day, down from 164,000 barrels from the same period last year. Lower volumes were primarily due to the cyclic nature of steaming and associated production, along with the impact of several unplanned third-party power outages.

The company's share of Syncrude's gross production in the first quarter was 73,000 barrels per day, up from 65,000 barrels in the first quarter of 2013. Increased production was the result of improved reliability.

Gross production from the Kearl initial development was 70,000 barrels per day (50,000 barrels Imperial's share). Production continued to ramp up during the quarter as progress was made towards stabilizing production at the targeted rate of 110,000 barrels per day (78,000 barrels Imperial's share).

Gross production of conventional crude oil averaged 22,000 barrels per day in the first quarter, versus 20,000 barrels in the corresponding period in 2013.

Gross production of natural gas during the first quarter of 2014 was 205 million cubic feet per day, up from 187 million cubic feet in the same period last year, reflecting contributions from the Celtic (XTO Energy Canada) acquisition completed in the first quarter of 2013.

Downstream net income was $488 million in the first quarter compared to $478 million in the first quarter of 2013. Increased earnings were primarily due to improved reliability in the first quarter of 2014 partially offset by lower industry refining margins.

Chemical net income was $43 million in the first quarter, up from $35 million in the same quarter in 2013. Higher margins across all major product lines contributed to the increase.

Net income effects from Corporate and Other were negative $37 million in the first quarter, versus negative $15 million in the same period of 2013, primarily due to changes in share-based compensation charges.

Cash flow generated from operating activities was $1,085 million in the first quarter, versus $597 million in the corresponding period in 2013. Higher cash flow was primarily due to higher earnings and working capital effects.

Investing activities used net cash of $1,143 million in the first quarter, compared with $2,935 million in the same period of 2013 (which included $1,602 million for the Celtic acquisition). Additions to property, plant and equipment were $1,206 million in the first quarter, compared with $1,345 million during the same quarter in 2013. Expenditures during the quarter were primarily directed towards the advancement of Kearl expansion and Cold Lake Nabiye projects.

Cash used in financing activities was $112 million in the first quarter, compared with cash from financing activities of $2,179 million in the first quarter of 2013. Dividends paid in the first quarter of 2014 were $110 million, $8 million higher than the corresponding period in 2013. Per-share dividend paid in the first quarter was $0.13, up from $0.12 in the same period of 2013.

The above factors led to a decrease in the company's balance of cash to $102 million at March 31, 2014, from $272 million at the end of 2013.

Key financial and operating data follow.

Forward-Looking Statements

Statements of future events or conditions in this report, including projections, targets, expectations, estimates, and business plans are forward-looking statements. Actual future results, including demand growth and energy source mix; production growth and mix; project plans, dates, costs and capacities; production rates and resource recoveries; cost savings; product sales; financing sources; and capital and environmental expenditures could differ materially depending on a number of factors, such as changes in the price, supply of and demand for crude oil, natural gas, and petroleum and petrochemical products; political or regulatory events; project schedules; commercial negotiations; the receipt, in a timely manner, of regulatory and third-party approvals; unanticipated operational disruptions; unexpected technological developments; and other factors discussed in this report and Item 1A of Imperial's most recent 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.

The term "project" as used in this release can refer to a variety of different activities and does not necessarily have the same meaning as in any government payment transparency reports.

             Attachment I
             
  IMPERIAL OIL LIMITED          
   FIRST QUARTER 2014          
        Three Months
millions of Canadian dollars, unless noted     2014   2013
             
Net Income (U.S. GAAP)          
  Total revenues and other income     9,226   8,014
  Total expenses     7,966   6,944
  Income before income taxes     1,260   1,070
  Income taxes     314   272
  Net income     946   798
             
  Net income per common share (dollars)     1.12   0.94
  Net income per common share - assuming dilution (dollars)     1.11   0.94
             
Other Financial Data          
  Federal excise tax included in operating revenues      370   326
             
  Gain/(loss) on asset sales, after tax     16   3
             
  Total assets at March 31     38,745   33,119
             
  Total debt at March 31     6,285   3,928
   Interest coverage ratio - earnings basis          
    (times covered)     49.8   175.5
             
  Other long-term obligations at March 31     3,114   4,104
             
  Shareholders' equity at March 31       20,361   17,023
  Capital employed at March 31       26,669   20,973
  Return on average capital employed (a)          
    (percent)     12.0   19.7
             
  Dividends declared on common stock          
    Total     110   102
    Per common share (dollars)     0.13   0.12
             
  Millions of common shares outstanding          
    At March 31       847.6   847.6
    Average - assuming dilution     850.5   850.6
             

 

(a) Return on capital employed is net income excluding after-tax cost of financing divided by the average rolling four quarters' capital employed.


            Attachment II
             
IMPERIAL OIL LIMITED
FIRST QUARTER 2014
             
        Three Months
millions of Canadian dollars     2014   2013
             
Total cash and cash equivalents at period end     102   323
             
Net income     946   798
Adjustments for non-cash items:          
  Depreciation and depletion     280   185
  (Gain)/loss on asset sales     (20)   (4)
  Deferred income taxes and other     5   29
Changes in operating assets and liabilities     (126)   (411)
Cash flows from (used in) operating activities      1085   597
             
Cash flows from (used in) investing activities     (1,143)   (2,935)
  Proceeds associated with asset sales     75   8
             
Cash flows from (used in) financing activities     (112)   2,179
           

 

 
            Attachment III
             
IMPERIAL OIL LIMITED
FIRST QUARTER 2014
             
        Three Months
millions of Canadian dollars     2014    2013
             
Net income (U.S. GAAP)          
  Upstream     452   300
  Downstream     488   478
  Chemical     43   35
  Corporate and other     (37)   (15)
  Net income     946   798
             
Revenues and other income          
  Upstream     3,278   2,154
  Downstream     7,088   7,242
  Chemical     458   380
  Eliminations/Other     (1,598)   (1,762)
  Total     9,226   8,014
             
Purchases of crude oil and products           
  Upstream     1,405   857
  Downstream     5,416   5,620
  Chemical     319   260
  Eliminations     (1,598)   (1,762)
  Purchases of crude oil and products     5,542   4,975
             
Production and manufacturing expenses          
  Upstream     1,029   747
  Downstream     386   382
  Chemical     61   53
  Eliminations       (1)
  Production and manufacturing expenses     1,476   1,181
             
Capital and exploration expenditures          
  Upstream     1,163   2,938
  Downstream     48   27
  Chemical     2   1
  Corporate and other     21   10
  Capital and exploration expenditures     1,234   2,976
             
  Exploration expenses charged to income included above     21   23
             

            Attachment IV
             
IMPERIAL OIL LIMITED
FIRST QUARTER 2014
Operating statistics     Three Months
        2014   2013
             
Gross crude oil and Natural Gas Liquids (NGL) production          
(thousands of barrels per day)          
  Cold Lake     147   164
  Syncrude     73   65
  Kearl     50   -
  Conventional     22   20
  Total crude oil production     292   249
  NGLs available for sale     4   4
  Total crude oil and NGL production     296   253
             
Gross natural gas production (millions of cubic feet per day)     205   187
             
Gross oil-equivalent production (a)          
(thousands of oil-equivalent barrels per day)     330   284
             
Net crude oil and NGL production (thousands of barrels per day)        
  Cold Lake     113   139
  Syncrude     69   63
  Kearl     47   -
  Conventional     18   15
  Total crude oil production     247   217
  NGLs available for sale     3   3
  Total crude oil and NGL production     250   220
             
Net natural gas production (millions of cubic feet per day)     182   180
             
Net oil-equivalent production (a)          
(thousands of oil-equivalent barrels per day)     281   250
             
Cold Lake blend sales (thousands of barrels per day)     197   215
Kearl blend sales (thousands of barrels per day)     60   -
NGL sales (thousands of barrels per day)       10   6
Natural gas sales (millions of cubic feet per day)       173   150
             
Average realizations (Canadian dollars)          
  Conventional crude oil realizations (per barrel)     71.69   73.52
  NGL realizations (per barrel)     66.28   36.53
  Natural gas realizations (per thousand cubic feet)     6.56   3.50
  Synthetic oil realizations (per barrel)     106.50   95.63
  Bitumen realizations (per barrel)     65.19   43.63
             
Refinery throughput (thousands of barrels per day)     378   430
Adjusted refinery throughput (b) (thousands of barrels per day)     378   357
Refinery capacity utilization (c) (percent)     90   85
             
Petroleum product sales (thousands of barrels per day)          
  Gasolines (Mogas)     232   207
  Heating, diesel and jet fuels (Distillates)     190   160
  Heavy fuel oils (HFO)     20   28
  Lube oils and other products (Other)     34   31
  Net petroleum products sales     476   426
             
Petrochemical sales (thousands of tonnes)     230   240

(a) Gas converted to oil-equivalent at 6 million cubic feet = 1 thousand barrels            
(b) Refinery operations at the Dartmouth refinery were discontinued on September 16, 2013.  Refinery throughput in the first quarter of 2013 was adjusted to exclude volumes processed at the Dartmouth refinery to facilitate comparison with the first  quarter of 2014.
(c) Capacity utilization is calculated based on the number of days the refineries were operated as a refinery.

                  Attachment V
                   
IMPERIAL OIL LIMITED
FIRST QUARTER 2014
                   
              Net income
      Net income (U.S. GAAP)       per common share
      (millions of Canadian dollars)       (dollars)
                   
2010                
First Quarter   476           0.56
Second Quarter   517           0.61
Third Quarter   418           0.49
Fourth Quarter   799           0.95
Year   2,210           2.61
                   
                   
2011                
First Quarter   781           0.92
Second Quarter   726           0.86
Third Quarter   859           1.01
Fourth Quarter   1,005           1.19
Year   3,371           3.98
                   
                   
2012                
First Quarter   1,015           1.20
Second Quarter   635           0.75
Third Quarter   1,040           1.22
Fourth Quarter   1,076           1.27
Year   3,766           4.44
                   
                   
2013                
First Quarter   798           0.94
Second Quarter   327           0.39
Third Quarter   647           0.76
Fourth Quarter   1,056           1.25
Year   2,828           3.34
                   
                   
2014                
First Quarter   946           1.12

  

 

SOURCE: Imperial Oil Limited

For further information:

403-237-2710


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