Imperial Oil announces estimated first-quarter financial and operating results

CALGARY, April 28 /CNW/ -

    <<
                                                           ------------------
                                                              First quarter
                                                           ------------------
    (millions of dollars, unless noted)                     2011  2010     %
    -------------------------------------------------------------------------

    Net income (U.S. GAAP)                                   781   476    64
    Net income per common share
    - assuming dilution (dollars)                           0.91  0.56    64

    Capital and exploration expenditures                     859   900    (5)
    >>

Bruce March, chairman, president and chief executive officer of Imperial Oil, commented:

"Imperial Oil delivered a first quarter of solid results with earnings of $781 million or $0.91 per share, up from $476 million in the first quarter of 2010. The 64 percent earnings increase resulted from improved industry refining margins, higher Syncrude and Cold Lake production and lower refinery planned maintenance activities. These factors were partially offset by the unfavourable foreign exchange effects of the stronger Canadian dollar. Reliability and expense management improvements in all operating segments allowed us to capture higher crude oil realizations in the Upstream and improved margins in petroleum product markets.

Our long-term business approach continues to support robust activity and exceptional growth, while achieving operational excellence in our base business. Capital and exploration expenditures were $859 million in the first quarter, funded from cash flow generated from operations. Our ability to deliver on the elements we can control, while meeting our objective of continuous improvement will continue to reward our shareholders in the future."

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    Imperial Oil is one of Canada's largest corporations and a leading member
    of the country's petroleum industry. The company is a major producer of
    crude oil and natural gas, Canada's largest petroleum refiner, a key
    petrochemical producer and a leading marketer with a coast-to-coast
    supply network that includes about 1,850 retail service stations.
    >>

First quarter items of interest

    <<
    -   Net income was $781 million, compared with $476 million for the first
        quarter of 2010, an increase of 64% or $305 million.

    -   Net income per common share was $0.91, an increase of 64% from the
        first quarter of 2010.

    -   Cash generated from operating activities was $959 million, compared
        with $914 million in the same period last year when changes in
        working capital contributed more cash flow.

    -   Capital and exploration expenditures were $859 million, compared with
        $900 million in the first quarter of 2010, supporting the Kearl oil
        sands and other growth projects.

    -   Gross oil-equivalent barrels of production averaged 310,000 barrels a
        day, compared with 291,000 barrels a day in the same period last
        year. Seven percent higher production volumes in the first quarter
        were primarily due to increased Syncrude and Cold Lake production.

    -   Kearl oil sands project update -- The Kearl initial development is
        nearly 60 percent complete and is progressing on schedule with
        expected start-up in late 2012. The Kearl development plan is being
        reconfigured from a three-phase to a two-phase strategy. Production
        from the initial development will be at 110,000 barrels of bitumen a
        day. A second phase expansion with debottlenecking of both phases
        will be used to reach the regulatory capacity of 345,000 barrels a
        day as approved under the original three-phase strategy. Full lease
        unit development costs are expected to remain the same.

    -   Mackenzie natural gas project update - In January, the federal
        cabinet issued Governor-in-Council approvals required for the project
        to proceed. This conclusion of the regulatory process is a
        significant milestone for the project.

    -   Horn River pilot project update - Drilling has begun on Imperial's
        multi-well horizontal pilot production pad to evaluate longer term
        well productivity and cost performance. Proposed start up is late
        2012. Imperial continues to view the Horn River Basin as a highly
        prospective area with the potential for significant resource and
        production volume additions.

    -   Cold Lake achieves production record - Cold Lake production
        established a first quarter production record and averaged 157,000
        barrels a day, compared to 148,000 barrels a day in Q1 2010 and
        147,000 barrels a day in Q4 2010. This increase is due to
        contributions from new wells steamed in 2010 partially offset by the
        cyclic nature of production at Cold Lake.

    -   Syncrude achieves production record - Improved reliability enabled
        Syncrude to establish a new first quarter record for synthetic crude
        oil production at 28.9 million barrels. Syncrude is an integrated
        mining, extraction and upgrading facility and Imperial has a 25
        percent interest in the joint venture.

    -   United Way record donation - Imperial Oil and ExxonMobil Canada
        employees and contractors contributed a record $4.2 million to United
        Way-Centraide campaigns across Canada in 2010. Imperial has been a
        loyal supporter of United Way for more than 25 years.
    >>

First quarter 2011 vs. first quarter 2010

The company's net income for the first quarter of 2011 was $781 million or $0.91 a share on a diluted basis, compared with $476 million or $0.56 a share for the same period last year.

Earnings in the first quarter were higher than the same quarter in 2010 primarily due to stronger industry refining margins of about $175 million, higher Syncrude and Cold Lake volumes of about $100 million and lower refinery planned maintenance activities of about $85 million. These factors were partially offset by the unfavourable foreign exchange effects of the stronger Canadian dollar of about $70 million. Reliability and expense management improvements in all operating segments allowed the capture of higher crude oil realizations in the Upstream and improved margins in petroleum product markets.

Upstream net income in the first quarter was $528 million, $84 million higher than the same period of 2010. Earnings increased primarily due to higher volumes and lower maintenance costs at Syncrude totaling about $80 million. Earnings were also positively impacted by higher Cold Lake bitumen production of about $30 million and higher crude oil commodity prices of about $30 million. These factors were partially offset by the unfavourable foreign exchange effects of the stronger Canadian dollar of about $50 million.

The average price of Brent crude oil in U.S. dollars, a common benchmark for world oil markets, was $105.01 a barrel in the first quarter of 2011, up almost 40 percent from the corresponding period last year. The company's average realizations on sales of Canadian conventional crude oil and synthetic crude oil from Syncrude production also increased. The company's average bitumen realizations in the first quarter were about ten percent lower than that in the first quarter of 2010, reflecting a widened price spread between the lighter crude oils and Cold Lake bitumen, primarily due to continuing impacts from third party pipeline integrity issues on heavy oil markets.

Gross production of Cold Lake bitumen averaged 157 thousand barrels a day during the first quarter, up from 148 thousand barrels in the same quarter last year. Higher volumes were the result of the ongoing development drilling program partially offset by the cyclic nature of production at Cold Lake.

The company's share of Syncrude's gross production in the first quarter was 80 thousand barrels a day, versus 67 thousand barrels in the first quarter of 2010. Increased production was primarily the result of improved mining and upgrading reliability as well as lower planned maintenance activities.

Gross production of conventional crude oil averaged 22 thousand barrels a day in the first quarter, down from 24 thousand barrels the same period last year, due to natural reservoir decline.

Gross production of natural gas during the first quarter of 2011 was 269 million cubic feet a day, down from 273 million cubic feet in the same period last year. The lower production volume was a result of natural reservoir decline.

Net income from Downstream was $276 million in the first quarter of 2011, $237 million higher than the same period a year ago. Earnings benefited from stronger industry refining margins of about $175 million due in part to favourably priced crude mix processed and improved demand for petroleum products, as well as the favourable impact of about $85 million associated with lower planned refinery maintenance activities. These factors were partially offset by the unfavourable effects of the stronger Canadian dollar of about $20 million.

Chemical net income was $38 million in the first quarter, $39 million higher than the same quarter last year. Improved industry margins across all product channels, lower costs due to lower planned maintenance activities, and higher polyethylene sales volumes were the main contributors to the increase.

Net income effects from Corporate and other were negative $61 million in the first quarter, compared with negative $6 million in the same period of 2010. Unfavourable earnings effects in the first quarter were primarily due to changes in share-based compensation charges.

In the first quarter, cash flow generated from operating activities was $959 million, and $822 million was invested in additions to property, plant and equipment, mostly associated with the Kearl oil sands and other growth projects. The company's balance of cash was $301 million at March 31, 2011, compared with $267 million at the end of 2010.

Key financial and operating data follow.

Forward-Looking Statements

Statements in this report relating to future plans, projections, events or conditions are forward-looking statements. Actual future results, including project plans, costs, timing and capacities; financing sources; the resolution of contingencies and uncertain tax positions; the effect of changes in prices and other market conditions; and environmental and capital expenditures could differ materially depending on a number of factors, such as the outcome of commercial negotiations; changes in the supply of and demand for crude oil, natural gas, and petroleum and petrochemical products; political or regulatory events; and other factors discussed in Item 1A of the company's 2010 Form 10K.

    <<
                             IMPERIAL OIL LIMITED
                              FIRST QUARTER 2011

    -------------------------------------------------------------------------

                                                              Three Months
    millions of Canadian dollars, unless noted             2011         2010
    -------------------------------------------------------------------------

    Net income (U.S. GAAP)
      Total revenues and other income                     6,871        6,166
      Total expenses                                      5,820        5,515
    -------------------------------------------------------------------------
      Income before income taxes                          1,051          651
      Income taxes                                          270          175
    -------------------------------------------------------------------------
      Net income                                            781          476
    -------------------------------------------------------------------------

    Net income per common share (dollars)                  0.92         0.56
    Net income per common share
     - assuming dilution (dollars)                         0.91         0.56

    Gain/(loss) on asset sales, after tax                     4            4

    Total assets at March 31                             22,008       18,335

    Total debt at March 31                                  755          139
    Interest coverage ratio - earnings basis
     (times covered)                                      336.4        307.1

    Other long-term obligations at March 31               2,880        2,679

    Shareholders' equity at March 31                     11,764        9,943
    Capital employed at March 31                         12,551       10,118
    Return on average capital employed (a)
     (percent)                                             21.7         18.4

    Dividends on common stock
      Total                                                  93           85
      Per common share (dollars)                           0.11         0.10

    Millions of common shares outstanding
      At March 31                                         847.6        847.6
      Average - assuming dilution                         854.1        854.2
    -------------------------------------------------------------------------

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



                             IMPERIAL OIL LIMITED
                              FIRST QUARTER 2011

    -------------------------------------------------------------------------
                                                              Three Months
    millions of Canadian dollars                           2011         2010
    -------------------------------------------------------------------------

    Total cash and cash equivalents at period end           301          534

    Net income                                              781          476
    Adjustment for non-cash items:
      Depreciation and depletion                            188          182
      (Gain)/loss on asset sales                             (6)          (4)
      Deferred income taxes and other                       (90)           2
    Changes in operating assets and liabilities              86          258
    -------------------------------------------------------------------------
    Cash from (used in) operating activities                959          914
    -------------------------------------------------------------------------

    Cash from (used in) investing activities               (806)        (807)
      Proceeds from asset sales                              14            6

    Cash from (used in) financing activities               (119)         (86)
    -------------------------------------------------------------------------



                             IMPERIAL OIL LIMITED
                              FIRST QUARTER 2011
    -------------------------------------------------------------------------

                                                              Three Months
    millions of Canadian dollars                           2011         2010
    -------------------------------------------------------------------------

    Net income (U.S. GAAP)
      Upstream                                              528          444
      Downstream                                            276           39
      Chemical                                               38           (1)
      Corporate and other                                   (61)          (6)
    -------------------------------------------------------------------------
      Net income                                            781          476
    -------------------------------------------------------------------------

    Revenues and other income
      Upstream                                            2,339        2,209
      Downstream                                          6,067        5,192
      Chemical                                              420          353
      Eliminations/Other                                 (1,955)      (1,588)
    -------------------------------------------------------------------------
      Total                                               6,871        6,166
    -------------------------------------------------------------------------

    Purchases of crude oil and products
      Upstream                                              861          787
      Downstream                                          4,769        4,187
      Chemical                                              307          276
      Eliminations                                       (1,957)      (1,589)
    -------------------------------------------------------------------------
      Purchases of crude oil and products                 3,980        3,661
    -------------------------------------------------------------------------

    Production and manufacturing expenses
      Upstream                                              599          602
      Downstream                                            337          370
      Chemical                                               43           58
    -------------------------------------------------------------------------
      Production and manufacturing expenses                 979        1,030
    -------------------------------------------------------------------------

    Capital and exploration expenditures
      Upstream                                              818          855
      Downstream                                             36           38
      Chemical                                                2            6
      Corporate and other                                     3            1
    -------------------------------------------------------------------------
      Capital and exploration expenditures                  859          900
    -------------------------------------------------------------------------

      Exploration expenses charged to income included
       above                                                 37           87
    -------------------------------------------------------------------------



                             IMPERIAL OIL LIMITED
                              FIRST QUARTER 2011
    -------------------------------------------------------------------------

                                                              Three Months
    Operating statistics                                   2011         2010
    -------------------------------------------------------------------------

    Gross crude oil and Natural Gas Liquids (NGL)
     production
    (thousands of barrels a day)
      Cold Lake                                             157          148
      Syncrude                                               80           67
      Conventional                                           22           24
    -------------------------------------------------------------------------
      Total crude oil production                            259          239
      NGLs available for sale                                 6            6
    -------------------------------------------------------------------------
      Total crude oil and NGL production                    265          245
    -------------------------------------------------------------------------

    Gross natural gas production (millions of cubic feet
     a day)                                                 269          273

    Gross oil-equivalent production (a)
    (thousands of oil-equivalent barrels a day)             310          291

    Net crude oil and NGL production (thousands of
     barrels a day)
      Cold Lake                                             120          118
      Syncrude                                               75           60
      Conventional                                           16           17
    -------------------------------------------------------------------------
      Total crude oil production                            211          195
      NGLs available for sale                                 4            5
    -------------------------------------------------------------------------
      Total crude oil and NGL production                    215          200
    -------------------------------------------------------------------------

    Net natural gas production (millions of cubic feet
     a day)                                                 249          237

    Net oil-equivalent production (a)
    (thousands of oil-equivalent barrels a day)             256          240

    Cold Lake blend sales (thousands of barrels a day)      211          201
    NGL Sales (thousands of barrels a day)                    9           12
    Natural gas sales (millions of cubic feet a day)        251          264

    Average realizations (Canadian dollars)
      Conventional crude oil realizations (a barrel)      81.18        74.54
      NGL realizations (a barrel)                         60.48        55.53
      Natural gas realizations (a thousand cubic feet)     3.85         5.20
      Synthetic oil realizations (a barrel)               93.24        82.24
      Bitumen realizations (a barrel)                     55.76        62.25

    Refinery throughput (thousands of barrels a day)        452          439
    Refinery capacity utilization (percent)                  89           87

    Petroleum product sales (thousands of barrels a day)
      Gasolines                                             210          204
      Heating, diesel and jet fuels                         166          145
      Heavy fuel oils                                        26           33
      Lube oils and other products                           36           39
    -------------------------------------------------------------------------
      Net petroleum products sales                          438          421
    -------------------------------------------------------------------------

    Petrochemical Sales (thousands of tonnes)               272          248
    -------------------------------------------------------------------------

    (a) Gas converted to oil-equivalent at 6 million cubic feet =
        1 thousand barrels



                             IMPERIAL OIL LIMITED
                              FIRST QUARTER 2011
    -------------------------------------------------------------------------

                                                                  Net income
                                                                  per common
                                          Net income (U.S. GAAP)       share
                                  (millions of Canadian dollars)    (dollars)
    -------------------------------------------------------------------------

    2007
    First Quarter                                           774         0.82
    Second Quarter                                          712         0.76
    Third Quarter                                           816         0.88
    Fourth Quarter                                          886         0.97
    -------------------------------------------------------------------------
    Year                                                  3,188         3.43
    -------------------------------------------------------------------------

    2008
    First Quarter                                           681         0.76
    Second Quarter                                        1,148         1.29
    Third Quarter                                         1,389         1.57
    Fourth Quarter                                          660         0.77
    -------------------------------------------------------------------------
    Year                                                  3,878         4.39
    -------------------------------------------------------------------------

    2009
    First Quarter                                           289         0.34
    Second Quarter                                          209         0.25
    Third Quarter                                           547         0.64
    Fourth Quarter                                          534         0.63
    -------------------------------------------------------------------------
    Year                                                  1,579         1.86
    -------------------------------------------------------------------------

    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         0.91
    -------------------------------------------------------------------------
    >>

SOURCE Imperial Oil Limited

For further information: 403-237-2710


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