Imperial Oil announces estimated fourth-quarter financial and operating
results

CALGARY, Feb. 2 /CNW/ -

    
                                  --------------------- ---------------------
                                    Fourth Quarter        Twelve Months
                                  --------------------- ---------------------
    (millions of dollars,
     unless noted)                  2009    2008    %     2009    2008    %
    -------------------------------------------------------------------------

    Net income (U.S. GAAP)           534     660   (19)  1,579   3,878   (59)
    Net income per common share
    - assuming dilution (dollars)   0.62    0.76   (18)   1.84    4.36   (58)

    Capital and exploration
     expenditures                    834     433    93   2,438   1,363    79
    

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

"Lower oil and natural gas prices and low demand for energy products continued to create challenging business conditions. Despite the ongoing economic downturn, Imperial continued to progress our company growth projects and delivered strong results.

Net income for the fourth quarter was $534 million, down 19 percent from the same period in 2008. While our Upstream earnings in the fourth quarter were up from the same period last year, Downstream earnings in the fourth quarter were significantly impacted by lower overall product demand and margins.

With our strong balance sheet, minimal debt, and long-term disciplined approach, we are well positioned to continue to invest through the business cycle. In the fourth quarter, capital and exploration expenditures increased to $834 million, up 93 percent from the same period last year. For the full year 2009, capital and exploration expenditures were $2,438 million, up 79 percent from 2008.

Our disciplined and long-term focused investment approach will continue to reward our shareholders. In 2009, Imperial distributed a total of $833 million to shareholders through dividends and share repurchases while we increased investments in major growth opportunities that will bring on new supplies of energy and growth for shareholders."

    
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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 and a
    leading marketer with a coast-to-coast supply network that includes about
    1,850 retail service stations.
    -------------------------------------------------------------------------

    Fourth quarter highlights

    -   Net income was $534 million, versus $660 million for the
        fourth quarter of 2008.

    -   Net income per common share was $0.62, versus $0.76 for the
        fourth quarter of 2008.

    -   Cash flow from operating activities was $927 million, compared with
        $912 million in the same period last year.

    -   Capital and exploration expenditures were $834 million, up 93 percent
        from the fourth quarter of 2008.

    -   Gross oil-equivalent barrels of production averaged 297,000 barrels a
        day, compared with 309,000 barrels a day in the same period last
        year. Lower production volumes in the fourth quarter were primarily
        due to well repairs in the northern part of the Cold Lake field.
        Drilling and steaming activities have since resumed in this area, and
        production is expected to return to normal levels.

    -   Achieved record safety performance - Imperial achieved its best-ever
        safety results for both employees and contractors in 2009. This
        achievement was an outcome of the significant commitment of the
        entire organization, and reflects Imperial's focus on operational
        excellence.

    -   Advanced Kearl - infrastructure construction and plant site
        preparation activities continued at the Kearl oil sands mining
        project, with a workforce of about 2,500 employees and contractors at
        year end. The Kearl project has a total estimated recoverable
        resource of 4.6 billion barrels of bitumen before royalties - in
        which Imperial holds a 71-percent interest.

    -   Strengthened position in the oil sands - utilizing its strong balance
        sheet, Imperial, in a 50-50 joint venture with ExxonMobil Canada,
        acquired oil sands mining leases from UTS Energy Corporation totaling
        a combined 16,600 net acres in Alberta's Athabasca region. The new
        leases are adjacent to existing undeveloped oil sands acreage held by
        Imperial in the area.

    -   Progressed exploration at Horn River - Imperial commenced its second
        winter season exploration program at Horn River in northeast British
        Columbia and is expected to drill up to 11 shale gas wells. Imperial,
        together with ExxonMobil Canada (50-50 interest), now holds 309,000
        net acres in the area, industry's largest land position in the basin.

    -   Update on Mackenzie natural gas project - the Joint Review Panel
        released its report on the environmental, social and cultural impacts
        of the Mackenzie natural gas project, with the final regulatory
        decision expected in September 2010 from the National Energy Board.

    -   Investing through the down cycle on major growth projects - completed
        a $2.4 billion capital and exploration program in 2009, focused on
        advancing major Upstream projects as well as investments in
        environmental initiatives. Planned capital and exploration
        expenditures in 2010 are $3.2 billion.

    -   Contributed to Canadian communities - Imperial contributed
        $23 million to Canadian communities in 2009, including $2 million
        towards math and science education. Special contributions in the
        fourth quarter included a $1 million commitment to the University of
        Calgary's School of Public Policy and an $8 million aircraft to the
        Southern Alberta Institute of Technology for use in its School of
        Transportation's aircraft maintenance, avionics and structures
        programs.
    

Fourth quarter 2009 vs. fourth quarter 2008

Net income for the fourth quarter of 2009 was $534 million or $0.62 a share on a diluted basis, versus $660 million or $0.76 a share for the same period of 2008.

Upstream net income in the fourth quarter was $491 million, $155 million higher than the same period of 2008. Increased earnings were primarily due to higher crude oil commodity prices totaling about $600 million. Improved realizations were partially offset by the negative impacts of a stronger Canadian dollar of about $265 million, higher royalties due to higher commodity prices of about $135 million and lower Cold Lake bitumen production of about $50 million.

The average price of Brent crude oil in U.S. dollars, a common benchmark for world oil markets, strengthened in the fourth quarter, averaging $74.54 a barrel, up about 36 percent from the corresponding period last year. The company's realizations on sales of Canadian conventional crude oil and synthetic crude oil from Syncrude production mirrored the same trend as world prices. However, the effect of a stronger Canadian dollar limited improvements in the company's Canadian-dollar realizations for conventional crude oil and synthetic crude oil from Syncrude in the fourth quarter of 2009.

Prices for Canadian heavier crude oil also increased along with the lighter crude oil. The company's average realizations for Cold Lake bitumen increased about 70 percent in the fourth quarter, compared to the corresponding period last year, reflecting the narrowing price spread between light crude oil and Cold Lake bitumen.

The company's average realizations for natural gas averaged $4.23 a thousand cubic feet in the fourth quarter, down from $7.31 in the same quarter last year.

Gross production of Cold Lake bitumen averaged 134 thousand barrels a day during the fourth quarter, versus 146 thousand barrels in the same quarter last year. Lower production volumes in the fourth quarter were due to well repairs in the northern part of the field. Drilling and steaming activities have since resumed in this area, and production is expected to return to normal levels.

The company's share of Syncrude's gross production in the fourth quarter was 82 thousand barrels a day, versus 77 thousand barrels in the fourth quarter of 2008. Volumes in the fourth quarter were higher than the same period in 2008 due to lower maintenance activities.

In the fourth quarter, gross production of conventional crude oil averaged 24 thousand barrels a day, compared with 27 thousand barrels in the corresponding period in 2008. The natural reservoir decline in the Western Canadian Basin was the main reason for the reduced production.

Gross production of natural gas during the fourth quarter of 2009 was 298 million cubic feet a day, essentially the same as the corresponding period last year.

Net income from Downstream was $52 million in the fourth quarter of 2009, compared with $257 million in the same period a year ago. Earnings in the fourth quarter of 2009 were negatively impacted by lower overall margins of about $180 million. Also impacting fourth quarter 2009 earnings was the negative impact of a stronger Canadian dollar.

Net income from Chemical was $16 million in the fourth quarter, compared with $28 million in the same quarter last year. Earnings in the fourth quarter were negatively impacted by lower overall margins as a result of the slow economy.

Net income effects from Corporate and other were negative $25 million in the fourth quarter, compared with $39 million in the same period of 2008. The decrease in the fourth quarter was primarily due to changes in share-based compensation charges.

In the fourth quarter of 2009, cash flow of $927 million was generated from operations, and $807 million was used to fund growth projects such as Kearl. The company's balance of cash was $513 million at December 31, 2009, an increase of $55 million from the end of the third quarter 2009.

    
    -------------------------------------------------------------------------
    Full year highlights

    -   Net income was $1,579 million, down from $3,878 million in 2008.

    -   Net income per common share decreased to $1.84 compared to $4.36
        in 2008.

    -   Cash flow from operations was $1,591 million, versus $4,263 million
        in 2008.

    -   Capital and exploration expenditures were $2,438 million, up
        79 percent.

    -   Gross oil-equivalent barrels of production averaged 293 thousands of
        barrels per day, compared to 308 thousands of barrels per day
        in 2008.

    -   Imperial distributed a total of $833 million cash to shareholders in
        2009 through dividends and share repurchases, compared with
        $2,540 million in 2008.

    -   Per-share dividends paid in 2009 totaled $0.40, up from $0.37
        in 2008.
    -------------------------------------------------------------------------
    

Full year 2009 vs. full year 2008

Net income for the full year of 2009 was $1,579 million or $1.84 a share on a diluted basis, versus $3,878 million or $4.36 a share for the full year 2008.

Upstream net income for the year was $1,324 million versus $2,923 million in 2008. Lower crude oil and natural gas commodity prices in 2009 reduced revenues, impacting earnings by about $2,400 million as a result of the global economic downturn. Earnings were also negatively impacted by lower Cold Lake bitumen production of about $100 million and lower conventional volumes from expected reservoir decline of about $60 million. These factors were partially offset by lower royalty costs due to lower commodity prices of about $600 million and the impact of a lower Canadian dollar of about $325 million.

The average price of Brent crude oil in U.S. dollars, a common benchmark for world oil markets, at $61.61 a barrel, declined about 36 percent from 2008. The company's realizations on sales of Canadian conventional crude oil and synthetic crude oil from Syncrude production mirrored the same trend as world prices.

Prices for Canadian heavier crude oil also declined along with the lighter crude oil. The company's average realizations for Cold Lake bitumen fell about 25 percent for the full year in 2009, compared to 2008, reflecting the narrowing price spread between light crude oil and Cold Lake bitumen.

In 2009, realizations for natural gas averaged $4.11 a thousand cubic feet, down from $8.69 in 2008.

For the full year, gross production of Cold Lake bitumen was 141 thousand barrels a day this year, compared with 147 thousand barrels in 2008. Lower production volumes in 2009 were due to the cyclic nature of production at Cold Lake and well repairs in the northern part of the field. Drilling and steaming activities have since resumed in this area, and production is expected to return to normal levels.

During 2009, the company's share of gross production from Syncrude averaged 70 thousand barrels a day, compared with 72 thousand barrels in 2008. Planned maintenance activities in the first half of 2009, which included design modifications to improve long-term operational performance, contributed to the reduced production for the full year in 2009.

Gross production of conventional crude oil averaged 25 thousand barrels a day in 2009, compared with 27 thousand barrels in 2008. The natural reservoir decline in the Western Canadian Basin was the main reason for the reduced production.

In the year, gross production of natural gas was 295 million cubic feet a day, down from 310 million cubic feet in 2008. The lower production volume was primarily a result of natural reservoir decline.

Net income from Downstream was $278 million in 2009, compared with $796 million in 2008. Earnings in 2008 included a gain of $187 million from the sale of Rainbow Pipe Line Co. Ltd. Also impacting earnings in 2009 were lower overall margins of about $270 million and lower sales volumes of about $70 million due to the slowdown in the economy. These factors were partially offset by the favourable impact of a weaker Canadian dollar of about $40 million.

Net income from Chemical was $46 million, compared with $100 million in 2008. Earnings in 2009 were negatively impacted by lower overall margins as a result of the slow economy.

For the full year, net income effects from Corporate and other were negative $69 million, versus $59 million in 2008. Unfavourable effects in 2009 were primarily due to changes in share-based compensation charges and lower interest income from lower yields on cash balances.

During 2009, share repurchases were reduced to about 12 million shares for $492 million, including shares purchased from ExxonMobil, when compared to about 44 million shares purchased in 2008 for $2,210 million. Imperial did not make any significant share repurchases since the second quarter of 2009, as cash flow from operations was used to fund growth projects such as Kearl. The company will continue to evaluate its share-purchase program in the context of its overall capital activities.

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 2008 Form 10K.

    
                             IMPERIAL OIL LIMITED
                             FOURTH QUARTER 2009

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

                                       Fourth Quarter        Twelve Months
    millions of Canadian dollars,
     unless noted                      2009       2008       2009       2008
    -------------------------------------------------------------------------

    Net income (U.S. GAAP)
      Total revenues and other
       income                         5,864      5,942     21,398     31,579
      Total expenses                  5,119      5,171     19,198     26,303
    -------------------------------------------------------------------------
      Income before income taxes        745        771      2,200      5,276
      Income taxes                      211        111        621      1,398
    -------------------------------------------------------------------------
      Net income                        534        660      1,579      3,878
    -------------------------------------------------------------------------

    Net income per common share
     (dollars)                         0.63       0.77       1.86       4.39
    Net income per common share
     - assuming dilution (dollars)     0.62       0.76       1.84       4.36

    Gain/(loss) on asset sales,
     after tax                           12          5         38        209

    Total assets at December 31                            17,473     17,035

    Total debt at December 31                                 140        143
    Interest coverage ratio - earnings
     basis
      (times covered)                                       276.0      480.6

    Other long-term obligations at
     December 31                                            2,839      2,254

    Shareholders' equity at
     December 31                                            9,439      9,065
    Capital employed at December 31                         9,615      9,248
    Return on average capital
     employed (a)
      (percent)                                              16.8       44.7

    Dividends on common stock
      Total                              85         85        340        334
      Per common share (dollars)       0.10       0.10       0.40       0.38

    Millions of common shares
     outstanding
      At December 31                                        847.6      859.4
      Average - assuming dilution     854.0      871.7      856.7      889.0


    (a) Return on capital employed is the net income excluding after-tax cost
        of financing, divided by the average of beginning and ending capital
        employed.
    -------------------------------------------------------------------------



                             IMPERIAL OIL LIMITED
                             FOURTH QUARTER 2009

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

                                       Fourth Quarter        Twelve Months
    millions of Canadian dollars       2009       2008       2009       2008
    -------------------------------------------------------------------------

    Total cash and cash equivalents
     at period end                      513      1,974        513      1,974

    Net income                          534        660      1,579      3,878
    Adjustment for non-cash items:
      Depreciation and depletion        197        178        781        728
      (Gain)/loss on asset sales        (13)        (5)       (45)      (241)
      Deferred income taxes and other   (12)       492        (61)       387
    Changes in operating assets
     and liabilities                   221(a)     (413)      (663)      (489)
    -------------------------------------------------------------------------
    Cash from (used in) operating
     activities                         927        912      1,591      4,263
    -------------------------------------------------------------------------

    Cash from (used in) investing
     activities                        (785)      (380)    (2,216)      (961)
      Proceeds from asset sales          22         12         67        272

    Cash from (used in) financing
     activities                         (87)      (491)      (836)    (2,536)

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

    (a) Fourth quarter 2009 cash flow from operating activities was
        positively impacted by the timing of scheduled income tax payments
        and lower inventory.



                             IMPERIAL OIL LIMITED
                             FOURTH QUARTER 2009

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

                                       Fourth Quarter        Twelve Months
    millions of Canadian dollars       2009       2008       2009       2008
    -------------------------------------------------------------------------

    Net income (U.S. GAAP)
      Upstream                          491        336      1,324      2,923
      Downstream                         52        257        278        796
      Chemical                           16         28         46        100
      Corporate and other               (25)        39        (69)        59
    -------------------------------------------------------------------------
      Net income                        534        660      1,579      3,878
    -------------------------------------------------------------------------

    Total revenues by segment
      Upstream                        2,025      1,721      6,919     11,240
      Downstream                      5,019      5,311     18,381     27,212
      Chemical                          336        331      1,236      1,833
      Eliminations/Other             (1,516)    (1,421)    (5,138)    (8,706)
    -------------------------------------------------------------------------
      Revenues                        5,864      5,942     21,398     31,579
    -------------------------------------------------------------------------

    Purchases of crude oil and
     products by segment
      Upstream                          624        515      2,024      3,995
      Downstream                      4,002      4,021     14,164     22,223
      Chemical                          248        228        898      1,401
      Eliminations                   (1,517)    (1,434)    (5,152)    (8,754)
    -------------------------------------------------------------------------
      Purchases of crude oil
       and products                   3,357      3,330     11,934     18,865
    -------------------------------------------------------------------------

    Production and manufacturing
     expenses
      Upstream                          560        642      2,385      2,569
      Downstream                        323        355      1,372      1,452
      Chemical                           52         49        194        208
      Eliminations                        -         (1)         -         (1)
    -------------------------------------------------------------------------
      Production and manufacturing
       expenses                         935      1,045      3,951      4,228
    -------------------------------------------------------------------------

    Capital and exploration
     expenditures
      Upstream                          745        355      2,167      1,110
      Downstream                         84         70        251        232
      Chemical                            3          6         15         13
      Corporate and other                 2          2          5          8
    -------------------------------------------------------------------------
      Capital and exploration
       expenditures                     834        433      2,438      1,363
    -------------------------------------------------------------------------

    Exploration expenses charged
     to income included above            27         41        153        132

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


                             IMPERIAL OIL LIMITED
                             FOURTH QUARTER 2009

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

    Operating statistics               Fourth Quarter        Twelve Months
                                       2009       2008       2009       2008
    -------------------------------------------------------------------------

    Gross crude oil and Natural
     Gas Liquids (NGL) production
    (thousands of barrels a day)
      Cold Lake                         134        146        141        147
      Syncrude                           82         77         70         72
      Conventional                       24         27         25         27
    -------------------------------------------------------------------------
      Total crude oil production        240        250        236        246
      NGLs available for sale             7          9          8         10
    -------------------------------------------------------------------------
      Total crude oil and NGL
       production                       247        259        244        256
    -------------------------------------------------------------------------

    Gross natural gas production
     (millions of cubic feet a day)     298        297        295        310

    Gross oil-equivalent production(a)
    (thousands of oil-equivalent
     barrels a day)                     297        309        293        308

    Net crude oil and NGL production
     (thousands of barrels a day)
      Cold Lake                         107        129        120        124
      Syncrude                           73         68         65         62
      Conventional                       18         20         20         19
    -------------------------------------------------------------------------
      Total crude oil production        198        217        205        205
      NGLs available for sale             6          7          6          8
    -------------------------------------------------------------------------
      Total crude oil and NGL
       production                       204        224        211        213
    -------------------------------------------------------------------------

    Net natural gas production
     (millions of cubic feet a day)     264        239        274        249

    Net oil-equivalent production (a)
    (thousands of oil-equivalent
     barrels a day)                     248        264        257        255

    Cold Lake blend sales
     (thousands of barrels a day)       174        190        184        191
    NGL Sales
     (thousands of barrels a day)        12         13         10         11
    Natural gas sales
     (millions of cubic feet a day)     277        291        272        288

    Average realizations and prices
     (Canadian dollars)
      Conventional crude oil
       realizations (a barrel)        69.92      56.75      60.32      95.76
      NGL realizations (a barrel)     48.15      43.61      41.19      59.35
      Natural gas realizations
       (a thousand cubic feet)         4.23       7.31       4.11       8.69
      Syncrude realizations
       (a barrel)                     78.64      69.21      69.69     106.61
      Western Canada Select
       heavy oil (a barrel)           67.68      47.73      58.67      82.96

    Refinery throughput
     (thousands of barrels a day)       412        441        413        446
    Refinery capacity utilization
     (percent)                           82         88         82         89

    Petroleum product sales
     (thousands of barrels a day)
      Gasolines                         200        204        200        204
      Heating, diesel and jet fuels     142        158        143        157
      Heavy fuel oils                    31         32         27         30
      Lube oils and other products       42         54         39         47
    -------------------------------------------------------------------------
      Net petroleum products sales      415        448        409        438
    -------------------------------------------------------------------------

    Petrochemical Sales
     (thousands of tonnes a day)        2.9        2.2        2.8        2.8

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



                             IMPERIAL OIL LIMITED
                             FOURTH QUARTER 2009

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

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

    2005
    First Quarter                            393                        0.38
    Second Quarter                           539                        0.52
    Third Quarter                            652                        0.64
    Fourth Quarter                         1,016                        1.00
    -------------------------------------------------------------------------
    Year                                   2,600                        2.54
    -------------------------------------------------------------------------

    2006
    First Quarter                            591                        0.60
    Second Quarter                           837                        0.85
    Third Quarter                            822                        0.84
    Fourth Quarter                           794                        0.83
    -------------------------------------------------------------------------
    Year                                   3,044                        3.12
    -------------------------------------------------------------------------


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

To view the graph "Factors affecting net income", please visit http://files.newswire.ca/706/Q4_2010_graphs.jpg

SOURCE Imperial Oil Limited

For further information: For further information: Investor relations: Mark Stumpf, (403) 237-4537; Media relations: Pius Rolheiser, (403) 237-2663


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