Imperial Oil announces estimated second-quarter financial and operating
results

CALGARY, July 29 /CNW/ -

    
                                    -------------------- --------------------
                                       Second Quarter         Six Months
    (millions of dollars,           -------------------- --------------------
    unless noted)                    2010    2009     %   2010   2009      %
    -------------------------------------------------------------------------
    Net income (U.S. GAAP)            517     209   147    993    498     99
    Net income per common share
     - assuming dilution (dollars)   0.60    0.25   140   1.16   0.58    100

    Capital and exploration
     expenditures                     881     535    65  1,781  1,029     73
    

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

"Imperial Oil delivered solid results with earnings of $517 million or $0.60 per share, up from $209 million in the second quarter of 2009, an increase of 147 percent. Earnings increased with stronger crude oil realizations, increased production, lower operating costs and improved downstream margins. These factors were partially offset by unfavourable foreign exchange effects of a stronger Canadian dollar. Strong operating performance in all business segments allowed us to take advantage of higher crude oil realizations in the Upstream and improved margins in petroleum product markets.

Earnings for the first six months of 2010 were $993 million or $1.16 per share, up from $498 million in the first six months of 2009, an increase of 99 percent.

With our strong balance sheet; cash flow from operations; minimal debt; and long-term disciplined approach, we are well positioned to add value to our shareholders through our company growth projects. Capital and exploration expenditures continued at a record pace and were $881 million in the second quarter, relating primarily to the Kearl oil sands project and continued exploration of promising shale gas acreage in Horn River.

We also announced an increase to the quarterly dividend paid to shareholders, which represents the fifteenth consecutive increase in Imperial's annual per share dividend payments."

    
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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.


    Second quarter items of interest

    -  Net income was $517 million, compared with $209 million for the second
       quarter of 2009, an increase of 147% or $308 million.

    -  Net income per common share was $0.60, an increase of 140% from the
       second quarter of 2009.

    -  Cash generated from operating activities was $324 million, compared
       with $262 million in the same period last year.

    -  Funding contributions of $295 million were made to the company's
       registered pension plan, compared with $6 million in the second
       quarter of 2009.

    -  Capital and exploration expenditures were $881 million, up 65% from
       the second quarter of 2009, supporting the Kearl oil sands and other
       growth projects.

    -  Gross oil-equivalent barrels of production averaged 300,000 barrels a
       day, compared with 271,000 barrels a day in the same period last year.
       Higher production volumes in the second quarter were primarily due to
       increased Syncrude volumes, a result of lower maintenance activities.

    -  Dividend increase - On April 28, 2010, the company declared a
       quarterly dividend of 11 cents per share, an increase of one cent a
       share from the previous quarter. The company has paid dividends every
       year for more than a century and has increased its annual dividend
       payment for fifteen consecutive years.

    -  Strathcona refinery wins safety awards - In the second quarter,
       Imperial's Strathcona refinery was honoured with two awards. Alberta
       Employment and Immigration recognized the refinery for best-in-class
       performance and the Alberta Petro-Chemical Safety Council honoured the
       facility for achieving best-in-class contractor safety performance.

    -  Kearl oil sands project update - About 2,500 employees and contractors
       are currently working at the Kearl site. Construction activities on
       Kearl in the second quarter included work on piling, foundations and
       earthworks along with vessel and pipe fabrication. The first phase of
       Kearl will initially produce about 110,000 barrels of bitumen a day.
       Production is expected in late 2012.

    -  Horn River update - Imperial drilled 10 exploration wells and
       participated in 3D seismic acquisition during the 2009-2010 winter
       drilling season. The company plans to initiate drilling a horizontal
       multi-well pad pilot development in the fall of 2010 to evaluate
       longer-term well productivity.

    -  Orphan Basin - Imperial is an equity participant (15%) in a Chevron
       operated exploration well that spud in May 2010 in the Orphan Basin.
       The area lies offshore of Newfoundland and Labrador.

    -  Indigenous women's leadership program launched - In an event attended
       by Her Excellency Michaëlle Jean, Governor General of Canada, the
       Imperial Oil and ExxonMobil Foundations announced a $4 million
       partnership with the Coady International Institute to develop and
       support the leadership potential of Canadian Aboriginal women.

    -  Executive management appointments - Effective May 1, 2010, the board
       of directors of Imperial Oil appointed Paul Masschelin as senior
       vice-president, finance and administration and treasurer. Mr.
       Masschelin previously held the position of controller, ExxonMobil
       Refining & Supply Company and ExxonMobil Research and Engineering
       Company.

       In addition, effective July 1, 2010, Imperial's board of directors
       also appointed Glenn Scott as senior vice-president, resources
       division. Mr. Scott previously held the position of president of
       ExxonMobil Canada Limited and production manager for ExxonMobil Canada
       East.
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Second quarter 2010 vs. second quarter 2009

The company's net income for the second quarter of 2010 was $517 million or $0.60 a share on a diluted basis, compared with $209 million or $0.25 a share for the same period last year. Net income for the first six months of 2010 was $993 million or $1.16 a share on a diluted basis, versus $498 million or $0.58 a share for the first half of 2009.

Earnings in the second quarter were higher than the same quarter in 2009 with improvements in all operating segments. Earnings increased primarily due to the impacts of higher crude oil prices of about $150 million, higher Syncrude volumes of about $150 million, lower refinery and Syncrude maintenance of about $85 million and improved downstream margins of about $40 million. These factors were partially offset by the unfavourable foreign exchange effects of a higher Canadian dollar of about $115 million and higher royalty costs due to higher commodity prices of about $70 million. Earnings in the second quarter of 2010 also included a gain of about $30 million from the sale of a non-operating real estate property.

Upstream net income in the second quarter was $446 million, $194 million higher than the same period of 2009. Higher crude oil commodity prices in the second quarter of 2010 increased revenues, contributing to higher earnings of about $150 million. Earnings were also positively impacted by higher Syncrude volumes of about $150 million and lower Syncrude maintenance costs of about $30 million. These factors were partially offset by the unfavourable foreign exchange effects of a higher Canadian dollar of about $90 million and higher royalties due to higher commodity prices of about $70 million.

The average price of Brent crude oil in U.S. dollars, a common benchmark for world oil markets, was $78.27 a barrel in the second quarter of 2010, up about 33 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.

Gross production of Cold Lake bitumen averaged 140 thousand barrels a day during the second quarter, versus 139 thousand barrels in the same quarter last year.

The company's share of Syncrude's gross production in the second quarter was 81 thousand barrels a day, versus 51 thousand barrels in the second quarter of 2009. Increased production in the second quarter was due to lower maintenance activities.

Gross production of conventional crude oil averaged 24 thousand barrels a day in the second quarter of 2010 and was slightly lower when compared to corresponding period in 2009 due to natural reservoir decline.

Gross production of natural gas during the second quarter of 2010 at 289 million cubic feet a day was essentially unchanged from the same period last year.

Downstream net income was $68 million in the second quarter of 2010, compared with negative $38 million in the same period a year ago. Favourable impacts of about $55 million associated with lower refinery maintenance activities and stronger overall margins of about $40 million were the main contributors to higher earnings. Second quarter earnings also benefited from a gain of about $25 million from the sale of a non-operating real estate property. These factors were partially offset by the unfavourable foreign exchange effects of a higher Canadian dollar of about $25 million.

Net income from Chemical was $22 million in the second quarter, $14 million higher than the same quarter last year. Improved industry margins were partially offset by lower sales volumes for polyethylene products and higher costs due to planned maintenance activities on the Sarnia ethylene cracker.

Net income effects from Corporate and other were negative $19 million in the second quarter, compared with negative $13 million in the same period of 2009. Unfavourable earnings effects in the second quarter were primarily due to higher share-based compensation charges.

In the second quarter of 2010, cash flow of $324 million was generated from operations, compared with $262 million in the same period last year. Higher cash flow was primarily driven by higher earnings partially offset by funding contributions of $295 million to the company's registered pension plan in the second quarter of 2010.

Investing activities used net cash of $797 million in the second quarter, an increase of $318 million from the corresponding period in 2009. Capital and exploration expenditures were $881 million in the second quarter, compared with $535 million during the same quarter 2009. Expenditures during the quarter were primarily for advancing growth projects such as Kearl.

The company's balance of cash was $64 million at June 30, 2010, compared with $513 million at the end of 2009.

    
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    Six months highlights

    -  Net income was $993 million, up from $498 million in the first six
       months of 2009.

    -  Net income per common share increased to $1.16 compared to $0.58 in
       the same period of 2009.

    -  Cash generated from operations was $1,238 million, versus cash used in
       operations of $34 million in the first six months of 2009.

    -  Capital and exploration expenditures were $1,781 million, up 73
       percent, supporting the Kearl oil sands and other growth projects.

    -  Gross oil-equivalent barrels of production averaged 296 thousands of
       barrels per day, compared to 286 thousands of barrels per day in the
       first half of 2009.

    -  Per-share dividends declared in the first two quarters of 2010 totaled
       $0.21, up from $0.20 in the same period of 2009.
    -------------------------------------------------------------------------
    

Six months 2010 vs. six months 2009

Net income for the first six months of 2010 was $993 million or $1.16 a share on a diluted basis, versus $498 million or $0.58 a share for the first half of 2009.

Upstream net income for the first six months was $890 million versus $394 million during the same period last year. Higher crude oil commodity prices in 2010 increased revenues, contributing to higher earnings of about $700 million. Earnings were also positively impacted by higher Syncrude volumes of about $150 million and lower overall maintenance costs of about $50 million. These factors were partially offset by higher royalty costs due to higher commodity prices of about $250 million and the impact of a higher Canadian dollar of about $200 million.

The average price of Brent crude oil in U.S. dollars, a common benchmark for world oil markets, was $77.30 a barrel in the first half of 2010, up about 50 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.

For the first six months, Cold Lake gross production was 144 thousand barrels a day this year, compared with 143 thousand barrels in the same period of 2009.

During the first half of the year, the company's share of gross production from Syncrude averaged 74 thousand barrels a day, up from 60 thousand barrels in 2009. Increased production in the first half of 2010 was due to lower maintenance activities.

Gross production of conventional crude oil averaged 24 thousand barrels a day in the six months of 2010, and was slightly lower when compared to corresponding period in 2009 due to natural reservoir decline.

In the first half of the year, gross production of natural gas was 281 million cubic feet a day, down from 296 million cubic feet in the first six months of 2009. The lower production volume was primarily a result of maintenance activities and natural reservoir decline.

Six-month net income from Downstream was $107 million, compared with $164 million in 2009. Lower earnings were primarily due to lower overall margins of about $90 million and the unfavourable effects of a higher Canadian dollar of about $55 million. These factors were partially offset by the favourable impacts of about $65 million associated with lower refinery maintenance activities and gain from sale of non-operating assets.

Chemical net income for the first six months was $21 million, up $10 million from the same period in 2009. Improved industry margins were partially offset by lower sales volumes for polyethylene products and higher costs due to planned maintenance activities.

For the six months, net income effects from Corporate and other were negative $25 million, versus negative $71 million last year. Favourable earnings effects were primarily due to lower share-based compensation charges.

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
                             SECOND QUARTER 2010
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    millions of Canadian dollars,         Second Quarter       Six Months
    unless noted                          2010      2009      2010      2009
    -------------------------------------------------------------------------
    Net income (U.S. GAAP)
      Total revenues and other income    6,139     5,303    12,305     9,973
      Total expenses                     5,457     5,009    10,972     9,277
    -------------------------------------------------------------------------
      Income before income taxes           682       294     1,333       696
      Income taxes                         165        85       340       198
    -------------------------------------------------------------------------
      Net income                           517       209       993       498
    -------------------------------------------------------------------------

    Net income per common share
     (dollars)                            0.61      0.25      1.17      0.59
    Net income per common share
     - assuming dilution (dollars)        0.60      0.25      1.16      0.58

    Gain/(loss) on asset sales,
     after tax                              36        25        40        26

    Total assets at June 30                                 18,368    16,663

    Total debt at June 30                                      228       141
    Interest coverage ratio
     - earnings basis
     (rolling 4 quarters, times covered)                     355.6     381.4

    Other long-term obligations
     at June 30                                              2,427     2,232

    Shareholders' equity at June 30                         10,393     8,924
    Capital employed at June 30                             10,656     9,104
    Return on average capital
     employed (a)
      (rolling 4 quarters, percent)                           20.8      27.8

    Dividends on common stock
      Total                                 93        84       178       170
      Per common share (dollars)          0.11      0.10      0.21      0.20

    Millions of common shares
     outstanding
      At June 30                                             847.6     847.6
      Average - assuming dilution        854.5     854.9     854.3     858.8
    -------------------------------------------------------------------------
    (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
                             SECOND QUARTER 2010
    -------------------------------------------------------------------------

                                         Second Quarter        Six Months
    millions of Canadian dollars          2010     2009       2010      2009
    -------------------------------------------------------------------------
    Total cash and cash equivalents
     at period end                          64      390         64       390

    Net income                             517      209        993       498
    Adjustment for non-cash items:
      Depreciation and depletion           192      193        374       390
      (Gain)/loss on asset sales           (42)     (31)       (46)      (32)
      Deferred income taxes and other       70      (71)        72       (43)
    Changes in operating assets and
     liabilities                          (413)(a)  (38)      (155)     (847)
    -------------------------------------------------------------------------
    Cash from (used in) operating
     activities                            324      262      1,238       (34)
    -------------------------------------------------------------------------

    Cash from (used in) investing
     activities                           (797)    (479)    (1,604)     (886)
      Proceeds from asset sales             54       35         60        37

    Cash from (used in) financing
     activities                              3     (148)       (83)     (664)

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    (a) Second quarter 2010 cash flow from operating activities was
        negatively impacted by $295 million funding contributions to the
        company's registered pension plans.


                             IMPERIAL OIL LIMITED
                             SECOND QUARTER 2010
    -------------------------------------------------------------------------


                                          Second Quarter       Six Months
    millions of Canadian dollars          2010      2009      2010      2009
    -------------------------------------------------------------------------
    Net income (U.S. GAAP)
      Upstream                             446       252       890       394
      Downstream                            68       (38)      107       164
      Chemical                              22         8        21        11
      Corporate and other                  (19)      (13)      (25)      (71)
    -------------------------------------------------------------------------
      Net income                           517       209       993       498
    -------------------------------------------------------------------------

    Total revenues
      Upstream                           1,984     1,596     4,193     3,016
      Downstream                         5,312     4,530    10,504     8,613
      Chemical                             331       313       684       585
      Eliminations/Other                (1,488)   (1,136)   (3,076)   (2,241)
    -------------------------------------------------------------------------
      Revenues                           6,139     5,303    12,305     9,973
    -------------------------------------------------------------------------

    Purchases of crude oil and
     products
      Upstream                             653       468     1,440       832
      Downstream                         4,237     3,566     8,424     6,433
      Chemical                             234       233       510       432
      Eliminations                      (1,488)   (1,136)   (3,077)   (2,246)
    -------------------------------------------------------------------------
      Purchases of crude oil and
       products                          3,636     3,131     7,297     5,451
    -------------------------------------------------------------------------

    Production and manufacturing
     expenses
      Upstream                             573       630     1,175     1,276
      Downstream                           389       400       759       736
      Chemical                              50        47       108        95
    -------------------------------------------------------------------------
      Production and manufacturing
       expenses                          1,012     1,077     2,042     2,107
    -------------------------------------------------------------------------

    Capital and exploration
     expenditures
      Upstream                             832       471     1,687       918
      Downstream                            46        61        84       103
      Chemical                               2         2         8         6
      Corporate and other                    1         1         2         2
    -------------------------------------------------------------------------
      Capital and exploration
       expenditures                        881       535     1,781     1,029
    -------------------------------------------------------------------------

      Exploration expenses charged
       to income included above             30        22       117       105

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


                             IMPERIAL OIL LIMITED
                             SECOND QUARTER 2010
    -------------------------------------------------------------------------


    Operating statistics                  Second Quarter       Six Months
                                          2010      2009      2010      2009
    -------------------------------------------------------------------------

    Gross crude oil and Natural Gas
     Liquids (NGL) production
    (thousands of barrels a day)
      Cold Lake                            140       139       144       143
      Syncrude                              81        51        74        60
      Conventional                          24        25        24        26
    -------------------------------------------------------------------------
      Total crude oil production           245       215       242       229
      NGLs available for sale                7         8         7         8
    -------------------------------------------------------------------------
      Total crude oil and NGL
       production                          252       223       249       237
    -------------------------------------------------------------------------

    Gross natural gas production
     (millions of cubic feet a day)        289       286       281       296

    Gross oil-equivalent production (a)
    (thousands of oil-equivalent
     barrels a day)                        300       271       296       286

    Net crude oil and NGL production
     (thousands of barrels a day)
      Cold Lake                            112       116       115       128
      Syncrude                              74        49        67        60
      Conventional                          18        19        18        21
    -------------------------------------------------------------------------
      Total crude oil production           204       184       200       209
      NGLs available for sale                5         6         5         6
    -------------------------------------------------------------------------
      Total crude oil and NGL
       production                          209       190       205       215
    -------------------------------------------------------------------------

    Net natural gas production
     (millions of cubic feet a day)        265       276       251       269

    Net oil-equivalent production (a)
    (thousands of oil-equivalent
     barrels a day)                        253       236       247       260

    Cold Lake blend sales (thousands
     of barrels a day)                     184       180       192       189
    NGL Sales (thousands of barrels
     a day)                                  9         6        11         9
    Natural gas sales (millions of
     cubic feet a day)                     263       265       263       271

    Average realizations
     (Canadian dollars)
      Conventional crude oil
       realizations (a barrel)           69.53     60.08     72.01     53.37
      NGL realizations (a barrel)        43.79     35.11     50.53     39.06
      Natural gas realizations
       (a thousand cubic feet)            3.79      3.48      4.49      4.67
      Synthetic oil realizations
       (a barrel)                        77.98     68.27     79.91     61.11
      Bitumen realizations (a barrel)    54.46     56.74     58.73     45.58

    Refinery throughput (thousands of
     barrels a day)                        418       365       428       412
    Refinery capacity utilization
     (percent)                              83        73        85        82

    Petroleum product sales
     (thousands of barrels a day)
      Gasolines                            214       205       209       198
      Heating, diesel and jet fuels        136       135       141       146
      Heavy fuel oils                       31        24        32        28
      Lube oils and other products          47        36        43        36
    -------------------------------------------------------------------------
      Net petroleum products sales         428       400       425       408
    -------------------------------------------------------------------------

    Petrochemical Sales (thousands of
     tonnes a day)                         2.6       2.9       2.6       2.8

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


                             IMPERIAL OIL LIMITED
                             SECOND QUARTER 2010
    -------------------------------------------------------------------------

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

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

    2010
    First Quarter                                    476                0.56
    Second Quarter                                   517                0.61

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To view the graph "Factors affecting net income", please visit http://files.newswire.ca/706/Q2_2010_ENG.jpg

SOURCE Imperial Oil Limited

For further information: For further information: Investor relations: Mark Stumpf, (403) 237-4537; Media relations: Gordon Wong, (403) 237-2710


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