Imperial Oil announces estimated third-quarter financial and operating
results

CALGARY, Oct. 29 /CNW/ -

    
                                  --------------------- ---------------------
                                    Third Quarter          Nine Months
                                  --------------------- ---------------------
    (millions of dollars,
     unless noted)                  2009    2008    %     2009    2008    %
    -------------------------------------------------------------------------

    Net income (U.S. GAAP)           547   1,389   (61)  1,045   3,218   (68)
    Net income per common share
     - assuming dilution (dollars)  0.64    1.57   (59)   1.22    3.60   (66)

    Capital and exploration
     expenditures                    575     360    60   1,604     930    72
    

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

"Net income for the third quarter was $547 million, down 61 percent from the third quarter of 2008, but up 162 percent from the second quarter of 2009. Earnings in the third quarter were down from the same quarter in 2008 primarily due to lower Upstream crude oil and natural gas commodity prices as a result of the global economic downturn. Downstream earnings in the third quarter of 2009 were impacted by reduced demand for products, resulting in lower overall downstream margins.

Net income for the first nine months of 2009 was $1,045 million or $1.22 a share, versus $3,218 million or $3.60 a share for the first nine months of 2008.

Continued lower commodity prices and tight downstream margins resulted in challenging business conditions for the quarter compared to the same period last year. Imperial continues to weather this economic downturn well, with earnings supporting our investments in company growth projects through the down cycle. Our proven approach of focusing on those elements of the business within our control, combined with prudent financial management and disciplined capital investment, will continue to reward our shareholders in these uncertain times.

Imperial Oil continued its long-term focus and disciplined approach to capital investment. In the third quarter, capital and exploration expenditures increased to $575 million, up 60 percent from the same period last year. For the first nine months of 2009, capital and exploration expenditures were $1,604 million, an increase of 72 percent over the first nine months of 2008. The company continues to develop its outstanding portfolio of company growth projects, delivering new energy supplies which are vital to economic growth.

During the first nine months of 2009, the company distributed $747 million cash to shareholders through dividends of $257 million and share repurchases of $490 million."

    
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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, and one of the largest petroleum refiners and
    marketers with a coast-to-coast supply network that includes about 1,900
    retail service stations.
    -------------------------------------------------------------------------

    Third quarter items of interest

    -   Net income was $547 million, versus $1,389 million for the third
        quarter of 2008, and $209 million for the second quarter of 2009.

    -   Net income per common share was $0.64, versus $1.57 for the third
        quarter of 2008.

    -   Cash flow from operating activities was $698 million, compared with
        $1,635 million in the same period last year.

    -   Capital and exploration expenditures were $575 million, versus
        $360 million for the third quarter of 2008.

    -   Gross oil-equivalent barrels of production averaged 304,000 barrels a
        day, compared with 310,000 barrels a day in the same period last
        year.

    -   Kearl oil sands project update

        Following board approval of the first phase of Kearl in May, the
        project has been proceeding with detailed design, procurement and
        construction activities with a current workforce of about 3,000
        employees and contractors. Kearl will be developed in three phases
        and could ultimately produce more than 300,000 barrels of bitumen a
        day before royalties. The first phase of the project is expected to
        start up in late 2012. Imperial holds a 71-percent interest in the
        project and is the operator in this joint venture with ExxonMobil
        Canada.

    -   Cold Lake surpasses one billion barrels of production

        The company's Cold Lake heavy oil operation in northeastern Alberta
        has surpassed one billion barrels of cumulative production. Only
        three other fields in Canada have achieved this milestone, and it is
        the only in-situ operation to have done so. During four decades of
        operation at Cold Lake, technological advancements have tripled
        recovery rates while reducing fresh water use and surface land
        disturbance.

    -   Cold Lake expansion

        In September, Imperial filed amendment applications for the
        previously approved Cold Lake Nabiye project (2004). The proposed
        changes to the project will result in improved energy efficiency,
        reduced greenhouse gas and sulphur dioxide emissions, and reduced
        surface footprint. The Nabiye expansion is continuing to be advanced,
        and if sanctioned, will add about 30,000 barrels a day of production
        from a new plant. The expansion will access 250 million barrels of
        previously undeveloped resource at the Cold Lake heavy oil operation.
    

Third quarter 2009 vs. third quarter 2008

Upstream net income in the third quarter was $439 million versus $999 million in the same period of 2008. Earnings decreased primarily due to lower crude oil and natural gas commodity prices of about $950 million as a result of the global economic downturn. Lower realizations were partially offset by lower royalty costs due to lower commodity prices of about $200 million, the impact of a lower Canadian dollar of about $115 million and lower energy costs of about $95 million.

The average price of Brent crude oil in U.S. dollars, a common benchmark for world oil markets, was $68.29 a barrel in the third quarter, down about 41 percent from the corresponding period last year. The company's realizations on sales of Canadian conventional crude oil mirrored the same trend as world prices, decreasing about 43 percent in the third quarter, compared to the same period last year.

The company's average realizations for Cold Lake heavy oil also declined about 40 percent in the third quarter of 2009, compared to the corresponding period last year. The decline was less than that of lighter crude oil, due to the narrowing price spread between light crude oil and Cold Lake heavy oil.

The company's average realizations for natural gas averaged $2.90 a thousand cubic feet in the third quarter, down from $9.20 in the same quarter last year.

Gross production of Cold Lake heavy oil averaged 145 thousand barrels a day during the third quarter, versus 143 thousand barrels in the same quarter last year. The cyclic nature of production at Cold Lake and lower maintenance activities contributed primarily to the increase in production in the third quarter of 2009.

The company's share of Syncrude's gross production in the third quarter was 78 thousand barrels a day, versus 79 thousand barrels in the third quarter of 2008.

Gross production of conventional crude oil averaged 25 thousand barrels a day in the third quarter, essentially the same as the corresponding period of 2008.

Gross production of natural gas during the third quarter of 2009 decreased to 291 million cubic feet a day from 309 million cubic feet in the same period last year. The lower production volume was primarily a result of natural reservoir decline.

Net income from Downstream was $62 million in the third quarter of 2009, compared with $270 million in the same period a year ago. When compared to the same period in 2008, earnings in the third quarter of 2009 were negatively impacted by reduced demand for products, resulting in lower overall downstream margins of about $160 million. North American refining margins in the third quarter of 2008 were significantly higher as a result of Hurricane Gustav in the Gulf of Mexico. Also impacting third quarter 2009 earnings were lower sales volumes due to the slowdown in the economy.

Chemical net income was $19 million in the third quarter, compared with $38 million in the same quarter last year. Earnings were lower in the quarter primarily due to lower margins for polyethylene products.

Net income effects from Corporate and other were $27 million in the third quarter, compared with $82 million in the same period of 2008. The decrease in earnings effects in the third quarter reflected changes in share-based compensation charges.

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.

In the third quarter of 2009, the company built $68 million of cash while funding its higher capital program requirements from operating cash flow.

First nine months 2009 vs. first nine months 2008

Net income for the first nine months of 2009 was $1,045 million or $1.22 a share on a diluted basis, versus $3,218 million or $3.60 a share for the first nine months of 2008.

    
    -------------------------------------------------------------------------
    First nine months highlights

    -   Net income was $1,045 million, down from $3,218 million in the first
        nine months of 2008.

    -   Net income per common share decreased to $1.22 compared to $3.60 in
        the same period of 2008.

    -   Cash flow from operations was $664 million, versus $3,351 million in
        the same period of 2008.

    -   Capital and exploration expenditures were $1,604 million, up
        72 percent.

    -   Gross oil-equivalent barrels of production averaged 292 thousands of
        barrels per day, compared to 309 thousands of barrels per day in the
        first nine months of 2008.

    -   Imperial distributed a total of $747 million cash to shareholders in
        2009 through dividends and share repurchases, compared with
        $2,048 million in 2008.

    -   Per-share dividends declared in the first three quarters of 2009
        totaled $0.30, up from $0.28 in the same period of 2008.
    -------------------------------------------------------------------------
    

Upstream net income for the first nine months was $833 million versus $2,587 million during the same period last year. Crude oil and natural gas commodity prices were lower by about $3,000 million compared to the first nine months of 2008. Earnings were also negatively impacted by lower cyclical Cold Lake heavy oil production of about $50 million, lower Syncrude volumes of about $30 million and lower conventional volumes from expected reservoir decline of about $30 million. These factors were partially offset by lower royalty costs due to lower commodity prices of about $750 million and the impact of a lower Canadian dollar of about $590 million.

The average price of Brent crude oil in U.S. dollars, a common benchmark for world oil markets, was $57.26 a barrel in the first nine months of 2009, down about 48 percent from the corresponding period last year. The company's realizations on sales of Canadian conventional crude oil mirrored the same trend as world prices, decreasing about 47 percent in the first nine months of the year, compared to the same period last year.

The company's average realizations for Cold Lake heavy oil also declined about 40 percent in the first three quarters of 2009, compared to the corresponding period last year. The decline was less than that of lighter crude oil, due to the narrowing price spread between light crude oil and Cold Lake heavy oil.

For the nine months of 2009, realizations for natural gas averaged $4.07 a thousand cubic feet, down from $9.16 in 2008.

For the first nine months, gross production of Cold Lake heavy oil was 144 thousand barrels a day this year, compared with 147 thousand barrels in the same period of 2008. Lower production in the first nine months of 2009 was primarily due to the cyclic nature of production at Cold Lake.

During the first nine months of 2009, the company's share of gross production from Syncrude averaged 66 thousand barrels a day, down from 71 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 in the first nine months of 2009.

Gross production of conventional crude oil averaged 25 thousand barrels a day in the first nine months of 2009, essentially the same as the corresponding period of 2008.

In the first nine months of the year, gross production of natural gas was 294 million cubic feet a day, down from 315 million cubic feet in the first nine months of 2008. The lower production volume was primarily a result of natural reservoir decline.

Nine-month net income from Downstream was $226 million, compared with $539 million in 2008. Earnings in the first nine months of 2008 included a gain of $187 million from the sale of Rainbow pipeline. Also impacting earnings in 2009 were lower overall downstream margins of about $90 million and lower sales volumes of about $60 million due to the slowdown in the economy. Higher planned maintenance activities at the refineries also negatively impacted earnings by $30 million. These factors were partially offset by the favourable impact of a weaker Canadian dollar of about $65 million.

Chemical nine-month net income was $30 million, compared with $72 million in 2008. Earnings in 2009 were negatively impacted by the slow economy, with lower overall margins and sales volumes.

For the nine months of 2009, net income effects from Corporate and other were negative $44 million, versus $20 million last year. Unfavourable earnings effects in the first nine months of 2009 were primarily due to higher share- based compensation charges and lower interest income from lower yields on cash balances.

During the first nine months of 2009, the company repurchased about 12 million shares for $490 million, including shares purchased from ExxonMobil.

Cash flow from operations was used to fund growth projects such as Kearl.

Key financial and operating data follow.

Go to http://files.newswire.ca/57/Q3_2009_Graphs.JPG to view charts of factors affecting net income.

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
                             THIRD QUARTER 2009

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

                                        Third Quarter          Nine Months
    (millions of Canadian dollars,
     unless noted)                     2009       2008       2009       2008
    -------------------------------------------------------------------------

    Net income (U.S. GAAP)
      Total revenues and other
       income                         5,561      9,515     15,534     25,637
      Total expenses                  4,802      7,558     14,079     21,132
    -------------------------------------------------------------------------
      Income before income taxes        759      1,957      1,455      4,505
      Income taxes                      212        568        410      1,287
    -------------------------------------------------------------------------
      Net income (U.S. GAAP)            547      1,389      1,045      3,218
    -------------------------------------------------------------------------

    Net income per common share
     (dollars)                         0.64       1.57       1.23       3.62
    Net income per common share
     - assuming dilution (dollars)     0.64       1.57       1.22       3.60

    Gain/(loss) on asset sales,
     after tax                            -          2         26        203

    Total assets at September 30                           16,822     18,627

    Total debt at September 30                                140        143
    Interest coverage ratio - earnings
     basis
      (rolling 4 quarters, times
       covered)                                             248.3      265.7

    Other long-term obligations at
     September 30                                           2,219      1,879

    Shareholders' equity at
     September 30                                           9,410      9,050
    Capital employed at September 30                        9,587      9,234
    Return on average capital
     employed (a)
      (rolling 4 quarters, percent)                          18.5       48.2

    Dividends on common stock
      Total                              85         88        255        249
      Per common share (dollars)       0.10       0.10       0.30       0.28

    Millions of common shares
     outstanding
      At September 30                                       847.6      869.7
      Average - assuming dilution     854.9      883.8      857.5      894.8


    (a)  Return on capital employed is net income excluding after-tax cost of
         financing divided by the average rolling four quarters' capital
         employed.
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                            IMPERIAL OIL LIMITED
                             THIRD QUARTER 2009

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

                                        Third Quarter          Nine Months
    (millions of Canadian dollars)     2009       2008       2009       2008
    -------------------------------------------------------------------------

    Total cash and cash equivalents     458      1,933        458      1,933

    Net income                          547      1,389      1,045      3,218
    Adjustment for non-cash items:
      Depreciation and depletion        194        188        584        550
      (Gain)/loss on asset sales          -         (4)       (32)      (236)
      Deferred income taxes and other    (6)       137        (49)      (105)
    Changes in operating assets and
     liabilities                        (37)       (75)      (884)(a)    (76)
    -------------------------------------------------------------------------
    Cash from (used in) operating
     activities                         698      1,635        664      3,351
    -------------------------------------------------------------------------

    Cash from (used in) investing
     activities                        (545)      (307)    (1,431)      (581)
      Sales of subsidiaries,
       investments and property,
       plant and equipment                8         19         45        260

    Cash from (used in) financing
     activities                         (85)      (690)      (749)    (2,045)

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

    (a)  Year-to-date 2009 cash flow from operating activities was negatively
         impacted by the timing of scheduled income tax payments.



                            IMPERIAL OIL LIMITED
                             THIRD QUARTER 2009

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

                                        Third Quarter          Nine Months
    (millions of Canadian dollars)     2009       2008       2009       2008
    -------------------------------------------------------------------------

    Net income (U.S. GAAP)
      Upstream                          439        999        833      2,587
      Downstream                         62        270        226        539
      Chemical                           19         38         30         72
      Corporate and other                27         82        (44)        20
    -------------------------------------------------------------------------
      Net income (U.S. GAAP)            547      1,389      1,045      3,218
    -------------------------------------------------------------------------

    Operating revenues by segment
      Upstream                          921      1,692      2,560      4,977
      Downstream                      4,380      7,393     12,217     19,223
      Chemical                          246        393        684      1,127
    -------------------------------------------------------------------------
      Operating revenues              5,547      9,478     15,461     25,327
    -------------------------------------------------------------------------

    Production and manufacturing
     expenses
      Upstream                          549        671      1,825      1,927
      Downstream                        313        369      1,049      1,097
      Chemical                           47         52        142        159
    -------------------------------------------------------------------------
      Production and manufacturing
       expenses                         909      1,092      3,016      3,183
    -------------------------------------------------------------------------

    Capital and exploration
     expenditures
      Upstream                          504        288      1,422        755
      Downstream                         64         67        167        162
      Chemical                            6          3         12          7
      Corporate and other                 1          2          3          6
    -------------------------------------------------------------------------
      Capital and exploration
       expenditures                     575        360      1,604        930
    -------------------------------------------------------------------------

      Exploration expenses charged
       to income included above          21         34        126         91

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



                            IMPERIAL OIL LIMITED
                             THIRD QUARTER 2009

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

                                        Third Quarter          Nine Months
    Operating statistics               2009       2008       2009       2008
    -------------------------------------------------------------------------

    Gross crude oil and NGL
     production (thousands of
     barrels a day)
      Cold Lake                         145        143        144        147
      Syncrude                           78         79         66         71
      Conventional                       25         27         25         27
    -------------------------------------------------------------------------
      Total crude oil production        248        249        235        245
      Natural gas liquids (NGLs)
       available for sale                 7          9          8         11
    -------------------------------------------------------------------------
      Total crude oil and NGL
       production                       255        258        243        256
    -------------------------------------------------------------------------

    Gross natural gas production
     (millions of cubic feet a day)     291        309        294        315

    Gross oil-equivalent production(a)
     (thousands of oil-equivalent
     barrels a day)                     304        310        292        309

    Net crude oil and NGL production
     (thousands of barrels a day)
      Cold Lake                         116        117        124        122
      Syncrude                           67         66         62         60
      Conventional                       19         20         21         19
    -------------------------------------------------------------------------
      Total crude oil production        202        203        207        201
      Natural gas liquids (NGLs)
       available for sale                 6          7          6          9
    -------------------------------------------------------------------------
      Total crude oil and NGL
       production                       208        210        213        210
    -------------------------------------------------------------------------

    Net natural gas production
     (millions of cubic feet a day)     295        248        278        254

    Net oil-equivalent production(a)
     (thousands of oil-equivalent
     barrels a day)                     257        251        259        252

    Cold Lake blend sales (thousands
     of barrels a day)                  185        180        187        191
    NGL Sales (thousands of barrels
     a day)                               9          8          9         11
    Natural gas sales (millions of
     cubic feet a day)                  269        286        270        287

    Average realizations and prices
     (Canadian dollars)
      Conventional crude oil
       realizations (a barrel)        65.29     114.58      57.30     108.89
      NGL realizations (a barrel)     36.24      78.21      38.14      65.70
      Natural gas realizations
       (a thousand cubic feet)         2.90       9.20       4.07       9.16
      Syncrude realizations
       (a barrel)                     73.27     127.34      65.95     120.30
      Western Canada Select heavy
       oil (a barrel)                 63.74     103.94      55.67      94.70

    Refinery throughput (thousands
     of barrels a day)                  417        468        414        448
    Refinery capacity utilization
     (percent)                           83         93         82         89

    Petroleum product sales
     (thousands of barrels a day)
      Gasolines                         204        210        200        203
      Heating, diesel and jet fuels     138        160        143        157
      Heavy fuel oils                    22         32         26         29
      Lube oils and other products       43         51         39         46
    -------------------------------------------------------------------------
      Net petroleum products sales      407        453        408        435
    -------------------------------------------------------------------------

    Petrochemical Sales (thousands
     of tonnes a day)                   2.8        2.8        2.8        3.0

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



                            IMPERIAL OIL LIMITED
                             THIRD 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

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

    To view the graph "Factors affecting net income", please visit http://files.newswire.ca/706/Q3_2009_Graphs.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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