Imperial Oil announces estimated fourth quarter financial and operating results

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2011

CALGARY, Jan. 31, 2012 /CNW/ -

	Fourth quarter				Twelve months
(millions of dollars, unless noted)	2011	2010	%		2011	2010	%
Net income (U.S. GAAP)	1,005	799	26		3,371	2,210	53
Net income per common share
- assuming dilution (dollars)	1.18	0.94	26		3.95	2.59	53
Capital and exploration expenditures	1,178	1,065	11		4,066	4,045	1

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

Imperial Oil's earnings in the fourth quarter of 2011 were $1,005 million, up 26 percent from the fourth quarter of 2010. Strong operating performance in Imperial's business segments allowed us to capture higher crude oil realizations in the Upstream and improved margins in the Downstream petroleum product markets.  Another record quarterly production at Cold Lake highlighted our consistent focus on operations excellence and production reliability.  The same focus in all areas of our business is fundamental to sustaining operating performance while advancing our company growth plans.

Earnings for the full year 2011 were $3,371 million, the second highest in our company's history and up $1,161 million or 53% from $2,210 million in 2010.

The strength of Imperial's business model and our flexibility to manage within changing business conditions continues to serve our shareholders well. We are entering the third year of our decade-long growth strategy in which we will double our total Upstream production to about 600,000 barrels per day. Capital expenditures in 2011 were $4.1 billion and were focused on advancing the construction of the Kearl oil sands project and funded from internally generated funds.

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Imperial Oil is one of Canada's largest corporations and a leading member of the country's petroleum industry. The company is a major producer of crude oil and natural gas, Canada's largest petroleum refiner, a key petrochemical producer and a leading marketer with coast-to-coast supply and retail service station networks.

Fourth quarter items of interest

• Net income was $1,005 million, compared with $799 million for the fourth quarter of 2010, an increase of 26 percent or $206 million.
  
  
• Net income per common share on a diluted basis was $1.18, up 26 percent from the fourth quarter of 2010.
  
  
• Cash generated from operating activities was $1,216 million, up 21 percent from the same period last year.
  
  
• Capital and exploration expenditures of $1,178 million compared with $1,065 million in the fourth quarter of 2010.
  
  
• Gross oil-equivalent barrels of production averaged 291,000 barrels a day versus 302,000 barrels in the same period last year with asset sales accounting for about 5,000 barrels a day.
  
  
• With a year-end cash balance of $1.2 billion, debt net of cash at year-end was essentially zero.
  
  
• Safety performance - Achieving a workplace where "nobody gets hurt" continues to be a priority. This past year saw a sustained improvement in contractor workforce safety performance but an increased employee incident rate, which will be the focus for improvement in 2012.
  
  
• Cold Lake achieves record annual and quarterly production - Cold Lake established a production record in 2011, averaging 160,000 barrels a day, compared to the previous annual record of 154,000 barrels a day in 2007. The fourth quarter also represented a second consecutive record quarterly production of 162,000 barrels a day. The increase is due to contributions from new wells steamed in 2010 and 2011, increased recovery as a result of technology applications and the cyclic nature of production at Cold Lake.
  
  
• Kearl oil sands project update - The Kearl initial development is 87 percent complete, and is progressing on schedule with expected start-up in late 2012. In response to delays in obtaining transportation permits, significant proactive efforts have been taken to successfully advance module movement to the Kearl site. Modules have been reduced in size and permits for additional U.S. interstate highway routes have been received. Re-assembly and integration into the plant facilities continues.
  
  
• Kearl oil sands expansion project approved - The Kearl expansion project was appropriated in December for $8.9 billion and will bring on additional production of 110,000 barrels per day by late 2015. Production from both the Kearl initial development and expansion phase will increase to a total of 290,000 barrels per day with additional mining output.  Future debottlenecking of both the initial development and expansion phases will increase output to reach the regulatory capacity of 345,000 barrels a day by the end of this decade.
  
  
• Capital and exploration expenditures - Cash generated by Imperial's businesses funded $4.1 billion of capital and exploration expenditures in 2011. This included, continued investment in the Kearl oil sands project and additional acreage acquisitions. In 2012, planned capital and exploration expenditures are expected to be about $5 billion as the company enters its third year of a decade-long strategy to invest about $35 to $40 billion in growth projects.
  
  
• Contributed to Canadian communities - Imperial contributed $15 million to communities across Canada in 2011, with a focus on education in math and sciences, environmental and energy initiatives and Aboriginal opportunities.
  
  

Fourth quarter 2011 vs. fourth quarter 2010

The company's net income for the fourth quarter of 2011 was $1,005 million or $1.18 a share on a diluted basis, compared with $799 million or $0.94 a share for the same period last year.

Earnings in the fourth quarter were higher than the same quarter in 2010 primarily due to higher crude oil commodity prices of about $275 million, increased Cold Lake bitumen production of about $70 million and stronger downstream margins of about $65 million. These factors were partially offset by the unfavourable impacts of lower Syncrude volumes of about $100 million, increased refinery maintenance totalling about $60 million, higher royalty costs of about $55 million and lower conventional crude oil volumes of about $30 million. Fourth quarter 2011 earnings also included higher gains of $95 million on primarily Upstream natural gas asset divestments partially offset by higher share-based compensation charges of about $30 million.

Upstream net income in the fourth quarter was $771 million, $245 million higher than the same period of 2010. Earnings benefited from higher crude oil commodity prices of about $275 million and increased Cold Lake bitumen production of about $70 million. These factors were partially offset by lower Syncrude volumes of about $100 million as a result of maintenance activities, higher royalty costs due to higher commodity prices of about $55 million, and lower conventional crude oil volumes of about $30 million due to natural reservoir decline. Included in fourth quarter 2011 earnings were gains of $112 million on asset divestments, about $95 million higher than the fourth quarter of 2010.

The average price of Brent crude oil in U.S. dollars, a common benchmark for world oil markets, was $109.29 a barrel in the fourth quarter of 2011, up about 26 percent from the corresponding period last year. Increases in the company's average realizations in Canadian dollars on sales of conventional crude oil, synthetic crude oil and bitumen mirrored the same trend as Brent crude oil prices, compared to the same period last year.

Gross production of Cold Lake bitumen averaged 162 thousand barrels a day, equalling the production record achieved in the previous quarter. Cold Lake production was up ten percent from 147 thousand barrels in the same quarter last year. Increased volumes were due to contributions from new wells steamed in 2010 and 2011, increased recoveries as a result of technology applications and the cyclic nature of production at Cold Lake.

The company's share of Syncrude's gross production in the fourth quarter was 63 thousand barrels a day, versus 79 thousand barrels in the fourth quarter of 2010. Lower production was primarily the result of higher planned and unplanned maintenance activities.

Gross production of conventional crude oil averaged 20 thousand barrels a day in the fourth quarter, down from 24 thousand barrels in the fourth quarter of 2010. Lower volumes were primarily due to natural reservoir decline.

Gross production of natural gas during the fourth quarter of 2011 was 240 million cubic feet a day, down from 275 million cubic feet in the same period last year. The lower production volume was primarily a result of the impact of divested producing properties.

In the fourth quarter, the company sold its interests in shallow gas properties in the Medicine Hat, Alberta area and the Coleville-Hoosier natural gas producing property in Saskatchewan, realizing a gain of about $72 million. Natural gas production for the company's share of the properties averaged about 52 million cubic feet a day in 2010. Also in the quarter, the company recorded a gain of about $40 million from an exchange of oil sands leases with third parties.

Downstream net income was $272 million in the fourth quarter of 2011, compared with $266 million in the same period a year ago. Earnings increased primarily due to stronger overall margins of about $65 million partially offset by the unfavourable impact of higher maintenance activities on refinery operations and expenses totalling about $60 million.

Chemical net income was $11 million in the fourth quarter, compared with $25 million in the same quarter last year. Earnings in the fourth quarter were negatively impacted by lower margins for polyethylene products and lower sales volume for intermediate products partially offset by higher margins for intermediate and aromatic products.

Net income effects from Corporate and other were negative $49 million in the fourth quarter, compared with negative $18 million in the same period of 2010. Unfavourable effects were primarily due to changes in share-based compensation charges.

Cash flow generated from operating activities was $1,216 million in the fourth quarter of 2011, an increase of $212 million from the corresponding period in 2010, and in line with the earnings increase versus the fourth quarter of 2010.

Investing activities used net cash of $833 million in the fourth quarter, compared with $992 million in the same period of 2010. Cash used for property, plant and equipment additions was $1,107 million in the fourth quarter, compared with $1,045 million during the same quarter 2010. For the Upstream segment, expenditures during the quarter were primarily directed towards the advancement of the Kearl initial development and Kearl expansion oil sands projects. Other investments included advancing the Nabiye expansion project at Cold Lake, environmental and efficiency projects at Syncrude, as well as the advancement of the production pilot at Horn River and tight oil acreage acquisitions. The Downstream segment's capital expenditures were focused mainly on refinery projects to improve reliability, feedstock flexibility, energy efficiency and environmental performance. Proceeds from asset sales were $270 million in the fourth quarter, $221 million higher than the fourth quarter of 2010.

The company's cash balance was $1,202 million at December 31, 2011, up $935 million from $267 million at the end of 2010.

Full year highlights

• Net income was $3,371 million, the second highest on record, and up from $2,210 million in 2010.
  
  
• All three operating segments achieved their second highest earnings ever in 2011.
  
  
• Net income per common share on a diluted basis increased to $3.95 compared to $2.59 in 2010.
  
  
• Cash generated from operations was $4,489 million, $1,282 million higher than 2010.
  
  
• Capital and exploration expenditures were $4,066 million, versus $4,045 million in 2010, supporting the Kearl oil sands and other growth projects.
  
  
• Gross oil-equivalent barrels of production averaged 297,000 barrels a day, compared to 294,000 barrels a day in 2010.
  
  
• Per-share dividends declared in 2011 totalled $0.44, up from $0.43 in 2010.
  
  

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Full year 2011 vs. full year 2010

Net income in 2011 was $3,371 million or $3.95 a share on a diluted basis, versus $2,210 million or $2.59 a share in 2010.

For the full year 2011, increased earnings were primarily attributable to higher crude oil commodity prices of about $925 million, stronger industry refining margins of about $590 million and increased Cold Lake bitumen production of about $260 million. These factors were partially offset by the unfavourable impacts of higher royalty costs of about $245 million, the stronger Canadian dollar of about $205 million, and lower conventional crude oil volumes of about $150 million, about $80 million of which was due to third party pipeline reliability issues. 2011 earnings also included higher gains of about $70 million on asset divestments.

Upstream net income for the year was $2,457 million, up $693 million from 2010. Earnings increased primarily due to the impacts of higher crude oil commodity prices of about $925 million and increased Cold Lake bitumen production of about $260 million. These factors were partially offset by the unfavourable effects of higher royalty costs of about $245 million, the stronger Canadian dollar of about $150 million and lower conventional crude oil volumes of about $150 million, of which about $80 million was a result of the second and third quarter 2011 third-party pipeline issues. Included in 2011 earnings were gains of $116 million on asset divestments, about $95 million higher than 2010.

The average price of Brent crude oil in U.S. dollars, a common benchmark for Atlantic Basin oil markets, was $111.29 a barrel in 2011, up about 40 percent from the previous year. Increase in the average price of West Texas Intermediate (WTI) crude oil, a common benchmark for mid-continent North American oil markets, was limited to 19 percent due to the continued weakness in WTI crude oil markets.  Increases in the company's average realizations on sales of Canadian conventional crude oil and synthetic crude oil were in line with that of WTI. The company's average bitumen realizations in Canadian dollars in 2011 increased ten percent to $63.95 per barrel as the price spread between light crude oil and Cold Lake bitumen widened.

Gross production of Cold Lake bitumen was a record 160 thousand barrels a day this year, compared with 144 thousand barrels in the 2010. Increased volumes were due to contributions from new wells steamed in 2010 and 2011, increased recoveries as a result of technology applications and the cyclic nature of production at Cold Lake.

During the year, the company's share of gross production from Syncrude averaged 72 thousand barrels a day, in line with 73 thousand barrels in 2010.

In 2011, gross production of conventional crude oil was 18 thousand barrels a day, compared with 23 thousand barrels in 2010. Lower volumes were primarily due to third-party pipeline downtime, which reduced production at the Norman Wells field, along with natural reservoir decline.

Gross production of natural gas in 2011 was 254 million cubic feet a day, down from 280 million cubic feet in 2010. The lower production volume was primarily a result of natural reservoir decline.

In 2011, Downstream net income was $884 million, an increase of $442 million over 2010. Higher earnings were primarily due to the favourable impact of stronger industry refining margins of about $590 million. This factor was partially offset by the unfavourable impacts of higher maintenance activities on refinery operations and expenses totalling about $60 million and the stronger Canadian dollar of about $55 million. Earnings in 2010 included a gain of about $25 million from sale of non-operating assets.

Chemical net income in 2011 was $122 million, up $53 million from 2010. Improved margins for intermediate and aromatic products, lower costs due to lower planned maintenance activities and higher polyethylene sales volumes were the main contributors to the increase. These factors were partially offset by lower margins for polyethylene products.

In 2011, net income effects from Corporate and other were negative $92 million, compared with negative $65 million in 2010. Unfavourable effects were primarily due to changes in 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
FOURTH QUARTER 2011
		Fourth Quarter				Twelve Months
millions of Canadian dollars, unless noted		2011		2010		2011		2010
Net Income (U.S. GAAP)
Total revenues and other income		8,124		6,936		30,714		25,092
Total expenses		6,860		5,883		26,308		22,138
Income before income taxes		1,264		1,053		4,406		2,954
Income taxes		259		254		1,035		744
Net income		1,005		799		3,371		2,210
Net income per common share (dollars)		1.19		0.95		3.98		2.61
Net income per common share - assuming dilution (dollars)		1.18		0.94		3.95		2.59
Other Financial Data
Federal excise tax included in operating revenues		335		345		1,320		1,316
Gain/(loss) on asset sales, after tax		134		30		153		80
Total assets at December 31						25,429		20,580
Total debt at December 31						1,207		756
Interest coverage ratio - earnings basis
(times covered)						260.2		370.3
Other long-term obligations at December 31						3,876		2,753
Shareholders' equity at December 31						13,321		11,177
Capital employed at December 31						14,556		11,966
Return on average capital employed (a)
(percent)						25.4		20.5
Dividends on common stock
Total		93		93		373		364
Per common share (dollars)		0.11		0.11		0.44		0.43
Millions of common shares outstanding
At December 31						847.6		847.6
Average - assuming dilution		852.6		853.6		853.6		854.2

(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 2011
			Fourth Quarter				Twelve Months
millions of Canadian dollars			2011		2010		2011		2010
Total cash and cash equivalents at period end			1,202		267		1,202		267
Net income			1,005		799		3,371		2,210
Adjustment for non-cash items:
	Depreciation and depletion		194		186		764		747
	(Gain)/loss on asset sales		(174)		(37)		(197)		(95)
	Deferred income taxes and other		98		97		71		152
Changes in operating assets and liabilities			93		(41)		480		193
Cash flows from (used in) operating activities			1,216		1,004		4,489		3,207
Cash flows from (used in) investing activities			(833)		(992)		(3,593)		(3,709)
	Proceeds from asset sales		270		49		314		144
Cash flows from (used in) financing activities			(101)		204		39		256

 

IMPERIAL OIL LIMITED
FOURTH QUARTER 2011
			Fourth Quarter				Twelve Months
millions of Canadian dollars			2011		2010		2011		2010
Net income (U.S. GAAP)
	Upstream		771		526		2,457		1,764
	Downstream		272		266		884		442
	Chemical		11		25		122		69
	Corporate and other		(49)		(18)		(92)		(65)
	Net income		1,005		799		3,371		2,210
Revenues and other income
	Upstream		2,766		2,159		9,906		8,144
	Downstream		6,975		6,027		26,756		21,619
	Chemical		360		358		1,641		1,386
	Eliminations/Other		(1,977)		(1,608)		(7,589)		(6,057)
	Total		8,124		6,936		30,714		25,092
Purchases of crude oil and products
	Upstream		976		707		3,581		2,692
	Downstream		5,630		4,698		21,642		17,169
	Chemical		282		255		1,222		1,009
	Eliminations		(1,980)		(1,608)		(7,598)		(6,059)
	Purchases of crude oil and products		4,908		4,052		18,847		14,811
Production and manufacturing expenses
	Upstream		662		608		2,484		2,375
	Downstream		352		334		1,451		1,413
	Chemical		46		52		179		209
	Eliminations		-		(1)		-		(1)
	Production and manufacturing expenses		1,060		993		4,114		3,996
Capital and exploration expenditures
	Upstream		1,127		1,006		3,880		3,844
	Downstream		46		55		166		184
	Chemical		1		1		4		10
	Corporate and other		4		3		16		7
	Capital and exploration expenditures		1,178		1,065		4,066		4,045
	Exploration expenses charged to income included above		16		20		92		191

 

IMPERIAL OIL LIMITED
FOURTH QUARTER 2011
Operating statistics			Fourth Quarter				Twelve Months
			2011		2010		2011		2010
Gross crude oil and Natural Gas Liquids (NGL) production
(thousands of barrels a day)
Cold Lake			162		147		160		144
Syncrude			63		79		72		73
Conventional			20		24		18		23
Total crude oil production			245		250		250		240
NGLs available for sale			6		6		5		7
Total crude oil and NGL production			251		256		255		247
Gross natural gas production (millions of cubic feet a day)			240		275		254		280
Gross oil-equivalent production (a)
(thousands of oil-equivalent barrels a day)			291		302		297		294
Net crude oil and NGL production (thousands of barrels a day)
Cold Lake			123		116		120		115
Syncrude			60		73		67		67
Conventional			15		18		13		17
Total crude oil production			198		207		200		199
NGLs available for sale			4		4		4		5
Total crude oil and NGL production			202		211		204		204
			-				-
Net natural gas production (millions of cubic feet a day)			226		252		228		254
Net oil-equivalent production (a)
(thousands of oil-equivalent barrels a day)			240		253		242		246
Cold Lake blend sales (thousands of barrels a day)			212		190		209		188
NGL Sales (thousands of barrels a day)			10		7		9		10
Natural gas sales (millions of cubic feet a day)			227		270		237		264
Average realizations (Canadian dollars)
Conventional crude oil realizations (a barrel)			89.06		74.14		85.22		71.64
NGL realizations (a barrel)			60.15		58.94		59.08		50.09
Natural gas realizations (a thousand cubic feet)			3.25		3.60		3.59		4.04
Synthetic oil realizations (a barrel)			104.82		84.31		101.43		80.63
Bitumen realizations (a barrel)			72.83		58.91		63.95		58.36
Refinery throughput (thousands of barrels a day)			433		467		430		444
Refinery capacity utilization (percent)			85		93		85		88
Petroleum product sales (thousands of barrels a day)
Gasolines (Mogas)			224		226		220		218
Heating, diesel and jet fuels (Distilates)			156		177		157		153
Heavy fuel oils (HFO)			37		29		29		28
Lube oils and other products (Other)			36		41		41		43
Net petroleum products sales			453		473		447		442
Petrochemical Sales (thousands of tonnes)			238		223		1,016		959

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

IMPERIAL OIL LIMITED
FOURTH QUARTER 2011
							Net income
			Net income (U.S. GAAP)				per common share
			(millions of Canadian dollars)				(dollars)
2007
First Quarter			774						0.82
Second Quarter			712						0.76
Third Quarter			816						0.88
Fourth Quarter			886						0.97
Year			3,188						3.43
2008
First Quarter			681						0.76
Second Quarter			1,148						1.29
Third Quarter			1,389						1.57
Fourth Quarter			660						0.77
Year			3,878						4.39
2009
First Quarter			289						0.34
Second Quarter			209						0.25
Third Quarter			547						0.64
Fourth Quarter			534						0.63
Year			1,579						1.86
2010
First Quarter			476						0.56
Second Quarter			517						0.61
Third Quarter			418						0.49
Fourth Quarter			799						0.95
Year			2,210						2.61
2011
First Quarter			781						0.92
Second Quarter			726						0.86
Third Quarter			859						1.01
Fourth Quarter			1,005						1.19
Year			3,371						3.98

 

 

 

 

 

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