Imperial Oil announces estimated second-quarter financial and operating
results
CALGARY, July 29 /CNW/ -
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Second Quarter Six Months
(millions of dollars, -------------------- --------------------
unless noted) 2010 2009 % 2010 2009 %
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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.
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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
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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
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Income before income taxes 682 294 1,333 696
Income taxes 165 85 340 198
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Net income 517 209 993 498
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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
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(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
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Second Quarter Six Months
millions of Canadian dollars 2010 2009 2010 2009
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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)
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Cash from (used in) operating
activities 324 262 1,238 (34)
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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
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Second Quarter Six Months
millions of Canadian dollars 2010 2009 2010 2009
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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)
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Net income 517 209 993 498
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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)
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Revenues 6,139 5,303 12,305 9,973
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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)
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Purchases of crude oil and
products 3,636 3,131 7,297 5,451
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Production and manufacturing
expenses
Upstream 573 630 1,175 1,276
Downstream 389 400 759 736
Chemical 50 47 108 95
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Production and manufacturing
expenses 1,012 1,077 2,042 2,107
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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
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Capital and exploration
expenditures 881 535 1,781 1,029
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Exploration expenses charged
to income included above 30 22 117 105
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IMPERIAL OIL LIMITED
SECOND QUARTER 2010
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Operating statistics Second Quarter Six Months
2010 2009 2010 2009
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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
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Total crude oil production 245 215 242 229
NGLs available for sale 7 8 7 8
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Total crude oil and NGL
production 252 223 249 237
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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
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Total crude oil production 204 184 200 209
NGLs available for sale 5 6 5 6
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Total crude oil and NGL
production 209 190 205 215
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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
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Net petroleum products sales 428 400 425 408
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Petrochemical Sales (thousands of
tonnes a day) 2.6 2.9 2.6 2.8
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(a) Gas converted to oil-equivalent at 6 million cubic feet =
1 thousand barrels
IMPERIAL OIL LIMITED
SECOND QUARTER 2010
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Net income
Net income (U.S. GAAP) per common share
(millions of Canadian dollars) (dollars)
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2006
First Quarter 591 0.60
Second Quarter 837 0.85
Third Quarter 822 0.84
Fourth Quarter 794 0.83
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Year 3,044 3.12
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2007
First Quarter 774 0.82
Second Quarter 712 0.76
Third Quarter 816 0.88
Fourth Quarter 886 0.97
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Year 3,188 3.43
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2008
First Quarter 681 0.76
Second Quarter 1,148 1.29
Third Quarter 1,389 1.57
Fourth Quarter 660 0.77
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Year 3,878 4.39
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2009
First Quarter 289 0.34
Second Quarter 209 0.25
Third Quarter 547 0.64
Fourth Quarter 534 0.63
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Year 1,579 1.86
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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
For further information: Investor relations: Mark Stumpf, (403) 237-4537; Media relations: Gordon Wong, (403) 237-2710
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