Exhibit 99.1
|
Q1 news release
FOR THE THREE MONTHS ENDED MARCH 31, 2012
|
Calgary, April 26, 2012
Imperial Oil announces estimated first quarter financial and operating results
| First quarter | ||||||||||||
| (millions of dollars, unless noted) | 2012 | 2011 | % | |||||||||
| Net income (U.S. GAAP) |
1,015 | 781 | 30 | |||||||||
| Net income per common share |
1.19 | 0.91 | 30 | |||||||||
| Capital and exploration expenditures |
1,173 | 859 | 37 | |||||||||
Bruce March, chairman, president and chief executive officer of Imperial Oil, commented:
Imperial Oil’s earnings in the first quarter of 2012 were $1,015 million, up 30 percent from the first quarter of 2011. Strong operating performance in all business segments allowed us to capture the benefits of both higher liquids realizations and strong mid-continent refining margins in the quarter. A consistent focus on operations excellence and cost efficiency sustains our operating performance while we advance our company growth at Kearl and now at Cold Lake, with our Nabiye project.
This quarter saw an increasing discount for our Western Canadian crude oil production caused by supply/demand imbalances in the North American mid-continent. Our integration provided strong shareholder value as our Downstream segment posted record quarterly earnings, mostly on the performance of three of our four refineries that can capture the value from processing discounted Western Canadian crudes.
The strength of our asset portfolio and deployment of new technologies provides a solid foundation as we progress our decade-long growth strategy to double the size of Upstream production. Capital and exploration expenditures were $1,173 million in the first quarter and funded primarily by cash flow from operations. Spending was primarily directed to advancing the construction of the Kearl oil sands project, while spending on Nabiye is ramping up. The Kearl initial development is expected to start-up by the end of the year and we expect to see production from Nabiye in 2014.
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.
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First quarter items of interest
| • | Net income was $1,015 million, compared with $781 million for the first quarter of 2011, an increase of 30 percent. Net income for the Downstream segment was $455 million in the quarter, the best quarter on record. |
| • | Net income per common share on a diluted basis was $1.19, up 30 percent from the first quarter of 2011. |
| • | Cash generated from operating activities was $1,047 million, up from $959 million in the first quarter of 2011, and largely covered the capital and exploration expenditures of $1,173 million. |
| • | Gross oil-equivalent barrels of production averaged 289,000 barrels a day versus 310,000 barrels in the same period last year. Ten thousand barrels a day of lower oil-equivalent production is a result of divestment of natural gas assets completed in 2011. |
| • | Cold Lake expansion project approved – The Nabiye project was approved in February 2012 for $2 billion and will bring on additional bitumen production of 40,000 barrels per day at Cold Lake. The project will access 280 million barrels of recoverable reserves and is expected to start-up by year-end 2014. Amended regulatory approvals for Nabiye were received in 2010 to improve the environmental performance of the project, highlighted by an energy-efficient 170-megawatt cogeneration facility. |
| • | Kearl oil sands project update – At the end of the first quarter of 2012, the Kearl initial development was 90 percent complete, and is progressing with expected start-up in late 2012. |
| • | Canada’s Oil Sands Innovation Alliance launched – Imperial is one of 12 companies that has formed a new alliance to accelerate the pace of improving environment performance in Canada’s oil sands. COSIA’s collaborative approach will build on the work of member companies and existing organizations to materially enhance environmental performance. |
| • | Cyclic Solvent Process pilot update – Drilling has been completed at Cold Lake on a three-well Cyclic Solvent Process pilot that is expected to start up in late 2013. CSP is a proprietary recovery technology that uses solvent instead of steam to extract oil from oil sands and if successful, could significantly reduce greenhouse gas emissions and eliminate water use in applicable reservoirs. |
| • | United Way record donation – Imperial Oil and ExxonMobil Canada employees and retirees contributed close to $4.2 million to United Way-Centraide campaigns across Canada in 2011. Imperial has been a loyal supporter of the United Way for more than 25 years. |
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First quarter 2012 vs. first quarter 2011
The company’s net income for the first quarter of 2012 was $1,015 million or $1.19 a share on a diluted basis, compared with $781 million or $0.91 a share for the same period last year.
Earnings in the first quarter were higher than the same quarter in 2011 primarily due to stronger industry refining margins of about $150 million and higher liquids realizations of about $115 million. These factors were partially offset by higher royalty costs of about $55 million and lower Syncrude volumes of about $30 million.
Upstream net income in the first quarter was $542 million, $14 million higher than the same period of 2011. Earnings benefited from higher liquids realizations of about $115 million. This factor was partially offset by higher royalty costs due to higher realizations of about $55 million and lower Syncrude volumes due to maintenance activities of about $30 million.
Prices for most of the company’s liquids production are based on West Texas Intermediate (WTI) oil markets, a common benchmark for mid-continent North American markets. Compared to the same quarter last year, the average price of WTI crude oil in U.S. dollars in the first quarter of 2012 was higher by about $8.43 a barrel, while Brent crude oil, the benchmark for Atlantic basin oil markets, was higher by about $13.46 a barrel in the first quarter of 2012. This widened the price differential between WTI and Brent crude oils to $15.43 a barrel in U.S. dollars in the first quarter of 2012. The company’s Western Canadian liquids realizations are also impacted by market discounts caused by supply/demand imbalances in the mid-continent North American crude oil market. Discounts for bitumen and synthetic crude oils increased through the first quarter, reflecting high industry refining downtime in mid-continent North America. For the quarter, bitumen realizations averaged $66.24 a barrel, an increase of $10.48 in Canadian dollars compared to the first quarter of 2011.
Gross production of Cold Lake bitumen averaged 157 thousand barrels a day during the first quarter, unchanged from the same period last year.
The company’s share of Syncrude’s gross production in the first quarter was 74 thousand barrels a day, versus 80 thousand barrels in the first quarter of 2011. Higher unplanned maintenance activities were the main contributor to the lower production.
Gross production of conventional crude oil averaged 21 thousand barrels a day in the first quarter, essentially unchanged from the 22 thousand barrels in the first quarter of 2011.
Gross production of natural gas during the first quarter of 2012 was 198 million cubic feet a day, down from 269 million cubic feet in the same period last year. The lower production volume was primarily a result of the impact of divested producing properties and natural reservoir decline.
Downstream net income was $455 million in the first quarter, the best quarter on record and $179 million higher than the first quarter of 2011. Earnings increased primarily due to the favourable impact of stronger industry refining margins of about $150 million. Refining margins were higher in the first quarter as the overall cost of crude oil processed at three of the company’s four refineries followed the trend of WTI prices and Western Canadian crude oils. Canadian wholesale prices of refined products are largely determined by wholesale prices in adjacent U.S. regions, where wholesale prices are predominately tied to international product markets. Stronger industry refining margins are the result of the widened differential between product prices and cost of crude oil processed.
First quarter Downstream earnings in 2012 included a gain of about $15 million from the sale of assets.
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First quarter 2012 vs. first quarter 2011 (continued)
Chemical net income was $35 million in the first quarter, compared with $38 million in the same quarter last year with continued strong margins across all product channels.
Net income effects from Corporate and other were negative $17 million in the first quarter, compared with negative $61 million in the same period of 2011. Favourable effects were primarily due to lower share-based compensation charges.
Cash flow generated from operating activities was $1,047 million in the first quarter, an increase of $88 million from the corresponding period in 2011. Higher cash flow was primarily due to higher earnings partially offset by working capital effects, which included inventory built in advance of the company’s extensive second quarter 2012 planned refinery maintenance activities.
Investing activities used net cash of $1,064 million in the first quarter, compared with $806 million in the same period of 2011. Additions to property, plant and equipment were $1,145 million in the first quarter, compared with $822 million during the same quarter 2011. Expenditures during the quarter were primarily directed towards the advancement of Kearl initial development and expansion. 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 company’s cash balance was $1,045 million at March 31, 2012, down $157 million from $1,202 million at the end of 2011.
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 2011 Form 10K.
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Attachment I
IMPERIAL OIL LIMITED
FIRST QUARTER 2012
| Three Months | ||||||||
| millions of Canadian dollars, unless noted | 2012 | 2011 | ||||||
| Net Income (U.S. GAAP) |
||||||||
| Total revenues and other income |
7,533 | 6,871 | ||||||
| Total expenses |
6,181 | 5,820 | ||||||
| Income before income taxes |
1,352 | 1,051 | ||||||
| Income taxes |
337 | 270 | ||||||
| Net income |
1,015 | 781 | ||||||
| Net income per common share (dollars) |
1.20 | 0.92 | ||||||
| Net income per common share - assuming dilution (dollars) |
1.19 | 0.91 | ||||||
| Other Financial Data |
||||||||
| Federal excise tax included in operating revenues |
316 | 315 | ||||||
| Gain/(loss) on asset sales, after tax |
24 | 4 | ||||||
| Total assets at March 31 |
26,511 | 22,008 | ||||||
| Total debt at March 31 |
1,206 | 755 | ||||||
| Interest coverage ratio - earnings basis (times covered) |
277.9 | 336.4 | ||||||
| Other long-term obligations at March 31 |
3,954 | 2,880 | ||||||
| Shareholders’ equity at March 31 |
14,120 | 11,764 | ||||||
| Capital employed at March 31 |
15,353 | 12,551 | ||||||
| Return on average capital employed (a) (percent) |
24.9 | 21.7 | ||||||
| Dividends declared on common stock |
||||||||
| Total |
102 | 93 | ||||||
| Per common share (dollars) |
0.12 | 0.11 | ||||||
| Millions of common shares outstanding |
||||||||
| At March 31 |
847.6 | 847.6 | ||||||
| Average - assuming dilution |
852.5 | 854.1 | ||||||
| (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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Attachment II
IMPERIAL OIL LIMITED
FIRST QUARTER 2012
| Three Months | ||||||||
| millions of Canadian dollars | 2012 | 2011 | ||||||
| Total cash and cash equivalents at period end |
1,045 | 301 | ||||||
| Net income |
1,015 | 781 | ||||||
| Adjustment for non-cash items: |
||||||||
| Depreciation and depletion |
190 | 188 | ||||||
| (Gain)/loss on asset sales |
(29 | ) | (6 | ) | ||||
| Deferred income taxes and other |
48 | (90 | ) | |||||
| Changes in operating assets and liabilities |
(177 | ) (a) | 86 | |||||
| Cash flows from (used in) operating activities |
1,047 | 959 | ||||||
| Cash flows from (used in) investing activities |
(1,064 | ) | (806 | ) | ||||
| Proceeds from asset sales |
78 | 14 | ||||||
| Cash flows from (used in) financing activities |
(140 | ) | (119 | ) | ||||
| (a) | 2012 cash flows from operating activities was negatively impacted by seasonal inventory builds partially offset by other working capital effects. |
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Attachment III
IMPERIAL OIL LIMITED
FIRST QUARTER 2012
| Three Months | ||||||||
| millions of Canadian dollars | 2012 | 2011 | ||||||
| Net income (U.S. GAAP) |
||||||||
| Upstream |
542 | 528 | ||||||
| Downstream |
455 | 276 | ||||||
| Chemical |
35 | 38 | ||||||
| Corporate and other |
(17 | ) | (61 | ) | ||||
| Net income |
1,015 | 781 | ||||||
| Revenues and other income |
||||||||
| Upstream |
2,492 | 2,339 | ||||||
| Downstream |
6,582 | 6,067 | ||||||
| Chemical |
426 | 420 | ||||||
| Eliminations/Other |
(1,967 | ) | (1,955 | ) | ||||
| Total |
7,533 | 6,871 | ||||||
| Purchases of crude oil and products |
||||||||
| Upstream |
1,021 | 861 | ||||||
| Downstream |
5,021 | 4,769 | ||||||
| Chemical |
314 | 307 | ||||||
| Eliminations |
(1,970 | ) | (1,957 | ) | ||||
| Purchases of crude oil and products |
4,386 | 3,980 | ||||||
| Production and manufacturing expenses |
||||||||
| Upstream |
591 | 599 | ||||||
| Downstream |
341 | 337 | ||||||
| Chemical |
45 | 43 | ||||||
| Production and manufacturing expenses |
977 | 979 | ||||||
| Capital and exploration expenditures |
||||||||
| Upstream |
1,145 | 818 | ||||||
| Downstream |
23 | 36 | ||||||
| Chemical |
1 | 2 | ||||||
| Corporate and other |
4 | 3 | ||||||
| Capital and exploration expenditures |
1,173 | 859 | ||||||
| Exploration expenses charged to income included above |
28 | 37 | ||||||
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Attachment IV
IMPERIAL OIL LIMITED
FIRST QUARTER 2012
| Operating statistics | Three Months | |||||||
| 2012 | 2011 | |||||||
| Gross crude oil and Natural Gas Liquids (NGL) production |
||||||||
| (thousands of barrels a day) |
||||||||
| Cold Lake |
157 | 157 | ||||||
| Syncrude |
74 | 80 | ||||||
| Conventional |
21 | 22 | ||||||
| Total crude oil production |
252 | 259 | ||||||
| NGLs available for sale |
4 | 6 | ||||||
| Total crude oil and NGL production |
256 | 265 | ||||||
| Gross natural gas production (millions of cubic feet a day) |
198 | 269 | ||||||
| Gross oil-equivalent production (a) |
||||||||
| (thousands of oil-equivalent barrels a day) |
289 | 310 | ||||||
| Net crude oil and NGL production (thousands of barrels a day) |
||||||||
| Cold Lake |
118 | 120 | ||||||
| Syncrude |
65 | 75 | ||||||
| Conventional |
15 | 16 | ||||||
| Total crude oil production |
198 | 211 | ||||||
| NGLs available for sale |
3 | 4 | ||||||
| Total crude oil and NGL production |
201 | 215 | ||||||
| Net natural gas production (millions of cubic feet a day) |
194 | 249 | ||||||
| Net oil-equivalent production (a) |
||||||||
| (thousands of oil-equivalent barrels a day) |
233 | 256 | ||||||
| Cold Lake blend sales (thousands of barrels a day) |
209 | 211 | ||||||
| NGL Sales (thousands of barrels a day) |
11 | 9 | ||||||
| Natural gas sales (millions of cubic feet a day) |
183 | 251 | ||||||
| Average realizations (Canadian dollars) |
||||||||
| Conventional crude oil realizations (a barrel) |
78.32 | 81.18 | ||||||
| NGL realizations (a barrel) |
49.97 | 60.48 | ||||||
| Natural gas realizations (a thousand cubic feet) |
2.36 | 3.85 | ||||||
| Synthetic oil realizations (a barrel) |
98.41 | 93.24 | ||||||
| Bitumen realizations (a barrel) |
66.24 | 55.76 | ||||||
| Refinery throughput (thousands of barrels a day) |
438 | 452 | ||||||
| Refinery capacity utilization (percent) |
86 | 89 | ||||||
| Petroleum product sales (thousands of barrels a day) |
||||||||
| Gasolines (Mogas) |
204 | 210 | ||||||
| Heating, diesel and jet fuels (Distilates) |
150 | 166 | ||||||
| Heavy fuel oils (HFO) |
24 | 26 | ||||||
| Lube oils and other products (Other) |
35 | 36 | ||||||
| Net petroleum products sales |
413 | 438 | ||||||
| Petrochemical Sales (thousands of tonnes) |
265 | 272 | ||||||
| (a) | Gas converted to oil-equivalent at 6 million cubic feet = 1 thousand barrels |
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Attachment V
IMPERIAL OIL LIMITED
FIRST QUARTER 2012
| Net income | ||||||||
| Net income (U.S. GAAP) | per common share | |||||||
| (millions of Canadian dollars | ) | (dollars | ) | |||||
| 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 | ||||||
| 2012 |
||||||||
| First Quarter |
1,015 | 1.20 | ||||||
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