10-Q

FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

[✓]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

OR

[    ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from --- to ---

Commission file number 0-12014

IMPERIAL OIL LIMITED

(Exact name of registrant as specified in its charter)

CANADA	98-0017682
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)
505 Quarry Park Boulevard S.E.
Calgary, Alberta, Canada	T2C 5N1
(Address of principal executive offices)	(Postal Code)

Registrant’s telephone number, including area code: 1-800-567-3776

The registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 91 days.

YES    ✓    NO           

The registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES    ✓    NO           

The registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act of 1934).

Large accelerated filer	✓	Smaller reporting company
Non-accelerated filer		Emerging growth company
Accelerated filer

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.          

The registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act of 1934).

YES            NO     ✓  

The number of common shares outstanding, as of March 31, 2017 was 847,599,011.

IMPERIAL OIL LIMITED

Table of contents

		Page
PART I. FINANCIAL INFORMATION			3
Item 1.	Financial statements		3
	Consolidated statement of income		3
	Consolidated statement of comprehensive income		4
	Consolidated balance sheet		5
	Consolidated statement of cash flows		6
	Notes to the consolidated financial statements		7
Item 2.	Management’s discussion and analysis of financial condition and results of operations		12
Item 3.	Quantitative and qualitative disclosures about market risk		14
Item 4.	Controls and procedures		14
PART II. OTHER INFORMATION			15
Item 2.	Unregistered sales of equity securities and use of proceeds		15
Item 6.	Exhibits		15
SIGNATURES			16

In this report all dollar amounts are expressed in Canadian dollars unless otherwise stated. Note that numbers may not add due to rounding. This report should be read in conjunction with the company’s annual report on Form 10-K for the year ended December 31, 2016.

The term “project” as used in this report can refer to a variety of different activities and does not necessarily have the same meaning as in any government payment transparency reports.

In this report, unless the context otherwise indicates, reference to “the company” or “Imperial” includes Imperial Oil Limited and its subsidiaries.

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IMPERIAL OIL LIMITED

PART I. FINANCIAL INFORMATION

Item 1.  Financial statements

Consolidated statement of income (U.S. GAAP, unaudited)

		Three Months to March 31
millions of Canadian dollars		2017		2016
Revenues and other income
Operating revenues (a)			6,958		5,174
Investment and other income (note 3)			198		48
Total revenues and other income			7,156		5,222
Expenses
Exploration			22		17
Purchases of crude oil and products (b)			4,333		2,986
Production and manufacturing (c)			1,375		1,271
Selling and general (c)			206		270
Federal excise tax			394		388
Depreciation and depletion			392		424
Financing costs (note 5)			14		15
Total expenses			6,736		5,371
Income (loss) before income taxes			420		(149)
Income taxes			87		(48)
Net income (loss)			333		(101)
Per-share information (Canadian dollars)
Net income (loss) per common share - basic (note 8)			0.39		(0.12)
Net income (loss) per common share - diluted (note 8)			0.39		(0.12)
Dividends per common share			0.15		0.14
(a)	Amounts from related parties included in operating revenues.		1,037		563
(b)	Amounts to related parties included in purchases of crude oil and products.		609		631
(c)	Amounts to related parties included in production and manufacturing and selling and general expenses.		141		104

The information in the notes to consolidated financial statements is an integral part of these statements.

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IMPERIAL OIL LIMITED

Consolidated statement of comprehensive income (U.S. GAAP, unaudited)

	Three Months to March 31
millions of Canadian dollars	2017		2016
Net income (loss)		333		(101)
Other comprehensive income (loss), net of income taxes
Post-retirement benefits liability adjustment (excluding amortization)		41		100
Amortization of post-retirement benefits liability adjustment included in net periodic benefit costs		36		41
Total other comprehensive income (loss)		77		141
Comprehensive income (loss)		410		40

The information in the notes to consolidated financial statements is an integral part of these statements.

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IMPERIAL OIL LIMITED

Consolidated balance sheet (U.S. GAAP, unaudited)

millions of Canadian dollars	As at Mar 31 2017			As at Dec 31 2016
Assets
Current assets
Cash		672			391
Accounts receivable, less estimated doubtful accounts (a)		1,745			2,023
Inventories of crude oil and products		1,032			949
Materials, supplies and prepaid expenses		457			468
Total current assets		3,906			3,831
Investments and long-term receivables		1,014			1,030
Property, plant and equipment,		53,620			53,515
less accumulated depreciation and depletion		(17,557	)		(17,182	)
Property, plant and equipment, net		36,063			36,333
Goodwill		186			186
Other assets, including intangibles, net		241			274
Total assets		41,410			41,654
Liabilities
Current liabilities
Notes and loans payable (b)		202			202
Accounts payable and accrued liabilities (a) (note 7)		2,983			3,193
Income taxes payable		24			488
Total current liabilities		3,209			3,883
Long-term debt (c) (note 6)		5,026			5,032
Other long-term obligations (d) (note 7)		3,620			3,656
Deferred income tax liabilities		4,251			4,062
Total liabilities		16,106			16,633
Shareholders’ equity
Common shares at stated value (e)		1,566			1,566
Earnings reinvested		25,558			25,352
Accumulated other comprehensive income (loss) (note 9)		(1,820	)		(1,897	)
Total shareholders’ equity		25,304			25,021
Total liabilities and shareholders’ equity		41,410			41,654

(a) Accounts receivable, less estimated doubtful accounts included net amounts receivable from related parties of $318 million (2016 - $172 million).

(b) Notes and loans payable included amounts to related parties of $75 million (2016 - $75 million).

(c) Long-term debt included amounts to related parties of $4,447 million (2016 - $4,447 million).

(d) Other long-term obligations included amounts to related parties of $93 million (2016 - $104 million).

(e) Number of common shares authorized and outstanding were 1,100 million and 848 million, respectively (2016 - 1,100 million and 848 million, respectively).

The information in the notes to consolidated financial statements is an integral part of these statements.

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IMPERIAL OIL LIMITED

Consolidated statement of cash flows (U.S. GAAP, unaudited)

Inflow (outflow)		Three Months to March 31
millions of Canadian dollars		2017			2016
Operating activities
Net income (loss)			333			(101)
Adjustments for non-cash items:
Depreciation and depletion			392			424
(Gain) loss on asset sales (note 3)			(182	)		(30)
Deferred income taxes and other			200			(82)
Changes in operating assets and liabilities:
Accounts receivable			278			(58)
Inventories, materials, supplies and prepaid expenses			(72	)		(32)
Income taxes payable			(464	)		(9)
Accounts payable and accrued liabilities			(210	)		(189)
All other items - net (a)			79			126
Cash flows from (used in) operating activities			354			49
Investing activities
Additions to property, plant and equipment			(122	)		(391)
Proceeds from asset sales (note 3)			183			33
Cash flows from (used in) investing activities			61			(358)
Financing activities
Short-term debt - net			-			(108)
Long-term debt - additions (note 6)			-			495
Reduction in capitalized lease obligations			(7	)		(7)
Dividends paid			(127	)		(119)
Cash flows from (used in) financing activities			(134	)		261
Increase (decrease) in cash			281			(48)
Cash at beginning of period			391			203
Cash at end of period (b)			672			155
(a)	Included contribution to registered pension plans.		(40	)		(31)
(b)	Cash is composed of cash in bank and cash equivalents at cost. Cash equivalents are all highly liquid securities with maturity of three months or less when purchased.

The information in the notes to consolidated financial statements is an integral part of these statements.

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IMPERIAL OIL LIMITED

Notes to consolidated financial statements (unaudited)

1.  Basis of financial statement preparation

These unaudited consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles of the United States of America (GAAP) and follow the same accounting policies and methods of computation as, and should be read in conjunction with, the most recent annual consolidated financial statements filed with the U.S. Securities and Exchange Commission (SEC) in the company’s 2016 annual report on Form 10-K. In the opinion of the company, the information furnished herein reflects all known accruals and adjustments necessary for a fair statement of the results for the periods reported herein. All such adjustments are of a normal recurring nature. Prior data has been reclassified in certain cases to conform to the current presentation basis.

The company’s exploration and production activities are accounted for under the “successful efforts” method.

The results for the three months ended March 31, 2017, are not necessarily indicative of the operations to be expected for the full year.

All amounts are in Canadian dollars unless otherwise indicated.

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IMPERIAL OIL LIMITED

2. Business segments

Three Months to March 31	Upstream						Downstream						Chemical
millions of Canadian dollars	2017			2016			2017			2016			2017			2016
Revenues and other income
Operating revenues (a)		1,711			980			4,974			3,940			273			254
Intersegment sales		618			479			309			225			67			44
Investment and other income (note 3)		5			19			191			29			1			-
		2,334			1,478			5,474			4,194			341			298
Expenses
Exploration		22			17			-			-			-			-
Purchases of crude oil and products		1,116			818			4,009			2,757			201			159
Production and manufacturing		973			909			349			315			53			47
Selling and general		3			1			188			238			22			22
Federal excise tax		-			-			394			388			-			-
Depreciation and depletion		336			357			48			61			3			2
Financing costs (note 5)		4			(3	)		-			-			-			-
Total expenses		2,454			2,099			4,988			3,759			279			230
Income (loss) before income taxes		(120	)		(621	)		486			435			62			68
Income taxes		(34	)		(173	)		106			115			17			19
Net income (loss)		(86	)		(448	)		380			320			45			49
Cash flows from (used in) operating activities		308			(482	)		56			469			(23	)		60
Capital and exploration expenditures (b)		103			346			34			43			4			6
Total assets as at March 31		35,898			37,086			4,251			5,368			391			394
Three Months to March 31	Corporate and Other						Eliminations						Consolidated
millions of Canadian dollars	2017			2016			2017			2016			2017			2016
Revenues and other income
Operating revenues (a)		-			-			-			-			6,958			5,174
Intersegment sales		-			-			(994	)		(748	)		-			-
Investment and other income (note 3)		1			-			-			-			198			48
		1			-			(994	)		(748	)		7,156			5,222
Expenses
Exploration		-			-			-			-			22			17
Purchases of crude oil and products		-			-			(993	)		(748	)		4,333			2,986
Production and manufacturing		-			-			-			-			1,375			1,271
Selling and general		(6	)		9			(1	)		-			206			270
Federal excise tax		-			-			-			-			394			388
Depreciation and depletion		5			4			-			-			392			424
Financing costs (note 5)		10			18			-			-			14			15
Total expenses		9			31			(994	)		(748	)		6,736			5,371
Income (loss) before income taxes		(8	)		(31	)		-			-			420			(149)
Income taxes		(2	)		(9	)		-			-			87			(48)
Net income (loss)		(6	)		(22	)		-			-			333			(101)
Cash flows from (used in) operating activities		13			2			-			-			354			49
Capital and exploration expenditures (b)		12			13			-			-			153			408
Total assets as at March 31		1,128			643			(258	)		(306	)		41,410			43,185

(a) Included export sales to the United States of $899 million (2016 - $797 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.

(b) Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to capital leases, additional investments and acquisitions.

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IMPERIAL OIL LIMITED

3. Investment and other income

Investment and other income included gains and losses on asset sales as follows:

	Three Months to March 31
millions of Canadian dollars	2017		2016
Proceeds from asset sales		183		33
Book value of assets sold		1		3
Gain (loss) on asset sales, before tax (a)		182		30
Gain (loss) on asset sales, after tax (a)		158		24

(a) First quarter included a gain of $174 million ($151 million after tax) for the sale of a surplus property in Ontario.

4. Employee retirement benefits

The components of net benefit cost were as follows:

	Three Months to March 31
millions of Canadian dollars	2017		2016
Pension benefits:
Current service cost		55		51
Interest cost		79		79
Expected return on plan assets		(101)		(99)
Amortization of prior service cost		3		2
Amortization of actuarial loss (gain)		44		41
Net periodic benefit cost		80		74
Other post-retirement benefits:
Current service cost		4		4
Interest cost		6		7
Amortization of actuarial loss (gain)		2		3
Net periodic benefit cost		12		14

5. Financing costs and additional notes and loans payable information

	Three Months to March 31
millions of Canadian dollars	2017		2016
Debt-related interest		22		31
Capitalized interest		(12)		(13)
Net interest expense		10		18
Other interest		4		(3)
Total financing costs		14		15

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IMPERIAL OIL LIMITED

6. Long-term debt

	As at Mar 31		As at  Dec 31
millions of Canadian dollars	2017		2016
Long-term debt		4,447		4,447
Capital leases		579		585
Total long-term debt		5,026		5,032

7. Other long-term obligations

	As at Mar 31		As at  Dec 31
millions of Canadian dollars	2017		2016
Employee retirement benefits (a)		1,516		1,645
Asset retirement obligations and other environmental liabilities (b)		1,564		1,544
Share-based incentive compensation liabilities		126		139
Other obligations		414		328
Total other long-term obligations		3,620		3,656

(a) Total recorded employee retirement benefits obligations also included $58 million in current liabilities (2016 - $58 million).

(b) Total asset retirement obligations and other environmental liabilities also included $108 million in current liabilities (2016 - $108 million).

8. Net income (loss) per-share

	Three Months to March 31
	2017		2016
Net income (loss) per common share - basic
Net income (loss) (millions of Canadian dollars)		333		(101)
Weighted average number of common shares outstanding (millions of shares)		847.6		847.6
Net income (loss) per common share (dollars)		0.39		(0.12)
Net income (loss) per common share - diluted
Net income (loss) (millions of Canadian dollars)		333		(101)
Weighted average number of common shares outstanding (millions of shares)		847.6		847.6
Effect of employee share-based awards (millions of shares)		2.7		2.8
Weighted average number of common shares outstanding, assuming dilution (millions of shares)		850.3		850.4
Net income (loss) per common share (dollars)		0.39		(0.12)

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IMPERIAL OIL LIMITED

9. Other comprehensive income (loss) information

Changes in accumulated other comprehensive income (loss):
millions of Canadian dollars	2017		2016
Balance at January 1		(1,897)	(1,828)
Post-retirement benefits liability adjustment:
Current period change excluding amounts reclassified from accumulated other comprehensive income		41	100
Amounts reclassified from accumulated other comprehensive income		36	41
Balance at March 31		(1,820)	(1,687)
Amounts reclassified out of accumulated other comprehensive income (loss) - before-tax income (expense):
	Three Months to March 31
millions of Canadian dollars	2017		2016
Amortization of post-retirement benefits liability adjustment included in net periodic benefit cost (a)		(49)	(46)
(a)    This accumulated other comprehensive income component is included in the computation of net periodic benefit cost (note 4).
Income tax expense (credit) for components of other comprehensive income (loss):
	Three Months to March 31
millions of Canadian dollars	2017		2016
Post-retirement benefits liability adjustments:
Post-retirement benefits liability adjustment (excluding amortization)		16	37
Amortization of post-retirement benefits liability adjustment included in net periodic benefit cost		13	5
Total		29	42

10. Recently issued accounting standards

In May 2014, the Financial Accounting Standards Board (FASB) issued a new standard, Revenue from Contracts with Customers. The standard establishes a single revenue recognition model for all contracts with customers, eliminates industry specific requirements and expands disclosure requirements. The standard is required to be adopted beginning January 1, 2018. The company expects to adopt the standard using the modified retrospective method, under which prior years’ results are not restated, but supplemental information on the impact of the new standard is provided for in the 2018 results. Imperial continues to evaluate other areas of the standard. The impact from the standard is not expected to have a material effect on the company’s financial statements.

In February 2016, the FASB issued a new standard, Leases. The standard requires all leases with an initial term greater than one year be recorded on the balance sheet as a lease asset and lease liability. The standard is required to be adopted beginning January 1, 2019. Imperial is evaluating the standard and its effect on the company’s financial statements and plans to adopt it in 2019.

In March 2017, the FASB issued an Accounting Standards Update, 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The update requires the service cost component of net benefit costs to be reported in the same line in the income statement as other compensation costs and the other components of net benefit costs to be presented separately from the service cost component. Additionally, only the service cost component of net benefit costs will be eligible for capitalization. The update is required to be adopted beginning January 1, 2018. Imperial is evaluating the standard and its effect on the company’s financial statements.

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IMPERIAL OIL LIMITED

Item 2. Management’s discussion and analysis of financial condition and results of operations

Operating results

First quarter 2017 vs. first quarter 2016

The company’s net income for the first quarter of 2017 was $333 million or $0.39 per-share on a diluted basis, an increase of $434 million compared to the net loss of $101 million or $(0.12) per-share for the same period last year.

Upstream recorded a net loss in the first quarter of $86 million, compared to a net loss of $448 million in the same period of 2016. Earnings in the first quarter of 2017 reflect the impact of higher Canadian crude oil realizations of about $600 million, partially offset by higher royalties of about $80 million, lower volumes of about $70 million and higher operating expenses of about $50 million primarily due to higher energy costs.

West Texas Intermediate (WTI) averaged US$51.78 per barrel in the first quarter of 2017, up from US$33.63 per barrel in the same quarter of 2016. Western Canada Select (WCS) averaged US$37.26 per barrel and US$19.30 per barrel respectively for the same periods. The WTI / WCS differential narrowed to 28 percent in the first quarter of 2017, from 43 percent in the same period of 2016.

The Canadian dollar averaged US$0.76 in the first quarter of 2017, an increase of US$0.03 from the first quarter of 2016.

Imperial’s average Canadian dollar realizations for bitumen and synthetic crudes increased essentially in line with the North American benchmarks, adjusted for changes in exchange rates and transportation costs. Bitumen realizations averaged $36.21 per barrel for the first quarter of 2017, an increase of $24.29 per barrel versus the first quarter of 2016. Synthetic crude realizations averaged $67.79 per barrel, an increase of $21.47 per barrel for the same period of 2016.

Gross production of Cold Lake bitumen averaged 158,000 barrels per day in the first quarter, compared to 165,000 barrels per day in the same period last year, mainly due to the timing of steam cycles.

Gross production of Kearl bitumen averaged 182,000 barrels per day in the first quarter (129,000 barrels Imperial’s share) compared to 194,000 barrels per day (138,000 barrels Imperial’s share) during the first quarter of 2016. Lower production was the result of planned and unplanned maintenance activities.

The company’s share of gross production from Syncrude averaged 66,000 barrels per day, compared to 80,000 barrels per day in the first quarter of 2016. Syncrude production was reduced by about 14,000 barrels per day mainly due to a fire at the Syncrude Mildred Lake upgrader.

Downstream net income was $380 million in the first quarter, compared to $320 million in the same period of 2016. Earnings increased mainly due to a gain of $151 million from the sale of a surplus property, partially offset by lower marketing margins of approximately $60 million.

Refinery throughput averaged 398,000 barrels per day, unchanged from the same period in 2016.

Petroleum product sales were 486,000 barrels per day, up from 469,000 barrels per day in the first quarter of 2016. Sales growth was primarily driven by the company’s focus on securing long-term supply agreements.

Chemical net income was $45 million in the first quarter, compared to $49 million in the same quarter of 2016.

Net income effects from Corporate and Other were negative $6 million in the first quarter, compared to negative $22 million in the same period of 2016.

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Liquidity and capital resources

Cash flow generated from operating activities was $354 million in the first quarter, compared with $49 million in the corresponding period in 2016, reflecting higher earnings.

Investing activities generated net cash of $61 million in the first quarter, compared with $358 million used in the same period of 2016, reflecting lower additions to property, plant and equipment and higher proceeds from asset sales.

Cash used in financing activities was $134 million in the first quarter, compared with cash from financing activities of $261 million in the first quarter of 2016. Dividends paid in the first quarter of 2017 were $127 million. The per-share dividend paid in the first quarter was $0.15, up from $0.14 in the same period of 2016.

The company’s cash balance was $672 million at March 31, 2017, versus $155 million at the end of the first quarter of 2016.

The company has entered into additional long-term pipeline transportation agreements to ship crude oil and products. These agreements, which have a total commitment of about $2 billion, will support the company’s plans for long-term growth. The company expects to fulfill these commitments in the normal course of business.

Recently issued accounting standards

In May 2014, the Financial Accounting Standards Board (FASB) issued a new standard, Revenue from Contracts with Customers. The standard establishes a single revenue recognition model for all contracts with customers, eliminates industry specific requirements and expands disclosure requirements. The standard is required to be adopted beginning January 1, 2018. The company expects to adopt the standard using the modified retrospective method, under which prior years’ results are not restated, but supplemental information on the impact of the new standard is provided for in the 2018 results. Imperial continues to evaluate other areas of the standard. The impact from the standard is not expected to have a material effect on the company’s financial statements.

In February 2016, the FASB issued a new standard, Leases. The standard requires all leases with an initial term greater than one year be recorded on the balance sheet as a lease asset and lease liability. The standard is required to be adopted beginning January 1, 2019. Imperial is evaluating the standard and its effect on the company’s financial statements and plans to adopt it in 2019.

In March 2017, the FASB issued an Accounting Standards Update, 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The update requires the service cost component of net benefit costs to be reported in the same line in the income statement as other compensation costs and the other components of net benefit costs to be presented separately from the service cost component. Additionally, only the service cost component of net benefit costs will be eligible for capitalization. The update is required to be adopted beginning January 1, 2018. Imperial is evaluating the standard and its effect on the company’s financial statements.

Forward-looking statements

Statements in this report regarding future events or conditions are forward-looking statements. Actual future financial and operating results could differ materially due to the impact of market conditions, changes in law or governmental policy, changes in operating conditions and costs, changes in project schedules, operating performance, demand for oil and gas, commercial negotiations or other technical and economic factors.

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Item 3.  Quantitative and qualitative disclosures about market risk

Information about market risks for the three months ended March 31, 2017, does not differ materially from that discussed on page 22 of the company’s annual report on Form 10-K for the year ended December  31, 2016.

Item 4.  Controls and procedures

As indicated in the certifications in Exhibit 31 of this report, the company’s principal executive officer and principal financial officer have evaluated the company’s disclosure controls and procedures as of March 31, 2017. Based on that evaluation, these officers have concluded that the company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to them in a manner that allows for timely decisions regarding required disclosures and are effective in ensuring that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There has not been any change in the company’s internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.

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PART II.  OTHER INFORMATION

Item 2.  Unregistered sales of equity securities and use of proceeds

Issuer purchases of equity securities

	Total number of       shares purchased	Average price       paid per share     (dollars)	Total number of   shares purchased       as part of publicly        announced plans     or programs	Maximum number     of shares that may   yet be purchased    under the plans or programs (a)
January 2017 (Jan 1 – Jan 31)	-	-	-	1,000,000
February 2017 (Feb 1 – Feb 28)	-	-	-	1,000,000
March 2017 (Mar 1 – Mar 31)		-	-	1,000,000

(a) On June 22, 2016, the company announced by news release that it had received final approval from the Toronto Stock Exchange for a new normal course issuer bid and will continue its share repurchase program. The new program enables the company to repurchase up to a maximum of 1,000,000 common shares during the period June 27, 2016 to June 26, 2017. The program will end when the company has purchased the maximum allowable number of shares, or on June 26, 2017.

The company will continue to evaluate its share repurchase program in the context of its overall capital activities.

Item 6. Exhibits

(31.1) Certification by the principal executive officer of the company pursuant to Rule 13a-14(a).

(31.2) Certification by the principal financial officer of the company pursuant to Rule 13a-14(a).

(32.1) Certification by the chief executive officer of the company pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350.

(32.2) Certification by the chief financial officer of the company pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350.

15

IMPERIAL OIL LIMITED

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Imperial Oil Limited (Registrant)
Date: May 2, 2017	/s/ Beverley A. Babcock
	(Signature)
	Beverley A. Babcock
	Senior Vice-President, Finance and Administration and Controller
	(Principal Accounting Officer)
Date: May 2, 2017	/s/ Cathryn Walker
	(Signature)
	Cathryn Walker
	Assistant Corporate Secretary

16

EX-31.1

IMPERIAL OIL LIMITED

Exhibit (31.1)

Certifications

I, Richard M. Kruger, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Imperial Oil Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:    May 2, 2017

/s/ Richard M. Kruger

Richard M. Kruger

Chairman, President and

Chief Executive Officer

(Principal Executive Officer)

17

EX-31.2

IMPERIAL OIL LIMITED

Exhibit (31.2)

Certifications

I, Beverley A. Babcock, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Imperial Oil Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:    May 2, 2017

/s/ Beverley A. Babcock

Beverley A. Babcock

Senior Vice-President, Finance and

Administration and Controller

(Principal Financial Officer)

18

EX-32.1

IMPERIAL OIL LIMITED

Exhibit (32.1)

Certification of Periodic Financial Report

Pursuant to 18 U.S.C. Section 1350

For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Richard M. Kruger, the chief executive officer of Imperial Oil Limited (the “company”), hereby certifies that, to his knowledge:

(i) the Quarterly Report on Form 10-Q of the company for the quarter ended March 31, 2017 as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company.

Date:    May 2, 2017

/s/ Richard M. Kruger

Richard M. Kruger

Chairman, President and

Chief Executive Officer

(Principal Executive Officer)

19

EX-32.2

IMPERIAL OIL LIMITED

Exhibit (32.2)

Certification of Periodic Financial Report

Pursuant to 18 U.S.C. Section 1350

For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Beverley A. Babcock, the chief financial officer of Imperial Oil Limited (the “company”), hereby certifies that, to her knowledge:

(i) the Quarterly Report on Form 10-Q of the company for the quarter ended March 31, 2017 as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company.

Date:    May 2, 2017

/s/ Beverley A. Babcock

Beverley A. Babcock

Senior Vice-President, Finance and

Administration and Controller

(Chief Financial Officer)

20

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2017 shares
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Trading Symbol	IMO
Entity Registrant Name	IMPERIAL OIL LTD
Entity Central Index Key	0000049938
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	847,599,011

XML

Consolidated statement of income - CAD CAD in Millions		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Revenues and other income
Operating revenues	[1],[2]	CAD 6,958	CAD 5,174
Investment and other income (note 3)		198	48
Total revenues and other income		7,156	5,222
Expenses
Exploration		22	17
Purchases of crude oil and products	[3]	4,333	2,986
Production and manufacturing	[4]	1,375	1,271
Selling and general	[4]	206	270
Federal excise tax		394	388
Depreciation and depletion		392	424
Financing costs (note 5)		14	15
Total expenses		6,736	5,371
Income (loss) before income taxes		420	(149)
Income taxes		87	(48)
Net income (loss)		CAD 333	CAD (101)
Per-share information (Canadian dollars)
Net income (loss) per common share - basic (note 8)		CAD 0.39	CAD (0.12)
Net income (loss) per common share - diluted (note 8)		0.39	(0.12)
Dividends per common share		CAD 0.15	CAD 0.14

[1] Amounts from related parties included in operating revenues. 1,037 563

[2] Included export sales to the United States of $899 million (2016 - $797 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.

[3] Amounts to related parties included in purchases of crude oil and products. 609 631

[4] Amounts to related parties included in production and manufacturing and selling and general expenses. 141 104

XML

Consolidated statement of income (Parenthetical) - CAD CAD in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Amounts from related parties included in operating revenues	CAD 1,037	CAD 563
Amounts to related parties included in purchases of crude oil and products	609	631
Amounts to related parties included in production and manufacturing and selling and general expenses	CAD 141	CAD 104

XML

Consolidated statement of comprehensive income - CAD CAD in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Net income (loss)	CAD 333	CAD (101)
Other comprehensive income (loss), net of income taxes
Post-retirement benefits liability adjustment (excluding amortization)	41	100
Amortization of post-retirement benefits liability adjustment included in net periodic benefit costs	36	41
Total other comprehensive income (loss)	77	141
Comprehensive income (loss)	CAD 410	CAD 40

XML

Consolidated balance sheet - CAD CAD in Millions		Mar. 31, 2017		Dec. 31, 2016
Current assets
Cash		CAD 672	[1]	CAD 391
Accounts receivable, less estimated doubtful accounts	[2]	1,745		2,023
Inventories of crude oil and products		1,032		949
Materials, supplies and prepaid expenses		457		468
Total current assets		3,906		3,831
Investments and long-term receivables		1,014		1,030
Property, plant and equipment,		53,620		53,515
less accumulated depreciation and depletion		(17,557)		(17,182)
Property, plant and equipment, net		36,063		36,333
Goodwill		186		186
Other assets, including intangibles, net		241		274
Total assets		41,410		41,654
Current liabilities
Notes and loans payable	[3]	202		202
Accounts payable and accrued liabilities (note 7)	[2]	2,983		3,193
Income taxes payable		24		488
Total current liabilities		3,209		3,883
Long-term debt (note 6)	[4]	5,026		5,032
Other long-term obligations (note 7)	[5]	3,620		3,656
Deferred income tax liabilities		4,251		4,062
Total liabilities		16,106		16,633
Shareholders' equity
Common shares at stated value	[6]	1,566		1,566
Earnings reinvested		25,558		25,352
Accumulated other comprehensive income (loss) (note 9)		(1,820)		(1,897)
Total shareholders' equity		25,304		25,021
Total liabilities and shareholders' equity		CAD 41,410		CAD 41,654

[1] Cash is composed of cash in bank and cash equivalents at cost. Cash equivalents are all highly liquid securities with maturity of three months or less when purchased.

[2] Accounts receivable, less estimated doubtful accounts included net amounts receivable from related parties of $318 million (2016 - $172 million).

[3] Notes and loans payable included amounts to related parties of $75 million (2016 - $75 million).

[4] Long-term debt included amounts to related parties of $4,447 million (2016 - $4,447 million).

[5] Other long-term obligations included amounts to related parties of $93 million (2016 - $104 million).

[6] Number of common shares authorized and outstanding were 1,100 million and 848 million, respectively (2016 - 1,100 million and 848 million, respectively).

XML

Consolidated balance sheet (Parenthetical) - CAD CAD in Millions	Mar. 31, 2017	Dec. 31, 2016
Amounts receivable (payable) from (to) related parties	CAD 318	CAD 172
Due to related parties, current	CAD 75	CAD 75
Common shares authorized	1,100,000,000	1,100,000,000
Common shares outstanding	848,000,000	848,000,000
Long-term debt
Due to related parties	CAD 4,447	CAD 4,447
Other long-term obligations
Due to related parties	CAD 93	CAD 104

XML

Consolidated statement of cash flows - CAD CAD in Millions		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Operating activities
Net income (loss)		CAD 333	CAD (101)
Adjustments for non-cash items:
Depreciation and depletion		392	424
(Gain) loss on asset sales (note 3)	[1]	(182)	(30)
Deferred income taxes and other		200	(82)
Changes in operating assets and liabilities:
Accounts receivable		278	(58)
Inventories, materials, supplies and prepaid expenses		(72)	(32)
Income taxes payable		(464)	(9)
Accounts payable and accrued liabilities		(210)	(189)
All other items - net	[2]	79	126
Cash flows from (used in) operating activities		354	49
Investing activities
Additions to property, plant and equipment		(122)	(391)
Proceeds from asset sales (note 3)		183	33
Cash flows from (used in) investing activities		61	(358)
Financing activities
Short-term debt - net			(108)
Long-term debt - additions (note 6)			495
Reduction in capitalized lease obligations		(7)	(7)
Dividends paid		(127)	(119)
Cash flows from (used in) financing activities		(134)	261
Increase (decrease) in cash		281	(48)
Cash at beginning of period		391	203
Cash at end of period	[3]	CAD 672	CAD 155

[1] First quarter included a gain of $174 million ($151 million after tax) for the sale of a surplus property in Ontario.

[2] Included contribution to registered pension plans. (40 ) (31)

[3] Cash is composed of cash in bank and cash equivalents at cost. Cash equivalents are all highly liquid securities with maturity of three months or less when purchased.

XML

Consolidated statement of cash flows (Parenthetical) - CAD CAD in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Included contribution to registered pension plans	CAD (40)	CAD (31)

XML

Basis of financial statement preparation

3 Months Ended

Mar. 31, 2017

Basis of financial statement preparation

1.  Basis of financial statement preparation

These unaudited consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles of the United States of America (GAAP) and follow the same accounting policies and methods of computation as, and should be read in conjunction with, the most recent annual consolidated financial statements filed with the U.S. Securities and Exchange Commission (SEC) in the company’s 2016 annual report on Form 10-K. In the opinion of the company, the information furnished herein reflects all known accruals and adjustments necessary for a fair statement of the results for the periods reported herein. All such adjustments are of a normal recurring nature. Prior data has been reclassified in certain cases to conform to the current presentation basis.

The company’s exploration and production activities are accounted for under the “successful efforts” method.

The results for the three months ended March 31, 2017, are not necessarily indicative of the operations to be expected for the full year.

All amounts are in Canadian dollars unless otherwise indicated.

XML

Business segments

3 Months Ended

Mar. 31, 2017

Business segments

2. Business segments

Three Months to March 31	Upstream						Downstream						Chemical
millions of Canadian dollars	2017			2016			2017			2016			2017			2016
Revenues and other income
Operating revenues (a)		1,711			980			4,974			3,940			273			254
Intersegment sales		618			479			309			225			67			44
Investment and other income (note 3)		5			19			191			29			1			-
		2,334			1,478			5,474			4,194			341			298
Expenses
Exploration		22			17			-			-			-			-
Purchases of crude oil and products		1,116			818			4,009			2,757			201			159
Production and manufacturing		973			909			349			315			53			47
Selling and general		3			1			188			238			22			22
Federal excise tax		-			-			394			388			-			-
Depreciation and depletion		336			357			48			61			3			2
Financing costs (note 5)		4			(3	)		-			-			-			-
Total expenses		2,454			2,099			4,988			3,759			279			230
Income (loss) before income taxes		(120	)		(621	)		486			435			62			68
Income taxes		(34	)		(173	)		106			115			17			19
Net income (loss)		(86	)		(448	)		380			320			45			49
Cash flows from (used in) operating activities		308			(482	)		56			469			(23	)		60
Capital and exploration expenditures (b)		103			346			34			43			4			6
Total assets as at March 31		35,898			37,086			4,251			5,368			391			394
Three Months to March 31	Corporate and Other						Eliminations						Consolidated
millions of Canadian dollars	2017			2016			2017			2016			2017			2016
Revenues and other income
Operating revenues (a)		-			-			-			-			6,958			5,174
Intersegment sales		-			-			(994	)		(748	)		-			-
Investment and other income (note 3)		1			-			-			-			198			48
		1			-			(994	)		(748	)		7,156			5,222
Expenses
Exploration		-			-			-			-			22			17
Purchases of crude oil and products		-			-			(993	)		(748	)		4,333			2,986
Production and manufacturing		-			-			-			-			1,375			1,271
Selling and general		(6	)		9			(1	)		-			206			270
Federal excise tax		-			-			-			-			394			388
Depreciation and depletion		5			4			-			-			392			424
Financing costs (note 5)		10			18			-			-			14			15
Total expenses		9			31			(994	)		(748	)		6,736			5,371
Income (loss) before income taxes		(8	)		(31	)		-			-			420			(149)
Income taxes		(2	)		(9	)		-			-			87			(48)
Net income (loss)		(6	)		(22	)		-			-			333			(101)
Cash flows from (used in) operating activities		13			2			-			-			354			49
Capital and exploration expenditures (b)		12			13			-			-			153			408
Total assets as at March 31		1,128			643			(258	)		(306	)		41,410			43,185

(a) Included export sales to the United States of $899 million (2016 - $797 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.

(b) Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to capital leases, additional investments and acquisitions.

XML

Investment and other income

3 Months Ended

Mar. 31, 2017

Investment and other income

3. Investment and other income

Investment and other income included gains and losses on asset sales as follows:

	Three Months to March 31
millions of Canadian dollars	2017		2016
Proceeds from asset sales		183		33
Book value of assets sold		1		3
Gain (loss) on asset sales, before tax (a)		182		30
Gain (loss) on asset sales, after tax (a)		158		24

(a) First quarter included a gain of $174 million ($151 million after tax) for the sale of a surplus property in Ontario.

XML

Employee retirement benefits

3 Months Ended

Mar. 31, 2017

Employee retirement benefits

4. Employee retirement benefits

The components of net benefit cost were as follows:

	Three Months to March 31
millions of Canadian dollars	2017		2016
Pension benefits:
Current service cost		55		51
Interest cost		79		79
Expected return on plan assets		(101)		(99)
Amortization of prior service cost		3		2
Amortization of actuarial loss (gain)		44		41
Net periodic benefit cost		80		74
Other post-retirement benefits:
Current service cost		4		4
Interest cost		6		7
Amortization of actuarial loss (gain)		2		3
Net periodic benefit cost		12		14

XML

Financing costs and additional notes and loans payable information

3 Months Ended

Mar. 31, 2017

Financing costs and additional notes and loans payable information

5. Financing costs and additional notes and loans payable information

	Three Months to March 31
millions of Canadian dollars	2017		2016
Debt-related interest		22		31
Capitalized interest		(12)		(13)
Net interest expense		10		18
Other interest		4		(3)
Total financing costs		14		15

XML

Long-term debt

3 Months Ended

Mar. 31, 2017

Long-term debt

6. Long-term debt

	As at Mar 31		As at  Dec 31
millions of Canadian dollars	2017		2016
Long-term debt		4,447		4,447
Capital leases		579		585
Total long-term debt		5,026		5,032

XML

Other long-term obligations

3 Months Ended

Mar. 31, 2017

Other long-term obligations

7. Other long-term obligations

	As at Mar 31		As at  Dec 31
millions of Canadian dollars	2017		2016
Employee retirement benefits (a)		1,516		1,645
Asset retirement obligations and other environmental liabilities (b)		1,564		1,544
Share-based incentive compensation liabilities		126		139
Other obligations		414		328
Total other long-term obligations		3,620		3,656

(a) Total recorded employee retirement benefits obligations also included $58 million in current liabilities (2016 - $58 million).

(b) Total asset retirement obligations and other environmental liabilities also included $108 million in current liabilities (2016 - $108 million).

XML

Net income (loss) per-share

3 Months Ended

Mar. 31, 2017

Net income (loss) per-share

8. Net income (loss) per-share

	Three Months to March 31
	2017		2016
Net income (loss) per common share - basic
Net income (loss) (millions of Canadian dollars)		333		(101)
Weighted average number of common shares outstanding (millions of shares)		847.6		847.6
Net income (loss) per common share (dollars)		0.39		(0.12)
Net income (loss) per common share - diluted
Net income (loss) (millions of Canadian dollars)		333		(101)
Weighted average number of common shares outstanding (millions of shares)		847.6		847.6
Effect of employee share-based awards (millions of shares)		2.7		2.8
Weighted average number of common shares outstanding,
assuming dilution (millions of shares)		850.3		850.4
Net income (loss) per common share (dollars)		0.39		(0.12)

XML

Other comprehensive income (loss) information

3 Months Ended

Mar. 31, 2017

Other comprehensive income (loss) information

9. Other comprehensive income (loss) information

Changes in accumulated other comprehensive income (loss):
millions of Canadian dollars	2017		2016
Balance at January 1		(1,897)		(1,828)
Post-retirement benefits liability adjustment:
Current period change excluding amounts reclassified from accumulated other comprehensive income		41		100
Amounts reclassified from accumulated other comprehensive income		36		41
Balance at March 31		(1,820)		(1,687)
Amounts reclassified out of accumulated other comprehensive income (loss) - before-tax income (expense):
	Three Months to March 31
millions of Canadian dollars	2017		2016
Amortization of post-retirement benefits liability adjustment included in net periodic benefit cost (a)		(49)		(46)
(a)    This accumulated other comprehensive income component is included in the computation of net periodic benefit cost (note 4).
Income tax expense (credit) for components of other comprehensive income (loss):
	Three Months to March 31
millions of Canadian dollars	2017		2016
Post-retirement benefits liability adjustments:
Post-retirement benefits liability adjustment (excluding amortization)		16		37
Amortization of post-retirement benefits liability adjustment included in net periodic benefit cost		13		5
Total		29		42

XML

Recently issued accounting standards

3 Months Ended

Mar. 31, 2017

Recently issued accounting standards

10. Recently issued accounting standards

In May 2014, the Financial Accounting Standards Board (FASB) issued a new standard, Revenue from Contracts with Customers. The standard establishes a single revenue recognition model for all contracts with customers, eliminates industry specific requirements and expands disclosure requirements. The standard is required to be adopted beginning January 1, 2018. The company expects to adopt the standard using the modified retrospective method, under which prior years’ results are not restated, but supplemental information on the impact of the new standard is provided for in the 2018 results. Imperial continues to evaluate other areas of the standard. The impact from the standard is not expected to have a material effect on the company’s financial statements.

In February 2016, the FASB issued a new standard, Leases. The standard requires all leases with an initial term greater than one year be recorded on the balance sheet as a lease asset and lease liability. The standard is required to be adopted beginning January 1, 2019. Imperial is evaluating the standard and its effect on the company’s financial statements and plans to adopt it in 2019.

In March 2017, the FASB issued an Accounting Standards Update, 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The update requires the service cost component of net benefit costs to be reported in the same line in the income statement as other compensation costs and the other components of net benefit costs to be presented separately from the service cost component. Additionally, only the service cost component of net benefit costs will be eligible for capitalization. The update is required to be adopted beginning January 1, 2018. Imperial is evaluating the standard and its effect on the company’s financial statements.

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Business segments (Tables)

3 Months Ended

Mar. 31, 2017

Business Segments

Three Months to March 31	Upstream						Downstream						Chemical
millions of Canadian dollars	2017			2016			2017			2016			2017			2016
Revenues and other income
Operating revenues (a)		1,711			980			4,974			3,940			273			254
Intersegment sales		618			479			309			225			67			44
Investment and other income (note 3)		5			19			191			29			1			-
		2,334			1,478			5,474			4,194			341			298
Expenses
Exploration		22			17			-			-			-			-
Purchases of crude oil and products		1,116			818			4,009			2,757			201			159
Production and manufacturing		973			909			349			315			53			47
Selling and general		3			1			188			238			22			22
Federal excise tax		-			-			394			388			-			-
Depreciation and depletion		336			357			48			61			3			2
Financing costs (note 5)		4			(3	)		-			-			-			-
Total expenses		2,454			2,099			4,988			3,759			279			230
Income (loss) before income taxes		(120	)		(621	)		486			435			62			68
Income taxes		(34	)		(173	)		106			115			17			19
Net income (loss)		(86	)		(448	)		380			320			45			49
Cash flows from (used in) operating activities		308			(482	)		56			469			(23	)		60
Capital and exploration expenditures (b)		103			346			34			43			4			6
Total assets as at March 31		35,898			37,086			4,251			5,368			391			394
Three Months to March 31	Corporate and Other						Eliminations						Consolidated
millions of Canadian dollars	2017			2016			2017			2016			2017			2016
Revenues and other income
Operating revenues (a)		-			-			-			-			6,958			5,174
Intersegment sales		-			-			(994	)		(748	)		-			-
Investment and other income (note 3)		1			-			-			-			198			48
		1			-			(994	)		(748	)		7,156			5,222
Expenses
Exploration		-			-			-			-			22			17
Purchases of crude oil and products		-			-			(993	)		(748	)		4,333			2,986
Production and manufacturing		-			-			-			-			1,375			1,271
Selling and general		(6	)		9			(1	)		-			206			270
Federal excise tax		-			-			-			-			394			388
Depreciation and depletion		5			4			-			-			392			424
Financing costs (note 5)		10			18			-			-			14			15
Total expenses		9			31			(994	)		(748	)		6,736			5,371
Income (loss) before income taxes		(8	)		(31	)		-			-			420			(149)
Income taxes		(2	)		(9	)		-			-			87			(48)
Net income (loss)		(6	)		(22	)		-			-			333			(101)
Cash flows from (used in) operating activities		13			2			-			-			354			49
Capital and exploration expenditures (b)		12			13			-			-			153			408
Total assets as at March 31		1,128			643			(258	)		(306	)		41,410			43,185

(a) Included export sales to the United States of $899 million (2016 - $797 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.

(b) Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to capital leases, additional investments and acquisitions.

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Investment and other income (Tables)

3 Months Ended

Mar. 31, 2017

Gains and Losses on Asset Sales

Investment and other income included gains and losses on asset sales as follows:

	Three Months to March 31
millions of Canadian dollars	2017		2016
Proceeds from asset sales		183		33
Book value of assets sold		1		3
Gain (loss) on asset sales, before tax (a)		182		30
Gain (loss) on asset sales, after tax (a)		158		24

(a) First quarter included a gain of $174 million ($151 million after tax) for the sale of a surplus property in Ontario.

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Employee retirement benefits (Tables)

3 Months Ended

Mar. 31, 2017

Schedule of Components of Net Benefit Cost

The components of net benefit cost were as follows:

	Three Months to March 31
millions of Canadian dollars	2017		2016
Pension benefits:
Current service cost		55		51
Interest cost		79		79
Expected return on plan assets		(101)		(99)
Amortization of prior service cost		3		2
Amortization of actuarial loss (gain)		44		41
Net periodic benefit cost		80		74
Other post-retirement benefits:
Current service cost		4		4
Interest cost		6		7
Amortization of actuarial loss (gain)		2		3
Net periodic benefit cost		12		14

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Financing costs and additional notes and loans payable information (Tables)

3 Months Ended

Mar. 31, 2017

Schedule of Financing Costs

	Three Months to March 31
millions of Canadian dollars	2017		2016
Debt-related interest		22		31
Capitalized interest		(12)		(13)
Net interest expense		10		18
Other interest		4		(3)
Total financing costs		14		15

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Long-term debt (Tables)

3 Months Ended

Mar. 31, 2017

Long-Term Debt

	As at Mar 31		As at  Dec 31
millions of Canadian dollars	2017		2016
Long-term debt		4,447		4,447
Capital leases		579		585
Total long-term debt		5,026		5,032

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Other long-term obligations (Tables)

3 Months Ended

Mar. 31, 2017

Other Long-Term Obligations

	As at Mar 31		As at  Dec 31
millions of Canadian dollars	2017		2016
Employee retirement benefits (a)		1,516		1,645
Asset retirement obligations and other environmental liabilities (b)		1,564		1,544
Share-based incentive compensation liabilities		126		139
Other obligations		414		328
Total other long-term obligations		3,620		3,656

(a) Total recorded employee retirement benefits obligations also included $58 million in current liabilities (2016 - $58 million).

(b) Total asset retirement obligations and other environmental liabilities also included $108 million in current liabilities (2016 - $108 million).

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Net income (loss) per-share (Tables)

3 Months Ended

Mar. 31, 2017

Calculation of Basic and Diluted Earnings Per Share

	Three Months to March 31
	2017		2016
Net income (loss) per common share - basic
Net income (loss) (millions of Canadian dollars)		333		(101)
Weighted average number of common shares outstanding (millions of shares)		847.6		847.6
Net income (loss) per common share (dollars)		0.39		(0.12)
Net income (loss) per common share - diluted
Net income (loss) (millions of Canadian dollars)		333		(101)
Weighted average number of common shares outstanding (millions of shares)		847.6		847.6
Effect of employee share-based awards (millions of shares)		2.7		2.8
Weighted average number of common shares outstanding,
assuming dilution (millions of shares)		850.3		850.4
Net income (loss) per common share (dollars)		0.39		(0.12)

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Other comprehensive income (loss) information (Tables)

3 Months Ended

Mar. 31, 2017

Changes in Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss):
millions of Canadian dollars	2017		2016
Balance at January 1		(1,897)		(1,828)
Post-retirement benefits liability adjustment:
Current period change excluding amounts reclassified from accumulated other comprehensive income		41		100
Amounts reclassified from accumulated other comprehensive income		36		41
Balance at March 31		(1,820)		(1,687)

Amounts Reclassified Out of Accumulated Other Comprehensive Income (Loss) - Before-Tax Income (Expense)

Changes in accumulated other comprehensive income (loss):
millions of Canadian dollars	2017		2016
Balance at January 1		(1,897)		(1,828)
Post-retirement benefits liability adjustment:
Current period change excluding amounts reclassified from accumulated other comprehensive income		41		100
Amounts reclassified from accumulated other comprehensive income		36		41
Balance at March 31		(1,820)		(1,687)
Amounts reclassified out of accumulated other comprehensive income (loss) - before-tax income (expense):
	Three Months to March 31
millions of Canadian dollars	2017		2016
Amortization of post-retirement benefits liability adjustment included in net periodic benefit cost (a)		(49)		(46)
(a)    This accumulated other comprehensive income component is included in the computation of net periodic benefit cost (note 4).

Income Tax Expense (Credit) for Components of Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss):
millions of Canadian dollars	2017		2016
Balance at January 1		(1,897)		(1,828)
Post-retirement benefits liability adjustment:
Current period change excluding amounts reclassified from accumulated other comprehensive income		41		100
Amounts reclassified from accumulated other comprehensive income		36		41
Balance at March 31		(1,820)		(1,687)
Amounts reclassified out of accumulated other comprehensive income (loss) - before-tax income (expense):
	Three Months to March 31
millions of Canadian dollars	2017		2016
Amortization of post-retirement benefits liability adjustment included in net periodic benefit cost (a)		(49)		(46)
(a)    This accumulated other comprehensive income component is included in the computation of net periodic benefit cost (note 4).
Income tax expense (credit) for components of other comprehensive income (loss):
	Three Months to March 31
millions of Canadian dollars	2017		2016
Post-retirement benefits liability adjustments:
Post-retirement benefits liability adjustment (excluding amortization)		16		37
Amortization of post-retirement benefits liability adjustment included in net periodic benefit cost		13		5
Total		29		42

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Business Segments (Detail) - CAD CAD in Millions		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Revenues and other income
Operating revenues	[1],[2]	CAD 6,958	CAD 5,174
Investment and other income (note 3)		198	48
Total revenues and other income		7,156	5,222
Expenses
Exploration		22	17
Purchases of crude oil and products	[3]	4,333	2,986
Production and manufacturing	[4]	1,375	1,271
Selling and general	[4]	206	270
Federal excise tax		394	388
Depreciation and depletion		392	424
Financing costs (note 5)		14	15
Total expenses		6,736	5,371
Income (loss) before income taxes		420	(149)
Income taxes		87	(48)
Net income (loss)		333	(101)
Cash flows from (used in) operating activities		354	49
Capital and exploration expenditures	[5]	153	408
Total assets		41,410	43,185	CAD 41,654
Corporate and Other
Revenues and other income
Investment and other income (note 3)		1
TOTAL OPERATING REVENUES, INTERSEGMENT SALES, INVESTMENT AND OTHER INCOME		1
Expenses
Selling and general		(6)	9
Depreciation and depletion		5	4
Financing costs (note 5)		10	18
Total expenses		9	31
Income (loss) before income taxes		(8)	(31)
Income taxes		(2)	(9)
Net income (loss)		(6)	(22)
Cash flows from (used in) operating activities		13	2
Capital and exploration expenditures	[5]	12	13
Total assets		1,128	643
Upstream
Revenues and other income
Operating revenues	[2]	1,711	980
Intersegment sales		618	479
Investment and other income (note 3)		5	19
TOTAL OPERATING REVENUES, INTERSEGMENT SALES, INVESTMENT AND OTHER INCOME		2,334	1,478
Expenses
Exploration		22	17
Purchases of crude oil and products		1,116	818
Production and manufacturing		973	909
Selling and general		3	1
Depreciation and depletion		336	357
Financing costs (note 5)		4	(3)
Total expenses		2,454	2,099
Income (loss) before income taxes		(120)	(621)
Income taxes		(34)	(173)
Net income (loss)		(86)	(448)
Cash flows from (used in) operating activities		308	(482)
Capital and exploration expenditures	[5]	103	346
Total assets		35,898	37,086
Downstream
Revenues and other income
Operating revenues	[2]	4,974	3,940
Intersegment sales		309	225
Investment and other income (note 3)		191	29
TOTAL OPERATING REVENUES, INTERSEGMENT SALES, INVESTMENT AND OTHER INCOME		5,474	4,194
Expenses
Purchases of crude oil and products		4,009	2,757
Production and manufacturing		349	315
Selling and general		188	238
Federal excise tax		394	388
Depreciation and depletion		48	61
Total expenses		4,988	3,759
Income (loss) before income taxes		486	435
Income taxes		106	115
Net income (loss)		380	320
Cash flows from (used in) operating activities		56	469
Capital and exploration expenditures	[5]	34	43
Total assets		4,251	5,368
Chemical
Revenues and other income
Operating revenues	[2]	273	254
Intersegment sales		67	44
Investment and other income (note 3)		1
TOTAL OPERATING REVENUES, INTERSEGMENT SALES, INVESTMENT AND OTHER INCOME		341	298
Expenses
Purchases of crude oil and products		201	159
Production and manufacturing		53	47
Selling and general		22	22
Depreciation and depletion		3	2
Total expenses		279	230
Income (loss) before income taxes		62	68
Income taxes		17	19
Net income (loss)		45	49
Cash flows from (used in) operating activities		(23)	60
Capital and exploration expenditures	[5]	4	6
Total assets		391	394
Consolidation, Eliminations
Revenues and other income
Intersegment sales		(994)	(748)
TOTAL OPERATING REVENUES, INTERSEGMENT SALES, INVESTMENT AND OTHER INCOME		(994)	(748)
Expenses
Purchases of crude oil and products		(993)	(748)
Selling and general		(1)
Total expenses		(994)	(748)
Total assets		CAD (258)	CAD (306)

[1] Amounts from related parties included in operating revenues. 1,037 563

[2] Included export sales to the United States of $899 million (2016 - $797 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.

[3] Amounts to related parties included in purchases of crude oil and products. 609 631

[4] Amounts to related parties included in production and manufacturing and selling and general expenses. 141 104

[5] Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to capital leases, additional investments and acquisitions.

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Business Segments (Parenthetical) (Detail) - CAD CAD in Millions		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Segment Reporting Information [Line Items]
Operating revenues	[1],[2]	CAD 6,958	CAD 5,174
United States Exports
Segment Reporting Information [Line Items]
Operating revenues		CAD 899	CAD 797

[1] Amounts from related parties included in operating revenues. 1,037 563

[2] Included export sales to the United States of $899 million (2016 - $797 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.

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Gains and Losses on Asset Sales (Detail) - CAD CAD in Millions		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Investment And Other Income [Line Items]
Proceeds from asset sales		CAD 183	CAD 33
Book value of assets sold		1	3
Gain (loss) on asset sales, before tax	[1]	182	30
Gain (loss) on asset sales, after tax	[1]	CAD 158	CAD 24

[1] First quarter included a gain of $174 million ($151 million after tax) for the sale of a surplus property in Ontario.

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Gains and Losses on Asset Sales (Parenthetical) (Detail) - CAD CAD in Millions		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Investment And Other Income [Line Items]
Gain (loss) on asset sales, before tax	[1]	CAD 182	CAD 30
Gain (loss) on asset sales, after tax	[1]	158	CAD 24
Surplus Property
Investment And Other Income [Line Items]
Gain (loss) on asset sales, before tax		174
Gain (loss) on asset sales, after tax		CAD 151

[1] First quarter included a gain of $174 million ($151 million after tax) for the sale of a surplus property in Ontario.

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Components of Net Periodic Benefit Cost (Detail) - CAD CAD in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Pension benefits
Defined Benefit Plan Disclosure [Line Items]
Current service cost	CAD 55	CAD 51
Interest cost	79	79
Expected return on plan assets	(101)	(99)
Amortization of prior service cost	3	2
Amortization of actuarial loss (gain)	44	41
Net periodic benefit cost	80	74
Other post-retirement benefits
Defined Benefit Plan Disclosure [Line Items]
Current service cost	4	4
Interest cost	6	7
Amortization of actuarial loss (gain)	2	3
Net periodic benefit cost	CAD 12	CAD 14

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Financing Costs and Additional Notes and Loans Payable Information (Detail) - CAD CAD in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Debt-related interest	CAD 22	CAD 31
Capitalized interest	(12)	(13)
Net interest expense	10	18
Other interest	4	(3)
Total financing costs	CAD 14	CAD 15

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Long-Term Debt (Detail) - CAD CAD in Millions		Mar. 31, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Long-term debt		CAD 4,447	CAD 4,447
Capital leases		579	585
Total long-term debt	[1]	CAD 5,026	CAD 5,032

[1] Long-term debt included amounts to related parties of $4,447 million (2016 - $4,447 million).

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Other Long-Term Obligations (Detail) - CAD CAD in Millions		Mar. 31, 2017	Dec. 31, 2016
Schedule of Other Liabilities [Line Items]
Employee retirement benefits	[1]	CAD 1,516	CAD 1,645
Asset retirement obligations and other environmental liabilities	[2]	1,564	1,544
Share-based incentive compensation liabilities		126	139
Other obligations		414	328
Total other long-term obligations	[3]	CAD 3,620	CAD 3,656

[1] Total recorded employee retirement benefits obligations also included $58 million in current liabilities (2016 - $58 million).

[2] Total asset retirement obligations and other environmental liabilities also included $108 million in current liabilities (2016 - $108 million).

[3] Other long-term obligations included amounts to related parties of $93 million (2016 - $104 million).

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Other Long-Term Obligations (Parenthetical) (Detail) - CAD CAD in Millions	Mar. 31, 2017	Dec. 31, 2016
Schedule of Other Liabilities [Line Items]
Employee retirement benefit obligations in current liabilities	CAD 58	CAD 58
Asset retirement obligations and other environmental liabilities in current liabilities	CAD 108	CAD 108

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Net Income (Loss) Per Share (Detail) - CAD CAD / shares in Units, shares in Millions, CAD in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Net income (loss) per common share - basic
Net income (loss)	CAD 333	CAD (101)
Weighted average number of common shares outstanding (millions of shares)	847.6	847.6
Net income (loss) per common share (dollars)	CAD 0.39	CAD (0.12)
Net income (loss) per common share - diluted
Net income (loss)	CAD 333	CAD (101)
Weighted average number of common shares outstanding (millions of shares)	847.6	847.6
Effect of employee share-based awards (millions of shares)	2.7	2.8
Weighted average number of common shares outstanding, assuming dilution (millions of shares)	850.3	850.4
Net income (loss) per common share (dollars)	CAD 0.39	CAD (0.12)

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Changes in Accumulated Other Comprehensive Income (Loss) (Detail) - CAD CAD in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at January 1	CAD (1,897)	CAD (1,828)
Current period change excluding amounts reclassified from accumulated other comprehensive income	41	100
Amounts reclassified from accumulated other comprehensive income	36	41
Balance at March 31	CAD (1,820)	CAD (1,687)

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Amounts Reclassified Out of Accumulated Other Comprehensive Income (Loss) (Detail) - CAD CAD in Millions		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Reclassification Adjustment out of Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Amortization of post-retirement benefits liability adjustment included in net periodic benefit cost	[1]	CAD (49)	CAD (46)

[1] This accumulated other comprehensive income component is included in the computation of net periodic benefit cost (note 4).

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Income Tax Expense (Credit) for Components of Other Comprehensive Income (Loss) (Detail) - CAD CAD in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Post-retirement benefits liability adjustment (excluding amortization)	CAD 16	CAD 37
Amortization of post-retirement benefits liability adjustment included in net periodic benefit cost	13	5
Total	CAD 29	CAD 42