Imperial Oil NYSEAMERICAN: IMO reported first-quarter 2026 net income of CAD 940 million, down CAD 348 million from the prior-year quarter, as management pointed to lower average upstream prices and a higher incentive compensation charge tied to the company’s share-price performance. On the company’s earnings call, executives also discussed operational results across upstream, downstream, and chemicals, along with capital allocation plans and the ongoing implementation of a broader restructuring effort.
Financial results and cash flow
Dan Lyons, senior vice president of finance and administration, said the quarter’s results were “primarily driven by higher incentive compensation charges as a result of our higher share price and unfavorable upstream realizations.” Lyons quantified the incentive compensation item as a “CAD 143 million after tax” mark-to-market charge, driven by what he described as a “historic share price increase of almost CAD 65 over 50% in the quarter.”
Compared with the fourth quarter of 2025, Lyons said first-quarter net income increased by CAD 448 million, citing the absence of prior “identified items” and higher prices, “partially offset by lower volumes and the incentive compensation charge.”
By segment, Lyons reported:
- Upstream earnings: CAD 470 million, up CAD 472 million sequentially due to the absence of identified items; excluding those items, he said net income rose CAD 52 million “primarily due to higher prices.”
- Downstream earnings: CAD 611 million, up CAD 92 million sequentially; excluding identified items in the prior quarter, he said net income rose CAD 47 million “mainly due to lower operating expenses.”
- Chemical earnings: CAD 24 million, up CAD 15 million sequentially; excluding identified items, he said net income increased CAD 4 million.
Lyons said cash flow from operating activities in the first quarter was CAD 1.239 billion, down CAD 521 million from the first quarter of 2025. He also flagged an “unfavorable deferred tax” impact of about CAD 350 million, which he attributed primarily to “much higher commodity prices late in the first quarter as compared to the fourth quarter of 2025,” noting that as a U.S. GAAP LIFO reporter the company can see “transitory negative inventory-driven deferred tax impacts when prices rise.”
Capital spending and shareholder returns
Capital expenditures totaled CAD 478 million, Lyons said, up CAD 80 million from the prior-year quarter and down CAD 173 million from the fourth quarter of 2025. Upstream spending of CAD 362 million focused on sustaining capital at Kearl, Cold Lake, and Syncrude, while downstream capital was “primarily spent on sustaining capital projects across our refinery network,” Lyons said.
Imperial paid CAD 350 million of dividends during the quarter. Lyons said the company declared a second-quarter dividend of CAD 0.87 per share and reiterated that management intends to renew its Normal Course Issuer Bid (NCIB) in June.
In response to a question on buybacks and the potential for a substantial issuer bid, Lyons said there was “no change in the way we look at this,” adding that if current prices persist “we’ll have a lot of cash,” and “that would certainly be a possibility,” depending on cash generation and market conditions. He also said management views share repurchases as “an efficient way to return cash.”
Upstream: near-record first-quarter production, Kearl and Cold Lake initiatives
Chairman, President, and CEO John Whelan said upstream production averaged 419,000 gross oil equivalent barrels per day, up 1,000 versus the first quarter of 2025. He added that first-quarter crude production was the “second-highest first quarter result in company history,” coming in about 1,000 barrels per day below the company’s first-quarter record set in 2024.
At Kearl, quarterly production averaged 259,000 barrels per day gross, up 3,000 from the prior-year quarter. Whelan said March volumes were affected by a “third-party regional gas supply outage” that required Imperial to temporarily reduce production. He said the company is focused in the second quarter on a planned turnaround that will extend the turnaround interval at the K-One train from two to four years, similar to work completed last year at K-Two. Later in 2026, Whelan said Imperial plans to add a secondary recovery project “designed to capture additional bitumen from the ore already being processed through the plant.”
Cheryl Gomez-Smith, senior vice president of upstream, detailed multiple Kearl initiatives aimed at increasing recovery and lowering costs, including a project she called “KFCC” expected to come online at the end of the year to capture additional bitumen from processed ore. She also referenced a “coarse sand tailings” project in development. Gomez-Smith said the company is pursuing technology solutions such as “upsiz[ing] our hydro transport lines,” “mine automation,” and fleet optimization, adding that the company intends to offset longer haul distances as the mine develops through “scale optimization and technology solutions.” She also said Kearl is “on target” to reach “our 1 billion barrels of production” milestone by late summer.
At Cold Lake, Whelan said first-quarter production averaged 155,000 barrels per day, up 1,000 from the prior-year quarter, and highlighted progress in shifting output toward technology-advantaged production. Discussing solvent-assisted SAGD, Whelan said Grand Rapids SA-SAGD continued to perform “above 20,000 barrels a day,” while the Leming SAGD project was “ramping up towards 9,000 barrels per day.” He said the company has begun investing in the Mahihkan project, which remains “on track” to start up in 2029 and deliver 30,000 barrels per day of advantaged volumes. Asked about accelerating the broader Cold Lake project pipeline, Whelan said investors “shouldn’t expect or anticipate major changes,” adding that Imperial was not “waiting for a price signal to drive pace” and remains focused on maximizing long-term value.
Imperial’s share of Syncrude production averaged 72,000 barrels per day, down 1,000 from the prior-year quarter, which Whelan attributed to unplanned downtime related to “Coker 8-3.” He said the interconnect pipeline enabled export of an additional 8,000 barrels per day of bitumen and other products during the quarter, and that planned second-quarter turnaround work on “Coker 8-2” was postponed until the summer due to the additional maintenance required.
Downstream: utilization, renewable diesel, and turnarounds
Whelan said Imperial refined 384,000 barrels per day in the first quarter, representing 88% utilization. Throughput was down 13,000 barrels per day year over year, which he attributed to unplanned downtime and disruption of synthetic crude feedstock to Strathcona tied to the Syncrude coker outage until alternative supply was arranged.
Whelan said Imperial’s renewable diesel facility at Strathcona “captured significant value compared to more costly imports,” while the company continued to optimize around hydrogen availability. He said a planned Strathcona turnaround began in early April and was scheduled to be completed in just over a week, focused on the crude unit that achieved a 10-year run length. Scott Maloney, vice president of downstream, said the turnaround is “a normal turnaround from a work scope perspective” and does not include adding new equipment. Maloney also noted that the renewable diesel unit “continues to run during this turnaround” and was not impacted by the turnaround activity to date.
On product demand and sales, Whelan said petroleum product sales were 441,000 barrels per day, down 14,000 year over year, primarily due to “a reduction in opportunistic supply sales,” partially offset by increased retail sales. He added that demand across Imperial’s Canadian network for primary petroleum products was “very similar” to the prior year’s first quarter.
In response to questions about refining flexibility and distillate/jet fuel market opportunities, Whelan and Maloney said the company has been maximizing production of diesel and jet relative to gasoline where economics support it, while balancing supply obligations to Canadian customers. Maloney said the company evaluates the gasoline/diesel/jet splits “every single month” and can leverage its “coast-to-coast logistics network.”
Asked about the synthetic crude oil (SCO) premium, Maloney said Imperial sees “some ongoing ability” to continue pushing jet production and sales into Canada and believes it has sufficient feedstocks. Whelan added that synthetics were “trading higher” because they are “a good way to make diesel and jet,” while cautioning the company would not attempt to predict the future premium.
Restructuring progress and technology focus
Whelan said Imperial’s restructuring and business transformation efforts are “firmly in the implementation phase and progressing well,” with an emphasis on maintaining safe, reliable operations. In Q&A, he described the transition as “pretty ratable,” involving both outsourcing workflows to ExxonMobil global capability centers and capturing efficiencies. Whelan said about 40% of the value is expected from “pure efficiency,” with about 60% tied to outsourcing work. He said roughly 130 people left the organization in the first quarter and that reductions are expected to continue “pretty ratably quarter-by-quarter and year-by-year this year and next year.”
Whelan also discussed Imperial’s access to ExxonMobil technology and the company’s role in heavy oil expertise. He said Imperial has been “the center of excellence around heavy oil technology,” including SAGD and related processes, while also using ExxonMobil technologies in areas like renewable diesel and materials.
Looking ahead, Whelan reiterated priorities of growing volumes, lowering unit cash costs, and increasing cash flow generation, while maintaining capital allocation priorities centered on investment, a growing dividend, and returning surplus cash to shareholders. He also pointed to continued construction of the Enhanced Bitumen Recovery Technology pilot at the Aspen lease as part of longer-term in-situ growth potential.
About Imperial Oil NYSEAMERICAN: IMO
Imperial Oil NYSEAMERICAN: IMO is a Canadian integrated energy company involved in the exploration, production, refining and marketing of petroleum and petrochemical products. Headquartered in Calgary, Alberta, Imperial has operated in Canada for well over a century and is one of the country's long-standing energy firms. The company is majority-owned by Exxon Mobil Corporation, which provides strategic and technical links to global upstream and downstream capabilities.
Imperial's operations span upstream activities—exploration and production of crude oil, natural gas and oil-sands resources—and downstream operations including refining, manufacturing of fuels and lubricants, petrochemical products, and retail distribution.
Further Reading
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider Imperial Oil, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Imperial Oil wasn't on the list.
While Imperial Oil currently has a Reduce rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
Discover the 10 Best High-Yield Dividend Stocks for 2026 and secure reliable income in uncertain markets. Download the report now to identify top dividend payers and avoid common yield traps.
Get This Free Report
