Imperial Oil Q2 Earnings Call Highlights

Imperial Oil NYSEAMERICAN: IMO reported second-quarter net income of CAD 2.19 billion, up CAD 1.24 billion from a year earlier and CAD 1.25 billion from the first quarter, as higher commodity prices lifted results across its upstream and downstream operations.

Cash flow from operating activities totaled about CAD 2.7 billion, or CAD 2.52 billion excluding working-capital effects. The company ended the quarter with more than CAD 2.8 billion in cash. Capital expenditures were CAD 531 million, including CAD 359 million directed toward sustaining work at Kearl, Cold Lake and Syncrude.

Chairman, President and CEO John Whelan said the company intends to accelerate repurchases under its normal course issuer bid, or NCIB, and expects to buy back all remaining allowable shares before year-end. Imperial paid CAD 421 million in dividends during the quarter and declared a third-quarter dividend of CAD 0.87 per share.

Higher Prices Support Upstream Earnings

Upstream earnings reached CAD 1.30 billion, an increase of CAD 829 million from the first quarter, primarily due to higher crude prices. Total upstream production averaged 414,000 gross oil-equivalent barrels per day, down 5,000 barrels per day sequentially.

Whelan said planned turnaround activity at Kearl, unplanned maintenance at Cold Lake and extreme rainfall at Syncrude weighed on quarterly output. Imperial maintained its full-year gross production guidance but now expects output to fall toward the low end of its range based on first-half results.

Kearl produced 257,000 barrels per day during the quarter, down 2,000 barrels per day from the first quarter. The company completed planned work on the K1 train ahead of schedule and below budget, extending Kearl’s turnaround interval to four years. The next planned Kearl turnaround is scheduled for 2029.

Management said Kearl’s second-quarter 2025 ore grades had been unusually strong, rather than current ore grades being unusually weak. Whelan said the company remains confident in the mine’s ore quality relative to other oil sands operations. Construction on flotation columns, a secondary recovery project designed to capture additional bitumen from processed ore, is nearing completion. Commissioning is expected to begin in the third quarter, with production startup anticipated in the fourth quarter.

Imperial reiterated its objective to reduce Kearl unit operating costs to CAD 18 per barrel in 2027, after reporting costs below CAD 20 per barrel last year. Whelan also said the company remains focused on lifting Kearl production to 300,000 barrels per day through recovery, reliability and productivity improvements.

Cold Lake Optimization and Longer-Term Growth

Cold Lake production averaged 149,000 barrels per day, down 6,000 barrels per day from the prior quarter because of unplanned maintenance completed in May. Imperial transferred volumes from its older Leming plant into available capacity at the Maskwacis and Mehekis plants, allowing the company to decommission the Leming plant and reduce its cost structure.

The company continues to ramp up its Leming SAGD project and is advancing an Enhanced Bitumen Recovery Technology pilot at its Aspen lease. Startup of the pilot remains targeted for 2027.

Whelan said Imperial’s Aspen, Clark Creek and Corner assets could potentially double its gross operated upstream production over time, contingent on a supportive investment climate and other factors. The company is conducting delineation drilling at Corner and Clark Creek to further assess the resources and development approach, with Enhanced Bitumen Recovery Technology expected to be the technology applied across all three assets if proven successful at Aspen.

Imperial’s share of Syncrude production was 73,000 barrels per day, up 1,000 barrels per day sequentially. Syncrude used its interconnect pipeline to import bitumen and gas oil, supporting about 11,000 barrels per day of additional Syncrude Sweet Premium production attributable to Imperial. A planned turnaround on Coker 8-2, deferred from the second quarter, is expected to begin in the latter half of August and last about 50 days.

Downstream Guidance Reduced After Operational Issues

Downstream earnings were CAD 787 million, up CAD 176 million from the first quarter as higher margins more than offset the impact of planned work at the Strathcona refinery. Refinery throughput averaged 331,000 barrels per day, representing 76% utilization and a decline of 53,000 barrels per day from the prior quarter.

Imperial lowered its full-year downstream throughput guidance by approximately 6%. Whelan cited higher unplanned downtime during the first half, reduced crude throughput at Strathcona as the company prioritized renewable diesel production, and unplanned downtime at Nanticoke in mid-July.

• Strathcona’s planned crude-unit turnaround was completed after a record 10-year run length, and management expects it to rank in the first quartile for cost and duration against industry benchmarks.
• Imperial is adding rail-handling capacity at Strathcona after identifying congestion as renewable diesel volumes ramped up. The work is expected to be completed by year-end.
• Nanticoke’s other units continued operating during the mid-July interruption, and full operations were expected to resume by early August.

Whelan said the company expects higher volumes and throughput across the business during the second half as major turnaround activity has been completed. Petroleum product sales were 446,000 barrels per day, down 5,000 barrels per day from the first quarter, while management said demand across its Canadian network was similar to 2025 levels.

Imperial’s chemicals business earned CAD 65 million, up CAD 41 million from the first quarter due to higher polyethylene margins. The company also said its restructuring program has entered the implementation phase. Senior Vice President of Finance and Administration Dan Lyons said the effort is expected to deliver CAD 150 million in lower cash operating expenses by 2028.

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.

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