Imperial Oil Q3 Earnings Call Highlights

Key Points

• Imperial Oil reported record quarterly results: Q3 net income rose to C$2.454 billion, supported by higher commodity prices and record Downstream earnings of C$1.555 billion. Operating cash flow exceeded C$3.2 billion, while refining margins and volumes benefited from tight fuel markets.
• Upstream production faced disruptions: Production averaged 418,000 barrels of oil equivalent per day, but third-party pipeline outages and maintenance reduced output and led Imperial to lower its annual Kearl production target to 280,000 barrels per day.
• Shareholder returns and growth remain priorities: Imperial returned nearly C$2.1 billion through share repurchases, paid C$420 million in dividends and maintained its C$0.87 quarterly dividend. The company is also advancing renewable diesel, potential oil-sands developments and discussions around a proposed West Coast pipeline and carbon-capture project.

Imperial Oil NYSEAMERICAN: IMO reported third-quarter net income of C$2.454 billion, up C$1.915 billion from the prior-year period, as higher commodity prices and record Downstream earnings supported results. The company generated more than C$3.2 billion in cash flow from operating activities and ended the quarter with C$2.9 billion in cash.

Chairman, President and CEO John Whelan said the company benefited from its integrated business model, particularly its refining and marketing operations, while Upstream production was affected by third-party pipeline disruptions and scheduled maintenance activity.

“Our Downstream segment delivered record earnings, reflecting tightness in refined product markets as we continue to reliably deliver the fuels Canadians need,” Whelan said. He added that the company continued to see strong market conditions in October.

Financial results and shareholder returns

Senior Vice President of Finance and Administration Dan Lyons said third-quarter net income increased by C$264 million from the second quarter, primarily because of higher Downstream margins and volumes, partly offset by lower crude prices. Excluding C$555 million of identified items in the third quarter of 2025, net income rose C$1.36 billion from a year earlier.

• Upstream earnings were C$941 million, down C$358 million sequentially, primarily due to lower realizations.
• Downstream earnings reached C$1.555 billion, up C$768 million from the second quarter on higher margins and volumes.
• Chemicals earnings were C$52 million, down C$13 million sequentially but up C$31 million from the prior-year quarter because of higher product pricing.
• Capital expenditures totaled C$668 million, including C$514 million in Upstream spending focused on sustaining work at Kearl, Syncrude and Cold Lake.

Imperial paid C$420 million in dividends during the quarter and returned almost C$2.1 billion through accelerated share repurchases under its normal course issuer bid program. The company expects to complete the accelerated NCIB by year-end and said it could consider additional shareholder distributions in 2027.

Lyons said the company cannot renew its NCIB until late June 2027, though a substantial issuer bid could provide another mechanism for earlier share repurchases. Imperial also declared a fourth-quarter dividend of C$0.87 per share, unchanged from the preceding quarter. Lyons said the company has increased its annual dividend for 32 consecutive years.

Upstream production affected by outages

Gross Upstream production averaged 418,000 oil-equivalent barrels per day in the third quarter, 4,000 barrels per day above the second quarter. The absence of a planned Kearl turnaround supported the increase, though this was partly offset by a third-party pipeline outage at Kearl and planned work at Cold Lake and Syncrude.

Kearl produced 282,000 gross barrels per day during the quarter, up 25,000 barrels per day sequentially. A transformer failure affecting the Woodland pipeline caused a full production shutdown for several days in mid-September. Imperial now targets gross annual Kearl production of 280,000 barrels per day, below its previous asset-specific guidance range due to the cumulative effects of third-party events.

Whelan said Kearl reached 1 billion barrels of cumulative production during the quarter. The company also started a flotation-column secondary recovery project intended to recover additional bitumen from ore already being processed. Imperial continues to target Kearl production of 300,000 barrels per day in 2028 and a unit cash cost of C$18 per barrel. It expects no planned major turnarounds at Kearl in 2027 or 2028.

Cold Lake production averaged 139,000 barrels per day, down 10,000 barrels per day from the second quarter, primarily due to the planned Mahihkan turnaround. The work was completed in October ahead of schedule and on budget. The Leming SAGD project was producing 10,000 barrels per day, while the Grand Rapids SA-SAGD project exceeded 21,000 barrels per day. Imperial continues to target 165,000 barrels per day and unit cash costs of C$13 per barrel at Cold Lake.

Imperial’s share of Syncrude production was 70,000 barrels per day, down 3,000 barrels per day sequentially because of the Coker 8-2 turnaround. The company said use of an interconnect pipeline enabled about 10,000 barrels per day of additional Syncrude sweet premium production, net to Imperial.

Record Downstream earnings and renewable diesel progress

Imperial refined 381,000 barrels per day in the third quarter, representing 88% utilization. Throughput increased 50,000 barrels per day from the second quarter, largely because planned turnaround work at Strathcona was absent. An 18-day third-party pipeline outage beginning in late August reduced refinery feedstock availability and curtailed overall throughput by about 12,000 barrels per day during the quarter.

At Strathcona, Imperial reached its highest renewable diesel production to date. Whelan said renewable diesel, which uses canola feedstocks rather than crude oil, is not included in reported refinery throughput but contributed to a C$170 million positive Downstream product-mix factor in the quarter and C$400 million year to date.

The company is progressing rail-logistics debottlenecking work at Strathcona that is expected to improve crude utilization by year-end while supporting continued canola throughput growth. A planned Sarnia turnaround, which ran from mid-September through late October, was completed ahead of schedule and on budget.

Petroleum product sales totaled 474,000 barrels per day, up 28,000 barrels per day from the second quarter, driven by opportunistic domestic sales and higher exports. Whelan said the company sees favorable refining-market conditions continuing, though the duration remains uncertain.

Growth and policy discussions

Management said it remains encouraged by government policy measures and discussions intended to support Canadian oil sands investment, including accelerated capital-cost allowances, project-approval reforms and potential growth royalty incentives. Imperial is participating with industry and governments in efforts to convert a non-binding trilateral memorandum of understanding into definitive agreements.

Whelan said the framework is intended to support production growth, a proposed West Coast pipeline with capacity of 1 million barrels per day, and a proposed 6-million-tonne-per-year carbon-capture project. He said Imperial’s investment decisions will continue to depend on technology readiness, project economics and the fiscal and regulatory environment.

The company is assessing whether to advance the timing of a potential Aspen development, while maintaining Enhanced Bitumen Recovery Technology as its preferred long-term approach. Imperial expects the Aspen pilot to begin in early 2027 and said it could be positioned to make a final investment decision toward the end of the decade. Whelan said Aspen, Clark Creek and Corner would more likely be developed as a sequenced program rather than simultaneously.

About Imperial Oil (NYSEAMERICAN:IMO)

Imperial Oil Limited is an integrated Canadian energy company headquartered in Calgary, Alberta. Founded in 1880, the company explores for, produces, transports, refines and markets crude oil and natural gas, serving customers primarily in Canada. Imperial is one of the country's largest petroleum companies and has a long-standing relationship with Exxon Mobil Corporation, which is its majority shareholder.

Imperial's upstream operations include oil sands production at the Kearl and Cold Lake projects in Alberta, as well as a significant interest in the Syncrude oil sands mining and upgrading operation.

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