Imperial Oil announces estimated third quarter financial and operating results

Imperial Oil announces estimated third quarter financial and operating results 
CALGARY, Nov. 1, 2012 /CNW/ - 
                                  Third quarter      Nine months 
(millions of dollars, unless noted)   2012  2011  %    2012  2011  % 
                                                                 
Net income (U.S. GAAP)               1,040   859 21   2,690 2,366 14 
Net income per common share                                          
-assuming dilution (dollars)        1.22  1.01 21    3.16  2.77 14 
                                                                 
Capital and exploration expenditures 1,409 1,104 28   3,890 2,888 35 


                                                                    

Bruce March, chairman, president and chief executive officer of Imperial Oil, 
commented:

Imperial Oil reached several significant milestones in our growth strategy 
this quarter; advancing Kearl initial development towards the planned start of 
production around year-end, commencing drilling on two production pads at 
Nabiye, and initiating production at our Horn River pilot project. We also 
announced plans to consolidate our Calgary offices into a campus-style complex 
in Quarry Park, a suburban development within Calgary city limits, to support 
our workforce strategy.

Our company growth projects continue to be underpinned by strong third quarter 
earnings of $1,040 million, an increase of 21 percent compared with the 
corresponding 2011 period. Third-quarter Downstream earnings were $536 
million, the strongest single quarter earnings on record. These results were 
primarily driven by solid refining operations that captured strong 
mid-continent refining margins.

Third quarter production averaged 285,000 gross oil-equivalent barrels per day 
compared to 296,000 barrels in the third quarter of 2011. Lower production 
was due primarily to producing property divestments and planned maintenance 
along with the cyclic nature of production at Cold Lake.

Our workforce continues to deliver industry leading safety results during a 
period of prolific growth. We are pleased with our workforce's ability to 
sustain base business performance while executing a complex portfolio of 
capital projects. I am excited by the advances we are making with in-situ and 
oil sands mining technology, which will significantly improve our 
environmental performance in the future.

Imperial Oil is one of Canada's largest corporations and a leading member of 
the country's petroleum industry. The company is a major producer of crude oil 
and natural gas, Canada's largest petroleum refiner, a key petrochemical 
producer and a leading marketer with coast-to-coast supply and retail service 
station networks.

Third quarter highlights
    --  Net income was $1,040 million, compared with $859 million for
        the third quarter of 2011, an increase of 21 percent.
    --  Net income per common share on a diluted basis was $1.22, up 21
        percent from the third quarter of 2011.
    --  Cash generated from operating activities was $669 million, a
        decrease from $1,658 million in the third quarter of 2011,
        primarily due to the timing of scheduled income tax payments
        and inventory builds, partially offset by higher net income.
    --  Gross oil-equivalent barrels of production averaged 285,000
        barrels a day versus 296,000 barrels in the same period last
        year. Lower production was due primarily to producing property
        divestments and planned maintenance along with the cyclic
        nature of production at Cold Lake.
    --  Kearl expansion and Cold Lake expansion project updates - At
        the end of the third quarter of 2012, the Kearl expansion
        project was 20 percent complete. The Nabiye project continued
        to progress facility construction and commenced drilling on two
        production pads in the quarter. The projects are progressing on
        schedule.
    --  Horn River pilot project update - Production began on schedule
        from an eight-horizontal-well pad in August 2012 to assess
        productivity and improve development costs. Imperial continues
        to evaluate information from the pilot phase to determine
        long-term plans for the development.
    --  ExxonMobil Canada acquisition of Celtic Exploration - Imperial
        Oil is currently evaluating the opportunity to participate up
        to 50% in the $3.1 billion purchase of Celtic Exploration
        Limited announced by ExxonMobil Canada on October 17, 2012.
    --  Calgary office project - Imperial will be consolidating its
        Calgary offices into a campus-style complex in Quarry Park,
        starting in 2014 with completion expected by mid-2016. The
        campus will include five low-rise office buildings with about
        800,000 square feet of office space designed to promote
        collaboration and interaction among employees. The site will
        have the capacity to accommodate about 3,000 people.

Kearl initial development project update

At the end of the third quarter of 2012, Kearl initial development was 98 
percent complete, with construction 96 percent complete.

Phased start-up activities currently progressing towards the planned start of 
production around year-end 2012:
    --  All equipment modules have been set in place at the Kearl site.
        The issues associated with the transportation of modules,
        constructed in South Korea and moved through the United States,
        have been addressed through construction re-sequencing.
    --  The operating organization is fully staffed and trained.
    --  Mining operations have commenced and ore is being stockpiled
        adjacent to the ore processing plant, which is being
        commissioned.
    --  Commissioning of the utilities systems is well advanced.
    --  Bitumen processing facilities (which use a proprietary process
        that eliminates the need for an upgrader) are being readied for
        the introduction of solvent.
    --  Diluent and natural gas supply systems are operational.
    --  A new diluted bitumen pipeline connecting to markets is being
        commissioned.

Start-up of an operation of this size and scope is a sequential process and 
good progress towards first oil continues.

Third quarter 2012 vs. third quarter 2011

The company's net income for the third quarter of 2012 was $1,040 million or 
$1.22 a share on a diluted basis, compared with $859 million or $1.01 a share 
for the same period last year.

Higher third quarter earnings were primarily attributable to higher 
mid-continent industry refining margins of about $270 million partially offset 
by lower Syncrude and natural gas realizations of about $75 million. Earnings 
in the third quarter of 2012 were also impacted by higher Kearl production 
readiness expenditures of about $30 million.

Upstream net income in the third quarter was $498 million versus $534 million 
in the same period of 2011. Earnings decreased primarily due to lower Syncrude 
and natural gas realizations of about $75 million, lower Cold Lake production 
of about $40 million and higher Kearl production readiness expenditures of 
about $30 million. These factors were partially offset by lower royalty costs 
of about $60 million, higher Syncrude and conventional volumes of about $60 
million, the latter primarily due to the absence of third-party pipeline 
downtime which significantly reduced conventional production in 2011.

Prices for most of the company's liquids production are based on West Texas 
Intermediate (WTI) crude oil, a common benchmark for mid-continent North 
American oil markets. Compared to the corresponding period last year, the 
average WTI crude price in U.S. dollars was higher by $2.66 a barrel or about 
three percent in the third quarter of 2012. The company's Syncrude 
realizations were impacted by market discounts caused by supply/demand 
imbalances in mid-continent North America. For the third quarter, Syncrude 
realizations in Canadian dollars decreased by about eight percent compared to 
the corresponding period last year. The company's average bitumen realizations 
in Canadian dollars increased in the third quarter of 2012 in line with WTI. 
The company's average realizations on natural gas sales were lower by about 39 
percent in the third quarter in line with the decline in the average of 30-day 
spot prices for natural gas in Alberta.

Gross production of Cold Lake bitumen averaged 152 thousand barrels a day 
during the third quarter, versus 162 thousand barrels in the same period last 
year. Lower volumes were primarily due to higher planned maintenance 
activities along with the cyclic nature of production at Cold Lake.

The company's share of Syncrude's gross production in the third quarter was 78 
thousand barrels a day, versus 75 thousand barrels in the third quarter of 
2011. Higher volumes were primarily the result of lower planned maintenance 
activities partially offset by the negative impact of weather on the mine 
operations in mid-September.

Gross production of conventional crude oil averaged 19 thousand barrels a day 
in the third quarter up from the 12 thousand barrels in the corresponding 
period in 2011 when third-party pipeline downtime significantly reduced 
production at the Norman Wells field.

Gross production of natural gas during the third quarter of 2012 was 188 
million cubic feet a day, down from 252 million cubic feet in the same period 
last year. The lower production volume was primarily a result of the producing 
properties divestments.

Downstream net income was $536 million in the third quarter, $264 million 
higher than the third quarter of 2011. The third quarter earnings for 2012 
were the best quarterly earnings on record and were primarily driven by solid 
refining operations that captured strong mid-continent refining margins.

Mid-continent North America industry refining margins continued to be strong 
in the third quarter of 2012. The overall cost of crude oil processed at three 
of the company's four refineries followed the trend of WTI prices and Western 
Canadian crude oils. Canadian wholesale prices of refined products are largely 
determined by wholesale prices in adjacent U.S. regions, where wholesale 
prices are predominately tied to international product markets. Stronger 
industry refining margins are the result of the widened differential between 
product prices and cost of crude oil processed.

Chemical net income was $37 million in the third quarter, unchanged from the 
same quarter last year.

Net income effects from Corporate & Other were negative $31 million in the 
third quarter, compared with $16 million in the same period of 2011.

Cash flow generated from operating activities was $669 million in the third 
quarter, a decrease of $989 million from the corresponding period in 2011. 
Lower cash flow was primarily due to the timing of scheduled income tax 
payments and inventory builds partially offset by higher net income.

Investing activities used net cash of $1,318 million in the third quarter, 
compared with $1,061 million in the same period of 2011. Additions to 
property, plant and equipment were $1,388 million in the third quarter, 
compared with $1,087 million during the same quarter 2011. Expenditures during 
the quarter were primarily directed towards the advancement of Kearl initial 
development and expansion. At the end of the third quarter of 2012, the Kearl 
initial development and expansion were 98 percent and 20 percent complete, 
respectively. Other investments included advancing the Nabiye expansion 
project at Cold Lake and environmental and efficiency projects at Syncrude.

The company's cash balance was $469 million at September 30, 2012, from $1,202 
million at the end of 2011.

Nine months highlights
    --  Net income was $2,690 million, up from $2,366 million in the
        first nine months of 2011.
    --  Net income per common share increased to $3.16 compared to
        $2.77 in the same period of 2011.
    --  Cash generated from operations was $3,033 million, versus
        $3,273 million in the first nine months of 2011.
    --  Gross oil-equivalent barrels of production averaged 281,000
        barrels a day, compared to 299,000 barrels in the first nine
        months of 2011. Lower production was due primarily to higher
        planned maintenance activities at Syncrude and Cold Lake and
        the impact of divestment of natural gas assets completed in
        2011.
    --  Per-share dividends declared in the first three quarters of
        2012 totalled $0.36, up from $0.33 in the same period of 2011.

Nine months 2012 vs. nine months 2011

Net income for the first nine months of 2012 was $2,690 million or $3.16 a 
share on a diluted basis, versus $2,366 million or $2.77 a share for the first 
nine months of 2011.

For the first nine months, earnings increased primarily due to stronger 
industry refining margins of about $700 million and lower royalty costs of 
about $160 million. These factors were partially offset by the impacts of 
lower Upstream realizations of about $325 million, lower Upstream volumes of 
about $85 million and higher refinery planned maintenance of about $80 
million. Year-to-date earnings in 2012 were also impacted by higher Kearl 
production readiness expenditures of about $60 million.

Upstream net income for the first nine months of 2012 was $1,400 million 
versus $1,686 million from 2011. Earnings were lower primarily due to the 
impacts of lower realizations of about $325 million, lower Syncrude and Cold 
Lake volumes of about $140 million largely as a result of increased planned 
maintenance and higher Kearl production readiness expenditures of about $60 
million. These factors were partially offset by lower royalty costs of about 
$160 million, the impact of a weaker Canadian dollar of about $70 million and 
higher conventional volumes of about $50 million.

Prices for most of the company's liquids production are based on West Texas 
Intermediate (WTI) crude oil, a common benchmark for mid-continent North 
American oil markets. Compared to the corresponding period last year, the 
average WTI crude price in U.S. dollars was essentially unchanged. The 
company's Syncrude realizations were impacted by market discounts caused by 
supply/demand imbalances in mid-continent North America. For the first nine 
months of 2012, Syncrude realizations in Canadian dollars decreased by about 
seven percent compared to the corresponding period last year. The company's 
average bitumen realizations in Canadian dollars increased in the first nine 
months of 2012 in line with WTI. The company's average realizations on natural 
gas sales were lower by about 43 percent in the first nine months of 2012 in 
line with the decline in the average of 30-day spot prices for natural gas in 
Alberta.

Gross production of Cold Lake bitumen was 154 thousand barrels a day, compared 
with 159 thousand barrels in the same period of 2011. Lower volumes were 
primarily due to higher planned maintenance activities in 2012 along with the 
cyclic nature of production at Cold Lake.

During the nine months of the year, the company's share of gross production 
from Syncrude averaged 70 thousand barrels a day, down from 75thousand 
barrels in 2011. Higher planned maintenance activities were the main 
contributor to the lower production.

Gross production of conventional crude oil averaged 20 thousand barrels a day 
the first nine months of the year, up from 17 thousand barrels in the 
corresponding period in 2011 when third-party pipeline downtime significantly 
reduced production at the Norman Wells field.

Gross production of natural gas was 194 million cubic feet a day, down from 
259 million cubic feet in the first nine months of 2011. The lower production 
volume was primarily a result of the producing properties divestments.

Downstream net income was $1,223 million, an increase of $611 million over 
2011. The first nine month earnings for 2012 were the best year-to-date 
earnings on record and were primarily due to stronger industry refining 
margins and partially offset by the unfavourable impact of a higher level of 
refinery planned maintenance activities compared with 2011.

Chemical net income was $121 million, up $10 million from 2011. Strong 
operating performance along with higher polyethylene sales volumes and margins 
were the main contributors to the increase on a year-to-date basis.

For the nine months of 2012, net income effects from Corporate & Other were 
negative $54 million, versus negative $43 million last year.

Key financial and operating data follow.

Forward-Looking Statements

Statements in this report relating to future plans, projections, events or 
conditions are forward-looking statements. Actual future results, including 
project plans, costs, timing and capacities; financing sources; the resolution 
of contingencies and uncertain tax positions; the effect of changes in prices 
and other market conditions; and environmental and capital expenditures could 
differ materially depending on a number of factors, such as the outcome of 
commercial negotiations; changes in the supply of and demand for crude oil, 
natural gas, and petroleum and petrochemical products; political or regulatory 
events; and other factors discussed in Item 1A of the company's 2011 Form 10K.


                                      IMPERIAL OIL LIMITED
                                       THIRD QUARTER 2012
                                                                       
                                      Third Quarter       Nine Months

millions of Canadian dollars,      2012          2011     2012     2011
unless noted  
                                                                       

Net Income (U.S. GAAP)                                                 

  Total revenues and other income 8,336         7,945   23,384   22,590



  Total expenses                  6,949         6,813   19,805   19,448 
Income before income taxes      1,387         1,132    3,579    3,142 
Income taxes                      347           273      889      776 
Net income                      1,040           859    2,690    2,366 
                                                                    
Net income per common share      1.22          1.01     3.17     2.79
  (dollars)   
Net income per common share -    1.22          1.01     3.16     2.77
  assuming dilution (dollars)   
                                                                    
Other Financial Data                                                    
Federal excise tax included in    355           345    1,011      985
  operating revenues    
                                                                    
Gain/(loss) on asset sales,         1            15       67       19
  after tax   
                                                                    
Total assets at September 30                          28,471   24,194 


                                                                       

  Total debt at September 30                             1,429    1,208

  Interest coverage ratio -                                            
  earnings basis  
    (times covered)                                      255.9    280.7
                                                                       

  Other long-term obligations at                         3,748    2,737
  September 30  
                                                                       

  Shareholders' equity at                               15,652   13,163
  September 30    

  Capital employed at September                         17,106   14,399
  30    

  Return on average capital                                            
  employed (a)  
       (percent)                                          23.5     24.1
                                                                       

  Dividends declared on common                                         
  stock  
    Total                           102            93      306      280
    Per common share (dollars)     0.12          0.11     0.36     0.33
                                                                       

  Millions of common shares                                            
  outstanding  
    At September 30                                      847.6    847.6
    Average - assuming dilution   851.4         853.8    851.4    854.0
                                                                       
                                                                       

(a) Return on capital employed is net income excluding after-tax cost
    of financing divided by the average
    rolling four quarters' capital employed.
                                         IMPERIAL OIL LIMITED
                                       THIRD QUARTER 2012
                                                                       
                                      Third Quarter         Nine Months

millions of Canadian dollars         2012      2011      2012      2011
                                                                       

Total cash and cash equivalents       469       920       469       920
at period end
                                                                       

Net income                          1,040       859     2,690     2,366

Adjustment for non-cash items:                                         

  Depreciation and depletion          183       192       551       570

  (Gain)/loss on asset sales          (2)      (17)      (86)      (23)

  Deferred income taxes and            72        59       289      (27)
  other

Changes in operating assets and     (624)       565     (411)       387
liabilities

Cash flows from (used in)             669     1,658     3,033     3,273
operating activities (a)
                                                                       

Cash flows from (used in)         (1,318)   (1,061)   (3,606)   (2,760)
investing activities

  Proceeds from asset sales            70        24       209        44
                                                                       

Cash flows from (used in)             122      (96)     (160)       140
financing activities
                                                                       
                                                                       

(a)       Cash flows from operating activities was lower in the third
          quarter of 2012 when compared to the
          same period in 2011 primarily due to the timing of scheduled
          income tax payments and inventory
          builds partially offset by higher net income.
          Cash flows from operating activites was lower in the first
          nine months of 2012 when compared to
          the same period in 2011 primarily due to working capital
          effects partially offset by higher net income.
                                        IMPERIAL OIL LIMITED
                                       THIRD QUARTER 2012
                                                                      
                                     Third Quarter         Nine Months

millions of Canadian dollars        2012      2011      2012      2011
                                                                      

Net income (U.S. GAAP)                                                

  Upstream                           498       534     1,400     1,686

  Downstream                         536       272     1,223       612

  Chemical                            37        37       121       111

  Corporate and other               (31)        16      (54)      (43)

  Net income                       1,040       859     2,690     2,366
                                                                      

Revenues and other income                                             

  Upstream                         2,069     2,258     6,620     7,140

  Downstream                       7,535     6,956    20,765    19,781

  Chemical                           369       416     1,211     1,281

  Eliminations/Other             (1,637)   (1,685)   (5,212)   (5,612)

  Total                            8,336     7,945    23,384    22,590
                                                                      

Purchases of crude oil and                                            
products 

  Upstream                           593       781     2,354     2,605

  Downstream                       5,818     5,596    16,073    16,012

  Chemical                           254       304       850       940

  Eliminations                   (1,639)   (1,688)   (5,220)   (5,618)

  Purchases of crude oil and       5,026     4,993    14,057    13,939
  products
                                                                      

Production and manufacturing                                          
expenses

  Upstream                           671       627     1,963     1,822

  Downstream                         357       347     1,197     1,099

  Chemical                            46        43       138       133

  Production and manufacturing     1,074     1,017     3,298     3,054
  expenses
                                                                      

Capital and exploration                                               
expenditures

  Upstream                         1,376     1,051     3,793     2,753

  Downstream                          27        48        80       120

  Chemical                             1         -         3         3

  Corporate and other                  5         5        14        12

  Capital and exploration          1,409     1,104     3,890     2,888
  expenditures
                                                                      

  Exploration expenses charged        21        17        67        76
      to income included above
                                                                      
                                         IMPERIAL OIL LIMITED
                                       THIRD QUARTER 2012
                                                                       
                                                                       

Operating statistics                   Third Quarter      Nine Months
                                        2012    2011    2012       2011
                                                                       

Gross crude oil and Natural Gas                                        
Liquids (NGL) production

(thousands of barrels a day)                                           

  Cold Lake                              152     162     154        159

  Syncrude                                78      75      70         75

  Conventional                            19      12      20         17

  Total crude oil production             249     249     244        251

  NGLs available for sale                  4       5       5          5

  Total crude oil and NGL production     253     254     249        256
                                                                       

Gross natural gas production             188     252     194        259
(millions of cubic feet a day)
                                                                       

Gross oil-equivalent production (a)                                    

(thousands of oil-equivalent barrels     285     296     281        299
a day)
                                                                       

Net crude oil and NGL production                                       
(thousands of barrels a day)

  Cold Lake                              126     124     120        119

  Syncrude                                75      70      67         70

  Conventional                            15       9      15         12

  Total crude oil production             216     203     202        201

  NGLs available for sale                  3       4       3          4

  Total crude oil and NGL production     219     207     205        205
                                                                       

Net natural gas production (millions     182     211     197        229
of cubic feet a day)
                                                                       

Net oil-equivalent production (a)                                      

(thousands of oil-equivalent barrels     249     242     238        243
a day)
                                                                       

Cold Lake blend sales (thousands of      191     205     200        208
barrels a day)

NGL sales (thousands of barrels a          5       9       8          9
day)

Natural gas sales (millions of cubic     185     230     183        241
feet a day)
                                                                       

Average realizations (Canadian                                         
dollars)

  Conventional crude oil               77.25   74.31   77.43      83.64
  realizations (a barrel)

  NGL realizations (a barrel)          38.43   54.31   43.76      58.67

  Natural gas realizations (a           2.18    3.56    2.12       3.70
  thousand cubic feet)

  Synthetic oil realizations (a        90.25   97.89   93.04     100.48
  barrel)

  Bitumen realizations (a barrel)      59.86   58.23   61.07      60.90
                                                                       

Refinery throughput (thousands of        449     436     424        429
barrels a day)

Refinery capacity utilization             89      86      84         85
(percent)
                                                                       

Petroleum product sales (thousands                                     
of barrels a day)

  Gasolines (Mogas)                      240     230     220        218

  Heating, diesel and jet fuels          161     160     148        158
  (Distillates)

  Heavy fuel oils (HFO)                   34      26      30         27

  Lube oils and other products            58      48      42         43
  (Other)

  Net petroleum products sales           493     464     440        446
                                                                       

Petrochemical sales (thousands of        252     257     780        778
tonnes)

(a) Gas converted to oil-equivalent at 6 million cubic feet = 1
thousand barrels      
    
                                     IMPERIAL OIL LIMITED
                                       THIRD QUARTER 2012
                                                           
                                                           
                                                            Net income
                         Net income (U.S. GAAP)       per common share
                 (millions of Canadian dollars)              (dollars)
                                                           

2008                                                       

First Quarter                               681                   0.76

Second Quarter                            1,148                   1.29

Third Quarter                             1,389                   1.57

Fourth Quarter                              660                   0.77

Year                                      3,878                   4.39
                                                           
                                                           

2009                                                       

First Quarter                               289                   0.34

Second Quarter                              209                   0.25

Third Quarter                               547                   0.64

Fourth Quarter                              534                   0.63

Year                                      1,579                   1.86
                                                           
                                                           

2010                                                       

First Quarter                               476                   0.56

Second Quarter                              517                   0.61

Third Quarter                               418                   0.49

Fourth Quarter                              799                   0.95

Year                                      2,210                   2.61
                                                           
                                                           

2011                                                       

First Quarter                               781                   0.92

Second Quarter                              726                   0.86

Third Quarter                               859                   1.01

Fourth Quarter                            1,005                   1.19

Year                                      3,371                   3.98
                                                           

2012                                                       

First Quarter                             1,015                   1.20

Second Quarter                              635                   0.75

Third Quarter                             1,040                   1.22







403-237-2710

SOURCE: Imperial Oil Limited

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CO: Imperial Oil Limited
ST: Alberta
NI: OIL 

-0- Nov/01/2012 13:00 GMT