IMPERIAL OIL LTD 10-Q

Item 1. Financial statements Consolidated statement of income (U.S. GAAP, unaudited) Third Quarter Nine Months to September 30 millions of Canadian dollars 2022 2021 2022 2021 Revenues and other income Revenues (a) 15,071 10,214 45,013 25,213 Investment and other income (note 3, 11) 153 19 204 65 Total revenues and other income 15,224 10,233 45,217 25,278 Expenses Exploration 1 2 4 6 Purchases of crude oil and products (b) 9,478 6,298 28,849 15,052 Production and manufacturing (c) 1,872 1,525 5,439 4,579 Selling and general (c) 209 180 625 569 Federal excise tax and fuel charge 584 535 1,616 1,404 Depreciation and depletion 555 488 1,432 1,432 Non-service pension and postretirement benefit 4 11 13 32 Financing (d) (note 5) 16 5 34 32 Total expenses 12,719 9,044 38,012 23,106 Income (loss) before income taxes 2,505 1,189 7,205 2,172 Income taxes 474 281 1,592 506 Net income (loss) 2,031 908 5,613 1,666 Per share information (Canadian dollars) Net income (loss) per common share - basic (note 9) 3.25 1.30 8.60 2.32 Net income (loss) per common share - diluted (note 9) 3.24 1.29 8.58 2.31 (a) Amounts from related parties included in revenues. 4,454 2,731 13,588 5,644 (b) Amounts to related parties included in purchases of crude oil and products. 1,086 828 2,865 2,009 (c) Amounts to related parties included in production and manufacturing, and selling and general expenses. 120 95 354 317 (d) Amounts to related parties included in financing, (note 5). 28 4 45 25 The information in the notes to consolidated financial statements is an integral part of these statements. 3 IMPERIAL OIL LIMITED Consolidated statement of comprehensive income (U.S. GAAP, unaudited) Third Quarter Nine Months to September 30 millions of Canadian dollars 2022 2021 2022 2021 Net income (loss) 2,031 908 5,613 1,666 Other comprehensive income (loss), net of income taxes Postretirement benefits liability adjustment (excluding amortization) — — 24 54 Amortization of postretirement benefits liability adjustment included in net benefit costs 21 33 63 99 Total other comprehensive income (loss) 21 33 87 153 Comprehensive income (loss) 2,052 941 5,700 1,819 The information in the notes to consolidated financial statements is an integral part of these statements. 4 IMPERIAL OIL LIMITED Consolidated balance sheet (U.S. GAAP, unaudited) millions of Canadian dollars As at Sept 30 2022 As at Dec 31 2021 Assets Current assets Cash and cash equivalents 3,576 2,153 Accounts receivable - net (a) 5,179 3,869 Inventories of crude oil and products 1,495 1,102 Materials, supplies and prepaid expenses 755 689 Total current assets 11,005 7,813 Investments and long-term receivables (b) 883 757 Property, plant and equipment, 53,763 56,762 less accumulated depreciation and depletion ( 23,750 ) ( 25,522 ) Property, plant and equipment, net (note 11) 30,013 31,240 Goodwill 166 166 Other assets, including intangibles - net 919 806 Total assets 42,986 40,782 Liabilities Current liabilities Notes and loans payable 122 122 Accounts payable and accrued liabilities (a) (note 7) 6,498 5,184 Income taxes payable 2,314 248 Total current liabilities 8,934 5,554 Long-term debt (c) (note 6) 4,038 5,054 Other long-term obligations (note 7) 3,428 3,897 Deferred income tax liabilities 4,278 4,542 Total liabilities 20,678 19,047 Shareholders’ equity Common shares at stated value (d) (note 9) 1,129 1,252 Earnings reinvested 22,269 21,660 Accumulated other comprehensive income (loss) (note 10) ( 1,090 ) ( 1,177 ) Total shareholders’ equity 22,308 21,735 Total liabilities and shareholders’ equity 42,986 40,782 (a) Accounts receivable - net included net amounts receivable from related parties of $ 1,534 million (2021 - $ 1,031 million). (b) Investments and long-term receivables included amounts from related parties of $ 289 million (2021 - $ 298 million). (c) Long-term debt included amounts to related parties of $ 3,447 million (2021 - $ 4,447 million). (d) Number of common shares authorized and outstanding were 1,100 million and 612 million, respectively (2021 - 1,100 million and 678 million, respectively). The information in the notes to consolidated financial statements is an integral part of these statements. 5 IMPERIAL OIL LIMITED Consolidated statement of shareholders’ equity (U.S. GAAP, unaudited) Third Quarter Nine Months to September 30 millions of Canadian dollars 2022 2021 2022 2021 Common shares at stated value (note 9) At beginning of period 1,177 1,302 1,252 1,357 Share purchases at stated value ( 48 ) ( 16 ) ( 123 ) ( 71 ) At end of period 1,129 1,286 1,129 1,286 Earnings reinvested At beginning of period 21,913 21,336 21,660 22,050 Net income (loss) for the period 2,031 908 5,613 1,666 Share purchases in excess of stated value ( 1,464 ) ( 297 ) ( 4,338 ) ( 1,413 ) Dividends declared ( 211 ) ( 188 ) ( 666 ) ( 544 ) At end of period 22,269 21,759 22,269 21,759 Accumulated other comprehensive income (loss) (note 10) At beginning of period ( 1,111 ) ( 1,869 ) ( 1,177 ) ( 1,989 ) Other comprehensive income (loss) 21 33 87 153 At end of period ( 1,090 ) ( 1,836 ) ( 1,090 ) ( 1,836 ) Shareholders’ equity at end of period 22,308 21,209 22,308 21,209 The information in the notes to consolidated financial statements is an integral part of these statements. 6 IMPERIAL OIL LIMITED Consolidated statement of cash flows (U.S. GAAP, unaudited) Inflow (outflow) Third Quarter Nine Months to September 30 millions of Canadian dollars 2022 2021 2022 2021 Operating activities Net income (loss) 2,031 908 5,613 1,666 Adjustments for non-cash items: Depreciation and depletion 555 488 1,432 1,432 (Gain) loss on asset sales (note 3, 11) ( 131 ) ( 12 ) ( 155 ) ( 39 ) Deferred income taxes and other 122 ( 120 ) ( 358 ) 16 Changes in operating assets and liabilities: Accounts receivable 1,648 ( 708 ) ( 1,322 ) ( 1,952 ) Inventories, materials, supplies and prepaid expenses ( 70 ) ( 199 ) ( 461 ) ( 300 ) Income taxes payable 296 227 1,608 269 Accounts payable and accrued liabilities ( 1,328 ) 1,123 1,315 2,362 All other items - net (b) ( 34 ) 240 13 390 Cash flows from (used in) operating activities 3,089 1,947 7,685 3,844 Investing activities Additions to property, plant and equipment ( 397 ) ( 276 ) ( 1,034 ) ( 684 ) Proceeds from asset sales (note 3, 11) 760 15 886 57 Additional investments ( 6 ) — ( 6 ) — Loans to equity companies - net 7 2 9 14 Cash flows from (used in) investing activities 364 ( 259 ) ( 145 ) ( 613 ) Financing activities Short-term debt - net — ( 75 ) — ( 111 ) Long-term debt - reductions (note 6) ( 1,000 ) — ( 1,000 ) — Reduction in finance lease obligations (note 6) ( 5 ) ( 6 ) ( 16 ) ( 14 ) Dividends paid ( 227 ) ( 195 ) ( 640 ) ( 518 ) Common shares purchased (note 9) ( 1,512 ) ( 313 ) ( 4,461 ) ( 1,484 ) Cash flows from (used in) financing activities ( 2,744 ) ( 589 ) ( 6,117 ) ( 2,127 ) Increase (decrease) in cash 709 1,099 1,423 1,104 Cash at beginning of period 2,867 776 2,153 771 Cash at end of period (a) 3,576 1,875 3,576 1,875 (a)  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. (b)  Included contributions to registered pension plans. ( 41 ) ( 43 ) ( 137 ) ( 113 ) Income taxes (paid) refunded. ( 64 ) 32 ( 339 ) 60 Interest (paid), net of capitalization. ( 19 ) ( 5 ) ( 41 ) ( 32 ) The information in the notes to consolidated financial statements is an integral part of these statements. 7 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 United States Generally Accepted Accounting Principles (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 2021 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. The company’s exploration and production activities are accounted for under the “successful efforts” method. The results for the nine months ended September 30, 2022, are not necessarily indicative of the operations to be expected for the full year. All amounts are in Canadian dollars unless otherwise indicated. 8 IMPERIAL OIL LIMITED 2. Business segments Third Quarter Upstream Downstream Chemical millions of Canadian dollars 2022 2021 2022 2021 2022 2021 Revenues and other income Revenues (a) (b) 156 1,015 14,537 8,813 378 386 Intersegment sales (c) 4,665 3,137 1,693 366 142 91 Investment and other income (note 3, 11) 128 — 6 18 — — 4,949 4,152 16,236 9,197 520 477 Expenses Exploration 1 2 — — — — Purchases of crude oil and products (c) 1,937 1,902 13,686 7,745 354 244 Production and manufacturing 1,381 1,120 419 356 72 49 Selling and general — — 174 141 17 21 Federal excise tax and fuel charge — — 583 535 1 — Depreciation and depletion 501 439 44 39 4 4 Non-service pension and postretirement benefit — — — — — — Financing (note 5) — — — — — — Total expenses 3,820 3,463 14,906 8,816 448 318 Income (loss) before income taxes 1,129 689 1,330 381 72 159 Income tax expense (benefit) 143 165 318 88 18 38 Net income (loss) (c) 986 524 1,012 293 54 121 Cash flows from (used in) operating activities (c) 1,280 2,508 1,532 ( 733 ) 109 157 Capital and exploration expenditures (d) 309 151 64 120 2 2 Third Quarter Corporate and other Eliminations Consolidated millions of Canadian dollars 2022 2021 2022 2021 2022 2021 Revenues and other income Revenues (a) (b) — — — — 15,071 10,214 Intersegment sales (c) — — ( 6,500 ) ( 3,594 ) — — Investment and other income (note 3, 11) 19 1 — — 153 19 19 1 ( 6,500 ) ( 3,594 ) 15,224 10,233 Expenses Exploration — — — — 1 2 Purchases of crude oil and products (c) — — ( 6,499 ) ( 3,593 ) 9,478 6,298 Production and manufacturing — — — — 1,872 1,525 Selling and general 19 19 ( 1 ) ( 1 ) 209 180 Federal excise tax and fuel charge — — — — 584 535 Depreciation and depletion 6 6 — — 555 488 Non-service pension and postretirement benefit 4 11 — — 4 11 Financing (note 5) 16 5 — — 16 5 Total expenses 45 41 ( 6,500 ) ( 3,594 ) 12,719 9,044 Income (loss) before income taxes ( 26 ) ( 40 ) — — 2,505 1,189 Income tax expense (benefit) ( 5 ) ( 10 ) — — 474 281 Net income (loss) (c) ( 21 ) ( 30 ) — — 2,031 908 Cash flows from (used in) operating activities (c) 168 15 — — 3,089 1,947 Capital and exploration expenditures (d) 17 4 — — 392 277 9 IMPERIAL OIL LIMITED (a) Included export sales to the United States of $ 3,176 million (2021 - $ 1,803 million). (b) Includes approximately 13 % and 10 % related to revenue outside the scope of ASC 606 “Revenue from Contracts with Customers” for the three months ended September 30, 2022 and September 30, 2021, respectively. Trade receivables in Accounts receivable – net reported on the Balance Sheet include both receivables within the scope of ASC 606 and those outside the scope of ASC 606. Revenue and receivables outside the scope of ASC 606 primarily relate to physically settled commodity contracts accounted for as derivatives. Credit quality and type of customer are generally similar between those revenues and receivables within the scope of ASC 606 and those outside it. (c) In the third quarter of 2021, the Downstream segment acquired a portion of Upstream crude inventory for $ 444 million. There was no earnings impact and the effects of this transaction have been eliminated for consolidation purposes. (d) Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to finance leases, additional investments and acquisitions and the company’s share of similar costs for equity companies. CAPEX excludes the purchase of carbon emission credits. 10 IMPERIAL OIL LIMITED Nine Months to September 30 Upstream Downstream Chemical millions of Canadian dollars 2022 2021 2022 2021 2022 2021 Revenues and other income Revenues (a) (b) 374 5,773 43,480 18,355 1,159 1,085 Intersegment sales (c) 14,923 5,800 5,550 1,927 395 223 Investment and other income (note 3, 11) 135 6 36 51 — 1 15,432 11,579 49,066 20,333 1,554 1,309 Expenses Exploration 4 6 — — — — Purchases of crude oil and products (c) 6,184 5,780 42,459 16,525 1,070 693 Production and manufacturing 4,053 3,395 1,193 1,039 193 145 Selling and general — — 474 416 62 68 Federal excise tax and fuel charge — — 1,615 1,404 1 — Depreciation and depletion 1,269 1,283 130 117 13 13 Non-service pension and postretirement benefit — — — — — — Financing (note 5) 1 1 — — — — Total expenses 11,511 10,465 45,871 19,501 1,339 919 Income (loss) before income taxes 3,921 1,114 3,195 832 215 390 Income tax expense (benefit) 807 264 761 187 52 93 Net income (loss) (c) 3,114 850 2,434 645 163 297 Cash flows from (used in) operating activities (c) 4,814 3,634 2,548 ( 135 ) 240 330 Capital and exploration expenditures (d) 764 366 201 308 5 6 Total assets as at September 30 (c) (note 11) 28,099 29,540 9,972 8,239 482 488 Nine Months to September 30 Corporate and other Eliminations Consolidated millions of Canadian dollars 2022 2021 2022 2021 2022 2021 Revenues and other income Revenues (a) (b) — — — — 45,013 25,213 Intersegment sales (c) — — ( 20,868 ) ( 7,950 ) — — Investment and other income (note 3, 11) 33 7 — — 204 65 33 7 ( 20,868 ) ( 7,950 ) 45,217 25,278 Expenses Exploration — — — — 4 6 Purchases of crude oil and products (c) — — ( 20,864 ) ( 7,946 ) 28,849 15,052 Production and manufacturing — — — — 5,439 4,579 Selling and general 93 89 ( 4 ) ( 4 ) 625 569 Federal excise tax and fuel charge — — — — 1,616 1,404 Depreciation and depletion 20 19 — — 1,432 1,432 Non-service pension and postretirement benefit 13 32 — — 13 32 Financing (note 5) 33 31 — — 34 32 Total expenses 159 171 ( 20,868 ) ( 7,950 ) 38,012 23,106 Income (loss) before income taxes ( 126 ) ( 164 ) — — 7,205 2,172 Income tax expense (benefit) ( 28 ) ( 38 ) — — 1,592 506 Net income (loss) (c) ( 98 ) ( 126 ) — — 5,613 1,666 Cash flows from (used in) operating activities (c) 83 15 — — 7,685 3,844 Capital and exploration expenditures (d) 32 19 — — 1,002 699 Total assets as at September 30 (c) (note 11) 4,704 2,778 ( 271 ) ( 170 ) 42,986 40,875 11 IMPERIAL OIL LIMITED (a) Included export sales to the United States of $ 9,551 million (2021 - $ 4,916 million). (b) Includes approximately 12 % and 5 % related to revenue outside the scope of ASC 606 “Revenue from Contracts with Customers” for the nine months ended September 30, 2022 and September 30, 2021, respectively. Trade receivables in Accounts receivable – net reported on the Balance Sheet include both receivables within the scope of ASC 606 and those outside the scope of ASC 606. Revenue and receivables outside the scope of ASC 606 primarily relate to physically settled commodity contracts accounted for as derivatives. Credit quality and type of customer are generally similar between those revenues and receivables within the scope of ASC 606 and those outside it. (c) In the third quarter of 2021, the Downstream segment acquired a portion of Upstream crude inventory for $ 444 million. There was no earnings impact and the effects of this transaction have been eliminated for consolidation purposes. (d) Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to finance leases, additional investments and acquisitions and the company’s share of similar costs for equity companies. CAPEX excludes the purchase of carbon emission credits. 12 IMPERIAL OIL LIMITED 3. Investment and other income Investment and other income included gains and losses on asset sales as follows: Third Quarter Nine Months to September 30 millions of Canadian dollars 2022 2021 2022 2021 Proceeds from asset sales 854 15 886 57 Book value of asset sales 723 3 731 18 Gain (loss) on asset sales, before tax (a) 131 12 155 39 Gain (loss) on asset sales, after tax (a) 222 10 241 34 (a) The third quarter of 2022 included a gain of $ 116 million ($ 208 million, after tax) from the sale of interests in XTO Energy Canada, which included the removal of a deferred tax liability. 4. Employee retirement benefits The components of net benefit cost were as follows: Third Quarter Nine Months to September 30 millions of Canadian dollars 2022 2021 2022 2021 Pension benefits: Service cost 70 81 210 243 Interest cost 74 68 221 204 Expected return on plan assets ( 103 ) ( 107 ) ( 309 ) ( 321 ) Amortization of prior service cost 4 4 12 12 Amortization of actuarial loss (gain) 21 36 64 108 Net benefit cost 66 82 198 246 Other postretirement benefits: Service cost 6 7 17 21 Interest cost 6 6 18 17 Amortization of actuarial loss (gain) 2 4 7 12 Net benefit cost 14 17 42 50 5. Financing costs Third Quarter Nine Months to September 30 millions of Canadian dollars 2022 2021 2022 2021 Debt-related interest 34 9 66 50 Capitalized interest ( 18 ) ( 4 ) ( 33 ) ( 19 ) Net interest expense 16 5 33 31 Other interest — — 1 1 Total financing 16 5 34 32 During the second quarter of 2022, the company reduced its existing $ 500 million committed long-term line of credit to $ 250 million and extended the maturity date to June 30, 2023 . The company also extended one of its $ 250 million committed long-term lines of credit to June 30, 2024 . The company has not drawn on any of its outstanding $ 750 million of available credit facilities. 13 IMPERIAL OIL LIMITED 6. Long-term debt millions of Canadian dollars As at Sept 30 As at Dec 31 2022 2021 Long-term debt (a) 3,447 4,447 Finance leases 591 607 Total long-term debt 4,038 5,054 (a) During the third quarter of 2022, the company decreased its long-term debt by $ 1 billion by partially repaying an existing facility with an affiliated company of ExxonMobil. 7. Other long-term obligations As at Sept 30 As at Dec 31 millions of Canadian dollars 2022 2021 Employee retirement benefits (a) 1,328 1,362 Asset retirement obligations and other environmental liabilities (b) 1,677 1,713 Share-based incentive compensation liabilities 121 79 Operating lease liability (c) 121 147 Other obligations 181 596 Total other long-term obligations 3,428 3,897 (a) Total recorded employee retirement benefits obligations also included $ 56 million in current liabilities (2021 - $ 56 million). (b) Total asset retirement obligations and other environmental liabilities also included $ 101 million in current liabilities (2021 - $ 102 million). (c) Total operating lease liability also included $ 92 million in current liabilities (2021 - $ 102 million). In addition to the total operating lease liability, additional undiscounted commitments for leases not yet commenced totalled $ 49 million (2021 - $ 5 million). 14 IMPERIAL OIL LIMITED 8. Financial and derivative instruments Financial instruments The fair value of the company’s financial instruments is determined by reference to various market data and other appropriate valuation techniques. There are no material differences between the fair value of the company’s financial instruments and the recorded carrying value. At September 30, 2022 and December 31, 2021, the fair value of long-term debt ($ 3,447 million and $ 4,447 million respectively, excluding finance lease obligations) was primarily a level 2 measurement. Derivative instruments The company’s size, strong capital structure and the complementary nature of the Upstream, Downstream and Chemical businesses reduce the company’s enterprise-wide risk from changes in commodity prices and currency exchange rates. In addition, the company uses commodity-based contracts, including derivative instruments to manage commodity price risk and to generate returns from trading. Commodity contracts held for trading purposes are presented in the Consolidated statement of income on a net basis in the line “Revenues”. The company does not designate derivative instruments as a hedge for hedge accounting purposes. Credit risk associated with the company’s derivative position is mitigated by several factors, including the use of derivative clearing exchanges and the quality of and financial limits placed on derivative counterparties. The company maintains a system of controls that includes the authorization, reporting and monitoring of derivative activity. The net notional long/(short) position of derivative instruments was: As at Sept 30 As at Dec 31 thousands of barrels 2022 2021 Crude 2,690 7,390 Products ( 1,210 ) ( 560 ) Realized and unrealized gain/(loss) on derivative instruments recognized in the Consolidated statement of income is included in the following lines on a before-tax basis: Third Quarter Nine Months to September 30 millions of Canadian dollars 2022 2021 2022 2021 Revenues 105 ( 21 ) 91 ( 30 ) Purchases of crude oil and products — — — ( 33 ) Total 105 ( 21 ) 91 ( 63 ) 15 IMPERIAL OIL LIMITED The estimated fair value of derivative instruments, and the related hierarchy level for the fair value measurement is as follows: At September 30, 2022 millions of Canadian dollars Fair value Effect of counterparty netting Effect of collateral netting Net carrying value Level 1 Level 2 Level 3 Total Assets Derivative assets (a) 55 35 — 90 ( 27 ) ( 38 ) 25 Liabilities Derivative liabilities (b) 17 16 — 33 ( 27 ) — 6 (a) Included in the Consolidated balance sheet line: “Materials, supplies and prepaid expenses”, “Accounts receivable - net” and “Other assets, including intangibles - net”. (b) Included in the Consolidated balance sheet line: “Accounts payable and accrued liabilities” and “Other long-term obligations”. At December 31, 2021 millions of Canadian dollars Fair value Effect of counterparty netting Effect of collateral netting Net carrying value Level 1 Level 2 Level 3 Total Assets Derivative assets (a) 24 17 — 41 ( 31 ) — 10 Liabilities Derivative liabilities (b) 31 12 — 43 ( 31 ) ( 7 ) 5 (a) Included in the Consolidated balance sheet line: “Materials, supplies and prepaid expenses”, “Accounts receivable - net” and “Other assets, including intangibles - net”. (b) Included in the Consolidated balance sheet line: “Accounts payable and accrued liabilities” and “Other long-term obligations”. At September 30, 2022 and December 31, 2021, the company had $ 36 million and $ 6 million, respectively, of collateral under a master netting arrangement not offset against the derivatives on the Consolidated balance sheet in “Accounts receivable - net”, primarily related to initial margin requirements. 16 IMPERIAL OIL LIMITED 9. Common shares thousands of shares As of Sept 30 2022 As of Dec 31 2021 Authorized 1,100,000 1,100,000 Common shares outstanding 611,516 678,080 The most recent 12-month normal course issuer bid program came into effect June 29, 2022 under which Imperial continued its existing share purchase program. The program enabled the company to purchase up to a maximum of 31,833,809 common shares ( 5 percent of the total shares on June 15, 2022) which included shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid. As in the past, Exxon Mobil Corporation advised the company that it intended to participate to maintain its ownership percentage at approximately 69.6 percent. Imperial accelerated share purchases under the normal course issuer bid program during the third quarter and, subsequent to the end of the third quarter, the program completed on October 21, 2022 as a result of the company purchasing the maximum allowable number of shares under the program. On May 6, 2022, the company commenced a substantial issuer bid pursuant to which it offered to purchase for cancellation up to $ 2.5 billion of its common shares through a modified Dutch auction and proportionate tender offer. The substantial issuer bid was completed on June 15, 2022, with the company taking up and paying for 32,467,532 common shares at a price of $ 77.00 per share, for an aggregate purchase of $ 2.5 billion and 4.9 percent of Imperial’s issued and outstanding shares at the close of business on May 2, 2022. This included 22,597,379 shares purchased from Exxon Mobil Corporation by way of a proportionate tender to maintain its ownership percentage at approximately 69.6 percent. The excess of the purchase cost over the stated value of shares purchased has been recorded as a distribution of earnings reinvested. On October 28, 2022 the company announced its intention to launch a substantial issuer bid pursuant to which the company will offer to purchase for cancellation up to $ 1.5 billion of its common shares. The substantial issuer bid will be made through a modified Dutch auction, with a tender price range to be determined by the company at the time of commencement of the offer. Shares may also be tendered by way of a proportionate tender, which will result in a shareholder maintaining their proportionate share ownership. ExxonMobil has advised Imperial that it intends to make a proportionate tender in connection with the offer in order to maintain its proportionate share ownership at approximately 69.6 percent following completion of the offer. Nothing in this report shall constitute an offer to purchase or a solicitation of an offer to sell any shares. The company’s common share activities are summarized below: Thousands of shares Millions of dollars Balance as at December 31, 2020 734,077 1,357 Issued under employee share-based awards 7 — Purchases at stated value ( 56,004 ) ( 105 ) Balance as at December 31, 2021 678,080 1,252 Issued under employee share-based awards — — Purchases at stated value ( 66,564 ) ( 123 ) Balance as at September 30, 2022 611,516 1,129 17 IMPERIAL OIL LIMITED The following table provides the calculation of basic and diluted earnings per common share and the dividends declared by the company on its outstanding common shares: Third Quarter Nine Months to September 30 2022 2021 2022 2021 Net income (loss) per common share – basic Net income (loss) (millions of Canadian dollars) 2,031 908 5,613 1,666 Weighted average number of common shares outstanding (millions of shares) 625.3 700.0 652.9 719.4 Net income (loss) per common share (dollars) 3.25 1.30 8.60 2.32 Net income (loss) per common share – diluted Net income (loss) (millions of Canadian dollars) 2,031 908 5,613 1,666 Weighted average number of common shares outstanding (millions of shares) 625.3 700.0 652.9 719.4 Effect of employee share-based awards (millions of shares) 1.6 1.9 1.5 1.7 Weighted average number of common shares outstanding, assuming dilution (millions of shares) 626.9 701.9 654.4 721.1 Net income (loss) per common share (dollars) 3.24 1.29 8.58 2.31 Dividends per common share – declared (dollars) 0.34 0.27 1.02 0.76 18 IMPERIAL OIL LIMITED 10. Other comprehensive income (loss) information Changes in accumulated other comprehensive income (loss): millions of Canadian dollars 2022 2021 Balance at January 1 ( 1,177 ) ( 1,989 ) Postretirement benefits liability adjustment: Current period change excluding amounts reclassified from accumulated other comprehensive income 24 54 Amounts reclassified from accumulated other comprehensive income 63 99 Balance at September 30 ( 1,090 ) ( 1,836 ) Amounts reclassified out of accumulated other comprehensive income (loss) - before-tax income (expense): Third Quarter Nine Months to September 30 millions of Canadian dollars 2022 2021 2022 2021 Amortization of postretirement benefits liability adjustment included in net benefit cost (a) ( 28 ) ( 44 ) ( 83 ) ( 132 ) (a) This accumulated other comprehensive income component is included in the computation of net benefit cost (note 4). Income tax expense (credit) for components of other comprehensive income (loss): Third Quarter Nine Months to September 30 millions of Canadian dollars 2022 2021 2022 2021 Postretirement benefits liability adjustments: Postretirement benefits liability adjustment (excluding amortization) — — 8 17 Amortization of postretirement benefits liability adjustment included in net benefit cost 7 11 20 33 Total 7 11 28 50 11. Divestment activities Jointly with ExxonMobil Canada, Imperial signed an agreement in the second quarter with Whitecap Resources Inc. for the sale of its interests in XTO Energy Canada which included assets in the Montney and Duvernay areas of central Alberta, for total cash consideration of approximately $ 1.9 billion ($ 0.9 billion Imperial's share). The transaction closed on August 31, 2022 and the company recognized a gain of approximately $ 0.2 billion. Imperial’s total assets associated with this transaction include about $ 0.9 billion (about $ 0.8 billion of property, plant and equipment) and about $ 0.2 billion total liabilities in the Upstream segment. 19 IMPERIAL OIL LIMITED