What changed in this filing

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Item 1A. Risk Factors

2023-02-22 compared with 2022-02-23 · 77 added, 74 removed, 171 unchanged (47% of the section changed)

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On the other hand, a material increase in crude oil prices could have a material adverse effect on Imperial’s Downstream margins, depending on the market conditions for refined products.

The company's pursuit of lower-emission business opportunities including carbon capture and storage, hydrogen, and lower-emission fuels also depends on the growth and development of markets for those products and services, including implementation of supportive government policies and developments in technology to enable those products and services to be provided on a cost-effective basis at commercial scale.

See "Climate change, energy transition and greenhouse gas restrictions" in this Item 1A.

The company may also be impacted by changes in other commodities the company utilizes, such as prices and availability of feedstocks for lower-emission fuels including renewable diesel.

Economic conditions

The demand for energy and petrochemicals is generally linked closely with broad-based economic activities and levels of prosperity.

The occurrence of recessions or other periods of low or negative economic growth will typically have a direct adverse impact on the company’s results.

Other factors that may affect the demand for crude oil, gas, fuels and petrochemicals, and therefore could impact Imperial’s results include technological improvements in energy efficiency;

Other factors that affect general economic conditions such as changes in population growth rates, government regulation or austerity programs, trade tariffs or broader breakdowns in global trade, security or public health issues and responses, the inability to access debt markets due to rating, banking, or legal constraints, liquidity crises, other events or conditions that impair the functioning of financial markets and institutions also pose risks to Imperial.

Other demand-related factors

Factors that may affect the demand for crude oil, gas, fuels and petrochemicals, and therefore could impact Imperial’s results include technological improvements in energy efficiency;

seasonal weather patterns, which affect the demand for our products, including lower demand for gasoline, impacting Downstream results in the winter;

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and security or public health issues and responses such as epidemics and pandemics.

Market factors may also result in losses from commodity derivatives and other instruments used to hedge price exposures or for trading purposes.

See also “Climate change, energy transition and greenhouse gas restrictions” below.

Other supply-related factors

Commodity prices and margins also vary depending on a number of factors affecting supply.

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Similarly, increases in industry refining or petrochemical manufacturing capacity relative to demand tend to reduce margins on affected products.

Crude oil, gas and petrochemical supply levels can also be affected by factors that reduce available supplies, such as the level of and adherence by participating countries or others to production quotas established by OPEC or “OPEC+” and other agreements among sovereigns, government policies that restrict oil and gas production or increase associated costs, including actions intended to reduce greenhouse gas emissions and previous Government of Alberta curtailment regulations, the occurrence of wars, hostile actions, natural disasters, trade tariffs or broader breakdowns in global trade, disruptions in competitors’ operations, or unexpected pipeline or rail constraints that may disrupt supplies.

For example, Russia's military action in Ukraine has impacted global crude oil and gas supply levels and prices, and continues to contribute to a volatile commodity environment, the duration of which is uncertain.

Technological change can also alter the relative costs for competitors to find, produce, and refine oil and gas and to manufacture petrochemicals.

Canadian-specific market factors

The market price for western Canadian heavy crude oil is typically lower than light and medium grades of oil, principally due to the higher transportation and refining costs.

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Gulf Coast are uncertain and changes in the heavy or light crude oil differentials could have a material adverse effect on the company’s business.

Increased differentials in 2018 also led the Government of Alberta to enact temporary mandatory production curtailment regulations in 2019.

These regulations enabled the government to impose production limits on large producers in Alberta such as Imperial.

Mandatory production curtailment was eliminated in December 2020 and the regulatory authority to impose curtailments was repealed at the end of 2021;

however, the use of similar curtailment regulations in the future could have an adverse effect on the company’s business.

Increased differentials, have in the past, led the Government of Alberta to enact temporary mandatory production curtailment regulations that imposed production limits on large producers in Alberta such as Imperial.

Although the regulatory authority to impose curtailments was repealed at the end of 2021, the use of similar curtailment regulations in the future could have an adverse effect on the company’s business.

A significant portion of the company’s production is bitumen, which is blended with diluent for transportation and marketability of heavy crude oil.

Increases to diluent prices, relative to heavy crude oil prices, could also have an adverse effect on the company’s business.

Other market factors

Market factors may also result in losses from commodity derivatives and other instruments used to hedge price exposures or for trading purposes.

Imperial’s future business results, including cash flows and financing needs, will also be affected by the rate of recovery from the COVID-19 pandemic, as well as the occurrence and severity of future outbreaks, the responsive actions taken by governments and others, and the resulting effects on regional and global markets and economies.

If the company’s mitigation and response efforts prove insufficient, then large outbreaks of epidemics, pandemics or other health crises such as COVID-19 at operating sites, particularly in remote locations and where work camps are utilized, could materially impact the company’s personnel and its operations, reducing productivity and increasing costs.

Government and political factors

Imperial’s results can be adversely impacted by political, legal or regulatory developments affecting operations and markets.

Changes in government policy or regulations, changes in law or interpretation of settled law, third-party opposition to company or infrastructure projects, and duration of regulatory reviews could impact Imperial’s existing operations and planned projects.

Changes in government policy or regulations, changes in law or interpretation of settled law, challenges to legislative jurisdiction between different levels of government, third-party opposition to company or infrastructure projects, and duration of regulatory reviews could impact Imperial’s existing operations and planned projects.

This includes actions by policy-makers, regulators or other actors to delay or deny necessary licences and permits, restrict the availability of oil and gas leases or the operation of third-party infrastructure that the company relies on, such as pipelines to transport the company’s upstream production to market or that supply feedstock to the company’s refineries.

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Other government and political factors that could adversely affect the company’s financial results include increases in taxes or government royalty rates (including retroactive claims) and changes in trade policies and agreements.

Changes in taxation policy, such as the Government of Canada announcement in 2022 of a tax on share buybacks, could impact the company’s results and ability to return surplus cash to shareholders.

Further, the adoption of regulations mandating efficiency standards, and the use of alternative fuels or uncompetitive fuel components could affect the company’s operations.

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Actions by policy makers, regulators or others may require changes in the company’s business or strategy that could result in reduced returns.

Governments may establish regulations with respect to the control of the company’s production, such as when increased price differentials in 2018 led the Government of Alberta to impose temporary mandatory production curtailment regulations in effect from 2019 through 2021, as discussed in the “Supply and demand” section above.

Governments may establish regulations with respect to the control of the company’s production, such as the Government of Alberta's temporary mandatory production curtailment regulations that were in effect from 2019 through 2021, as discussed in the “Supply and demand” section above.

Government intervention in free markets may introduce unintended consequences such as market volatility and uncertainty, misallocation of resources, and erosion of investor confidence.

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The failure to operate as anticipated and adhere to conditions, the delay or denial of approvals and changes to conditions or regulations could impact the company’s ability to operate its projects and facilities and adversely affect the company’s results.

Regulation of air, water and land

The implementation of, and compliance with, policies and regulations related to air, water and land, such as Alberta’s Lower Athabasca Regional Plan and Wetland Policy applicable to the company’s oil sands assets, could restrict development in current and future areas of operation.

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Water use may be limited by regulatory requirements, seasonal fluctuations, competing demands, environmental sensitivities, increasingly stringent water management standards, and changes to conditions or availability of licences, which may restrict and adversely affect the company’s operations.

Additionally, a number of air quality regulations and frameworks are being developed at the federal and provincial levels, and when implemented could impact existing and planned projects through increased capital and operating expenses including retrofits to existing equipment, and could adversely impact the company’s operations and financial results.

Additionally, a number of air quality regulations and frameworks are being developed and implemented at the federal and provincial levels, including sulphur dioxide limits for refineries in Ontario, and could impact existing and planned operations and projects through increased capital and operating expenses including retrofits to existing equipment, and could adversely impact the company’s operations and financial results.

Regulation of wildlife

Federal and provincial legislation aimed at protecting sensitive, threatened or endangered wildlife, such as woodland caribou and species of migratory birds, may also increase restoration and offset costs and impact the company’s projects.

If it is determined that such wildlife and their habitat are not sufficiently protected, governments or other parties may take actions to limit the pace or ability to develop in areas of Imperial’s current and future projects.

Regulation of oil sands

The company’s mining operations are subject to tailings management regulations that establish approval, monitoring, reporting and performance criteria for tailings ponds and management plans.

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Additionally, successful management and closure requires the release of water to the environment, and although an Alberta water release policy and federal oil sands effluent regulations are being developed, the timing and impact of these regulations is uncertain and the absence of effective regulation could negatively impact the company’s operations and financial results.

Environmental assessments

In addition, certain types of operations, including exploration and development projects and significant changes to certain existing projects, may require the submission and approval of environmental impact assessments.

In 2019, the Government of Canada implemented a new environmental assessment framework under the Impact Assessment Act

, which expands assessment considerations beyond the environment to include social, health, economic, and gender-based impacts and the impact on Canada’s climate change commitments (including a requirement under the Strategic Assessment for Climate Change to provide a credible plan for the project to deliver net-zero

greenhouse gas emissions by 2050).

The Government of Canada's environmental assessment framework under the Impact Assessment Act expands assessment considerations beyond the environment to include social, health, economic, and gender-based impacts and the impact on Canada’s climate change commitments (including a requirement under the Strategic Assessment for Climate Change to provide a credible plan for the project to deliver net-zero greenhouse gas emissions by 2050).

It also includes a reliance on strategic and regional assessments and adjusted regulatory review timelines.

The impact of this legislation is not fully apparent, but it may impact the cost, manner, duration and ability to advance large energy projects.

Compliance with environmental legislation can require significant expenditures and failure to comply with environmental legislation may result in the cessation of operations, imposition of fines and penalties, and liability for clean-up

costs and damages.

The impact of this legislation is not fully apparent, but it may impact the cost, manner, duration and ability to advance large energy projects and project expansions.

Compliance costs

The costs of complying with environmental legislation in the future could have a material adverse effect on the company’s financial condition or results of operations.

The company anticipates that changes in environmental legislation may require, among other things, reductions in emissions from its operations to the air and water and may result in increased capital expenditures.

Changes in environmental legislation (including, but not limited to, application of regulations related to air, water, land, biodiversity and waste, such as mine tailings and the use of new or recycled plastics) may increase the cost of compliance or reduce or delay available business opportunities.

Changes in environmental legislation (including, but not limited to, application of regulations related to air, water, land, biodiversity and waste, such as mine tailings and the production or use of new or recycled plastics) may increase the cost of compliance or reduce or delay available business opportunities.

Future changes in environmental legislation and the enforcement of regulations could occur and result in stricter standards and enforcement, larger fines, penalties and liability, and increased capital expenditures and operating costs, which could have a material adverse effect on the company’s financial condition or results of operations.

Risk Management

There are operational risks inherent in oil and gas exploration and production activities, as well as the potential to incur substantial financial liabilities, if the company does not manage those risks effectively.

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Driven by concern over the risks of climate change, the provinces and the Government of Canada have adopted or have revised regulatory frameworks to reduce greenhouse gas emissions including emissions from the production and use of oil and gas, and their products.

These actions are being taken both independently by national and regional governments and within the framework of United Nations Conference of the Parties’ summits under which Canada has endorsed objectives to reduce the atmospheric concentration of CO2 over the coming decades, with an ambition ultimately to achieve “net zero.” Net zero means that emissions of greenhouse gases from human activities would be balanced by actions that remove such gases from the atmosphere.

Net zero means that emissions of greenhouse gases from human activities would be balanced by actions that remove such gases from the atmosphere.

Expectations for transition of the world’s energy system to lower-emission sources, and ultimately net zero, derive from hypothetical scenarios that reflect many assumptions about the future and reflect substantial uncertainties.

The company’s actions with respect to the energy transition, including its announced ambition, ultimately, to achieve net zero with respect to emissions from its upstream oil sands operations, carries risks that the transition, including underlying technologies, policies, and markets as discussed in more detail below, will not develop at the pace or in the manner expected by current net-zero

The company’s actions with respect to the energy transition, including its announced goal, ultimately, to achieve company-wide net-zero emissions (Scope 1 and 2) from its operated assets, carries risks that the transition, including underlying technologies, policies, and markets as discussed in more detail below, will not develop at the pace or in the manner estimated by current net-zero scenarios.

The success of Imperial's strategy for the energy transition will also depend on its ability to recognize key signposts of change in the global energy system on a timely basis, and the corresponding ability to direct investment to the technologies and businesses, at the appropriate stage of development, to best capitalize on the company's competitive strengths.

Greenhouse gas restrictions

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The Government of Canada has updated its nationally determined contribution (NDC) under the Paris Agreement on climate change, to reduce greenhouse gas emissions economy-wide by 40 to 45 percent below 2005 levels by 2030, a substantial increase in ambition beyond its original NDC.

To implement these goals, the Government of Canada uses a number of policy tools including the Greenhouse Gas Pollution Pricing Act

(GGPPA), which sets a federal backstop carbon price Canada-wide through a carbon levy applied to fossil fuels ($50 per tonne CO2 equivalent emissions starting in 2022 and increasing by $15 per tonne annually to $170 per tonne in 2030), and an output-based pricing system for large industrial emitters.

To implement these goals, the Government of Canada uses a number of policy tools including the Greenhouse Gas Pollution Pricing Act (GGPPA), which sets a federal backstop carbon price Canada-wide through a carbon levy applied to fossil fuels ($50 per tonne CO2 equivalent emissions starting in 2022 and increasing by $15 per tonne annually to $170 per tonne in 2030), and an output-based pricing system for large industrial emitters.

Under the GGPPA, provinces are required to either adopt the GGPPA, or obtain equivalency by adopting a price-based system (with a minimum of the federal carbon pricing) or a cap and trade system.

Further, in 2021 the Government of Canada enacted legislation to formalize Canada’s target to achieve net-zero

emissions by 2050 and establish interim emissions reductions targets at five year intervals.

For 2022, under the Canadian Net-Zero

Emissions Accountability Act, the Government of Canada is required to develop an emissions reduction plan for 2030 consistent with achieving net-zero

emissions by 2050.

The Government of Alberta has obtained federal equivalency for its Technology Innovation and Emissions Reduction Regulation (TIER) that came into effect in 2020 and applies to facilities with CO2 emissions in excess of 100,000 tonnes per year.

TIER is designed to reduce emissions by putting a price on nominally 10 percent of a facility’s emissions in 2020, increasing by 1 percent per year.

Further, the Alberta Oil Sands Emissions Limit Act

sets a limit of 100 megatonnes of CO2 per year of emissions in the oil sands sector, but oil sands emissions remain below the limit and it is not yet possible to predict the impact of this act on the company’s future oil sands operations in Alberta.

With respect to other provinces, with Ontario cancelling the cap and trade program in 2018, the company’s operations in Ontario were subject to the federal carbon levy and output based pricing system through 2021.

Starting in 2022, Ontario has received equivalency for its Emissions Performance System, which puts a price on 8 percent of a facility’s emissions.

British Columbia has carbon pricing in place for all emissions, with pricing expected to align with federal pricing in 2022.

Increases in carbon pricing could adversely impact the company’s operations and financial results unless the company can adapt its operations.

Further, in 2021 the Government of Canada enacted legislation to formalize Canada’s target to achieve net-zero emissions by 2050 and establish interim emissions reductions targets at five year intervals.

Under the Canadian Net-Zero Emissions Accountability Act, the Government of Canada is required to develop an emissions reduction plan for 2030 consistent with achieving net-zero emissions by 2050.

The Government of Alberta obtained federal equivalency for its Technology Innovation and Emissions Reduction Regulation (TIER) that came into effect in 2020 and applies to facilities with CO2 emissions in excess of 100,000 tonnes per year.

TIER is designed to reduce emissions by putting a price on nominally 10 percent of a facility’s emissions in 2020.

This price increased to 11 percent in 2021 and 12 percent in 2022, with the oil sands mining and upgrading facilities increasing to 17 percent in 2021 and 18 percent in 2022, and these percentages are anticipated to increase by 2 percent per year starting in 2023, followed by an increase of 4 percent in 2029 and 2030 for the oil sands sector.

Further, the Alberta Oil Sands Emissions Limit Act sets a limit of 100 megatonnes of CO2 per year of emissions in the oil sands sector, but oil sands emissions remain below the limit and it is not yet possible to predict the impact of this act on the company’s future oil sands operations in Alberta.

With respect to other provinces, Ontario obtained federal equivalency for its Emissions Performance System, which puts a price on 8 percent of a facility’s emissions, increasing by 2.4 percent in 2023 followed by 1.5 percent in 2024.

British Columbia has carbon pricing in place for all emissions, with pricing expected to meet or exceed the federal carbon pricing schedule in 2023.

Increases in carbon pricing could adversely impact the company’s operations and financial results unless the company can adapt its operations through technological innovation and investment in a cost-effective manner or meet compliance through offset credits or other mechanisms.

There are also various low carbon fuel standards being developed or already applicable to the company’s products.

The Government of Canada is finalizing draft regulations for the Clean Fuel Regulations, which will require the reduction in carbon intensity of liquid transportation fuels supplied in Canada starting in December 2022.

In 2022, the Government of Canada finalized draft regulations for the Clean Fuel Regulations, which will require the reduction in carbon intensity of liquid transportation fuels supplied in Canada starting in July 2023.

The regulations build upon the existing federal renewable fuels regulations that require fuel producers and importers to have a specified amount of renewable fuel in gasoline and diesel.

Similarly, British Columbia introduced a Low Carbon Fuel Standard in 2013, which increased to a 10 percent carbon intensity reduction requirement in 2020.

The British Columbia government has announced its intention to reduce the carbon intensity of fuels by a further 20 percent by 2030.

Beginning in 2023, the British Columbia government has further increased the carbon intensity reductions to a total of 30 percent by 2030 (compared to the 2010 baseline).

Compliance can be achieved by either blending renewable fuels with low carbon intensity or by purchasing credits.

In 2019, the Government of Canada enacted the Impact Assessment Act

, which links environmental assessment approvals to climate change-related goals, and has also discussed a goal of establishing legally-binding policies for being carbon-neutral by 2050.

The Government of Canada's Impact Assessment Act links environmental assessment approvals to climate change-related goals, and has also discussed a goal of establishing legally-binding policies for being carbon-neutral by 2050.

Changes and policies related to this act could adversely impact the company’s ability to progress new oil sands projects.

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Political and other actors and their agents are also increasingly seeking to advance climate change objectives indirectly, such as by seeking to reduce the availability or increase the cost of financing and investment in the oil and gas sector and taking actions intended to promote changes in business strategy for oil and gas companies.

Achieving societal ambitions to reduce greenhouse gas emissions and ultimately achieve net zero will require new technologies to reduce the cost and increase the scalability of alternative energy sources as well as technologies such as carbon capture and sequestration (CCS).

CCS technologies, focused initially capturing and sequestering CO2 emissions from high-intensity industrial activities, can assist in meeting society’s objective to mitigate atmospheric greenhouse gas levels while also helping ensure the availability of the reliable and affordable energy the world requires.

The company’s future results and ability to succeed through the energy transition will depend in part on the success of these research and collaboration efforts and on the company’s ability to adapt and apply the strengths of its current business model to providing the energy products of the future in a cost-competitive manner.

Technology and lower-emission solutions

Achieving societal ambitions to reduce greenhouse gas emissions and ultimately achieve net-zero will require new technologies to reduce the cost and increase the scalability of alternative energy sources as well as technologies such as carbon capture and storage (CCS).

CCS technologies, focused initially on capturing and sequestering CO2 emissions from high-intensity industrial activities, can assist in meeting society’s objective to mitigate atmospheric greenhouse gas levels while also helping ensure the availability of the reliable and affordable energy the world requires.

The company’s future results and ability to succeed through the energy transition while helping meet Canada's emission-reduction goals and meet its own net-zero and emission reduction goals will depend in part on the success of these research and collaboration efforts.

It will also rely on the company’s ability to adapt and apply the strengths of its current business model to providing the energy products of the future in a cost-competitive manner.

Policy and market development

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Such effects in turn may depress economic growth or lead to rapid or conflicting shifts in policy by different actors, with resulting adverse effects on the company’s business.

In addition, the existence of supportive policies in any jurisdiction is not a guarantee that those policies will continue in the future.

See also the discussion of “Supply and demand”, “Government and political factors”, and “Management effectiveness” in this Item 1A.

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The company also enters into contractual relationships with suppliers, partners and other counterparties to procure and sell goods and services, and the company’s operations, market position and financial condition may be adversely impacted if these counterparties do not fulfil their obligations.

Imperial may also be adversely affected by the outcome of litigation resulting from its operations or by government enforcement proceedings alleging non-compliance

with applicable laws or regulations.

Imperial may also be adversely affected by the outcome of litigation resulting from its operations or by government enforcement proceedings alleging non-compliance with applicable laws or regulations.

Litigation is subject to uncertainty and success is not guaranteed, and the company may incur significant expenses and devote significant resources in defending litigation.

Management effectiveness

Current and future increases in operating costs such as energy, transportation and materials, including through shipping, supply chain disruptions and inflationary cost pressures, could adversely affect the company’s financial results if it is unable to control or offset these costs.

In addition to direct potential impacts on the company's costs and revenues, market factors such as rates of inflation may indirectly impact results to the extent such factors reduce general rates of economic growth and therefore energy demand, as discussed under “Supply and demand".

Further, with inflation rising in Canada and other countries throughout 2022, governments have increased interest rates which may further impact the company through the availability of financing, cost of debt, and exchange rate fluctuations.

Additional information regarding the potential future impact of market factors on our businesses is included or incorporated by reference under Item 7A Quantitative and qualitative disclosures about market risk in this report.

Operational and other factors

In addition to external economic and political factors, Imperial’s future business results also depend on the company’s ability to manage successfully those factors that are at least in part within its control.

The extent to which Imperial manages these factors will impact its performance relative to competition.

For projects in which the company is not the operator, Imperial depends on the management effectiveness of one or more co-venturers whom the company does not control.

For projects in which the company is not the operator such as Syncrude, Imperial depends on the management effectiveness of one or more co-venturers whom the company does not control.

Project management

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the impact of general economic, business and market conditions;

and the company’s ability to respond effectively to unforeseen technical difficulties that could delay project start-up

or cause unscheduled downtime.

and the company’s ability to respond effectively to unforeseen technical difficulties that could delay project start-up or cause unscheduled downtime.

Operational efficiency

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The scope and nature of the company’s operations present a variety of significant hazards and risks, including operational hazards and risks such as explosions, fires, pipeline ruptures and crude oil spills.

Imperial’s operations are also subject to the additional hazards of pollution, releases of toxic gas and environmental hazards and risks, such as severe weather and geological events.

Imperial’s operations are also subject to the additional hazards of pollution, releases of toxic gas and environmental hazards and risks, including severe weather (such as extreme cold weather events that impacted the company's oil sands operations in early 2022) and geological events.

The company’s results depend on management’s ability to minimize these inherent risks, to effectively control business activities and to minimize the potential for human error.

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Imperial’s defensive preparedness includes multi-layered technological capabilities for prevention and detection of cybersecurity disruptions:

non-technological

measures such as threat information sharing with governmental and industry groups;

internal training and awareness campaigns including routine testing of employee awareness via mock threats;

non-technological measures such as threat information sharing with governmental and industry groups;

annual internal training and awareness campaigns including routine testing of employee awareness via mock threats;

and an emphasis on resiliency including business response and recovery.

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The company’s operations may be disrupted by severe weather events, natural disasters, human error, and similar events.

Imperial’s ability to mitigate the adverse impacts of these events depends in part upon the effectiveness of its rigorous disaster preparedness and response planning, as well as business continuity planning.

As a result of COVID-19,

governments in many countries, including Canada, have mandated quarantines, closures, stay-at-home

orders and travel restrictions that have had a significant impact on demand for the company’s products.

While these effects are expected to be temporary, the resurgence of cases of COVID-19

has led to a highly uncertain business environment.

Although there has been some movement toward pre-pandemic

activity levels, the duration of the business disruptions and related financial impact cannot be reasonably estimated at this time and continued or new restrictions could continue to impact the demand for petroleum products.

Imperial’s future business results, including cash flows and financing needs, will be affected by the scope and severity of current and future COVID outbreaks;

actions taken by governments and others to address the pandemic and the effects of those actions on national and global economies and markets;

changes in consumer behavior that affect demand for our products;

and the effectiveness of the company’s own responsive actions to protect the safety and well-being of its people.

The company has had positive COVID-19

cases, but these cases have not had a material impact on its operations or business.

The company has initiated numerous emergency response and business continuity plans, and a substantial portion of the company’s workforce has implemented remote working arrangements.

However, if the company’s mitigation and response efforts prove insufficient, then large outbreaks of epidemics, pandemics or other health crises such as COVID-19

at operating sites, particularly in remote locations and where work camps are utilized, could materially impact the company’s personnel and its operations, reducing productivity and increasing costs.

The company could also be impacted by disruption to supply chains, methods of distribution and key third-party service providers, which could impact the ability to produce or sell its products, as well as increase the costs associated with its operations and decrease revenues and margins.

pandemic continues to evolve, with changing case numbers and the potential for additional public health restrictions.

The impact of the pandemic remains difficult to predict.

Our facilities are designed, engineered, constructed, and operated to withstand a variety of extreme climatic and other conditions, with safety factors built in to cover a number of uncertainties, including those associated with permafrost stability, temperature extremes, extreme rainfall events, earthquakes and other events.

Our consideration of changing weather conditions and inclusion of safety factors in design covers the engineering uncertainties that climate change and other events may potentially introduce.

Imperial’s ability to mitigate the adverse impacts of these events depends in part upon the effectiveness of its robust facility engineering, rigorous disaster preparedness and response, and business continuity planning.

Imperial’s reputation is an important corporate asset.

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and other adverse events such as those described in this Item 1A.

Negative impacts on Imperial’s reputation could, in turn, make it more difficult for the company to compete successfully for new opportunities, obtain necessary regulatory approvals, obtain financing, or could reduce consumer demand for the company’s branded products.

Negative impacts on Imperial’s reputation could, in turn, make it more difficult for the company to compete successfully for new opportunities, obtain necessary regulatory approvals, obtain financing, and attract talent, or they could reduce consumer demand for the company’s branded products.

Imperial’s reputation may also be harmed by events which negatively affect the image of the industry as a whole, including public and investor perception of Alberta oil sands in relation to greenhouse gas emissions and environmental impact.

The company’s future production and cash flows from bitumen, synthetic oil, liquids and natural gas reserves are highly dependent upon the company’s success in exploiting its current reserves.

The company’s future production and cash flows from bitumen, synthetic crude oil, liquids and natural gas reserves are highly dependent upon the company’s success in exploiting its current reserves.

To maintain production and cash flows over the long term, the company must replace produced reserves, which can be accomplished through exploration discovery of new resources, appraisal and investments in developing discovered resources, or acquisition of reserves.

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geological and engineering estimates, including that additional information obtained through seismic and drilling programs, reservoir analysis and production and operational history may result in revisions to reserves;

the assumed effects of regulation or changes to regulation by government agencies, including royalty frameworks and environmental regulations (such as the regulation of greenhouse gas emissions, which could impose significant compliance costs on the company, require new technology, or impact the economic viability of certain projects);

the assumed effects of regulation or changes to regulation by government agencies, including royalty frameworks and environmental regulations (such as the regulation of greenhouse gas emissions, including accelerated timelines and emission reduction stringency to meet government goals, which could impose significant compliance costs on the company, require new technology, or impact the economic viability of certain projects);

future commodity prices, where low commodity prices may affect reserves development;

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Reference is made to Item 1 above.

Legal proceedings

Refer to the relevant portions of note 9.

"Litigation and other contingencies" of the “Financial section” of this report for additional information on legal proceedings.

Imperial has elected to use a US $1 million threshold for disclosing environmental proceedings.

Mine safety disclosures

Not applicable.

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What changed 10-K

Item 1A. Risk Factors