What changed in this filing

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Item 1. Financial Statements

2023-05-02 compared with 2022-11-02 · 44 added, 192 removed, 327 unchanged (42% of the section changed)

2 unchanged sentences

GAAP, unaudited)

Third Quarter

to September 30

millions of Canadian dollars 2023 2022

2 unchanged sentences

Investment and other income (note 3)

153 19 204 65

Total revenues and other income 12,121 12,686

1 unchanged sentence

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 529 479

8 unchanged sentences

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

120 95 354 317

and selling and general expenses.

(d) Amounts to related parties included in financing, (note 5).

3 unchanged sentences

GAAP, unaudited)

Third Quarter

to September 30

millions of Canadian dollars 2023 2022

19 unchanged sentences

less accumulated depreciation and depletion ( 24,549 ) ( 24,062 )

Property, plant and equipment, net (note 11)

Property, plant and equipment, net

30,442 30,506

26 unchanged sentences

GAAP, unaudited)

Third Quarter

to September 30

millions of Canadian dollars 2023 2022

18 unchanged sentences

GAAP, unaudited)

Inflow (outflow)

Third Quarter

to September 30

millions of Canadian dollars

2022 2021 2022 2021

Operating activities

3 unchanged sentences

(Gain) loss on asset sales (note 3)

( 131 ) ( 12 ) ( 155 ) ( 39 )

Deferred income taxes and other ( 56 ) ( 331 )

10 unchanged sentences

Proceeds from asset sales (note 3)

760 15 886 57

Additional investments ( 6 ) — ( 6 ) —

Loans to equity companies - net 1 1

1 unchanged sentence

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 )

Finance lease obligations - reduction (note 6)

Dividends paid ( 266 ) ( 185 )

Common shares purchased (note 9)

( 1,512 ) ( 313 ) ( 4,461 ) ( 1,484 )

Cash flows from (used in) financing activities ( 271 ) ( 639 )

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

Increase (decrease) in cash and cash equivalents ( 1,506 ) 996

Cash and cash equivalents at beginning of period 3,749 2,153

Cash and cash equivalents at end of period (a)

(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.

Cash equivalents are all highly liquid securities with maturity of three months or less.

(b) Included contributions to registered pension plans.

13 unchanged sentences

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.

The results for the three months ended March 31, 2023, are not necessarily indicative of the operations to be expected for the full year.

All amounts are in Canadian dollars unless otherwise indicated.

1 unchanged sentence

Business segments

Third Quarter Upstream

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

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

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

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

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.

IMPERIAL OIL LIMITED

Nine Months to September 30 Upstream

Three Months to March 31 Upstream

millions of Canadian dollars 2023 2022 2023 2022 2023 2022

2 unchanged sentences

76 99 11,639 12,191 342 367

Intersegment sales (c)

Intersegment sales

3,622 4,431 1,823 1,833 91 104

3 unchanged sentences

Exploration 1 2 — — — —

Purchases of crude oil and products (c)

Purchases of crude oil and products

1,543 1,890 11,196 12,512 274 315

8 unchanged sentences

Income tax expense (benefit) 105 238 275 121 17 18

Net income (loss) (c)

Net income (loss)

330 782 870 389 53 56

Cash flows from (used in) operating activities (c)

Cash flows from (used in) operating activities

( 398 ) 1,447 ( 419 ) 375 ( 32 ) 67

Capital and exploration expenditures (d)

Capital and exploration expenditures (c)

321 222 74 68 4 1

Total assets as at September 30 (c) (note 11)

Total assets as at March 31

29,059 29,182 9,535 10,179 477 501

Nine Months to September 30

Three Months to March 31

Corporate and other Eliminations

3 unchanged sentences

— — — — 12,057 12,657

Intersegment sales (c)

Intersegment sales

— — ( 5,536 ) ( 6,368 ) — —

3 unchanged sentences

Exploration — — — — 1 2

Purchases of crude oil and products (c)

Purchases of crude oil and products

— — ( 5,535 ) ( 6,367 ) 7,478 8,350

9 unchanged sentences

Income tax expense (benefit) — ( 16 ) — — 397 361

Net income (loss) (c)

Net income (loss)

( 5 ) ( 54 ) — — 1,248 1,173

Cash flows from (used in) operating activities (c)

Cash flows from (used in) operating activities

28 25 — — ( 821 ) 1,914

Capital and exploration expenditures (d)

Capital and exploration expenditures (c)

30 5 — — 429 296

Total assets as at September 30 (c) (note 11)

Total assets as at March 31

3,815 4,136 ( 771 ) ( 188 ) 42,115 43,810

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.

(a) Includes export sales to the United States of $ 2,375 million (2022 - $ 2,504 million).

(b) Revenues include both revenue within the scope of ASC 606 and outside the scope of ASC 606 .

Trade receivables in "Accounts receivable – net" reported on the Consolidated 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.

Contractual terms, credit quality, and type of customer are generally similar between those revenues and receivables within the scope of ASC 606 and those outside it.

Revenues Three Months

millions of Canadian dollars 2023 2022

Revenue from contracts with customers 10,520 10,864

Revenue outside the scope of ASC 606

Total 12,057 12,657

(c) 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.

2 unchanged sentences

Investment and other income included gains and losses on asset sales as follows:

Third Quarter

to September 30

millions of Canadian dollars 2023 2022

1 unchanged sentence

Book value of asset sales 5 4

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.

Gain (loss) on asset sales, before tax 9 20

Gain (loss) on asset sales, after tax 8 16

Employee retirement benefits

The components of net benefit cost were as follows:

Third Quarter

to September 30

millions of Canadian dollars 2023 2022

12 unchanged sentences

Financing costs

Third Quarter

to September 30

millions of Canadian dollars 2023 2022

1 unchanged sentence

Capitalized interest

( 18 ) ( 4 ) ( 33 ) ( 19 )

Net interest expense

1 unchanged sentence

Total financing

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.

IMPERIAL OIL LIMITED

1 unchanged sentence

millions of Canadian dollars As at

Sept 30 As at

Long-term debt (a)

Long-term debt

Finance leases

Total long-term debt 4,027 4,033

(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.

Other long-term obligations

15 unchanged sentences

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.

At March 31, 2023 and December 31, 2022, the fair value of long-term debt ($ 3,447 million, 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.

The company’s size, strong capital structure and the complementary nature of its business segments 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 derivatives, 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”.

7 unchanged sentences

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

to September 30

millions of Canadian dollars 2023 2022

Revenues ( 23 ) 37

Purchases of crude oil and products — — — ( 33 )

Total 105 ( 21 ) 91 ( 63 )

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

The estimated fair value of derivative instruments, and the related hierarchy level for the fair value measurement was as follows:

At March 31, 2023

millions of Canadian dollars

23 unchanged sentences

“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.

At March 31, 2023 and December 31, 2022, the company had $ 9 million and $ 14 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.

IMPERIAL OIL LIMITED

3 unchanged sentences

Common shares outstanding 584,153 584,153

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:

6 unchanged sentences

Purchases at stated value — —

Balance as at September 30, 2022 611,516 1,129

IMPERIAL OIL LIMITED

Balance as at March 31, 2023 584,153 1,079

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

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

IMPERIAL OIL LIMITED

6 unchanged sentences

Amounts reclassified from accumulated other comprehensive income 10 21

Balance at September 30 ( 1,090 ) ( 1,836 )

Balance at March 31 ( 481 ) ( 1,132 )

Amounts reclassified out of accumulated other comprehensive income (loss) - before-tax income (expense):

Third Quarter

to September 30

millions of Canadian dollars 2023 2022

4 unchanged sentences

Income tax expense (credit) for components of other comprehensive income (loss):

Third Quarter

to September 30

millions of Canadian dollars 2023 2022

2 unchanged sentences

Amortization of postretirement benefits liability adjustment included in net benefit cost

Total 7 11 28 50

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.

IMPERIAL OIL LIMITED

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements