What changed in this filing

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Item 1A. Risk Factors

2024-02-28 compared with 2023-02-22 · 88 added, 64 removed, 184 unchanged (45% of the section changed)

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Commodity prices have been volatile, and the company expects that volatility to continue.

Any material decline in crude oil prices could have a material adverse effect on Imperial’s Upstream operations, financial position, proved reserves and the amount spent to develop reserves.

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.

Any material decline in crude oil prices could have a material adverse effect on the company’s Upstream operations, financial position, proved reserves and the amount spent to develop reserves.

On the other hand, a material increase in crude oil prices could have a material adverse effect on the company'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.

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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 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;

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

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

increased competitiveness of, or government policy support for, alternative energy sources;

new product quality regulations;

technological changes or consumer preferences that alter fuel choices, such as technological advances in energy storage that make wind and solar more competitive for power generation;

technological changes or consumer preferences that alter fuel choices, such as technological advances in energy storage or other critical areas that make wind, solar, hydrogen, nuclear or other alternatives more competitive for power generation;

changes in consumer preferences for the company’s products, including consumer demand for alternative fueled or electric transportation or alternatives to plastic products;

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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 and have in the past disrupted supplies.

government policies that restrict oil and gas production or exports, or increase associated costs, including actions intended to reduce greenhouse gas emissions and previous Government of Alberta curtailment regulations;

the occurrence of wars or hostile actions, including disruption of land or sea transportation routes;

natural disasters;

trade tariffs or broader breakdowns in global trade;

disruptions in competitors’ operations;

and unexpected pipeline or rail constraints that may disrupt and have in the past disrupted 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.

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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, 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.

In the past, increased differentials have 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.

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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.

Imperial’s future business results, including cash flows and financing needs, may also be affected by the occurrence, severity, pace and rate of recovery of future public health epidemics or pandemics, 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 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, 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.

Additionally, changes in environmental regulations, assessment processes or other laws and increasing and expanding stakeholder consultation (including Indigenous stakeholders), may increase the cost of compliance or reduce or delay available business opportunities and adversely impact the company’s results.

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.

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 the company’s existing operations and planned projects.

This includes actions by policy makers, regulators or other actors to delay or deny necessary licences and permits, or 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.

Additionally, changes in environmental regulations, assessment processes or other laws (including but not limited to in respect of climate change and greenhouse gas emissions), regulatory interpretations that exclude or disfavour the company's products under government policies or programs intended to support new or developing markets or technologies or that are otherwise not technology-neutral, and increasing and expanding consultation with stakeholders and Indigenous communities, may increase the cost of compliance or reduce or delay available business opportunities and adversely impact the company’s results.

Changes in taxation policy, such as

the Government of Canada's proposed tax on repurchases of equity effective from January 1, 2024, could impact the company’s financial 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.

Many governments are providing tax advantages and other subsidies to support alternative energy sources or are mandating the use of specific fuels or technologies.

Governments are also introducing bans on certain technologies that could impact demand for products, such as the Government of Canada’s intention to ban the sale of new internal combustion engine cars and light trucks beginning in 2035.

Governments are also introducing bans on certain technologies that could impact demand for products, such as the Government of Canada’s regulations to gradually reduce the proportion of permitted sales of new internal combustion engine cars and light trucks from 2026-2034 and ban such sales beginning in 2035.

Governments and others are also promoting research into new technologies to reduce the cost and increase the scalability of alternative energy sources, and the success of these initiatives may decrease demand for the company’s products.

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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.

Of note, the first of two court cases brought against the government by Indigenous groups regarding the assessment of cumulative impacts and infringement on exercise of treaty rights in Alberta is scheduled to be heard in 2024.

These cases may inform future government decisions and policies regarding land use planning and resource development, and could impact the requirements or willingness to grant regulatory licenses or approvals.

The company also depends on water obtained under licences for withdrawal, storage, reuse and discharge in both its Upstream and Downstream businesses, including future projects and expansions.

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 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.

Water use may be limited by regulatory requirements, seasonal fluctuations, regional drought, 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 or have been 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

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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.

A failure or perceived failure to satisfy the requirements or if the company’s tailings management operations do not operate in the manner anticipated by the company or third parties such as the events relating to the environmental protection order at the company’s Kearl operations in 2023 could impact the company's ability to operate its assets, and such impact could be material.

Further, the absence or evolving nature of policies and regulations for the timing and closure of tailings ponds, including the approved technologies and methods for closure (such as the use of end pit lakes and water capped tailings), and dam safety directives, regulations, guides and abandonment requirements could have a material impact on conditions for approvals and ultimate mine closure costs.

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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 and project expansions.

In October 2023, the Supreme Court of Canada ruled that the new federal assessment scheme was unconstitutional in part.

Legislative and regulatory amendments have yet to be made to address this decision.

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

Compliance costs

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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 production or 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 operation or 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.

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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.

Environmental hazards including severe weather events may impact the company’s operational performance, such as extreme cold weather that makes mining operations more difficult.

Environmental hazards and risks, including severe weather, drought, forest fires and geological events, may impact the company’s operational performance.

For example, the company's oil sands operations were particularly affected by extreme cold weather in 2022 and wildfires in 2016.

The ability to insure risks is limited by the capacity of the applicable insurance markets, which may not be sufficient to cover the likely cost of a major adverse operating event.

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Net-zero scenarios

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”.

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 carbon dioxide (CO 2 ) 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.

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 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.

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 with continued technology development and policy support, carries risks that the transition, including underlying technologies, policies, and markets as discussed in more detail below, will not be available or 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 changes 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.

Imperial’s results may be impacted if the implementation pace and uncertainty of policy reduces the global competitiveness of the Canadian oil and gas industry and the company’s crude oil and refined products.

Greenhouse gas restrictions

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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.

This percentage of priced emissions increased nominally 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.

These percentages increase by 2 percent per year for 2023 to 2028 (inclusive), 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 CO 2 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.

With respect to other provinces, Ontario obtained federal equivalency for its Emissions Performance System, which put a price on 8 percent of a facility’s emissions in 2022.

The price increased by 2.4 percent in 2023 and will increase by 1.5 percent per year starting in 2024.

British Columbia has carbon pricing in place for all industrial emissions, with pricing that matches the federal carbon pricing schedule since 2022.

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.

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.

In 2022, the Government of Canada finalized the Clean Fuel Regulations, which require the reduction

in carbon intensity of liquid transportation fuels supplied in Canada starting in July 2023.

The regulations require fuel suppliers to reduce the carbon intensity of gasoline and diesel by reducing the GHG emissions within the fossil fuel life cycle, blending in low carbon intensity renewables or fuel switching away from fossil fuels.

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

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

Uncertainty exists regarding federal overreach into provincial jurisdiction to implement such changes and policies.

In October 2023, the Supreme Court of Canada ruled that the Impact Assessment Act was unconstitutional in part.

Legislative and regulatory amendments have yet to be made to address this decision, and the impact of this legislation and its expected amendments is not fully apparent.

International accords and underlying regional and national regulations covering climate change and greenhouse gas emissions continue to evolve with uncertain timing and outcome, making it difficult to predict their business impact.

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Current and pending greenhouse gas regulations or policies may also increase compliance and abatement costs including taxes and levies, increase abandonment and reclamation obligations and impact decommissioning timelines, lengthen project evaluation and implementation times, impact reserves evaluations and affect operations.

Increased costs may not be recoverable in the market place, could negatively affect our returns and could reduce the global competitiveness of the company’s crude oil, natural gas and refined products.

Increased costs may not be recoverable in the market place, could negatively affect the company's returns and could reduce the global competitiveness of the company’s crude oil, natural gas and refined products.

Governments may also impose restrictions on production of, or emissions from, oil and gas to the extent they view such measures as a viable approach for pursuing national and global energy and climate policies.

For example, the Government of Canada announced its intention to pursue a cap on greenhouse gas emission from oil and gas activities by 2030.

For example, in December 2023, the Government of Canada published a regulatory framework to pursue a cap on greenhouse gas emissions from upstream oil and gas activities by 2030.

Concern over the risks of climate change may lead governments to make laws applicable to the energy industry progressively more stringent over time.

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.

These actions include delaying or blocking needed infrastructure, utilizing shareholder governance mechanisms against companies or their shareholders or financial institutions in an effort to deter investments in oil and gas activities, and taking other actions intended to promote changes in business strategy for oil and gas companies.

Technology and lower-emission solutions

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and local or regional energy shortages.

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.

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.

The company's operations and planned projects that have been developed with regard to current or anticipated policies may become uneconomic or otherwise adversely impacted if such policies change or are not adopted as anticipated.

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

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Imperial is reliant on a number of key chemicals, catalysts and third-party service providers, including input and output commodity transportation (pipelines, rail, trucking, marine) and utilities providing services, including electricity and water, to various company operations.

The lack of availability, capacity or proximity, with respect to pipeline facilities and railcars, could negatively impact Imperial’s ability to produce at capacity levels.

The lack of availability, capacity or proximity, with respect to pipeline facilities and railcars, could negatively impact the company’s ability to produce at capacity levels.

Transportation disruptions, including those caused by events unrelated to the company’s operations, could adversely affect the company’s price realizations, refining operations and sales volumes.

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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.

The company 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.

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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.

Further, as underlying inflationary pressures remained in Canada and other countries throughout 2023, governments maintained elevated 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 the company's 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.

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

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.

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The nature of the company’s Upstream, Downstream and Chemical businesses depend on complex, long-term, and capital intensive projects that require a high degree of project management expertise to maximize efficiency.

This includes development, engineering, construction, commissioning and ongoing operational activities and expertise.

This includes development, engineering, construction, commissioning and ongoing operational

activities and expertise.

The company’s results are affected by its ability to develop and operate projects and facilities as planned, and by events or conditions that affect the advancement, operation, cost or results of such projects or facilities.

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changes in resources and operating costs including the availability and cost of materials, equipment and qualified personnel;

the ability to qualify for certain incentives available under supportive government policies for emerging markets and technologies;

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 prevent, to the extent possible, and respond effectively to unforeseen technical difficulties that could delay project start-up or cause unscheduled downtime.

Operational efficiency

An important component of Imperial’s competitive performance, especially given the commodity based nature of Imperial’s business, is the ability to operate efficiently, including the company’s ability to manage expenses and improve production yields on an ongoing basis.

This requires continuous management focus, including technological improvements, cost control, productivity enhancements and regular reappraisal of the company’s asset portfolio.

An important component of Imperial’s competitive performance, especially given the commodity-based nature of the company’s business, is the ability to operate efficiently, including the company’s ability to manage expenses and improve production yields on an ongoing basis.

This requires continuous management focus, including technological integration and improvements, cost control, productivity enhancements and regular reappraisal of the company’s asset portfolio.

The company’s operations and results also depend on key personnel and subject matter expertise, the recruitment, development and retention of high caliber employees, and the availability of skilled labour.

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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, 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.

Imperial applies rigorous management systems, including a combined program of effective operations integrity management, ongoing upgrades, key equipment replacements, and comprehensive inspection and surveillance.

The company applies rigorous management systems, including a combined program of effective operations integrity management, ongoing upgrades, key equipment replacements, and comprehensive inspection and surveillance.

The company also maintains a disciplined framework of internal controls and applies a controls management system for monitoring compliance with this framework.

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Cybersecurity

Imperial is regularly subject to attempted cybersecurity disruptions from a variety of sources, including state-sponsored actors.

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

The company is regularly subject to attempted cybersecurity disruptions from a variety of sources, including state-sponsored actors.

The company’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;

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and an emphasis on resiliency including business response and recovery.

See "Item 1C.

Cybersecurity" for information on the company's program for managing cybersecurity risks.

The company has limited ability to influence third parties, including the company's partners, suppliers, service providers (including providers of cloud-based services for the company's data or applications) and customers, to implement strong cybersecurity controls, and the company is exposed to potential harm from cybersecurity events that may affect their operations.

During 2023, the company responded to several cyber-attacks on suppliers and joint venture partners, none of which caused a material impact to Imperial.

The company’s response included giving technical assistance, loaning equipment, and taking additional defensive measures.

If the measures the company is taking to protect against cybersecurity disruptions prove to be insufficient or if the company’s proprietary data is otherwise not protected, the company, as well as its customers, employees or third parties, could be adversely affected.

The company is exposed to potential harm from cybersecurity events that may affect the operations of third parties, including our partners, suppliers, service providers (including providers of cloud-based services for our data or applications), and customers.

Cybersecurity disruptions could cause physical harm to people or the environment;

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or otherwise disrupt the company’s business operations.

Imperial could incur significant costs to remedy the effects of a major cybersecurity disruption, in addition to costs in connection with resulting regulatory actions, litigation or reputational harm.

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

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.

The company could incur significant costs to remedy the effects of a major cybersecurity disruption, in addition to costs in connection with resulting regulatory actions, litigation or reputational harm.

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

The company's 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.

The company's 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.

Factors that could have an impact on the company’s reputation including an operating incident or significant cybersecurity disruption;

Factors that could have an impact on the company’s reputation include an operating incident or significant cybersecurity disruption;

changes in consumer views concerning the company’s products;

a perception by the public that the company is not being fully transparent in the sharing of information regarding its operations that is or may be relevant to community decision-making;

actions taken by the company's business partners;

a perception by investors or others that insufficient progress is being made with respect to the company’s ambition in the energy transition, or that pursuit of this ambition may result in allocation of capital to investments with reduced returns;

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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 crude oil, liquids and natural gas reserves are highly dependent upon the company’s success in exploiting its current reserves.

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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;

future commodity

prices, where low commodity prices may affect reserves development;

abandonment and reclamation costs, including reclamation and tailings requirements for mining operations;

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Actual production, revenues, taxes and royalties, development costs, abandonment and reclamation costs, and operating expenditures, with respect to reserves, will likely vary from such estimates, and such variances could be material.

Unresolved staff comments

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