What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-04 compared with 2024-08-05 · 47 added, 49 removed, 159 unchanged (38% of the section changed)

16 unchanged sentences

Reconciliation of net income (loss) excluding identified items

There were no identified items in the second quarter or year-to-date 2024 and 2023 periods.

There were no identified items in the third quarter or year-to-date 2024 and 2023 periods.

IMPERIAL OIL LIMITED

Recent business environment

In the first half of 2024, the price of crude oil remained relatively flat compared to the fourth quarter of 2023.

The Canadian WTI/WCS spread continued to narrow in the second quarter, primarily due to additional pipeline capacity coming online.

Refining margins fell as increasing supply more than met growing demand and geopolitical trade-flow disruptions lessened.

During the third quarter, crude prices decreased versus the second quarter, reflecting uncertainty about future China demand and OPEC+ supply.

The Canadian WTI/WCS spread remained stable in the third quarter and narrowed versus the 2023 full-year average.

Industry refining margins declined versus the second quarter as increased supply outpaced global demand.

Operating results

Second quarter 2024 vs.

second quarter 2023

Second Quarter

Third quarter 2024 vs.

third quarter 2023

Third Quarter

millions of Canadian dollars, unless noted 2024 2023

3 unchanged sentences

millions of Canadian dollars

Price – Average bitumen realizations increased by $14.38 per barrel, primarily driven by higher marker prices and the narrowing of the WTI/WCS spread.

Synthetic crude oil realizations increased by $10.64 per barrel, generally in line with WTI.

Volumes – Higher volumes were primarily driven by higher mine fleet productivity and optimized turnaround at Kearl, production and steam cycle timing and GRP1 production at Cold Lake.

Royalty – Higher royalties were primarily driven by improved commodity prices.

Price – Average bitumen realizations decreased by $8.81 per barrel, primarily driven by lower marker prices.

Synthetic crude oil realizations decreased by $8.57 per barrel, generally in line with WTI.

Volumes – Higher volumes were primarily at Cold Lake driven by Grand Rapids, and by production and steam cycle timing.

Royalty – Lower royalties were primarily driven by lower commodity prices, partially offset by higher volumes.

Other – Includes lower operating expenses of about $80 million, primarily due to lower energy prices.

Marker prices and average realizations

Second Quarter

Third Quarter

Canadian dollars, unless noted 2024 2023

7 unchanged sentences

IMPERIAL OIL LIMITED

Second Quarter

Third Quarter

thousands of barrels per day 2024 2023

1 unchanged sentence

Kearl total gross production (thousands of barrels per day)

(a) In the second quarter of 2024, Syncrude gross production included about 2 thousand barrels per day of bitumen and other products (2023 - 0 thousand barrels per day) that were exported to the operator's facilities using an existing interconnect pipeline.

Higher production at Kearl was primarily driven by higher mine fleet productivity and optimized turnaround.

Higher production at Cold Lake was primarily driven by production and steam cycle timing, and GRP1 production.

Higher production at Cold Lake was primarily driven by Grand Rapids, and by production and steam cycle timing.

Net income (loss) factor analysis

1 unchanged sentence

Margins – Lower margins primarily reflect weaker market conditions.

Other – Primarily due to lower turnaround impacts of about $140 million.

Refinery utilization and petroleum product sales

Second Quarter

Third Quarter

thousands of barrels per day, unless noted 2024 2023

2 unchanged sentences

Petroleum product sales

Refinery throughput in the second quarter of 2024 reflects the impact of turnaround activities at the Sarnia and Strathcona refineries.

Refinery throughput in the second quarter of 2023 reflected the impact of turnaround activities at the Strathcona refinery.

Refinery throughput in the third quarter of 2024 reflects the impact of turnaround activities at the Nanticoke and Strathcona refineries.

Refinery throughput in the third quarter of 2023 reflected the impact of turnaround activity at the Sarnia refinery.

Net income (loss) factor analysis

2 unchanged sentences

Corporate and other

Second Quarter

Third Quarter

millions of Canadian dollars 2024 2023

1 unchanged sentence

Liquidity and capital resources

Second Quarter

Third Quarter

millions of Canadian dollars 2024 2023

5 unchanged sentences

Cash and cash equivalents at period end 1,490 2,716

Cash flows from operating activities primarily reflect higher Upstream realizations and volumes, and favourable working capital impacts.

Cash flows used in investing activities primarily reflect lower additions to property, plant and equipment.

Cash flows from operating activities primarily reflect unfavourable working capital impacts.

Cash flows used in investing activities primarily reflect higher additions to property, plant and equipment.

Cash flows used in financing activities primarily reflect:

Second Quarter

Third Quarter

millions of Canadian dollars, unless noted 2024 2023

3 unchanged sentences

Number of shares purchased (millions) (a)

(a) The company did not purchase any shares during the second quarter of 2024 and 2023.

On June 24, 2024, the company announced by news release that it had received final approval from the Toronto Stock Exchange for a new normal course issuer bid and will continue its existing share purchase program.

Shareholders may obtain a copy of the Notice of Intention to Make a Normal Course Issuer Bid approved by the TSX without charge by contacting the company.

The program enables the company to purchase up to a maximum of 26,791,840 common shares during the period June 29, 2024 to June 28, 2025.

This maximum includes shares purchased under the normal course issuer bid from Exxon Mobil Corporation.

As in the past, Exxon Mobil Corporation has advised the company that it intends to participate to maintain its ownership percentage at approximately 69.6 percent.

The program will end should the company purchase the maximum allowable number of shares or otherwise on June 28, 2025.

Imperial plans to accelerate its share purchases under the normal course issuer bid program, and anticipates repurchasing all remaining allowable shares prior to year end.

Purchase plans may be modified at any time without prior notice.

In June 2024, the company extended the maturity date of its existing long-term, variable-rate, Canadian dollar loan from ExxonMobil to June 30, 2035.

All other terms and conditions remain unchanged.

(a) Share repurchases were made under and in connection with the company's normal course issuer bid program, and include shares purchased from Exxon Mobil Corporation.

IMPERIAL OIL LIMITED

Six months 2024 vs.

six months 2023

Nine months 2024 vs.

nine months 2023

millions of Canadian dollars, unless noted 2024 2023

3 unchanged sentences

millions of Canadian dollars

Price – Average bitumen realizations increased by $15.76 per barrel, primarily driven by higher marker prices and the narrowing WTI/WCS spread.

Synthetic crude oil realizations increased by $0.37 per barrel, primarily driven by higher WTI, partly offset by a weaker Synthetic/WTI spread.

Volumes – Higher volumes were primarily driven by higher mine fleet productivity and optimized turnaround at Kearl, production and steam cycle timing and GRP1 production at Cold Lake.

Royalty – Higher royalties were primarily driven by improved commodity prices.

Other – Includes lower operating expenses of about $120 million, primarily from lower energy prices, partially offset by lower electricity sales at Cold Lake due to lower prices.

Price – Average bitumen realizations increased by $6.90 per barrel, primarily driven by the narrowing WTI/WCS spread, lower diluent costs, and higher marker prices.

Synthetic crude oil realizations decreased by $2.70 per barrel, primarily driven by a weaker Synthetic/WTI spread, partially offset by higher WTI.

Volumes – Higher volumes were primarily driven by improved mine fleet productivity and optimized turnaround at Kearl, as well as Grand Rapids and production and steam cycle timing at Cold Lake.

Royalty – Higher royalties were primarily driven by higher volumes.

Other – Includes lower operating expenses of about $200 million, primarily from lower energy prices, and favourable foreign exchange impacts of about $70 million, partially offset by lower electricity sales at Cold Lake due to lower prices.

Marker prices and average realizations

12 unchanged sentences

(a) In 2024, Syncrude gross production included about 1 thousand barrels per day of bitumen and other products (2023 - 1 thousand barrels per day) that were exported to the operator's facilities using an existing interconnect pipeline.

Higher production at Kearl was primarily driven by higher mine fleet productivity and optimized turnaround.

Higher production at Kearl was primarily driven by improved mine fleet productivity and optimized turnaround.

Higher production at Cold Lake was primarily driven by Grand Rapids, and by production and steam cycle timing.

Net income (loss) factor analysis

7 unchanged sentences

Petroleum product sales

Refinery throughput in 2024 reflects the impact of turnaround activities at the Sarnia and Strathcona refineries.

Refinery throughput in 2023 reflected the impact of turnaround activities at the Strathcona refinery.

Lower refinery throughput in 2024 mainly reflects the impact of turnaround activity at the Nanticoke refinery.

Net income (loss) factor analysis

19 unchanged sentences

Number of shares purchased (millions) (a)

(a) The company did not purchase any shares during the six months ended June 30, 2024 and 2023.

(a) Share repurchases were made under and in connection with the company's normal course issuer bid program, and include shares purchased from Exxon Mobil Corporation.

The program enables the company to purchase up to a maximum of 26,791,840 common shares during the period June 29, 2024 to June 28, 2025.

This maximum includes shares purchased under the normal course issuer bid from Exxon Mobil Corporation.

As in the past, Exxon Mobil Corporation has advised the company that it intends to participate to maintain its ownership percentage at approximately 69.6 percent.

The program will end should the company purchase the maximum allowable number of shares or otherwise on June 28, 2025.

Imperial plans to accelerate its share purchases under the normal course issuer bid program, and anticipates repurchasing all remaining allowable shares prior to year end.

Purchase plans may be modified at any time without prior notice.

As previously communicated, in June 2024, the company extended the maturity date of its existing long-term, variable-rate, Canadian dollar loan from ExxonMobil to June 30, 2035.

All other terms and conditions remain unchanged.

Contractual obligations

8 unchanged sentences

the use of derivative instruments and effectiveness of risk mitigation;

the continued evaluation of the company’s share purchase program in the context of overall capital activities;

and the company’s belief that the commitment related to the long-term purchase agreement will not have a material effect on the company’s operations, financial condition or financial statements.

3 unchanged sentences

for shareholder returns, assumptions such as cash flow forecasts, financing sources and capital structure, participation of the company’s majority shareholder and the results of periodic and ongoing evaluation of alternate uses of capital;

project plans, timing, costs, technical evaluations and capacities and the company’s ability to effectively execute on these plans and operate its assets, including the Cold Lake Grand Rapids Phase 1 project, the Strathcona renewable diesel project and the Leming SAGD redevelopment project;

project plans, timing, costs, technical evaluations and capacities and the company’s ability to effectively execute on these plans and operate its assets, including the Cold Lake Grand Rapids project and the Strathcona renewable diesel project and the Leming SAGD redevelopment project;

capital and environmental expenditures;

26 unchanged sentences

Quantitative and qualitative disclosures about market risk

Information about market risks for the six months ended June 30, 2024, does not differ materially from that discussed on page 34 of the company’s annual report on Form 10-K for the year ended December 31, 2023.

Information about market risks for the nine months ended September 30, 2024, does not differ materially from that discussed on page 34 of the company’s annual report on Form 10-K for the year ended December 31, 2023.

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 2. Management’s Discussion and Analysis