What changed in this filing

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Item 1A. Risk Factors

2025-02-19 compared with 2024-02-28 · 102 added, 78 removed, 194 unchanged (48% of the section changed)

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Crude oil, natural gas, petrochemical and petroleum product prices and margins depend on local, regional, and global events or conditions that affect supply and demand for the relevant commodity or product.

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

Commodity prices have been volatile, and the company expects that volatility to continue during the lifespan of its major assets.

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.

The company's pursuit of lower-emission business opportunities including carbon capture and storage, hydrogen, lower-emission fuels, and lithium also depends on the growth and development of markets for those products and services, including implementation of supportive and stable 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.

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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 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 the company.

The occurrence of economic downturns, 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, national or regional trade tariffs, trade sanctions or trade controls, international monetary and currency exchange rate fluctuations, decoupling of economies, disruptions in trade alliances or military alliances, or a broader breakdown in global trade, security or public health issues and responses, extended government shutdowns, the inability to access debt markets due to rating, banking, or legal constraints, liquidity crises, de-dollarization in global trade or the growth or use of alternative common currencies, and other events or conditions that impair the functioning of financial markets and institutions, also pose risks to the company.

Other demand-related factors

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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;

increased competitiveness of, or government policy support for, alternative energy sources or potential substitutes for the company's products;

new product quality regulations;

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;

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

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

broad-based changes in personal income levels, interest rates and inflation;

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

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

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

Other supply-related factors

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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 exports, or increase associated costs, including actions intended to reduce greenhouse gas emissions and previous Government of Alberta curtailment regulations;

government policies that restrict (or may have a consequence of restricting) oil and gas production or exports, or increase associated production, reporting or compliance costs, including actions intended to reduce greenhouse gas emissions as described under “Climate change, energy transition and greenhouse gas restrictions” in this Item 1A, and previous Government of Alberta curtailment regulations;

collective actions by non-governmental organizations and financial institutions to withhold funding or support from oil and gas producers;

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;

trade tariffs, sanctions 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.

For example, Russia's military action in Ukraine impacted global crude oil and gas supply levels and prices, and contributed to a volatile commodity environment ;

and the potential for trade tariffs by the United States on Canadian goods and potential retaliatory actions by Canadian or provincial governments could impact market prices and demand for, and export volumes of, Canadian goods.

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

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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.

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 or punitive taxes on oil, gas and petrochemical operations) and changes in trade policies and agreements.

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.

This includes actions by policy makers, regulators or other actors to delay or deny necessary licences and permits, reduce or retract government incentives for emissions reductions, 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 and company communications relating thereto), 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.

Other government and political factors that could adversely affect the company’s financial results include increases or changes in taxes or government royalty rates (including retroactive claims or punitive taxes on oil, gas and petrochemical operations) and changes in trade policies and agreements (including those potential tariffs and retaliatory actions discussed above in this Item 1A under “Other supply-related factors”).

Changes in taxation policy, such as the Government of Canada's tax on repurchases of equity that became 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, emission standards or 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.

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This includes the requirement for specific approvals for many areas of interaction with the environment, such as land use, air quality, water use, biodiversity protection and waste, including mine tailings management.

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.

The failure to operate as anticipated and adhere to conditions, the delay or denial of approvals, and changes to conditions or regulations, could negatively impact the company’s ability to operate its projects and facilities (including but not limited to resulting in mandatory facility shutdowns or suspensions) 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.

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.

Of note, there are currently a number of court actions against the government by Indigenous groups regarding the assessment of cumulative impacts and infringement on exercise of treaty rights.

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, 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.

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 volatile organic compounds (VOC) and benzene controls required for petroleum liquid storage tanks and loading operations at refining and terminal locations, 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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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.

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.

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

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 and delicensing directives, regulations, guides and abandonment requirements, could have a material impact on conditions for approvals and ultimate mine closure costs.

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.

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).

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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.

In November 2024, Alberta referred the constitutionality of the amended Impact Assessment Act to the Court of Appeal of Alberta.

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

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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 operation or 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, as well as laws and regulations affecting production of the company's products, trading, carbon capture and storage, hydrogen, lower-emission fuels or lithium) or other laws that penalize the company for past or current production of legal and/or permitted products and operations 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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The company’s future results will depend on the continued effectiveness of these efforts.

See also “Safety, business controls and environmental risk management” under “Operational and other factors” in this Item 1A below.

Climate change, energy transition and greenhouse gas restrictions

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 as well as the use or support for different emission-reduction technologies.

Greenhouse gas emissions reductions

Driven by concern over the risks of climate change, the provinces and the Government of Canada have adopted or have revised regulatory frameworks to report on or reduce greenhouse gas emissions including emissions from the production and use of oil and gas and their products, as well as increase the use of or support for different emission-reduction technologies.

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 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 company’s actions with respect to the energy transition carry risks that the transition, including underlying technologies, government 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.

Political government changes may create further policy uncertainty resulting in greater investment uncertainty and industry competitiveness concerns.

Greenhouse gas restrictions

Government actions intended to reduce greenhouse gas emissions include adoption of carbon emissions pricing, cap and trade regimes, carbon taxes, emissions limits, increased mileage and other efficiency standards, low carbon fuels standards, mandates for sales of electrical vehicles and incentives or mandates for renewable energy.

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.

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 45 to 50 percent below 2005 levels by 2035, a substantial increase in ambition beyond its original and most recent 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 CO 2 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.

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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.

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, and additional sector specific regulations may be developed to achieve this target.

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 CO 2 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 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.

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, 18 percent

in 2022 and 20 percent in 2023.

These percentages increase by 2 percent per year for 2024 to 2028 (inclusive), followed by an increase of 4 percent in 2029 and 2030 for the oil sands sector.

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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.

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

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 the Clean Fuel Regulations, which require the reduction

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

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

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.

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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.

In November 2024, Alberta referred the constitutionality of the amended Impact Assessment Act to the Court of Appeal of Alberta.

The impact of this legislation 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.

Such laws and policies could make Imperial’s products more expensive and less competitive, reduce or delay available business opportunities, reduce demand for hydrocarbons, and shift hydrocarbon demand toward lower greenhouse gas emission energy sources.

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.

Current and pending greenhouse gas regulations or policies may also increase compliance costs (such as complying with increased or mandatory disclosure or due diligence requirements and government mandated energy transition plans), increase 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 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, 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.

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

For example, following the publication of a regulatory framework in December 2023, in November 2024 the Government of Canada released proposed regulations that will impose a cap on greenhouse gas emissions from upstream oil and gas activities by 2030, and in December 2024 the Government of Canada released final Clean Electricity Regulations that will require reductions in the carbon intensity of electricity provided to the grid between 2035 and 2050.

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.

Political and other actors (and their agents) are also increasingly seeking to collectively 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.

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

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 CO 2 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.

Achieving societal ambitions to reduce greenhouse gas emissions and ultimately achieve net-zero emissions will require new technologies and added infrastructure to reduce the cost and increase the scalability of

alternative energy sources.

The company is continuing research and collaboration efforts to advance the development and deployment of carbon capture and storage, hydrogen, lower-emission fuels and lithium.

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 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

The scale of the world’s energy system means that, in addition to developments in technology discussed above, a successful energy transition will require appropriate support from governments and private participants throughout the global economy.

The company’s ability to develop and deploy CCS and other lower-emission energy technologies at commercial scale will depend in part on the continued development of supportive government policies and markets.

Failure or delay of these policies or markets to materialize or be maintained could adversely impact these investments.

Policy and other actions that result in restricting the availability of hydrocarbon products without commensurate reduction in demand may have unpredictable adverse effects, including increased commodity price volatility;

The scale of the world’s energy system means that, in addition to developments in technology discussed above, any successful energy transition will require appropriate support from governments and private participants throughout the global economy.

Ultimately, market solutions with sound business fundamentals are necessary to incentivize and sustain wide-spread solutions that drive emissions reductions.

The company’s ability to develop and deploy carbon capture and storage, hydrogen, lower-emission fuels, lithium, and other new energy technologies at commercial scale will depend in part on the continued development of stable and supportive government policies and markets.

Failure or delay of these policies or markets to materialize or be maintained, or the development of these policies or markets in a manner that differs from the company’s expectations, could adversely impact these investments.

Policy and other actions that result in restricting the availability of hydrocarbon products without a commensurate reduction in demand may have unpredictable adverse effects, including increased commodity price volatility;

periods of significantly higher commodity prices and resulting inflationary pressures;

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.

The company's operations and planned projects that have been developed with regard to current or anticipated policies, including but not limited to policies relating to carbon emission credits, 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 "Project management" in this Item 1A.

Prices for commodities produced by the company are commonly benchmarked in U.S.

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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.

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

This includes outages of key third-party infrastructure, such as pipelines servicing the company’s oil sands assets or pipelines supplying feedstock to its refineries, which could impact the company’s ability to operate its assets or limit the ability to deliver production and products to market.

A third-party utilities outage could have an adverse impact on the company’s operations and ability to produce.

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.

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.

The company also enters into contractual relationships with suppliers, partners and other counterparties to procure and sell goods and services, including with counterparties located outside of Canada.

The company’s operations, market position and financial condition may be adversely impacted if these counterparties fail to fulfil their obligations.

For counterparties located outside of Canada, the risk of such failure may be enhanced and the company’s ability to mitigate against such failure may be reduced as a result of a lack of physical proximity, foreign government actions or other geopolitical factors.

The company may also be adversely affected by the outcome of litigation or arbitration resulting from its operations, including but not limited to proceedings in respect of greenhouse gas emissions and the promotion of the company’s products, or by government enforcement proceedings alleging non-compliance with applicable

laws or regulations.

Such proceedings are subject to uncertainty and success is not guaranteed, and the company may incur significant expenses and devote significant resources in defending such proceedings.

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, 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.

Further, although inflationary pressures declined in Canada and other countries during 2024, moderate inflation levels have persisted and governments generally maintained elevated interest rates which may further impact the company through the availability of financing, cost of debt, and exchange rate fluctuations.

In addition, potential tariffs and retaliatory actions discussed above in this Item 1A under “Other supply-related factors” could have further inflationary impacts.

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, including its capital allocation into existing and new businesses.

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

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

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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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the ability to negotiate successfully with joint venturers, partners, governments, suppliers, customers and others;

the ability to protect and enforce the company’s contractual and legal rights (including with joint venture partners);

the ability to model and optimize reservoir performance;

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Imperial relies upon the research and development organizations of the company and ExxonMobil, with whom the company conducts shared research.

Innovation and technology are important to maintain the company’s competitive position, especially in light of the technological nature of Imperial’s business and the need for continuous efficiency improvement.

The company’s research and development organizations must be able to adapt to a changing market and policy environment, including developing technologies to help reduce greenhouse gas emissions intensity.

There are risks associated with projects that rely on new technology, including that the results of implementing the new technology may differ from simulated, piloted or expected results.

The failure to develop and adopt new technology may have an adverse impact on the company’s operations, ability to meet regulatory requirements and operational commitments and targets (including environmental sustainability and reduction of greenhouse gas emissions), and financial results.

Innovation and technology are important to maintain the company’s competitive position, especially in light of the technological nature of Imperial’s business, the dynamic and rapidly evolving technological landscape, and the need for continuous efficiency improvement.

The company’s research and development organizations must be able to adapt to a changing market, regulatory and policy environment, including developing or deploying technologies to help reduce greenhouse gas emissions intensity.

To remain competitive, the company must also continuously adapt and capture the benefits of new technologies including growing the company’s capabilities to utilize digital data technologies (including but not limited to artificial intelligence technologies) to gain new business insights and support business operations.

There are risks associated with existing and new operations and projects that rely on new technology, including that the results of implementing the new technology may differ from simulated, piloted or expected results.

The failure to develop and adopt new technology may have an adverse impact on the company’s operations, ability to meet regulatory requirements and operational commitments and targets (including those relating to environmental sustainability and reduction of greenhouse gas emissions), and financial results.

In 2023, the company’s Kearl site completed its multiyear program to convert its 81 haul trucks to autonomous operation.

The autonomous system is composed of perception systems, sensors and mechanical components on each truck, which feed information to a number of onboard computer systems.

These onboard computer systems send real time information over a wireless network to a central server and database that displays real time information to central control room operators who manage the overall fleet’s operation.

Computer automation systems are used to both maneuver the individual trucks and in an overarching truck assignment application which manages truck routing patterns.

The use of the autonomous system helps the company to capture productivity improvements while also reducing costs and further enhancing operational safety.

Failure of the autonomous system to operate as intended could result in material adverse impacts to production at the Kearl site and the company’s financial results, physical harm to people or the environment, damage or destruction of company assets, and negative reputational consequences.

The company applies risk management, internal controls and controls management systems in respect of these risks relating to autonomous haul trucks, as described in “Safety, business controls and environmental risk management” in this Item 1A below.

See also “Cybersecurity” and “Reputation” in this Item 1A below.

Safety, business controls and environmental risk management

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The company’s upstream and downstream operations may experience loss of production, slowdowns or shutdowns and increased costs due to the failure of interdependent systems, and substantial liabilities and other adverse impacts could result if the company’s management systems and controls do not function as intended.

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.

Cybersecurity

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

The company is regularly subject to attempted cybersecurity disruptions from a variety of sources, including state-sponsored actors and actors potentially employing emerging technologies such as artificial intelligence technologies.

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

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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.

events that may affect their operations.

During 2024, the company responded to several cyber-attacks on suppliers and joint venture partners, none of which caused a material impact to Imperial.

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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.

As noted in Item 1 above, the Canadian energy and petrochemical industries are highly competitive.

Technology and expertise provided by industry service companies may enhance the competitiveness of firms that may not have the internal resources and capabilities of Imperial.

As described in more detail above, the company’s hydrocarbon-based energy products are also subject to growing and, in many cases, government-supported competition from alternative energy sources.

In addition, as the company enters new markets in pursuit of lower-emission business opportunities, the company will need to compete effectively with established competitors in these markets, as well as with new market entrants seeking to capitalize on these opportunities, while successfully navigating changing market conditions or technologies.

Imperial’s reputation is an important corporate asset.

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changes in consumer views concerning the company’s products;

changes in consumer media preferences from traditional mainstream media to decentralized and personalized media;

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;

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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;

and operating costs.

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.

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.

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-K

Item 1A. Risk Factors