What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-05 compared with 2024-11-04 · 42 added, 133 removed, 73 unchanged (71% of the section changed)

Management’s discussion and analysis of financial condition and results of operations

Non-GAAP financial measures and other specified financial measures

Certain measures included in this document are not prescribed by U.S.

Generally Accepted Accounting Principles (GAAP).

These measures constitute "non-GAAP financial measures" under Securities and Exchange Commission Regulation G and Item 10(e) of Regulation S-K, and "specified financial measures" under National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure of the Canadian Securities Administrators.

Reconciliation of these non-GAAP financial measures to the most comparable GAAP measure, and other information required by these regulations, have been provided.

Non-GAAP financial measures and specified financial measures are not standardized financial measures under GAAP and do not have a standardized definition.

As such, these measures may not be directly comparable to measures presented by other companies, and should not be considered a substitute for GAAP financial measures.

Net income (loss) excluding identified items

Net income (loss) excluding identified items is a non-GAAP financial measure that is total net income (loss) excluding individually significant non-operational events with an absolute corporate total earnings impact of at least $100 million in a given quarter.

The net income (loss) impact of an identified item for an individual segment in a given quarter may be less than $100 million when the item impacts several segments or several periods.

The most directly comparable financial measure that is disclosed in the financial statements is "Net income (loss)" within the company’s Consolidated statement of income.

Management uses these figures to improve comparability of the underlying business across multiple periods by isolating and removing significant non-operational events from business results.

The company believes this view provides investors increased transparency into business results and trends, and provides investors with a view of the business as seen through the eyes of management.

Net income (loss) excluding identified items is not meant to be viewed in isolation or as a substitute for net income (loss) as prepared in accordance with U.S.

All identified items are presented on an after-tax basis.

Reconciliation of net income (loss) excluding identified items

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

IMPERIAL OIL LIMITED

Recent business environment

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.

During the first quarter of 2025, the price of crude oil and the Canadian WTI/WCS spread remained relatively flat with the fourth quarter of 2024.

Industry refining margins improved versus the fourth quarter of 2024, reflecting changes in supply and demand balances.

During 2025, the United States announced a variety of trade-related actions, including the imposition of tariffs on imports from Canada and several other countries.

In response, Canada announced its own retaliatory tariffs.

Certain tariffs were paused for a period of time but have not been withdrawn.

The global trade environment continues to be volatile.

The likelihood of the United States, Canada or their trading partners resuming tariffs, imposing new or reciprocal tariffs, export restrictions, or other forms of trade-related sanctions is highly uncertain.

Additionally, significant uncertainty exists as to what effects these actions will ultimately have on Imperial, its suppliers and its customers.

The company continually monitors the global trade environment and works to mitigate potential impacts.

Operating results

Third quarter 2024 vs.

third quarter 2023

Third Quarter

First quarter 2025 vs.

first quarter 2024

First Quarter

millions of Canadian dollars, unless noted 2025 2024

3 unchanged sentences

millions of Canadian dollars

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

Third Quarter

Canadian dollars, unless noted 2024 2023

West Texas Intermediate (US$ per barrel)

Western Canada Select (US$ per barrel)

WTI/WCS Spread (US$ per barrel)

Bitumen (per barrel)

Synthetic crude oil (per barrel)

104.41 112.98

Average foreign exchange rate (US$)

IMPERIAL OIL LIMITED

Third Quarter

thousands of barrels per day 2024 2023

Kearl (Imperial's share)

Kearl total gross production (thousands of barrels per day)

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

Net income (loss) factor analysis

millions of Canadian dollars

Margins – Lower margins primarily reflect weaker market conditions.

Refinery utilization and petroleum product sales

Third Quarter

thousands of barrels per day, unless noted 2024 2023

Refinery throughput 389 416

Refinery capacity utilization (percent)

Petroleum product sales

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

millions of Canadian dollars

IMPERIAL OIL LIMITED

Corporate and other

Third Quarter

millions of Canadian dollars 2024 2023

Net income (loss) (U.S.

Liquidity and capital resources

Third Quarter

millions of Canadian dollars 2024 2023

Cash flows from (used in):

Operating activities 1,487 2,359

Investing activities (484) (380)

Financing activities (1,533) (1,639)

Increase (decrease) in cash and cash equivalents (530) 340

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

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:

Third Quarter

millions of Canadian dollars, unless noted 2024 2023

Dividends paid

Per share dividend paid (dollars)

Share repurchases (a)

Number of shares purchased (millions) (a)

(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.

Price – Average bitumen realizations increased by $8.75 per barrel, primarily driven by the narrowing WTI/WCS spread.

Synthetic crude oil realizations increased by $5.28 per barrel, primarily driven by an improved Synthetic/WTI spread.

Other – Primarily due to favourable foreign exchange impacts of about $130 million.

IMPERIAL OIL LIMITED

Nine months 2024 vs.

nine months 2023

millions of Canadian dollars, unless noted 2024 2023

Net income (loss) (U.S.

Net income (loss) per common share, assuming dilution (dollars)

Net income (loss) factor analysis

millions of Canadian dollars

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

First Quarter

Canadian dollars, unless noted 2025 2024

4 unchanged sentences

Synthetic crude oil (per barrel)

102.95 105.65

Average foreign exchange rate (US$)

IMPERIAL OIL LIMITED

First Quarter

thousands of barrels per day 2025 2024

1 unchanged sentence

Kearl total gross production (thousands of barrels per day)

(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 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.

(a) In the first quarter of 2025, Syncrude gross production included about 2 thousand barrels per day of bitumen and other products (2024 - 0 thousand barrels per day) that were exported to the operator's facilities using an existing interconnect pipeline.

Lower production at Kearl was primarily driven by extreme cold weather and unplanned downtime, mitigated by enhanced winter operating procedures.

Higher production at Cold Lake was primarily driven by Grand Rapids solvent-assisted SAGD, partially offset by production and steam cycle timing.

Net income (loss) factor analysis

millions of Canadian dollars

Margins – Lower margins primarily reflect weaker market conditions.

Other – Primarily due to lower turnaround impacts of about $110 million.

Refinery utilization and petroleum product sales

First Quarter

thousands of barrels per day, unless noted 2025 2024

2 unchanged sentences

Petroleum product sales

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

Lower refinery throughput was primarily due to additional maintenance in the company's eastern manufacturing hub.

IMPERIAL OIL LIMITED

Net income (loss) factor analysis

millions of Canadian dollars

IMPERIAL OIL LIMITED

Corporate and other

First Quarter

millions of Canadian dollars 2025 2024

1 unchanged sentence

Liquidity and capital resources

First Quarter

millions of Canadian dollars 2025 2024

4 unchanged sentences

Increase (decrease) in cash and cash equivalents 785 312

Cash flows from operating activities primarily reflect the absence of unfavourable working capital impacts mainly related to an income tax catch-up payment of $2.1 billion in the prior year.

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

Cash and cash equivalents at period end 1,764 1,176

Cash flows from operating activities primarily reflect higher Upstream realizations and lower unfavourable working capital impacts.

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

Cash flows used in financing activities primarily reflect:

First Quarter

millions of Canadian dollars, unless noted 2025 2024

3 unchanged sentences

Number of shares purchased (millions) (a)

(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.

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.

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

As previously communicated, in the first quarter of 2024, the company entered into a long-term purchase agreement with a third party for about $2 billion.

It has no material impact on the 2024 and 2025 obligations disclosed in Imperial's 2023 annual report on Form 10-K.

The company does not believe that the additional obligation will have a material effect on Imperial's operations, financial condition or financial statements.

(a) The company did not purchase any shares in the first quarter of 2025 and 2024.

IMPERIAL OIL LIMITED

2 unchanged sentences

Forward-looking statements can be identified by words such as believe, anticipate, intend, propose, plan, goal, seek, project, predict, target, estimate, expect, strategy, outlook, schedule, future, continue, likely, may, should, will and similar references to future periods.

Forward-looking statements in this release include, but are not limited to, references to the company’s purchases under the normal course issuer bid and plans to accelerate completion prior to year end;

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.

Forward-looking statements in this release include, but are not limited to, references to the use of derivative instruments and effectiveness of risk mitigation.

Forward-looking statements are based on the company's current expectations, estimates, projections and assumptions at the time the statements are made.

2 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 project and 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 Strathcona renewable diesel project, the Leming, Grand Rapids and LASER projects at Cold Lake, and autonomous operations at Kearl;

performance of third-party service providers including service providers located outside of Canada;

capital and environmental expenditures;

the ability to offset any ongoing inflationary pressures;

the ability to offset any ongoing or renewed inflationary pressures;

applicable laws and government policies, including with respect to climate change, greenhouse gas emissions reductions and low carbon fuels;

1 unchanged sentence

and commodity prices, foreign exchange rates and general market conditions, could differ materially depending on a number of factors.

These factors include global, regional or local changes in supply and demand for oil, natural gas, and petroleum and petrochemical products and resulting price, differential and margin impacts, including foreign government action with respect to supply levels and prices, and the occurrence of wars;

political or regulatory events, including changes in law or government policy, applicable royalty rates, and tax laws;

These factors include global, regional or local changes in supply and demand for oil, natural gas, petroleum and petrochemical products, feedstocks and other market factors, economic conditions and seasonal fluctuations and resulting demand, price, differential and margin impacts, including Canadian and foreign government action with respect to supply levels, prices, trade tariffs, trade sanctions or trade controls, the occurrence of disruptions in trade or military alliances, or a broader breakdown in global trade;

political or regulatory events, including changes in law or government policy, applicable royalty rates, and tax laws including taxes on share repurchases;

third-party opposition to company and service provider operations, projects and infrastructure;

failure, delay or uncertainty regarding supportive policy and market development for the adoption of emerging lower emission energy technologies and other technologies that support emissions reductions;

the receipt, in a timely manner, of regulatory and third-party approvals, including for new technologies that will help the company meet its lower emissions goals;

failure, delay, reduction, revocation or uncertainty regarding supportive policy and market development for the adoption of emerging lower emission energy technologies and other technologies that support emissions reductions;

the receipt, in a timely manner, of regulatory and third-party approvals, including for new technologies relating to the company’s lower emissions business activities;

competition from alternative energy sources and established competitors in such markets;

availability and allocation of capital;

1 unchanged sentence

unanticipated technical or operational difficulties;

availability and performance of third-party service providers;

availability and performance of third-party service providers including those located outside of Canada;

environmental risks inherent in oil and gas exploration and production activities;

2 unchanged sentences

operational hazards and risks;

cybersecurity incidents;

cybersecurity incidents including incidents caused by actors employing emerging technologies such as artificial intelligence;

currency exchange rates;

4 unchanged sentences

Imperial undertakes no obligation to update any forward-looking statements contained herein, except as required by applicable law.

The term "project" as used in this report can refer to a variety of different activities and does not necessarily have the same meaning as in any government payment transparency reports.

IMPERIAL OIL LIMITED

Quantitative and qualitative disclosures about market risk

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.

Information about market risks for the three months ended March 31, 2025, does not differ materially from that discussed on page 35 of the company’s annual report on Form 10-K for the year ended December 31, 2024.

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