What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-03 compared with 2025-08-04 · 75 added, 47 removed, 142 unchanged (46% of the section changed)

1 unchanged sentence

Recent business environment

During the second quarter of 2025, the price of crude oil decreased relative to first quarter of 2025, while the Canadian WTI/WCS spread narrowed due to low inventory levels.

Industry refining margins improved in the second quarter of 2025, driven by strong seasonal demand.

During the third quarter of 2025, the price of crude oil increased slightly relative to second quarter of 2025, while the Canadian WTI/WCS spread remained relatively flat with the second quarter of 2025.

Industry refining margins improved in the third quarter of 2025, driven by strong seasonal demand and global diesel supply disruptions.

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Certain tariffs were paused for a period of time but have not been withdrawn, while others have been revised.

The global trade environment continues to be volatile.

The likelihood of the United States, Canada or their trading partners resuming tariffs, imposing new or revised 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.

Despite the current uncertainty as to what effects these actions will ultimately have on Imperial, its suppliers and its customers, the company does not anticipate any material near-term financial impacts.

Operating results

Second quarter 2025 vs.

second quarter 2024

Second Quarter

Third quarter 2025 vs.

third quarter 2024

Third Quarter

millions of Canadian dollars, unless noted 2025 2024

1 unchanged sentence

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

Net income (loss) excluding identified items 1

Current quarter results include identified items 1 of a $306 million after-tax ($406 million before-tax) non-cash impairment charge and a $249 million after-tax ($330 million before-tax) restructuring charge.

Net income (loss) factor analysis

millions of Canadian dollars

Price – Average bitumen realizations decreased by $17.20 per barrel, primarily driven by lower marker prices.

Price – Average bitumen realizations decreased by $9.02 per barrel, primarily driven by lower marker prices partially offset by narrowing WTI/WCS spread.

Synthetic crude oil realizations decreased by $13.29 per barrel, primarily driven by lower WTI and a weaker Synthetic/WTI spread.

Volumes – Higher volumes were primarily driven by the timing of the annual coker turnaround at Syncrude and mine productivity and improved reliability at Kearl.

Volume – Inventory impacts partially offset by higher production.

Royalty – Lower royalties were primarily driven by lower commodity prices.

¹ non-GAAP financial measure - see non-GAAP financial measures and other specified financial measures for definition and reconciliation

IMPERIAL OIL LIMITED

Marker prices and average realizations

Second Quarter

Third Quarter

Canadian dollars, unless noted 2025 2024

5 unchanged sentences

Average foreign exchange rate (US$)

Second Quarter

Third Quarter

thousands of barrels per day 2025 2024

1 unchanged sentence

Kearl total gross production (thousands of barrels per day)

(a) In the second quarter of 2025, Syncrude gross production included about 4 thousand barrels per day of bitumen and other products (2024 - 2 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 mine productivity and improved reliability.

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

Higher production at Syncrude was primarily driven by the timing of the annual coker turnaround.

Higher production at Kearl was primarily driven by improved reliability and recovery.

Net income (loss) factor analysis

1 unchanged sentence

Margins - Higher margins primarily reflect improved market conditions.

Other - Includes lower turnaround impacts of about $70 million.

Refinery utilization and petroleum product sales

Second Quarter

Third Quarter

thousands of barrels per day, unless noted 2025 2024

2 unchanged sentences

Petroleum product sales

Lower refinery throughput was primarily due to unplanned downtime partially offset by lower turnaround impacts.

Higher petroleum product sales were enabled by the Trans Mountain pipeline expansion.

Higher refinery throughput was primarily due to lower turnaround impacts.

Lower petroleum product sales were primarily due to lower volumes in the supply and wholesale channels.

IMPERIAL OIL LIMITED

2 unchanged sentences

Corporate and other

Second Quarter

Third Quarter

millions of Canadian dollars 2025 2024

Net income (loss) (U.S.

Liquidity and capital resources

Second Quarter

Third Quarter

millions of Canadian dollars 2025 2024

5 unchanged sentences

Cash and cash equivalents at period end 1,861 1,490

Cash flows from operating activities primarily reflect lower earnings and lower favourable working capital impacts.

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

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

Cash flows used in financing activities primarily reflect:

Second Quarter

Third Quarter

millions of Canadian dollars, unless noted 2025 2024

3 unchanged sentences

Number of shares purchased (millions) (a)

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

On June 23, 2025, 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 25,452,248 common shares during the period June 29, 2025 to June 28, 2026.

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, 2026.

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.

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

¹ non-GAAP financial measure - see non-GAAP financial measures and other specified financial measures for definition and reconciliation

IMPERIAL OIL LIMITED

Six months 2025 vs.

six months 2024

Nine months 2025 vs.

nine months 2024

millions of Canadian dollars, unless noted 2025 2024

1 unchanged sentence

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

Net income (loss) excluding identified items 1

Current year results include identified items 1 of a $306 million after-tax ($406 million before-tax) non-cash impairment charge and a $249 million after-tax ($330 million before-tax) restructuring charge.

Net income (loss) factor analysis

millions of Canadian dollars

Price – Average bitumen realizations decreased by $4.20 per barrel, primarily driven by lower marker prices partially offset by narrowing WTI/WCS spread and lower diluent costs.

Price – Average bitumen realizations decreased by $5.92 per barrel, primarily driven by lower marker prices partially offset by narrowing WTI/WCS spread.

Synthetic crude oil realizations decreased by $10.51 per barrel, primarily driven by lower WTI partially offset by an improved Synthetic/WTI spread.

Volume – Higher volumes were primarily driven by Grand Rapids solvent-assisted SAGD and the timing of the annual coker turnaround at Syncrude.

Volume – Higher volumes were driven by higher production at Syncrude, Kearl and Cold Lake.

Royalty – Lower royalties were primarily driven by lower commodity prices.

8 unchanged sentences

Average foreign exchange rate (US$)

¹ non-GAAP financial measure - see non-GAAP financial measures and other specified financial measures for definition and reconciliation

IMPERIAL OIL LIMITED

3 unchanged sentences

(a) In 2025, Syncrude gross production included about 2 thousand barrels per day of bitumen and other products (2024 - 1 thousand barrels per day) that were exported to the operator's facilities using an existing interconnect pipeline.

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

1 unchanged sentence

Margins – Higher margins primarily reflect improved market conditions.

Other – Primarily due to unfavourable wholesale volume impacts of about $70 million.

Other – Primarily due to unfavourable wholesale volume impacts of about $70 million, higher operating expenses of about $70 million driven by higher energy costs, and unplanned downtime of about $60 million, partially offset by lower turnaround impacts of about $100 million.

Refinery utilization and petroleum product sales

3 unchanged sentences

Petroleum product sales

Lower refinery throughput was primarily due to unplanned downtime partially offset by lower turnaround impacts.

Net income (loss) factor analysis

5 unchanged sentences

Net income (loss) (U.S.

results also reflect higher incentive compensation as a result of the higher share price.

Liquidity and capital resources

5 unchanged sentences

Increase (decrease) in cash and cash equivalents 882 626

Cash flows from operating activities primarily reflect lower unfavourable deferred tax and working capital impacts.

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

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

5 unchanged sentences

Number of shares purchased (millions) (a)

(a) The company did not purchase any shares during the six months ended June 30, 2025 and 2024.

(a) Share repurchases were made under 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 25,452,248 common shares during the period June 29, 2025 to June 28, 2026.

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, 2026.

Imperial plans to continue its acceleration of 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.

¹ non-GAAP financial measure - see non-GAAP financial measures and other specified financial measures for definition and reconciliation

IMPERIAL OIL LIMITED

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 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

Third Quarter

millions of Canadian dollars 2025 2024 2025 2024

From Imperial's Consolidated statement of income

Net income (loss) (U.S.

GAAP) 539 1,237 2,776 3,565

Less identified items included in Net income (loss)

Impairments (306) — (306) —

Restructuring charges (249) — (249) —

Subtotal of identified items (555) — (555) —

Net income (loss) excluding identified items 1,094 1,237 3,331 3,565

IMPERIAL OIL LIMITED

Forward-looking statements

9 unchanged sentences

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;

performance of third-party service providers, including service providers located outside of Canada and ExxonMobil global capability centres;

capital and environmental expenditures;

12 unchanged sentences

unanticipated technical or operational difficulties;

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

availability and performance of third-party service providers, including those located outside of Canada and ExxonMobil global capability centres;

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

11 unchanged sentences

Quantitative and qualitative disclosures about market risk

Information about market risks for the six months ended June 30, 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.

Information about market risks for the nine months ended September 30, 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