What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-04 compared with 2025-11-03 · 42 added, 140 removed, 77 unchanged (70% of the section changed)

1 unchanged sentence

Recent business environment

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.

During the first quarter of 2026, the price of crude oil increased relative to the fourth quarter of 2025, while the Canadian WTI/WCS spread widened.

Geopolitical events in the Middle East and increasing supply uncertainty continued to drive volatility in crude oil prices and heavy crude differentials.

Industry refining margins improved in the first quarter of 2026, impacted by industry supply outages.

During 2025, the United States implemented and adjusted a variety of trade-related measures, including tariffs on certain imports from Canada and several other countries.

In response, Canada announced its own retaliatory tariffs.

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.

Based on Imperial's assessment of these actions and their effects to date, the company does not expect them to have a material impact on its consolidated financial position, results of operations, or cash flows.

Operating results

Third quarter 2025 vs.

third quarter 2024

Third Quarter

First quarter 2026 vs.

first quarter 2025

First Quarter

millions of Canadian dollars, unless noted 2026 2025

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 $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.

Price – Average bitumen realizations decreased by $7.10 per barrel, primarily driven by a weaker WTI/WCS spread.

Synthetic crude oil realizations decreased by $2.66 per barrel, primarily driven by a weaker Synthetic/WTI spread.

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

Third Quarter

Canadian dollars, unless noted 2025 2024

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)

Average foreign exchange rate (US$)

Third Quarter

thousands of barrels per day 2025 2024

Kearl (Imperial's share)

Kearl total gross production (thousands of barrels per day)

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

Net income (loss) factor analysis

millions of Canadian dollars

Margins - Higher margins primarily reflect improved market conditions.

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

Refinery utilization and petroleum product sales

Third Quarter

thousands of barrels per day, unless noted 2025 2024

Refinery throughput 425 389

Refinery capacity utilization (percent)

Petroleum product sales

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

Net income (loss) factor analysis

millions of Canadian dollars

Corporate and other

Third Quarter

millions of Canadian dollars 2025 2024

Net income (loss) (U.S.

Liquidity and capital resources

Third Quarter

millions of Canadian dollars 2025 2024

Cash flows from (used in):

Operating activities 1,798 1,487

Investing activities (482) (484)

Financing activities (1,841) (1,533)

Increase (decrease) in cash and cash equivalents (525) (530)

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

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

Cash flows used in financing activities primarily reflect:

Third Quarter

millions of Canadian dollars, unless noted 2025 2024

Dividends paid

Per share dividend paid (dollars)

Share repurchases (a)

Number of shares purchased (millions) (a)

(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

Nine months 2025 vs.

nine months 2024

millions of Canadian dollars, unless noted 2025 2024

Net income (loss) (U.S.

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 $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 driven by higher production at Syncrude, Kearl and Cold Lake.

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

Other – Primarily due to favourable foreign exchange impacts of about $200 million.

Other – Primarily due to unfavourable foreign exchange impacts of about $100 million.

Marker prices and average realizations

First Quarter

Canadian dollars, unless noted 2026 2025

5 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

First Quarter

thousands of barrels per day 2026 2025

1 unchanged sentence

Kearl total gross production (thousands of barrels per day)

(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.

(a) In the first quarter of 2026, Syncrude gross production included about 8 thousand barrels per day of bitumen and other products (2025 - 2 thousand barrels per day) that were exported to the operator's facilities using an existing interconnect pipeline.

Lower production at Syncrude driven by unplanned coker downtime, partially offset by improved mine reliability.

Net income (loss) factor analysis

millions of Canadian dollars

Margins – Higher margins primarily reflect improved market conditions.

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.

Other – Primarily due to product mix effects.

Refinery utilization and petroleum product sales

First Quarter

thousands of barrels per day, unless noted 2026 2025

2 unchanged sentences

Petroleum product sales

Lower refinery throughput and capacity utilization were primarily due to unplanned downtime and a disruption of synthetic crude feedstock caused by Syncrude's coker outage.

Lower petroleum product sales were primarily due to lower volumes in the supply channel.

Net income (loss) factor analysis

millions of Canadian dollars

Margins - Lower margins primarily reflect weaker industry polyethylene margins.

IMPERIAL OIL LIMITED

Corporate and other

First Quarter

millions of Canadian dollars 2026 2025

Net income (loss) (U.S.

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

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

Liquidity and capital resources

First Quarter

millions of Canadian dollars 2026 2025

4 unchanged sentences

Increase (decrease) in cash and cash equivalents (113) 785

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.

Cash and cash equivalents at period end 1,029 1,764

Cash flows from operating activities primarily reflect lower earnings and 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:

First Quarter

millions of Canadian dollars, unless noted 2026 2025

3 unchanged sentences

Number of shares purchased (millions) (a)

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

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.

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

(a) The company did not purchase any shares in the first quarter of 2026 and 2025.

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;

Forward-looking statements in this release include, but are not limited to, references to the renewal of the company’s normal course issuer bid;

the use of derivative instruments and effectiveness of risk mitigation;

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

the company’s workforce transformation and restructuring plans to centralize activities in global business and technology centres, including timing and impacts;

and the impact on the company of trade-related actions.

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

Actual future financial and operating results, including expectations and assumptions concerning future energy demand, supply and mix;

Actual future financial and operating results, including expectations and assumptions concerning for the renewal of the company’s normal course issuer bid, approval of the Toronto Stock Exchange and participation of the company’s majority shareholder;

future energy demand, supply and mix;

production rates, growth and mix across various assets;

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 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 and ExxonMobil global capability centres;

for shareholder returns, assumptions such as cash flow forecasts, financing sources and capital structure, participation of the company’s majority shareholder in the normal course issuer bid, 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;

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

capital and environmental expenditures;

3 unchanged sentences

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, 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;

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, disruptions, realignment or breaking of trade alliances or agreements or a broader breakdown in global trade, and disruptions in military alliances or wars;

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

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

1 unchanged sentence

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;

competition from alternative energy sources, other emission reduction technologies, 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, including those located outside of Canada and ExxonMobil global capability centres;

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

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

environmental regulation, including climate change and greenhouse gas regulation and changes to such regulation;

management effectiveness and disaster response preparedness;

effectiveness of company risk management programs and emergency response preparedness;

operational hazards and risks;

1 unchanged sentence

currency exchange rates;

general economic conditions, including inflation and the occurrence and duration of economic recessions or downturns;

general economic conditions, including continued or renewed inflation and the occurrence and duration of economic recessions or downturns;

and other factors discussed in "Item 1A risk factors" and "Item 7 management’s discussion and analysis of financial condition and results of operations" of Imperial’s most recent annual report on Form 10-K.

4 unchanged sentences

Quantitative and qualitative disclosures about market risk

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.

Information about market risks for the three months ended March 31, 2026, 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, 2025.

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