IMPERIAL OIL LTD 10-Q

Item 2. Management’s discussion and analysis of financial condition and results of operations Recent business environment 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. 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 First quarter 2026 vs. first quarter 2025 First Quarter millions of Canadian dollars, unless noted 2026 2025 Net income (loss) (U.S. GAAP) 940 1,288 Net income (loss) per common share, assuming dilution (dollars) 1.94 2.52 Upstream Net income (loss) factor analysis millions of Canadian dollars 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. Other – Primarily due to unfavourable foreign exchange impacts of about $100 million. Marker prices and average realizations First Quarter Canadian dollars, unless noted 2026 2025 West Texas Intermediate (US$ per barrel) 72.67 71.42 Western Canada Select (US$ per barrel) 58.33 58.83 WTI/WCS Spread (US$ per barrel) 14.34 12.59 Bitumen (per barrel) 68.21 75.31 Synthetic crude oil (per barrel) 96.13 98.79 Average foreign exchange rate (US$) 0.73 0.70 18 IMPERIAL OIL LIMITED Production First Quarter thousands of barrels per day 2026 2025 Kearl (Imperial's share) 183 181 Cold Lake 155 154 Syncrude (a) 72 73 Kearl total gross production (thousands of barrels per day) 259 256 (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. Downstream Net income (loss) factor analysis millions of Canadian dollars Other – Primarily due to product mix effects. Refinery utilization and petroleum product sales First Quarter thousands of barrels per day, unless noted 2026 2025 Refinery throughput 384 397 Refinery capacity utilization (percent) 88 91 Petroleum product sales 441 455 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. Chemicals Net income (loss) factor analysis millions of Canadian dollars 19 IMPERIAL OIL LIMITED Corporate and other First Quarter millions of Canadian dollars 2026 2025 Net income (loss) (U.S. GAAP) (165) (58) 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 Cash flows from (used in): Operating activities 756 1,527 Investing activities (450) (377) Financing activities (419) (365) Increase (decrease) in cash and cash equivalents (113) 785 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 Dividends paid 350 307 Per share dividend paid (dollars) 0.72 0.60 Share repurchases (a) — — Number of shares purchased (millions) (a) — — (a) The company did not purchase any shares in the first quarter of 2026 and 2025. 20 IMPERIAL OIL LIMITED Forward-looking statements Statements of future events or conditions in this report, including projections, targets, expectations, estimates, and business plans are forward-looking statements. 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 renewal of the company’s normal course issuer bid; the use of derivative instruments and effectiveness of risk mitigation; 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 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 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; 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; cash generation, financing sources and capital structure, such as dividends and shareholder returns, including the timing and amounts of share repurchases; 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, 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; 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, other emission reduction technologies, and established competitors in such markets; availability and allocation of capital; project management and schedules and timely completion of projects; unanticipated technical or operational difficulties; 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; effectiveness of company risk management programs and emergency response preparedness; operational hazards and risks; cybersecurity incidents including incidents caused by actors employing emerging technologies such as artificial intelligence; currency exchange rates; 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. Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, some that are similar to other oil and gas companies and some that are unique to Imperial. Imperial’s actual results may differ materially from those expressed or implied by its forward-looking statements and readers are cautioned not to place undue reliance on them. Imperial undertakes no obligation to update any forward-looking statements contained herein, except as required by applicable law. 21 IMPERIAL OIL LIMITED Item 3. Quantitative and qualitative disclosures about market risk 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.