What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-03 compared with 2026-05-04 · 111 added, 32 removed, 87 unchanged (62% of the section changed)

1 unchanged sentence

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.

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

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.

Industry refining margins improved in the second quarter of 2026, impacted by global product supply disruptions.

Starting in 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.

1 unchanged sentence

Operating results

First quarter 2026 vs.

first quarter 2025

First Quarter

Second quarter 2026 vs.

second quarter 2025

Second Quarter

millions of Canadian dollars, unless noted 2026 2025

3 unchanged sentences

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.

Price – Average bitumen realizations increased by $29.97 per barrel, primarily driven by higher marker prices, partially offset by a weaker WTI/WCS spread and higher diluent costs.

Synthetic crude oil realizations increased by $53.25 per barrel, primarily driven by higher marker prices and an improved Synthetic/WTI spread.

Volume – Lower volumes were primarily driven by lower production at Kearl and Syncrude.

Royalty – Higher royalties were primarily driven by higher commodity prices.

Marker prices and average realizations

First Quarter

Second Quarter

Canadian dollars, unless noted 2026 2025

6 unchanged sentences

IMPERIAL OIL LIMITED

First Quarter

Second Quarter

thousands of barrels per day 2026 2025

1 unchanged sentence

Kearl total gross production (thousands of barrels per day)

(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.

(a) In the second quarter of 2026, Syncrude gross production included about 0 thousand barrels per day of bitumen and other products (2025 - 4 thousand barrels per day) that were exported to the operator's facilities using an existing interconnect pipeline.

Lower production at Kearl was driven by the absence of exceptional high-quality ore grade versus the second quarter of 2025.

Lower production at Syncrude was driven by extreme rainfall, partially offset by lower unplanned downtime.

Net income (loss) factor analysis

millions of Canadian dollars

Other – Primarily due to product mix effects.

Margins – Higher margins primarily reflect improved market conditions.

Other – Primarily due to turnaround impacts of about $190 million partially offset by favourable product mix effects of about $140 million.

Refinery utilization and petroleum product sales

First Quarter

Second 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.

Lower refinery throughput and capacity utilization were primarily due to planned turnaround impacts.

Lower petroleum product sales were aligned with lower throughput related to planned turnaround work at the Strathcona refinery.

Imperial has updated its refinery throughput and refinery utilization guidance ranges for 2026 from 395,000 - 405,000 barrels per day and 91% - 93% utilization to 370,000 - 380,000 barrels per day and 85% - 88% utilization, to reflect unplanned downtime, and a short-term rail logistic challenge at Strathcona which is targeted to be resolved by year end.

IMPERIAL OIL LIMITED

Net income (loss) factor analysis

millions of Canadian dollars

IMPERIAL OIL LIMITED

Margins – Higher margins primarily reflect improved industry polyethylene margins.

Corporate and other

First Quarter

Second Quarter

millions of Canadian dollars 2026 2025

Net income (loss) (U.S.

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

Current quarter results reflect lower incentive compensation.

Liquidity and capital resources

First Quarter

Second Quarter

millions of Canadian dollars 2026 2025

5 unchanged sentences

Cash and cash equivalents at period end 2,839 2,386

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 from operating activities primarily reflect higher earnings.

Cash flows used in investing activities primarily reflect additions to property, plant, and equipment offset by proceeds from the sale of surplus property in Montreal.

Cash flows used in financing activities primarily reflect:

First Quarter

Second Quarter

millions of Canadian dollars, unless noted 2026 2025

3 unchanged sentences

Number of shares purchased (millions) (a)

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

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

On June 23, 2026, 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 24,179,635 common shares during the period June 29, 2026 to June 28, 2027.

This maximum includes shares purchased under the normal course issuer bid from ExxonMobil Holdings Corporation.

As in the past, ExxonMobil Holdings 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, 2027.

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.

IMPERIAL OIL LIMITED

Six months 2026 vs.

six months 2025

millions of Canadian dollars, unless noted 2026 2025

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 $11.41 per barrel, primarily driven by higher marker prices, partially offset by a weaker WTI/WCS spread and higher diluent costs.

Synthetic crude oil realizations increased by $25.72 per barrel, primarily driven by higher marker prices and an improved Synthetic/WTI spread.

Volume – Lower volumes were primarily driven by lower production at Kearl and Syncrude.

Royalty – Higher royalties were primarily driven by higher commodity prices.

Other – Primarily due to unfavourable foreign exchange impacts of about $100 million and higher operating costs of about $100 million, primarily related to Syncrude.

Marker prices and average realizations

Canadian dollars, unless noted 2026 2025

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$)

thousands of barrels per day 2026 2025

Kearl (Imperial's share)

Kearl total gross production (thousands of barrels per day)

(a) In 2026, Syncrude gross production included about 4 thousand barrels per day of bitumen and other products (2025 - 3 thousand barrels per day) that were exported to the operator's facilities using an existing interconnect pipeline.

IMPERIAL OIL LIMITED

Net income (loss) factor analysis

millions of Canadian dollars

Margins – Higher margins primarily reflect improved market conditions.

Other – Primarily due to favourable product mix effects of about $230 million partially offset by turnaround impacts of about $190 million.

Refinery utilization and petroleum product sales

thousands of barrels per day, unless noted 2026 2025

Refinery throughput 358 387

Refinery capacity utilization (percent)

Petroleum product sales

Lower refinery throughput and capacity utilization were primarily due to planned turnaround impacts.

Lower petroleum product sales were aligned with lower throughput related to planned turnaround work at the Strathcona refinery.

Net income (loss) factor analysis

millions of Canadian dollars

Margins – Higher margins primarily reflect improved industry polyethylene margins.

IMPERIAL OIL LIMITED

Corporate and other

millions of Canadian dollars 2026 2025

Net income (loss) (U.S.

Liquidity and capital resources

millions of Canadian dollars 2026 2025

Cash flows from (used in):

Operating activities 3,460 2,992

Investing activities (920) (849)

Financing activities (843) (736)

Increase (decrease) in cash and cash equivalents 1,697 1,407

Cash flows from operating activities primarily reflect higher earnings partially offset by unfavourable working capital impacts.

Cash flows used in investing activities primarily reflect additions to property, plant, and equipment partially offset by proceeds from the sale of surplus property in Montreal.

Cash flows used in financing activities primarily reflect:

millions of Canadian dollars, unless noted 2026 2025

Dividends paid

Per share dividend paid (dollars)

Share repurchases (a)

Number of shares purchased (millions) (a)

(a) The company did not purchase any shares during the six months ended June 30, 2026 and 2025.

IMPERIAL OIL LIMITED

Forward-looking statements

1 unchanged sentence

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;

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

the company’s updated Downstream refinery throughput and capacity utilization guidance for 2026;

company performance in the second half of the year;

the target date to resolve short-term rail logistic challenges at Strathcona by year end;

the use of derivative instruments and effectiveness of risk mitigation;

2 unchanged sentences

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;

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

production rates, growth and mix across various assets;

2 unchanged sentences

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

Strathcona rail logistics challenges;

maintenance and turnaround activity and cost;

capital and environmental expenditures;

11 unchanged sentences

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;

unanticipated technical or operational disruptions or difficulties;

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

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

6 unchanged sentences

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.

IMPERIAL OIL LIMITED

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.

3 unchanged sentences

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.

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