Item 1. Financial Statements
Item 1. Financial statements
Consolidated statement of income (U.S. GAAP, unaudited)
Three Months
to March 31
millions of Canadian dollars
2022
2021
Revenues and other income
Revenues (a)
12,657
6,992
Investment and other income (note 3)
29
6
Total revenues and other income
12,686
6,998
Expenses
Exploration
2
2
Purchases of crude oil and products (b)
8,350
3,887
Production and manufacturing (c)
1,659
1,485
Selling and general (c)
225
189
Federal excise tax and fuel charge
479
404
Depreciation and depletion
426
494
Non-service
pension and postretirement benefit
4
11
Financing (d) (note 5)
7
14
Total expenses
11,152
6,486
Income (loss) before income taxes
1,534
512
Income taxes
361
120
Net income (loss)
1,173
392
Per share information
(Canadian dollars)
Net income (loss) per common share - basic (note 9)
1.75
0.53
Net income (loss) per common share - diluted (note 9)
1.75
0.53
(a) Amounts from related parties included in revenues.
3,959
1,508
(b) Amounts to related parties included in purchases of crude oil and products.
650
515
(c) Amounts to related parties included in production and manufacturing, and selling and general expenses.
118
116
(d) Amounts to related parties included in financing (note 5).
4
11
The information in the notes to consolidated financial statements is an integral part of these statements.
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Consolidated statement of comprehensive income (U.S. GAAP, unaudited)
Three Months
to March 31
millions of Canadian dollars
2022
2021
Net income (loss)
1,173
392
Other comprehensive income (loss), net of income taxes
Postretirement benefits liability adjustment (excluding amortization)
24
54
Amortization of postretirement benefits liability adjustment included in net benefit costs
21
33
Total other comprehensive income (loss)
45
87
Comprehensive income (loss)
1,218
479
The information in the notes to consolidated financial statements is an integral part of these statements.
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Consolidated balance sheet (U.S. GAAP, unaudited)
As at
As at
Mar 31
Dec 31
millions of Canadian dollars
2022
2021
Assets
Current assets
Cash
3,149
2,153
Accounts receivable - net (a)
5,413
3,869
Inventories of crude oil and products
1,374
1,102
Materials, supplies and prepaid expenses
782
689
Total current assets
10,718
7,813
Investments and long-term receivables (b)
754
757
Property, plant and equipment,
56,925
56,762
less accumulated depreciation and depletion
( 25,818
)
( 25,522
)
Property, plant and equipment, net
31,107
31,240
Goodwill
166
166
Other assets, including intangibles - net
1,065
806
Total assets
43,810
40,782
Liabilities
Current liabilities
Notes and loans payable
122
122
Accounts payable and accrued liabilities (a) (note 7)
7,364
5,184
Income taxes payable
1,165
248
Total current liabilities
8,651
5,554
Long-term debt (c) (note 6)
5,049
5,054
Other long-term obligations (note 7)
3,426
3,897
Deferred income tax liabilities
4,408
4,542
Total liabilities
21,534
19,047
Shareholders’ equity
Common shares at stated value (d) (note 9)
1,237
1,252
Earnings reinvested
22,171
21,660
Accumulated other comprehensive income (loss) (note 10)
( 1,132
)
( 1,177
)
Total shareholders’ equity
22,276
21,735
Total liabilities and shareholders’ equity
43,810
40,782
(a) Accounts receivable - net included net amounts receivable from related parties of $ 1,632 million (2021 - $ 1,031 million).
(b) Investments and long-term receivables included amounts from related parties of $ 297 million (2021 - $ 298 million).
(c) Long-term debt included amounts to related parties of $ 4,447 million (2021 - $ 4,447 million).
(d) Number of common shares authorized and outstanding were 1,100 million and 669 million, respectively (2021 - 1,100 million and 678 million, respectively).
The information in the notes to consolidated financial statements is an integral part of these statements.
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Consolidated statement of shareholders’ equity (U.S. GAAP, unaudited)
Three Months
to March 31
millions of Canadian dollars
2022
2021
Common shares at stated value
(note 9)
At beginning of period
1,252
1,357
Share purchases at stated value
( 15
)
-
At end of period
1,237
1,357
Earnings reinvested
At beginning of period
21,660
22,050
Net income (loss) for the period
1,173
392
Share purchases in excess of stated value
( 434
)
-
Dividends declared
( 228
)
( 161
)
At end of period
22,171
22,281
Accumulated other comprehensive income (loss)
(note 10)
At beginning of period
( 1,177
)
( 1,989
)
Other comprehensive income (loss)
45
87
At end of period
( 1,132
)
( 1,902
)
Shareholders’ equity at end of period
22,276
21,736
The information in the notes to consolidated financial statements is an integral part of these statements.
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Consolidated statement of cash flows (U.S. GAAP, unaudited)
Three Months
Inflow (outflow)
to March 31
millions of Canadian dollars
2022
2021
Operating activities
Net income (loss)
1,173
392
Adjustments for non-cash
items:
Depreciation and depletion
426
494
(Gain) loss on asset sales (note 3)
( 20
)
( 3
)
Deferred income taxes and other
( 331
)
60
Changes in operating assets and liabilities:
Accounts receivable
( 1,544
)
( 469
)
Inventories, materials, supplies and prepaid expenses
( 364
)
( 159
)
Income taxes payable
459
21
Accounts payable and accrued liabilities
2,144
584
All other items - net (b)
( 29
)
125
Cash flows from (used in) operating activities
1,914
1,045
Investing activities
Additions to property, plant and equipment
( 304
)
( 167
)
Proceeds from asset sales (note 3)
24
7
Loans to equity companies - net
1
13
Cash flows from (used in) investing activities
( 279
)
( 147
)
Financing activities
Short-term debt - net
-
( 36
)
Reduction in finance lease obligations (note 6)
( 5
)
( 4
)
Dividends paid
( 185
)
( 162
)
Common shares purchased (note 9)
( 449
)
-
Cash flows from (used in) financing activities
( 639
)
( 202
)
Increase (decrease) in cash
996
696
Cash at beginning of period
2,153
771
Cash at end of period (a)
3,149
1,467
(a) Cash is composed of cash in bank and cash equivalents at cost. Cash equivalents are all highly liquid securities with maturity of three months or less when purchased.
(b) Included contributions to registered pension plans.
( 50
)
( 28
)
Income taxes (paid) refunded.
( 223
)
1
Interest (paid), net of capitalization.
( 12
)
( 13
)
The information in the notes to consolidated financial statements is an integral part of these statements.
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IMPERIAL OIL LIMITED
Notes to consolidated financial statements (unaudited)
1.
Basis of financial statement preparation
These unaudited consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (GAAP) and follow the same accounting policies and methods of computation as, and should be read in conjunction with, the most recent annual consolidated financial statements filed with the U.S. Securities and Exchange Commission (SEC) in the company’s 2021 annual report on Form 10-K.
In the opinion of the company, the information furnished herein reflects all known accruals and adjustments necessary for a fair statement of the results for the periods reported herein. All such adjustments are of a normal recurring nature.
The company’s exploration and production activities are accounted for under the “successful efforts” method.
The results for the three months ended March 31, 2022, are not necessarily indicative of the operations to be expected for the full year.
All amounts are in Canadian dollars unless otherwise indicated.
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2.
Business segments
Three Months to March 31
Upstream
Downstream
Chemical
millions of Canadian dollars
2022
2021
2022
2021
2022
2021
Revenues and other income
Revenues (a)
99
2,142
12,191
4,527
367
323
Intersegment sales
4,431
1,351
1,833
773
104
53
Investment and other income (note 3)
4
-
21
5
-
-
4,534
3,493
14,045
5,305
471
376
Expenses
Exploration
2
2
-
-
-
-
Purchases of crude oil and products
1,890
1,834
12,512
4,020
315
209
Production and manufacturing
1,249
1,109
356
326
54
50
Selling and general
-
-
147
133
23
25
Federal excise tax and fuel charge
-
-
479
404
-
-
Depreciation and depletion
373
445
41
39
5
4
Non-service
pension and postretirement benefit
-
-
-
-
-
-
Financing (note 5)
-
1
-
-
-
-
Total expenses
3,514
3,391
13,535
4,922
397
288
Income (loss) before income taxes
1,020
102
510
383
74
88
Income tax expense (benefit)
238
23
121
91
18
21
Net income (loss)
782
79
389
292
56
67
Cash flows from (used in) operating activities
1,447
531
375
462
67
62
Capital and exploration expenditures (b)
222
85
68
68
1
2
Total assets as at March 31
29,182
31,754
10,179
4,909
501
462
Three Months to March 31
Corporate and other
Eliminations
Consolidated
millions of Canadian dollars
2022
2021
2022
2021
2022
2021
Revenues and other income
Revenues (a)
-
-
-
-
12,657
6,992
Intersegment sales
-
-
( 6,368
)
( 2,177
)
-
-
Investment and other income (note 3)
4
1
-
-
29
6
4
1
( 6,368
)
( 2,177
)
12,686
6,998
Expenses
Exploration
-
-
-
-
2
2
Purchases of crude oil and products
-
-
( 6,367
)
( 2,176
)
8,350
3,887
Production and manufacturing
-
-
-
-
1,659
1,485
Selling and general
56
32
( 1
)
( 1
)
225
189
Federal excise tax and fuel charge
-
-
-
-
479
404
Depreciation and depletion
7
6
-
-
426
494
Non-service
pension and postretirement benefit
4
11
-
-
4
11
Financing (note 5)
7
13
-
-
7
14
Total expenses
74
62
( 6,368
)
( 2,177
)
11,152
6,486
Income (loss) before income taxes
( 70
)
( 61
)
-
-
1,534
512
Income tax expense (benefit)
( 16
)
( 15
)
-
-
361
120
Net income (loss)
( 54
)
( 46
)
-
-
1,173
392
Cash flows from (used in) operating activities
25
( 10
)
-
-
1,914
1,045
Capital and exploration expenditures (b)
5
8
-
-
296
163
Total assets as at March 31
4,136
2,346
( 188
)
( 464
)
43,810
39,007
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(a)
Included export sales to the United States of $ 2,504 million (2021 - $ 1,569 million).
(b)
Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to finance leases, additional investments and acquisitions and the company’s share of similar costs for equity companies. CAPEX excludes the purchase of carbon emission credits.
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3.
Investment and other income
Investment and other income included gains and losses on asset sales as follows:
Three Months
to March 31
millions of Canadian dollars
2022
2021
Proceeds from asset sales
24
7
Book value of asset sales
4
4
Gain (loss) on asset sales, before tax
20
3
Gain (loss) on asset sales, after tax
16
2
4.
Employee retirement benefits
The components of net benefit cost were as follows:
Three Months
to March 31
millions of Canadian dollars
2022
2021
Pension benefits:
Service cost
70
81
Interest cost
73
68
Expected return on plan assets
( 103
)
( 107
)
Amortization of prior service cost
4
4
Amortization of actuarial loss (gain)
22
36
Net benefit cost
66
82
Other postretirement benefits:
Service cost
6
7
Interest cost
6
6
Amortization of actuarial loss (gain)
2
4
Net benefit cost
14
17
5.
Financing costs
Three Months
to March 31
millions of Canadian dollars
2022
2021
Debt-related interest
12
21
Capitalized interest
( 5
)
( 8
)
Net interest expense
7
13
Other interest
-
1
Total financing
7
14
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6.
Long-term debt
As at
Mar 31
As at
Dec 31
millions of Canadian dollars
2022
2021
Long-term debt
4,447
4,447
Finance leases
602
607
Total long-term debt
5,049
5,054
7.
Other long-term obligations
As at
Mar 31
As at
Dec 31
millions of Canadian dollars
2022
2021
Employee retirement benefits (a)
1,326
1,362
Asset retirement obligations and other environmental liabilities (b)
1,713
1,713
Share-based incentive compensation liabilities
111
79
Operating lease liability (c)
138
147
Other obligations
138
596
Total other long-term obligations
3,426
3,897
(a)
Total recorded employee retirement benefits obligations also included $ 56 million in current liabilities (2021 - $ 56 million).
(b)
Total asset retirement obligations and other environmental liabilities also included $ 102 million in current liabilities (2021 - $ 102 million).
(c)
Total operating lease liability also included $ 95 million in current liabilities (2021 - $ 102 million). In addition to the total operating lease liability, additional undiscounted commitments for leases not yet commenced totalled $ 0 million (2021 - $ 5 million).
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8.
Financial and derivative instruments
Financial instruments
The fair value of the company’s financial instruments is determined by reference to various market data and other appropriate valuation techniques. There are no material differences between the fair value of the company’s financial instruments and the recorded carrying value. At March 31, 2022 and December 31, 2021, the fair value of long-term debt ($ 4,447 million, excluding finance lease obligations) was primarily a level 2 measurement.
Derivative instruments
The company’s size, strong capital structure and the complementary nature of the Upstream, Downstream and Chemical businesses reduce the company’s enterprise-wide risk from changes in commodity prices and currency exchange rates. In addition, the company uses commodity-based contracts, including derivative instruments to manage commodity price risk and to generate returns from trading. Commodity contracts held for trading purposes are presented in the Consolidated statement of income on a net basis in the line “Revenues”. The company does not designate derivative instruments as a hedge for hedge accounting purposes.
Credit risk associated with the company’s derivative position is mitigated by several factors, including the use of derivative clearing exchanges and the quality of and financial limits placed on derivative counterparties. The company maintains a system of controls that includes the authorization, reporting and monitoring of derivative activity.
The net notional long/(short) position of derivative instruments was:
As at
Mar 31
As at
Dec 31
thousands of barrels
2022
2021
Crude
( 620
)
7,390
Products
( 70
)
( 560
)
Realized and unrealized gain or (loss) on derivative instruments recognized in the Consolidated statement of income is included in the following lines on a before-tax
basis:
Three Months
to March 31
millions of Canadian dollars
2022
2021
Revenues
37
-
Purchases of crude oil and products
-
( 14
)
Total
37
( 14
)
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The estimated fair value of derivative instruments, and the related hierarchy level for the fair value measurement is as follows:
At March 31, 2022
millions of Canadian dollars
Fair value
Effect of
Effect of
Net
counterparty
collateral
carrying
Level 1
Level 2
Level 3
Total
netting
netting
value
Assets
Derivative assets (a)
48
18
-
66
( 59
)
-
7
Liabilities
Derivative liabilities (b)
53
25
-
78
( 59
)
( 4
)
15
(a)
Included in the Consolidated balance sheet line: “Materials, supplies and prepaid expenses”, “Accounts receivable—net” and “Other assets, including intangibles - net”.
(b)
Included in the Consolidated balance sheet line: “Accounts payable and accrued liabilities” and “Other long-term obligations”.
At December 31, 2021
millions of Canadian dollars
Fair value
Effect of
Effect of
Net
counterparty
collateral
carrying
Level 1
Level 2
Level 3
Total
netting
netting
value
Assets
Derivative assets (a)
24
17
-
41
( 31
)
-
10
Liabilities
Derivative liabilities (b)
31
12
-
43
( 31
)
( 7
)
5
(a)
Included in the Consolidated balance sheet line: “Materials, supplies and prepaid expenses”, “Accounts receivable - net” and “Other assets, including intangibles - net”.
(b)
Included in the Consolidated balance sheet line: “Accounts payable and accrued liabilities” and “Other long-term obligations”.
At March 31, 2022 and December 31, 2021, the company had $ 47 million and $ 6 million, respectively, of collateral under a master netting arrangement not offset against the derivatives on the Consolidated balance sheet in “Accounts receivable - net”, primarily related to initial margin requirements.
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9.
Common shares
As of
As of
Mar 31
Dec 31
thousands of shares
2022
2021
Authorized
1,100,000
1,100,000
Common shares outstanding
669,144
678,080
The most recent 12 -month
normal course issuer bid program came into effect June 29, 2021, under which Imperial continued its existing share purchase program. The program enabled the company to purchase up to a maximum of 35,583,671 common shares ( 5 percent of the total shares on June 15, 2021) which included shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid. As in the past, Exxon Mobil Corporation advised the company that it intended to participate to maintain its ownership percentage at approximately 69.6 percent. The program completed on January 31, 2022 as a result of the company purchasing the maximum allowable number of shares under the program.
On April 29, 2022 the company announced its intention to launch a substantial issuer bid pursuant to which the company will offer to purchase for cancellation up to $ 2,500 ,000,000 of its common shares. The substantial issuer bid will be made through a modified Dutch auction, with a tender price range to be determined by the company at the time of commencement of the offer. Shares may also be tendered by way of a proportionate tender, which will result in a shareholder maintaining their proportionate share ownership. ExxonMobil has advised Imperial that it intends to make a proportionate tender in connection with the offer in order to maintain its proportionate share ownership at approximately 69.6 percent following completion of the offer. Nothing in this report shall constitute an offer to purchase or a solicitation of an offer to sell any shares.
The excess of the purchase cost over the stated value of shares purchased has been recorded as a distribution of earnings reinvested.
The company’s common share activities are summarized below:
Thousands of
shares
Millions of
dollars
Balance as at December 31, 2020
734,077
1,357
Issued under employee share-based awards
7
-
Purchases at stated value
( 56,004
)
( 105
)
Balance as at December 31, 2021
678,080
1,252
Issued under employee share-based awards
-
-
Purchases at stated value
( 8,936
)
( 15
)
Balance as at March 31, 2022
669,144
1,237
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The following table provides the calculation of basic and diluted earnings per common share and the dividends declared by the company on its outstanding common shares:
Three Months
to March 31
2022
2021
Net income (loss) per common share - basic
Net income (loss) (millions of Canadian dollars)
1,173
392
Weighted average number of common shares outstanding (millions of shares)
670.5
734.1
Net income (loss) per common share (dollars)
1.75
0.53
Net income (loss) per common share - diluted
Net income (loss) (millions of Canadian dollars)
1,173
392
Weighted average number of common shares outstanding (millions of shares)
670.5
734.1
Effect of employee share-based awards (millions of shares)
1.4
1.6
Weighted average number of common shares outstanding, assuming dilution (millions of shares)
671.9
735.7
Net income (loss) per common share (dollars)
1.75
0.53
Dividends per common share - declared (dollars)
0.34
0.22
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10. Other comprehensive income (loss) information
Changes in accumulated other comprehensive income (loss):
millions of Canadian dollars
2022
2021
Balance at January 1
( 1,177
)
( 1,989
)
Postretirement benefits liability adjustment:
Current period change excluding amounts reclassified from accumulated other comprehensive income
24
54
Amounts reclassified from accumulated other comprehensive income
21
33
Balance at March 31
( 1,132
)
( 1,902
)
Amounts reclassified out of accumulated other comprehensive income (loss) - before tax income (expense):
Three Months
to March 31
millions of Canadian dollars
2022
2021
Amortization of postretirement benefits liability adjustment included in net benefit cost (a)
( 28
)
( 44
)
(a) This accumulated other comprehensive income component is included in the computation of net benefit cost (note 4).
Income tax expense (credit) for components of other comprehensive income (loss):
Three Months
to March 31
millions of Canadian dollars
2022
2021
Postretirement benefits liability adjustments:
Postretirement benefits liability adjustment (excluding amortization)
8
17
Amortization of postretirement benefits liability adjustment included in net benefit cost
7
11
Total
15
28
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.