Imperial Oil Limited · TSX:IMO
Imperial Oil — Investor Day (April 2023)
76 slides from Imperial Oil's investor day presentation, Apr 19, 2023
Slide 1: Imperial Investor Day
> Imperial Investor Day April 19, 2023
Slide 2: Emergency evacuation route
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Slide 3: Agenda
Agenda Topic Speaker Time Opening remarks Brad Corson 9:00 Chairman, president and chief executive officer Sustainable solutions Sherri Evers 9:20 Vice-president, commercial and corporate development Upstream outlook Simon Younger 9:50 Senior vice-president, upstream Break 10:30 Downstream & Chemica
Slide 4: Opening remarks
Opening remarks Brad Corson Chairman, president and chief executive officer
Slide 5: Record earnings and cash flow
Record earnings and cash flow Underpinned by getting the most out of our assets Strong operations underpinned record financial results in 2022 Priority on safe and reliable operations, cost efficiencies, and capital discipline Strategy remains focused on: Maximizing value from existing assets Progre
Slide 6: Record shareholder returns in 2022
Record shareholder returns in 2022 Efficiently returning cash 28th consecutive year of growth 63% year-on-year growth $0.9B 48% Dividends $/share 80 70 60 50 40 J F M A M J J A S O N D Total shareholder $6.4B ■ 45% share price appreciation return Share buybacks ~ 14% shares repurchased 5% NCIB, 2 SI
Slide 7: Key accomplishments
Key accomplishments Delivering results across the value chain Best-ever lost time Best-ever second half Five consecutive quarters Highest annual production incident rate production at Kearl above 140 KBD at Cold Lake in Syncrude's history Record refinery Record distillate Completion of Sanctioned 20
Slide 8: Opportunities in the energy transition
Opportunities in the energy transition Meeting Canada's energy needs in a lower carbon future 30% lmperial's goal for reducing greenhouse gas intensity of operated oil sands facilities by 2030 compared with 2016 20KBD •••••••••• ••••••••••• 2050 Approved project to construct Announced company-wide g
Slide 9: Current business environment
Current business environment Supply challenges, demand growth, energy transition impacting global energy mix Global oil supply Capital constraints, energy transition driving underinvestment, challenging new supply Geopolitics play larger role as spare capacity shrinks Global oil demand Demand return
Slide 10: What you will hear today
What you will hear today Well-positioned for the future The value of integration Technology solutions for Optimizing Expanded GHGi meeting sustainability goals existing assets reduction goals Relentless focus on costs Industry-leading Delivering value Pursue value-accretive Corporate-wide in base op
Slide 11: Sustainable solutions
Sustainable s0lutions Sherri Evers Vice-president, commercial and corporate development Imperial I 2023
Slide 12: Canada - focused on sustainability
Canada - focused on sustainability Strong track record from a secure and reliable energy supplier @Pragmatic policies with fiscal support ® Net zero ambition @Expertise in carbon management ® Advanced regulatory systems @unprecedented industry collaboration ® Collaboration with Indigenous Peoples
Slide 13: Our climate strategy
Our climate strategy Leveraging our expertise, integration and technologies Continuing TCFD disclosure with third-party verified GHGs Imperial I 2023
Slide 14: Imperial climate goals
Imperial climate goals Recently announced company-wide net zero by 2050 goal i 2050 On track to Goal to reduce operated oil sands Company-wide goal to meet emissions GHG emissions achieve net intensity 10% intensity by zero em1ss1ons reduction goal 30% by 2030 by 2050 in its operated assets through
Slide 15: Imperial net zero by 2050
Imperial net zero by 2050 Robust planning and emission reduction roadmaps identified Supportive policy Low Cl environment production j Technological advancements ccs 2050 Company-wide goal to Investment in innovation Lower Cl fuels achieve net zero em1ss1ons by 2050 in its operated assets through co
Slide 16: Leveraging our strengths
Leveraging our strengths Evaluating low carbon solutions businesses that capitalize on core capabilities - Oil upstream QJ O"I -Hydro t0 Chemicals- ...J - Oil refining and sales ccse N a QJ .!::! Renewable V>� 0 .... Lil QJ 0 fuels• �.!::!. L.. t0 -Lithium � -�-. Hydrogen Nuclear - t0 - EVCl 3 LOW C
Slide 17: Advancing carbon solutions
Advancing carbon solutions Innovating for a lower-carbon future Kearl Boiler Flue Gas Autonomous Haul Trucks Cold Lake LASER Pathways 0 ® Supporting Renewable Power Biofuel Blending Strathcona RD Cold Lake SA-SAGD Co-processing EBRT & CSP @Lithium Extraction @ ccs @) Low-carbon H2 @ Sustainable Avia
Slide 18: Transformational collaboration
Transformational collaboration Enabling sustainable solutions in support of lower-carbon future 3 Progressing pilot project at historic Leduc field E3 LITHIUM - - --------- ✓•----------4 • Engaged in cross-industry development discussions for SAF - � •• +-•------�- � •------f-e3 • EV charging servic
Slide 19: Pathways to Net Zero Alliance
Pathways to Net Zero Alliance Unprecedented collaboration, resources and progress Pathways Alliance key milestones achieved October 2021 October 2022 Q1 2023 Pathways interim Pore space Commercial negotiation alignment funding agreement evaluation awarded Drilled 2 evaluation wells I June 2021 April
Slide 20: Pathways phase 1
Pathways phase 1 Effective fiscal policies and regulatory framework required for continued phase 1 progress Pathways foundational project schedule Imperial phase 1 activities with effective fiscal policies and regulatory framework in place with effective fiscal policies and regulatory framework in p
Slide 21: Continued momentum
Continued momentum Sustainable solutions in support of lower carbon future Canada remains positioned to lead as a sustainable, secure and reliable global energy supplier Imperial on track to meet 2023 climate goal Plans identified to achieve 2030 goals and net zero emissions by 2050, requiring: Supp
Slide 22: Upstream outlook
Upstream outlook Simon Younger Senior vice-president, upstream Imperial I 2023
Slide 23: Upstream strategy
Upstream strategy Best-in-class producer, maximizing cash flow, positioning for a lower carbon future Maximize value from long-life, low-decline assets Targeting industry-leading unit cash cost and reliability Select, disciplined capital investments Lowering emissions through profitable investments
Slide 24: 2022 Upstream performance
2022 Upstream performance Continued strong operational performance and foundation for future success Kearl Recovered from extreme cold weather, record performance in 2H Continued Autonomous Haul ramp-up, converting entire mine to autonomous operating zone (65 trucks converted by year end) Second Boi
Slide 25: Kearl winterization strategy
Kearl winterization strategy Maintaining reliability through extreme winter conditions Extreme Cold(< -25 ° C) Crusher Procedures Crusher Throughput Comprehensive response to 2022 extreme cold weather Ore Prep Plant 1 - K1 -25 ° c to -35 ° c 1 < -35 ° C 2 of 2 crushers running Balanced I Analysis an
Slide 26: Long-life, low-decline asset base
Long-life, low-decline asset base High-quality stable production base; focused on GHG-advantaged growth Production koebd 500 Multi-decade production profile 400 Low sustaining capital 300 -3.8 billion boe of proved and probable reserves 200 410 - 430 koebd production outlook for 2023 100 ■ 17% low c
Slide 27: Upstream cash flow outlook
Upstream cash flow outlook Delivering value and strengthening cash flow from operating activities Average annual cash from operating activities $B 8 Strong cash flow in 2022 6 Outlook for robust cash flows across a range of price cases 4 Pipeline of highly accretive investments Focused on industry-l
Slide 28: Upstream investment outlook
Upstream investment outlook Investing for value through select volume growth and GHG intensity reduction Average annual capital expenditures 1 Sustaining capital moderates from 2022 $B 5-year average of -$5 per barrel Key sustaining projects include: Kearl In-pit Tailings Cold Lake Infill Drilling S
Slide 29: Industry-leading digital initiatives
Industry-leading digital initiatives Accelerating value with a continually expanding digital portfolio Digital investment principles: Capital-efficient • Fast payback • Agile development >$1.1 B Near-term focus and wins > 40 successful initiatives • Optimizing production and GHGi Smart sensor implem
Slide 30: Digital technology enabling value
Digital technology enabling value Unlocking our full potential surveillance Leveraging Analytics and platform, analytics software to enhanced and Al to optimize sensors, make production & enabling better uptime production decisions optimization Schedule optimization and digitally enabled technicians
Slide 31: Kearl performance
Kearl performance Building on a decade of improvement Production and unit cash costs 1 kbd $US/bbl 300 Extreme cold 40 weather Recovered from extreme cold weather in 30 1 H '22 with strong performance in 2H 200 Highest single day production 360 kbd on Dec. 29 20 Best-ever 2H production, 278 kbd 100
Slide 32: Kearl journey
Kearl journey - Optimization phase continuing kbd 300 Extreme cold weather 1111 - - On track to deliver 280 kbd in 2024 Reliability and maintenance improvements 250 Improved recovery through digital and crusher enhancements 200 Evaluating opportunities to increase to 300 kbd in future 2022 Reliabili
Slide 33: Autonomous haul update
Autonomous haul update First fully autonomous oil sands mining operator May 2022 converted full mine pit to autonomous operating zone Step change safety improvement Continuously raising the bar on daily mine material movement records 65 haul trucks converted to date, with remaining trucks expected 7
Slide 34: Cold Lake performance
Cold Lake performance Performance exceeding expectations and sustainable into the future Production performance -- kbd 150 Highest annual production since 2018 Strong performance from new Mahihkan infills (-8 kbd) Continued optimization and reliability enhancements (- 2kbd) Continued innovative comp
Slide 35: Cold Lake strategy
Cold Lake strategy Maximize asset value and cash flow through transformational GHG strategy Transition to lower emission profile Transforming asset to lower unit cash cost2, lower emissions next generation technologies to improve price resiliency and maintain kbd ■ Base ■ LASER ■ GRP 1 ■ Leming SAGD
Slide 36: Key Cold Lake volume sustainment investments
Key Cold Lake volume sustainment investments Progressing capital-efficient, economically attractive projects to sustain strong production Grand Rapids Phase 1 Leming SAGD Future SA-SAGD 15 kbd advantaged production 50 kbd advantaged production by 2030 9 kbd advantaged production at peak 40% GHGi red
Slide 37: Cold Lake carbon capture and storage (CCS)
Cold Lake carbon capture and storage (CCS) Efficient emissions reduction, supporting Cold Lake strategy transformation Imperial Kearl Pursuing CCS emissions reduction opportunity that captures efficiencies with Cold Lake operations Fort McMurray Geographically and geologically advantaged to be an I
Slide 38: Syncrude update
Syncrude update Building momentum following operator transition Production Capturing value through owner-operator model kbd 80 $300M in efficiencies achieved to date, evaluating further synergies 60 Increased asset utilization through improved reliability and interconnect pipeline Best-ever total pr
Slide 39: Future resource optionality
Future resource optionality Portfolio of growth opportunities with net zero potential EBRT Overview Large inventory of in situ opportunities Steam& Aspen, Corner, Clarke Creek, Clyden Solvent Strategic approach to future development Solvent Maintain optionality while evaluating next generation in si
Slide 40: Upstream summary
Upstream summary Best-in-class producer, maximizing value, positioning for a lower carbon future Maximizing value from existing assets Robust cash flow across a range of price outlooks, resilient at low prices Investing for value through select volume growth and GHG intensity reduction Industry-lead
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Slide 42: Downstream and Chemical outlook
Downstream and Chemical outlook Jon Wetmore Vice-president, downstream Imperial I 2023 '
Slide 43: Downstream and Chemical strategy
Downstream and Chemical strategy Increasing profitability across the value chain Deliver industry-leading performance in safety, reliability and operations integrity Strategically invest in logistics to expand market reach, reduce costs and improve supply reliability Enhance world-class Esso and Mob
Slide 44: Structurally advantaged Canadian margin environment
Structurally advantaged Canadian margin environment Robust margins throughout the commodity cycle Average gasoline crack $US/bbl 80 60 Advantaged logistics 40 20 0 2022 Avg 2012-2021 Avg ■ US Gasoline Crack ■ CDN Gasoline Crack Proximity to crude Average diesel crack $US/bbl 80 60 40 20 Import parit
Slide 45: Canadian fuel demand update
Canadian fuel demand update Robust liquid fuel demand for decades Canadian Gasoline Demand View to 2035 1 (indexed, 2022 = 100) 120 Significant gasoline demand through 2035 100 Advantaged refining, logistics and branding allows for growth 80 in gasoline market share through 2035 60 Continued advanta
Slide 46: Canadian refining
Canadian refining Canada's largest refiner with access to global technology Refinery throughput and utilization Structurally advantaged refining business kbd Largest domestic refiner, strategically located assets 450 100% Fully integrated Chemical plant for optimized molecule uplift Low overall cost
Slide 47: Fuel, lubricant and asphalt marketing
Fuel, lubricant and asphalt marketing Industry-leading brands and product offering creates customer pull Mobir Retail branded wholesale model provides structural advantages Industry-leading site count with -2,400 sites across Canada Targeting capital efficient market share growth Strategic partnersh
Slide 48: Strathcona renewable diesel project
Strathcona renewable diesel project Building Canada's largest renewable diesel (RD) facility Scope 20 kbd renewable diesel production at Imperial Strathcona Refinery -3 MT annual CO2 reduction in transportation sector compared to conventional fuels 1 Status Final Investment Decision approved $720M p
Slide 49: Strathcona renewable diesel project
Strathcona renewable diesel project Advantaged project is value accretive Increasing demand for renewable diesel in Canada Layered Canadian and British Columbia regulations 1 create Western demand for lower carbon intensity (Cl) transportation Fuels Growing demand for renewable diesel as drop in fue
Slide 50: Innovation delivers shareholder value
Innovation delivers shareholder value Further enhancing lmperial's advantage with innovative solutions and technologies Advanced recycling Bio feedstock co-processing Collaborative product trials Sustainable aviation fuel 0 0 0 Q Transforming plastic waste into Vegetable oil and ethanol Identifying
Slide 51: Downstream investments
Downstream investments Strategic investments in low-capital, high-return business Average annual capital expenditures 1 $M 600 Increase in growth spend due to Strathcona RD project 400 200 Continuing selective investing in refinery slate, production efficiency and resiliency 2022 2023 2024-2027 Supp
Slide 52: Downstream profitability
Downstream profitability Resilient business model, focused on increasing profitability Annual net income Resilient, reliable performance across the cycle $8 4 Expanding geographic reach enabling record refinery utilization and profitability in 2022 3 Fully integrated, flexible business model Focusin
Slide 53: Advantaged chemicals business
Advantaged chemicals business Positioned for income generation throughout the commodity cycle Annual net income $M 400 Integration with refinery and upstream 300 Proximity *-'- - ' _" Sarn1a Marcellus 200 to feeds and market j 100 Premium Products to meet specific customer needs 0 2012 2013 2014 201
Slide 54: Chemicals - integration and proximity
Chemicals - integration and proximity Advantaged integration, located near customers and feedstock Fully integrated, flexible business model Integration provides leading cost structure and profitability advantages �� * -'-· Heavy integration with Sarnia and Nanticoke refineries _.L -�a Marcellus ""
Slide 55: Chemicals - premium products
Chemicals - premium products Meeting customer needs with consistent, high-quality, differentiated products Produce high-density polyethylene (HDPE) for rotational and injection molding applications End product uses are mostly durables, not single-use plastics Intimate customer relationships Resins d
Slide 56: Imperial's Downstream and Chemical advantage
lmperial 1s Downstream and Chemical advantage Sustainably advantaged assets, brands and products Canadian domestic fuel markets benefit from advantaged margins Strategically located, highly-integrated assets with low sustaining capital requirements Portfolio of superior brands and products fostering
Slide 57: Financial outlook
Financial outl0ok Dan Lyons Chief financial officer Imperial I 2023
Slide 58: Financial profile
Financial profile Resilient business model with upside leverage 10-year cash flow from operating activities Integrated, advantaged business model Upstream: low-cost growth, long-life low decline assets Downstream: advantaged margins and logistics Chemicals: integration, proximity, premium products D
Slide 59: 2022 results summary
2022 results summary Achieved record performance while strengthening core businesses Annual cash flows from operating activities $B 12 Strongest year in company history Highest ever Downstream utilization Highest ever second half Kearl production Record earnings and cash flow Record cash distributio
Slide 60: Cash operating costs
Cash operating costs Energy prices drove increased operating costs Annual cash operating costs1 $B 9 Key drivers of increased operating costs 50% increase in energy cost with rising commodity prices 5% average inflationary pressure on non-energy costs 6 Laser-focused on lowering unit cash operating
Slide 61: Capital expenditure forecast
Capital expenditure forecast Low sustaining capital, attractive growth investments Annual capital expenditure1 forecast $B 2 2023 target of $1.7B, up $0.2B from prior outlook Strathcona renewable diesel accretive logistics scope Cold Lake Grand Rapids phase 1 acceleration Sustaining capital2 average
Slide 62: Capital allocation priorities
Capital allocation priorities Committed to returning surplus cash to shareholders Dividend per share (paid basis) and shares outstanding $ Millions of shares 2.00 1,000 Reliable and growing dividend 28 years of consecutive increases 1.00 750 100% increase in quarterly dividend since 1 Q21 0.00 500 L
Slide 63: Free cash flow
Free cash flow Financial discipline and capital efficient volume growth support free cash flow outlook Annual cash distributions Free cash flow 1 , 2 profile $B $B 6 6 4 4 2 2 0 0 2016-20 Avg 2021 2022 $60 $70 $80 $90 $100 ■ Dividend ■ Buyback $USWTI 1 Non-GAAP financial measure - see supplemental i
Slide 64: Corporate guidance
Corporate guidance 2023 Annual Guidance1 2023 Turnaround Schedule Total Capex $B 1.7 Upstream (full-year opex and production impacts, before royalties) 2Q: Kearl K2 plant, 8 kbd, $75M opex (IOL share) Upstream Production kboed 410-430 3Q: Cold Lake Nabiye, 2 kbd, $20M opex Kearl kbd (gross) 265-275
Slide 65: Closing remarks
Closing remanks Brad Corson Chairman, president & chief executive Imperial I 2023 •
Slide 66: A disciplined strategy
A disciplined strategy Maximizing shareholder value Continue to focus on existing asset base Optimization and debottlenecking, getting the most out of our existing assets Value accretive opportunistic growth Disciplined financial management Target industry-leading cost structure Remain robust throug
Slide 67: Why Imperial
Why Imperial Confidence in the future High quality, long life, low decline upstream assets Continued growth through focus on optimization, debottlenecking Advantaged downstream assets Integrated across value chain Low cost, high return growth Progressing value accretive projects, maintaining optiona
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Slide 69: For more information
> Imperial For more information: Dave Hughes Vice-president, investor relations +1 587.476.4743 dave.a.hughes@exxonmobil.com imperialoil.ca twitter.com/ImperialOil linkedin.com/company/Imperial-Oil youtube.com/ImperialOil facebook.com/ImperialOilLimited
Slide 70: Cautionary statement
Cautionary statement Forward statements: Statements of future events or conditions in this report, including projections, goals, expectations, estimates, business plans and descriptions of strategic and emission reduction goals are forward-looking statements. Similarly, emission-reduction pathways a
Slide 71: Cautionary statement
Cautionary statement 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 or seasonal fluctuations and resulting demand, price, differential and margin impacts
Slide 72: Cautionary statement
Cautionary statement In these materials, certain natural gas volumes have been converted to barrels of oil equivalent (BOE) on the basis of six thousand cubic feet (Md) to one barrel (bbl). BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Md to one bbl is based o
Slide 73: Supplemental information
Supplemental information Debt-to-capital ratio Debt, defined as the sum of "Notes and loans payable" and "Long-term debt", divided by capital, defined as the sum of debt and "Total shareholders' equity" Capital and exploration expenditures Capital and exploration expenditures (or capital expenditure
Slide 74: Supplemental information
Supplemental information Cash operating costs (Cash costs) Cash operating costs is a non-GAAP financial measure that consists of total expenses, less Purchases of crude oil and products, Federal excise taxes and fuel charge, Financing and costs that are non-cash in nature, including Depreciation and
Slide 75: Supplemental information
Supplemental information Unit cash operating costs (Unit cash costs) Unit cash operating costs is a non-GAAP ratio. Unit cash operating costs (unit cash costs) is calculated by dividing cash operating costs by total gross oil-equivalent production, and is calculated for the Upstream segment, as well
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