Imperial Oil Limited · TSX:IMO
Imperial Oil — Investor Day (June 2013)
77 slides from Imperial Oil's investor day presentation, Jun 27, 2013
Slide 1: Investor Day June 2013
Exhibit 99.1 Investor Day June 2013
Slide 2: Agenda
Agenda 9:30 a.m. Welcome John Charlton, Manager, Investor Relations Energy Outlook Rich Kruger, Chairman, President and CEO Corporate Overview Downstream & Chemical Paul Masschelin, Senior Vice-President, Finance BREAK (10 minutes) Upstream Glenn Scott, Senior Vice-President, Resources Technology &
Slide 3: Cautionary statement
Cautionary statement This presentation contains forward-looking information on future production, project start-ups and future capital spending. Actual results could differ materially due to changes in project schedules, operating performance, demand for oil and gas, commercial negotiations or other
Slide 4: Energy Outlook
Energy Outlook
Slide 5: Economic growth drives energy demand
Economic growth drives energy demand Global energy demand up 35% by 2040 GDP $ trillions 2005 Average Growth / Yr. 2010 – 2040 2.8% Non OECD OECD Energy Demand Quadrillion BTUs Average Growth / Yr. 2010 – 2040 1.0% Expected savings from efficiency gains Non OECD OECD Source: ExxonMobil 2013 Outlook
Slide 6: Demand for all energy sources to increase
Demand for all energy sources to increase Oil and gas will continue to meet 60% of total demand World energy demand by source Quadrillion BTUs 250 200 150 100 50 0 Oil Gas Coal Nuclear Other Source: ExxonMobil 2013 Outlook for Energy; other includes biomass/waste, hydro and other renewables
Slide 7: Significant new liquids supplies required
Significant new liquids supplies required 65+ million barrels per day of new production required by 2035 Global liquids mb/d 120 100 80 60 40 20 0 Existing production New production required 2010 2035 Source: International Energy Agency – 2010
Slide 8: Canadian oil sands growth to continue
Canadian oil sands growth to continue With projected growth, North America balanced post-2030 North American liquids mbd Demand Net Imports Canadian Oil Sands Biofuels NGLs, Other Crude & Condensate Source: ExxonMobil 2013 Outlook for Energy
Slide 9: Imperial Oil Corporate Overview
Imperial Oil Corporate Overview
Slide 10: Imperial Oil's business model
Imperial Oil’s business model Deliver superior, long-term shareholder value 1. Long-life, advantaged assets 2. Disciplined investment and cost management 3. Integration and synergies 4. High-impact technologies and innovation 5. Operational excellence and responsible growth ExxonMobil relationship
Slide 11: Operational excellence & risk management
Operational excellence & risk management Comprehensive system to manage operational risks Operations Integrity Management System Management Leadership, Commitment, and Accountability 2 Risk Assessment and Management 3 Facilities Design and Construction Information/ Documentation 5 Personnel and Trai
Slide 12: Workforce safety
Workforce safety Safety is first in all we do Workforce safety Incidents per 200k hours 0.8 0.6 0.4 0.2 0.0 Best ever 2008 2009 2010 2011 2012 “Nobody Gets Hurt”
Slide 13: Spills & other releases
Spills & other releases Committed to ensuring the integrity of our operations Spills and other releases Number Best ever 2008 2009 2010 2011 2012 “Protect Tomorrow. Today”
Slide 14: Air emissions
Air emissions Committed to reducing the environmental impact of our operations Emissions k tonnes/year Best ever 2008 2009 2010 2011 2012
Slide 15: Financial performance
Financial performance Record earnings per share in 2012 Net income per share $/share 5 4 3 2 1 0 2008 2009 2010 2011 2012 2012 1Q13 Earnings - $ billions 3.77 0.80 Earnings - $ per share1 4.42 0.94 ROCE - % 23 20 Gross production2 - koebd 282 284 Refining throughput - kbd 435 430 Cash flow - $ billi
Slide 16: Industry leadership across all business lines
Industry leadership across all business lines • World’s largest in-situ heavy oil operation at Cold Lake • World’s largest oil sands producer at Syncrude • Next generation mining project at Kearl • Largest petroleum refiner in Canada • Major fuels marketer across the country • Leading manufacturer a
Slide 17: Industry-leading return on capital employed
Industry-leading return on capital employed Maximizing investment value and life-cycle asset performance ROCE % 30 25 20 15 10 5 0 5-yr. average 2012 IMO HSE CVE SU CNRL Source: Bloomberg, company publications
Slide 18: Unmatched shareholder distributions
Unmatched shareholder distributions Nearly $14 billion returned to shareholders in last 10 years Shareholder distributions 2003-2012 $ billions 15 10 5 0 Share reductions Dividends IMO HSE SU CNRL CVE Source: company publications
Slide 19: Increased ownership per share
Increased ownership per share 2-3 times ownership increase in the last 20 years Share repurchases* 1994—2012 Outstanding 848 million Repurchased 902 million Indexed ownership per share 2012 vs. 1994 metrics, % Crude production Refinery throughput Chemical sales Proved reserves * shares outstanding a
Slide 20: Long-life, high-quality proved reserves
Long-life, high-quality proved reserves 3.6 billion oil-equivalent barrels, concentrated in world-class assets 2012 proved reserves billion oeb* Other Kearl Syncrude Cold Lake * after royalties
Slide 21: Large, non-proved resource base
Large, non-proved resource base 13 billion oil-equivalent barrels to support profitable growth 2012 resource base billion oeb* Other Mining In-situ Gas Liquids Growth opportunities Progressing * after royalties
Slide 22: Executing plans to achieve growth
Executing plans to achieve growth Investing about $40 billion this decade focused on upstream growth Average capex per year* $ billions 5 4 3 2 1 0 2000-2009 2010-2019 *Upstream, Downstream, Chemical & Corporate
Slide 23: Production positioned to double by 2020
Production positioned to double by 2020 Funded nearly 200 kbd of additional liquids Production outlook* kboed New Opportunities Oil Sands - mining Oil Sands - in-situ Conventional To be sanctioned Under construction Starting up Existing 2010 2013 2016 2020 * before royalties 23 Esso Imperial Oil
Slide 24: Financial strength to support growth plans
Financial strength to support growth plans Strong balance sheet maintained under wide range of scenarios Debt to capital* % $55/bbl WTI $95/bbl WTI • S&P AAA rating • Flexibility for new opportunities 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 * Projected at May 31, 2013, includes Celtic acqu
Slide 25: Downstream & Chemical
py GETS HURT: 2% «no Downstream & Chemical
Slide 26: Integration & synergies
Integration & synergies Delivering competitive advantage across the value chain Production Refining Chemical Crude and natural gas Petroleum products Commodities and specialties Leveraging ExxonMobil relationship 26 Esso Imperial Oil
Slide 27: Downstream & Chemical strategies
Downstream & Chemical strategies Maximizing value of every molecule Consistently deliver best-in-class performance Provide valued and high-quality products and services Lead industry in efficiency and effectiveness Selectively invest for advantaged returns 27 Esso Imperial Oil
Slide 28: Downstream business results
Downstream business results Record earnings and strong competitive position 2012 Downstream profitability* US$/bbl SU IMO HSE CVE 2012 1Q13 Earnings - $ billions 1.77 0.48 ROCE - % 63 N/A Refinery throughput - kbd 435 430 Net petroleum prod. sales - kbd 445 426 Investments - $ millions 140 27 * Sour
Slide 29: Refineries capture crude price differentials
Refineries capture crude price differentials 80% of capacity accesses advantaged mid-continent crudes 2012 throughput kbd 200 160 120 80 40 0 Strathcona/Sarnia - 100% advantaged Expanding access to Nanticoke Dartmouth refinery - decision in 2013 Advantaged crudes Strathcona Sarnia Nanticoke Dartmout
Slide 30: Efficient operations and selective investment
Efficient operations and selective investment Relentless focus on operational excellence, costs and self-help Refining energy intensity % 105 100 95 90 Industry Imperial 2003 2005 2007 2009 2011 Downstream & Chemical capex % of depreciation 200 150 100 50 0 2003-2007 2008-2012 *Source: Solomon data,
Slide 31: Downstream to maximize value of Kearl
Downstream to maximize value of Kearl Unique level of technical, operational and commercial support Refinery* Nanticoke Sarnia Joliet Billings Beaumont Baton Rouge Chalmette Baytown Torrance Total Gross cap. kbd* 2,372 Coking cap. kbd* “Imperial & ExxonMobil refineries can run all initial Kearl prod
Slide 32: Downstream value extends beyond refining
Downstream value extends beyond refining World-class brands, extensive marketing networks Esso On the Run Esso Mobil 1 Tim HortonsR RBCR RBC Royal Bank RBC Banque Royale Reliable provider of quality products National retail network - 18% market share Diverse sales channels Company-owned retail sites
Slide 33: Chemical business results
Chemical business results Record earnings from integrated manufacturing Earnings - $ millions ROCE (%) Petrochemical sales (kT) 1,044 1Q13 N/A 33 Esso Imperial Oil
Slide 34: Focus on high-value products
Focus on high-value products Sarnia polyethylene is a top-tier asset serving specialty customers Site advantages: Integrated with refinery Cracking ethane and propane Leading supplier to North American rotational moulding market Sustained technology development focus Ethane feed, capacity creep oppo
Slide 35: Downstream & Chemical funding upstream growth
Downstream & Chemical funding upstream growth About $5 billion of net cash over last 4 years Imperial net income $ billions 4 3 2 1 0 Chemical Downstream Upstream Corporate 2009 2010 2011 2012 Downstream & Chemical net cash $ billions 2.5 2.0 1.5 1.0 0.5 0.0 2009 2010 2011 2012 35 Esso Imperial Oil
Slide 36: Upstream
Upstream
Slide 37: World-class assets
World-class assets A distinct competitive advantage Cold Lake Syncrude Kearl 37 Esso Imperial Oil
Slide 38: Upstream strategies
Upstream strategies Profitable growth, high-impact technology and portfolio quality Maximize value of existing production Invest in growth projects that deliver superior results Enhance resource value through high-impact technologies Pursue the highest quality exploration opportunities
Slide 39: Upstream business results
Upstream business results Operational excellence and asset quality drive industry-leading profitability 2012 Upstream profitability1 US$/boe 25 20 15 10 5 0 IMO SU CVE HSE 1Q13 Earnings - $ billions 1.89 0.30 ROCE - % N/A Gross production2 - koebd Liquids production2 - kbd Investments - $ billions 5
Slide 40: Syncrude
Syncrude Strategic asset with improvement potential Ownership: 25% Imperial Start-up: 2012 production*: 72 kbd Cumulative production*: 0.6 billion bbls Recoverable resource*: 2.0 billion bbls *IOL share, before royalties
Slide 41: Focused on increasing production
Focused on increasing production First priority is to improve reliability Syncrude production kbd, 25% IOL share 100 75 50 25 0 Near-term opportunity range 2010 2011 2012
Slide 42: Systematic approach to reliability improvements
Systematic approach to reliability improvements Progress in several areas Downtime factors % 100 75 50 25 0 2010 2011 2012 Extended average coker run life from 2 to 3 years Addressed furnace failures by correcting erosion root cause Addressed hydrogen unit heat exchange failures by redesigning tube
Slide 43: Focus on improving cost structure
Focus on improving cost structure Progress in several areas Syncrude employee workforce number 6000 5500 5000 4500 2010 2011 2012 Aligned organization with IOL/EM best practices - Line of sight through asset teams - Eliminated redundant interfaces - Sharing support services - Saving $90M per year IO
Slide 44: Cold Lake
Cold Lake A premier asset Ownership: 100% Imperial Commercial start-up: Gross production: 150 kbd Active wells: ~ 4,500 Cumulative production: > 1 billion bbls Proved reserves: 1.1 billion bbls* Non-proved resource: 2.9 billion bbls* * after royalties
Slide 45: Industry-leading reliability
Industry-leading reliability Consistently delivering nameplate capacity Production - 3 year average 2010-2012* % of capacity IMO Cold Lake MEG Christina Lake CVE Foster Creek SU MacKay River DVN Jackfish CVE Christina Lake CNQ Primrose SU Firebag COP Surmont Shell Peace River CLL Great Divide JACOS
Slide 46: Highly competitive cost structure
Highly competitive cost structure Results from operational excellence and cost discipline In-situ cash operating costs* C$/bbl CLL Great Divide HSE Tucker STP Thermal SU Thermal DVN Jackfish MEG Christina Lake CVE Christina Lake IMO Cold Lake CVE Foster Creek HSE Sask. Thermal CNQ Thermal 0 10 20 30
Slide 47: Increasing recovery through innovation
Increasing recovery through innovation Leveraging technology and operational best practices Cold Lake demonstrated recovery (%) 60 40 20 0 1970’s 1980’s 1990’s 2000’s 2010+
Slide 48: Phased expansion - "design one, build many"
Phased expansion - “design one, build many” Over 1 billion barrels produced with continued growth planned Cold Lake production* kbd 200 150 100 50 0 Pilots Maskwa Mahihkan Mahkeses Nabiye 1980 1990 2000 2012 2015 * before royalties
Slide 49: Cold Lake - Nabiye project
Cold Lake - Nabiye project On schedule and on budget for 2014 start-up Sanctioned in 2012 for $2B - 40 kbd production - 140 kbd steam generation - 170 MW cogeneration - 7 pads of 24 wells each More than 40% complete Design one, build many replicates Mahkeses
Slide 50: Kearl
Kearl Next generation oil sands development Ownership: 71% Imperial 29% ExxonMobil Commercial start-up: Gross production: 110 kbd (initial)* 345 kbd (final)* Development cost: $6.80/bbl Recoverable resource: 4.6 billion bbls* * Gross, before royalties
Slide 51: First oil sands mine without an upgrader
First oil sands mine without an upgrader Producing pipeline-quality diluted bitumen Mining Overburden Oil Sands Shovels Trucks 400T load Ore Preparation Plant Crusher Conveyor Surge Bin Slurry Prep Hot Water & Caustic Hydrotransport Hydrotransport pumps 6 in series for each PL Proprietary Froth Trea
Slide 52: Kearl Oil Sands virtual tour
Kearl Oil Sands virtual tour Watch the video on Imperial’s YouTube channel. YouTubeTM YouTube.com/ImperialOil
Slide 53: The Kearl value advantage
The Kearl value advantage Large resource, long-life production Resource quality Proprietary froth treatment Reliability enhancements Environmental performance Competitive cost structure
Slide 54: 40+ year asset life
40+ year asset life Gross production plateau of 345 kbd, Imperial share 71% Kearl development plan* kbd Plant Debottleneck 45 kbd Third Ore Preparation Plant 80 kbd Expansion Project 110 kbd Initial Development 110 kbd Sanctioned 2013 2050 * before royalties
Slide 55: Resource quality
Resource quality A lasting unit cost advantage Athabasca undeveloped mining resources ore grade, % bitumen 12.5 12.0 11.5 11.0 10.5 10.0 Increasing Mining Efficiency Increasing Processing Efficiency Higher quality Kearl 12 11 10 9 8 7 Total Volume: Bitumen in Place
Slide 56: Proprietary froth treatment
Proprietary froth treatment Higher reliability, pipeline-quality and refinery-ready crude Existing mines Naphthenic Froth Treatment 3.5% 96.5% Sediment and water Bitumen Onsite upgrader Sale Synthetic crude Refinery Bitumen Froth Kearl Paraffinic Froth Treatment 0.1% 92% 8% X Sediment and water Bitu
Slide 57: Reliability enhancements
Reliability enhancements Investment to reduce unit operating cost Dual hydro transport lines to main plant site Dual slurry prep plants Oversized surge bin Oversized crusher Dual surge bin feed conveyors
Slide 58: Next generation oil sands technology
Next generation oil sands technology Kearl full-cycle GHGs about the same as average crude refined in U.S. Wells-to-wheels GHG Emissions* kgCO2/bbl of refined products Saudi Arabia–Arab Light Average barrel refined in the US (2005) Kearl Mexico–Maya Venezuela–Bachaquero Canadian oil sands: SAGD dilb
Slide 59: Cost structure competitive with SAGD
Cost structure competitive with SAGD Profitable across a broad range of oil prices Cost structure* $/bbl Major opportunity for ongoing efficiencies Application of IOL/EM best practices consistently delivers low unit costs 40 30 20 10 0 Realization (vs. Kearl) CO2 tax Sustaining capital Initial devel
Slide 60: Kearl Expansion Project
Kearl Expansion Project On schedule and on budget for start-up late 2015 Sanctioned in 2011 for $8.9B - Initial production 110 kbd About one-third complete All full-size modules being constructed in Edmonton Same contractors as the Kearl Initial Development project
Slide 61: Upstream summary
Upstream summary Significant near-term production and earnings growth Highly competitive operating costs Kearl and Nabiye designed for best-in-industry reliability Driving systematic improvements at Syncrude 300 kbd new production by around 2020 - 200 kbd starting up or under construction
Slide 62: Market access strategy
Market access strategy Ensure take-away capacity for all equity crude Optimize use of existing systems to maximize value Participate in multiple new pipeline opportunities Use rail options to bridge and provide insurance Mitigate any future surplus via portfolio optimizations
Slide 63: Strategy recognizes uncertainties
Strategy recognizes uncertainties Pursuing a portfolio of options Commitments to new pipeline capacity kbd Currently transporting more than 400 kbd from Alberta by pipeline Secured 290 kbd of additional pipeline capacity for Kearl and Nabiye - Keystone, Gulf Coast Access, Keystone XL, Trans Mountain
Slide 64: Technology & Innovation
Technology & Innovation
Slide 65: Technology & innovation
Technology & innovation Selective value-driven development, industry-leading capabilities Long-term, unmatched commitment Systematic research process $200 million invested in 2012 Integrated with ExxonMobil’s research Founding member of Canada’s Oil Sands Innovation Alliance (COSIA) 65 Esso Imperial
Slide 66: High-impact technologies
High-impact technologies Focused on fundamental business improvements and long-term value Increase recovery Improve reliability Lower costs Increase margins Improve environmental performance
Slide 67: Imperial's game-changing research
Imperial’s game-changing research Watch the video on Imperial’s YouTube channel. YouTubeTM YouTube.com/ImperialOil
Slide 68: Potential game-changing technologies
Potential game-changing technologies A history of success, organizational commitment to further innovate SA-SAGD Solvent-assisted SAGD CSP Cyclic solvent process CIMA Chemically induced micro agglomeration NAE Non-aqueous extraction Deliver business improvements and long-term value 68 Esso Imperial
Slide 69: Future opportunities
Future opportunities Significant growth potential beyond current plans 2012 non-proved resource base – billion oeb* 15 10 5 0 Other Mining In-situ Gas Liquids Growth opportunities Progressing Horn River Firebag Aspen Corner Celtic Cold Lake/ Grand Rapids gas mining in-situ * after royalties 69 Esso
Slide 70: New in-situ opportunities
New in-situ opportunities Development planning underway Aspen – 100% IOL Ft. McMurray Corner – 63% IOL Grand Rapids – 100% IOL Resource potential: 3 billion barrels Enabling technology: SAGD/SA-SAGD Potential scope: 9+ phases 35-45 kbd per phase Commercial start-up: 2019+ 70 Esso Imperial Oil
Slide 71: Unconventional gas
Unconventional gas Large acreage position, development optionality Horn River 340K acres Montney / Duvernay 650K acres Resource potential: 15+ TCF Liquids-rich Montney Enabling technology: Horizontal drilling Hydraulic fracturing LNG Ownership: 50% IOL, 50% EM Current production: 100 MCFD, 4 kbd For
Slide 72: Benefiting from ExxonMobil relationship
Benefiting from ExxonMobil relationship Complete access to global LNG technology, experience and expertise World’s largest LNG trains World’s largest LNG ships Project planning and execution Operational experience International marketing expertise Project financing 72 Esso Imperial Oil
Slide 73: Long-term growth
Long-term growth Potential of 1+ million barrels per day by 2030 Production outlook* kboed 1000 800 600 400 200 0 New technologies/opportunities Oil Sands - mining Oil Sands - in-situ Conventional 2010 2020 2030 * before royalties 73 Esso Imperial Oil
Slide 74: Final Comments
Final Comments
Slide 75: Imperial Oil's business model
Imperial Oil’s business model Deliver superior, long-term shareholder value 1. Long-life, advantaged assets 2. Disciplined investment and cost management 3. Integration and synergies 4. High-impact technologies and innovation 5. Operational excellence and responsible growth 75 Esso Imperial Oil
Slide 76: For more information
For more information www.imperialoil.ca For more detailed investor information, or to receive annual and interim reports, please contact: John A. Charlton Manager, Investor Relations Imperial Oil Limited 237 Fourth Avenue SW Calgary, Alberta T2P 3M9 Email: john.a.charlton@esso.ca Phone: (403) 237-45
Slide 77: Investor Day June 2013
Investor Day June 2013