Imperial Oil Limited · TSX:IMO
Imperial Oil — Investor Day (September 2016)
75 slides from Imperial Oil's investor day presentation, Sep 21, 2016
Slide 1: Imperial Investor Day
Exhibit 99.1 Imperial September 21 2016 Investor Day
Slide 2: Cautionary statement
Cautionary statement Statements of future events or conditions in these materials, including projections, targets, expectations, estimates, and business plans, are forward-looking statements. Such statements are not guarantees of future performance and involve a number of risks and uncertainties. Ac
Slide 3: Why Imperial?
Why Imperial? Distinct competitive advantages that deliver long-term value Asset base High quality, high performing assets across the portfolio Operational excellence Effective technical, operational and financial risk management that enhances value Value chain integration Significant synergies acro
Slide 4: Energy fundamentals
Energy fundamentals Global megatrends will drive the world’s demand for energy Population Economy Quality of life Technology Increasing populations Growing economies Improved living standards Advances in energy efficiency
Slide 5: Energy demand
Energy demand Global demand to increase 25% by 2040, oil & gas remain key Energy demand, quadrillion BTUs + 25% 500 Renewables1 Coal 250 Gas Oil 2014 2040 Gas demand driven by power generation + Fastest growing major energy source Oil remains largest energy source + Meets 90+% of all transportation
Slide 6: Responsible development
Responsible development Dual challenge to meet demand, reduce environmental impact Safe Reliable Affordable Abundant All energy sources required Climate policies to affect energy mix Investments must compete globally Technology and innovation key
Slide 7: Liquids challenge
Liquids challenge Significant new production required to offset natural decline Global liquids production, mbd New 50+ 60 mbd Existing 2016 2040 Global decline of 4-5% per year New supplies needed from all regions Major ongoing investment required Technology key to competitiveness Source: Internatio
Slide 8: Canada's opportunity
Canada’s opportunity Oil sands represent large, accessible liquids resource base Access to world’s oil reserves Restricted Other Open to private sector Canada (97% oil sands) World class resources Relative political stability Balanced regulatory environment Competitive fiscal terms Leader in respons
Slide 9: Global competitiveness
Global competitiveness Highest quality oil sands competitive on a global basis Breakeven Brent price, US$ 100 mining in situ Brazil North Sea GOM West Africa Canada North America oil sands tight oil Source: IHS, Assumes a 10% internal rate of return
Slide 10: Oil sands
Oil sands Unique technical and operational requirements Production, mbd In situ Mining 2005 2010 2015 Production split between in situ & mining History of technology and innovation Economies of scale fundamental Specialized expertise Source: CAPP
Slide 11: Business environment
Business environment Several challenges, time of uncertainty and opportunity Commodity prices Market access Policy reviews Global competition Current period of low oil prices Environmental, regulatory reviews Global competitiveness pressures Pipeline, market access uncertainties
Slide 12: Scope of operations
Scope of operations Nationwide leadership across the full value chain Syncrude mining Kearl mining Research Cold Lake in situ Rail terminal Sarnia refinery Fuels marketing Strathcona refinery Sarnia chemical Nanticoke refinery
Slide 13: Business model
Business model Deliver superior, long-term shareholder value Long-life, competitively advantaged assets Disciplined investment and cost management Value-chain integration and synergies High-impact technologies and innovation Operational excellence and responsible growth ExxonMobil relationship
Slide 14: Company priorities
Company priorities Disciplined focus on performance, execution and creating value Integrity Execution Performance Integration Base business fundamentals + Maximizing asset performance + Capturing cost and organizational efficiencies Progressing growth opportunities + Developing enabling technologies
Slide 15: Safety performance
Safety performance Committed to a workplace where “Nobody gets hurt” Operations Contractors Laboratories Offices Total incidents per 200,000 hours worked1 1.0 0.8 0.6 5-yr 0.4 average 2015 0.2 YTD 0.0 Canadian industry Imperial 1Equivalent to 100 workers for one year Imperial | 2016 | 15
Slide 16: Organizational effectiveness
Organizational effectiveness Definitive steps to enhance efficiency, increase effectiveness Above-field personnel1, indexed % Contractors - 22% Employees 2014 2015 “Clarify. Simplify. Focus.” mindset Realigning capacity with business need Retaining institutional knowledge $200M reduction in “above-f
Slide 17: Integration & synergies
Integration & synergies Delivering competitive advantage in all business lines Upstream Oil & natural gas production Downstream Refining & marketing products Chemical Commodities & specialties IMO / XOM value-added capabilities Equity crude placed in highest netback markets Cost-advantaged feedstock
Slide 18: Technology leadership
Technology leadership Unparalleled commitment, history of research and innovation Canada’s first research department Cyclic steam stimulation patent Steam-assisted gravity drainage patent Solvent assisted technology pilots First lube oil hydrofining First horizontal well in Canada Paraffinic froth t
Slide 19: Upstream
Imperial Upstream
Slide 20: Upstream portfolio
Upstream portfolio Completing period of unprecedented liquids growth In situ Cold Lake Growth portfolio Mining Kearl Syncrude Natural gas Unconventional growth portfolio Research Oil sands Production, kbd Highest liquids production since 1989 Highest total production since 1995 Gas Liquids 1985 1990
Slide 21: Core asset growth
Core asset growth Large, long-life oil sands portfolio Kearl Mining - PFT 71% interest Syncrude Mining - upgrader 25% interest Cold Lake In situ - CSS 100% interest Production, kbd 1985 1990 1995 2000 2005 2010 2015
Slide 22: Cold Lake: world-class in situ operation
Cold Lake: world-class in situ operation Best-in-class operational performance Cyclic steam stimulation 100% IMO owned Producing since 1985 1.7B bbls 2P reserves1 kbd average production1 Large, high quality bitumen resource Highly efficient operation Significant, long-term growth potential 1IMO shar
Slide 23: Continuously improving resource recovery
Continuously improving resource recovery Achieved through technology, innovation and best practices Cold Lake demonstrated recovery, % 2010+ 2000’s 1990’s 1980’s 1970’s Thermal Pilots First horizontal well Commercialization of cyclic steam stimulation Megarow steaming 3D seismic analysis Limited ent
Slide 24: Maximizing steam utilization
Maximizing steam utilization Achieving enhanced economic, environmental performance 2008 vs. 2015, indexed % Fresh water to bitumen ratio Total fresh water use Recycling more than 95% of water Reducing energy intensity Increasing production
Slide 25: Industry-leading reliability
Industry-leading reliability Achieved through continuous improvement 2012-15 average gas turbine1 reliability, % +7 days annual uptime Global fleet Cold Lake Leader in equipment reliability Effective maintenance strategies Optimizing turnaround intervals 1OEM fleet data
Slide 26: Achieving lower cost per barrel
Achieving lower cost per barrel Mature, lean asset continuing to see improvements Unit cash opex, US$ indexed % Production, kbd 2014 2015 1H16 2015 industry unit cash opex, C$ Cold Lake Source: FirstEnergy Capital Corp.
Slide 27: Kearl: next generation oil sands mining
Kearl: next generation oil sands mining Driving operational performance and synergies Mining without upgrader 71% IMO owned Producing since 2013 3.2B bbls 2P reserves1 kbd targeted production2 Large, high-quality bitumen resource Capturing economies of scale Environmental leadership 1IMO share, befo
Slide 28: Proprietary froth treatment
Proprietary froth treatment Producing pipeline-quality bitumen without an on-site upgrader Kearl +Diluent Bitumen Dilbit “Paraffinic” froth treatment Sediment & water Refinery Asphaltenes Other mines Bitumen Synthetic crude “Naphthenic” froth treatment Sediment & water On-site upgrader Refinery
Slide 29: Achieving lower cost per barrel
Achieving lower cost per barrel Cost discipline, economies of scale fundamental to success Production, kbd Unit cash opex, US$ indexed % 2014 2015 1H16 More than 50% reduction in unit opex Expansion benefiting cost profile Continuing improvement efforts
Slide 30: Mine performance improvement
Mine performance improvement Optimization ongoing, integrating with plant performance 2014 vs. 20151, % Best-in-class Truck Shovel Truck Shovel Availability Effective utilization Best-in-class availability Utilization improving with plant uptime Enhancing ore processing 1SMART industry data
Slide 31: Plant performance improvements
Plant performance improvements Doing more with less, extracting value from plant operations Solvent additions, indexed % 2014 2015 - 60% Bitumen recovery rate1, % 2014 + 11% 2015 Systematic, integrated team approach Sustainable value capture Exceeding performance expectations 1Bitumen recovery prior
Slide 32: Enhancement opportunities
Enhancement opportunities Activities focused on efficient capacity creep Existing scope Implementation of operational learnings to enhance capacity and optimize asset Incremental scope Equipment upgrades and utilities integration to enhance volumes and efficiencies Major scope Major additions to the
Slide 33: Syncrude: pioneer of oil sands mining
Syncrude: pioneer of oil sands mining Improvement underway to capture full potential Mining with upgrader 25% IMO owned Producing since 1978 1.1B bbls 2P reserves1 kbd average production1 High value, synthetic crude production Competitive mining performance Intense improvement focus 1IMO share, befo
Slide 34: Reliability improvement
Reliability improvement Value is driven by producing the incremental barrel Production1, kbd 60 turnarounds Reliability risk management & 40fire Planning and execution excellence of Impact Focus on upgrader performance 2014 2015 1Q16 2Q16 1IMO share, before royalties Imperial 2016
Slide 35: Syncrude focus areas
Syncrude focus areas Improving resilience in a low price environment 2015 cash conservation, % Market capture Scope and timing Efficiencies US$10 per barrel opex reduction Enhanced execution of key programs Work selection and fit-for-purpose scope Workforce productivity
Slide 36: Enhancement opportunities
Enhancement opportunities Leveraging existing and owner-driven oil sands expertise Reliability Utilization of expertise, competency and equipment strategies to enhance performance Synergy Identify further opportunities to leverage owner-provided services with joint venture capability Integration Imp
Slide 37: Sustainable, structural savings
Sustainable, structural savings Driving upstream costs down with continuous improvement Continued market capture Ongoing rate, term negotiation Expanded scope of reverse auctions Productivity enhancement, alignment Scope, structure and technology Innovative, efficient new work approaches Optimizing
Slide 38: Upstream costs per barrel
Upstream costs per barrel Asset portfolio remains competitive at full cost Unit cash opex1, US$ 2014 2015 1H16 - 35% Realizing economies of scale Implementing scope optimization Sustainable efficiency gains 1Data as reported in company 10-K, 8-K filings
Slide 39: Leader in technological advancement
Leader in technological advancement Objective to improve economics, reduce environmental impact Production Refining Distribution Combustion Well-to-wheels GHG emissions intensity, indexed % Imperial breakthrough technologies CSS dilbit Mining synthetic SAGD dilbit SA-SAGD dilbit* Kearl dilbit Avg ba
Slide 40: Imperial's advantage: Research & innovation
Imperial’s advantage: Research & innovation Watch the video on Imperial’s YouTube channel YouTube
Slide 41: Upstream resources
Upstream resources Large, high quality resource base with significant potential In situ Aspen Cold Lake Exp. Growth portfolio Mining Non-aqueous extraction Natural gas Unconventional growth portfolio Research Oil sands Year-end 2015 resource base, billion boe1 Contingent Resource On Hold Development
Slide 42: In situ growth portfolio
In situ growth portfolio Multiple opportunities, development planning ongoing Aspen 100% IOL Fort McMurray Corner 63% IOL Clyden 27.5% IOL 72.5% EM Cold Lake Expansion 100% IOL Edmonton Calgary Resource potential ~5 billion barrels bitumen1,2 Top-tier quality Enabling technology SA-SAGD / other solv
Slide 43: In situ technology advancements
In situ technology advancements SA-SAGD provides step-change improvement opportunity Pilot results, indexed % SAGD SA-SAGD Industry IMO Cumulative steam oil ratio Initial capital per flowing barrel Economic, environmental gains Ability to scale efficiently Technology ready to apply
Slide 44: Aspen
Aspen First potential commercial SA-SAGD project In situ with solvents 100% IMO owned 1st production 2020+ 1.2B barrels resource potential1 75K bbl/d gross production per phase1 Environmental, economic technology advantages Two phase project, ~$2 billion per phase Progressing technical, regulatory f
Slide 45: Cold Lake Expansion
Cold Lake Expansion Development of Grand Rapids formation with SA-SAGD Production well Steam and solvent (diluent) injection well Glacial Till Colorado Shale Steam and solvent (diluent) Grand Rapids Heated bitumen flows to well Clearwater In situ with solvents 100% IMO owned 1st production 2020+ 550
Slide 46: Upstream summary
Upstream summary Distinct competitive advantages deliver long-term value Asset base + High quality + Long-life + Oil sands focus Operational excellence + Industry leading + Integrity & reliability + Cost efficiency Growth opportunities + Large inventory + In situ focus + Capital discipline Technolog
Slide 47: Downstream & Chemical
Imperial Downstream & Chemical
Slide 48: Downstream & Chemical portfolio
Downstream & Chemical portfolio Operational excellence and integration drive performance Refining Nanticoke Sarnia Strathcona Marketing Esso Mobil 1 Chemical Sarnia Research Sarnia Operations, % 10-year avg 2015 Volumes, kbd Refinery utilization Advantaged crude Petroleum product sales
Slide 49: Strong cash flow, selective investments
Strong cash flow, selective investments More than $8 billion net cash generated over the past 5 years Net cash, C$ billion 2010-14 average 2015 1H16 Strong cash generating capabilities Continued structural advantages Low sustaining capital required
Slide 50: Refining: efficient, value-driven business
Refining: efficient, value-driven business Integration elevates advantage in mature industry Nanticoke, Ontario Sarnia, Ontario Strathcona, Alberta kbd refining capacity percent 2015 utilization Well-positioned, competitive assets Integrated, 100% advantaged feeds Leveraging global best practices
Slide 51: Refining ranking
Refining ranking Strong performance in North America, top-tier in Canada 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile Non-energy cash opex Process unit utilization Energy efficiency IMO refineries Canadian industry excluding IMO Source: 2014 Solomon survey, includes 96 refineries in North Ame
Slide 52: Continuous improvement
Continuous improvement Global leadership, ongoing competitive focus 2015 refinery utilization, % » Improvement vs. 2010 IMO Canada* North America Global Source: BP Statistical Review of World Energy 2016, company data * Excludes IMO
Slide 53: Downstream enhancements
Downstream enhancements Evaluating further value creation Cogeneration Strathcona | Earliest FID 2017 Capture gas-power spread More efficient steam Leverage carbon tax credits Diluent Recovery Unit Strathcona | Timing to be determined Recycle local diluent pool Reduce supply costs Leverage rail term
Slide 54: Optimizing value
Optimizing value Competitive advantage through scale, skill and integration Currently shipping 400 kbd by pipeline Crude sold to 35+ refineries worldwide Real-time midstream optimization Imperial | 2016 | 54
Slide 55: Rail terminal
Rail terminal Strategic asset provides options to reach high value markets Edmonton, Alberta Location advantage Start-up April 2015 Joint venture with Kinder Morgan 210K bbl/d gross capacity Equity crude flow assurance Mitigation of apportionment impact Ability to reach new, less accessible markets
Slide 56: Fuels & Lubes: marketing excellence
Fuels & Lubes: marketing excellence Delivering valued products to customers nationwide Wholesale Commercial Industrial 1,700+ BW retail sites1 kbd 2015 sales Focused on premium markets High capability distributor network Leading market share in all segments 1Full conversion to branded wholesaler (BW
Slide 57: Retail conversion
Retail conversion Sale of remaining 497 company-owned sites Company-owned, agent-operated Pre-sale: ~30% of sites Post-sale: 0% of sites Imperial Supplies fuel & brand standards Owns real estate & facilities Agent Operates retail site ESSO Proceeds: $2.8B Proven operators Financial strength Business
Slide 58: Continuous development
Continuous development Committed to enhance retail offering and grow value Existing, successful partnerships Long-term supply agreements Commitment to grow the Esso brand Fuel technology development Customer experience enhancements Standardized loyalty programs
Slide 59: Chemical: unique, commodity business
Chemical: unique, commodity business One of Canada’s leading producers of chemical products Sarnia, Ontario Refinery integration Location advantage kt 2015 sales $287 million 2015 record earnings Top-tier asset, specialty customers Integrated manufacturing facility Leveraging proprietary technologie
Slide 60: Leadership in polyethylene
Leadership in polyethylene Innovation in injection and rotational molding since 1983 Outstanding resin quality Expert technical knowledge Solutions for complex designs Imperial | 2016 |
Slide 61: Fully integrated with Sarnia refinery
Fully integrated with Sarnia refinery Diversified, low-cost feedstocks enhance profitability Feedstock mix, % 100 50 0 Propane Midwest ethane Refinery off gas Spot Cost advantaged ethane Refinery off gas 2009-2014 2015+ Indexed % 250 200 150 100 50 0 Unit margin Sales volume 2010 2011 2012 2013 2014
Slide 62: Gas cracker furnace project
Gas cracker furnace project Improves energy efficiency, increases high value production Cutting-edge technology Capacity creep Feed-in July 2016 7% capacity increase $5M annual cost savings Improved energy efficiency Reduced maintenance costs Increased polyethylene sales
Slide 63: Downstream and Chemical summary
Downstream and Chemical summary Distinct competitive advantages deliver long-term value Asset base + Location advantage + Operational scale + Low sustaining capital Operational excellence + History & expertise + Global best practices + Leading reliability Value chain integration + Customer focus + L
Slide 64: Corporate
Imperial Corporate
Slide 65: Financial performance
Financial performance Demonstrating value of integration through the business cycle Cash flow from operating activities, C$ billion 5 4 3 2 1 0 2011 2012 2013 2014 2015 Five-year average, % Upstream Downstream & other
Slide 66: Capital efficiency
Capital efficiency Maximizing investment value and life cycle performance Return on capital employed, % 25 15 5 -5 10-year average 3-year average IMO HSE SU CNQ CVE Source: company publications
Slide 67: Financial strength
Financial strength Strong balance sheet, priority access to financial markets 2Q16 debt to capital, % 40 30 20 10 0 CNQ BBB+ HSE BBB+ SU A- IMO AA+ CVE BBB Ratings1 Leverage XOM relationship Borrow on most attractive terms Optimize use of floating rate debt Maintain capital structure flexibility 1Ba
Slide 68: Shareholder distributions
Shareholder distributions Over $10 billion returned to shareholders in the last 10 years 2006-15 average payout ratio1, % IMO HSE CVE SU CNQ 0 5 10 15 20 25 30 35 2006-15 total distributions, C$ billion SU IMO HSE CNQ CVE 0 3 6 9 12 Source: company publications, Yahoo Finance 1Operating cash flow pa
Slide 69: Share buybacks
Share buybacks Proven history of returning cash and preserving value Million1 2,000 1,500 1,000 1995 2015 Shares outstanding Repurchased 50% of shares Non-dilutive equity strategy Priority on shareholder interests 1Adjusted for three-for-one stock splits (May 15, 1998 and May 23, 2006)
Slide 70: Dividends
Dividends Priority to pay a reliable and growing dividend Dividend per share1, C$ 0.60 0.40 0.20 0.00 2005 2010 2015 100+ years of consecutive payment 21 years of consecutive growth 5.5% 10-yr compounded growth rate Increase to $0.15/sh payable 2Q16 1Adjusted for three-for-one stock split (May 23, 2
Slide 71: Capital expenditures
Capital expenditures Recently completed growth, evaluating future opportunities Annual average, C$ billion 6 5 4 3 2 1 0 2001-2009 2010-2015 2016-2020 Kearl, Nabiye projects complete + Added nearly 200 kbd capacity Sustaining capex under C$1B annually + Down 30+% from earlier estimates Next tranche
Slide 72: Financial resilience
Financial resilience Strength provides flexibility under a range of oil prices 2016-20 annual average, C$ billion 4 3 2 1 0 Growth Sustaining Dividend1 $55 $45 $35 Dividend and capex Cash flow from operations Ability to meet highest priorities Significant cash flow leverage Options to pursue growth
Slide 73: Why Imperial?
Why Imperial? Distinct competitive advantages that deliver long-term value Asset base High quality, high performing assets across the portfolio Operational excellence Effective technical, operational and financial risk management that enhances value Value chain integration Significant synergies acro
Slide 74: For more information:
For more information: imperialoil.ca | Twitter | YouTube | LinkedIn For more detailed investor information, or to receive annual and interim reports, please contact: Meredith C. Milne Manager, Investor Relations T: +1 (587) 476-4743 E: meredith.c.milne@esso.ca Imperial Oil 505 Quarry Park Blvd SE Ca
Slide 75: Imperial Investor Day September 2016
Imperial September 21 2016 Investor Day