Imperial Oil Limited · TSX:IMO
Imperial Oil — Investor Day (September 2015)
71 slides from Imperial Oil's investor day presentation, Sep 23, 2015
Slide 1: Form 8-K Current Report
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): September 23, 2015 IMPERIAL OIL LIMITED (Exact name of registrant as specified in i
Slide 2: Item 7.01 Regulation FD Disclosure
Item 7.01 Regulation FD Disclosure On September 23, 2015, the Company hosted an investor meeting in Toronto, Ontario at which senior management gave a presentation (the “Presentation”) that provided an update on the Company’s current operations and major projects. The Presentation included informati
Slide 3: Signatures
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. IMPERIAL OIL LIMITED Date: September 23, 2015 By: /s/ Lara Pella _____________________________________ Na
Slide 4: Investor Day
Exhibit 99.1 Investor Day September 23, 2015 Imperial │ 2015 │ 1
Slide 5: 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 6: A worldwide view to 2040
A worldwide view to 2040 2 billion more people on the planet 140 percent larger global economy 35 percent greater demand for energy, despite efficiencies non-OECD countries lead the growth in demand 60 percent of demand to be supplied by oil and natural gas natural gas to surpass coal as the second-
Slide 7: Demand for all energy sources to increase
Demand for all energy sources to increase Global energy demand, quadrillion BTUs 250 2040 200 2010 150 100 50 0 Oil Gas Coal Nuclear Other Source: ExxonMobil 2015 Outlook for Energy; other includes biomass/waste, hydro and other renewables Imperial │ 2015 │ 4
Slide 8: Significant new liquids production required
Significant new liquids production required Global liquids, mbd 120 50+ 100 New 80 production million bpd 60 of new production Existing production required by 2040 40 20 0 2015 2040 Source: International Energy Agency, World Energy Outlook 2014 Imperial │ 2015 │ 5
Slide 9: Responsible energy development
Responsible energy development Dual challenge to increase energy supplies… Safe Reliable Affordable Abundant …while addressing societal and environmental risks All energy sources Technology & Investments must required innovation key compete globally Imperial │ 2015 │ 6
Slide 10: Canadian business environment
Canadian business environment • Large, accessible upstream resources • Mature, competitive downstream markets • Relative political stability, competitive fiscal regime • Evolving regulatory, environmental framework • Market access limitations, uncertainties • Regional cost pressures, alleviating wit
Slide 11: Imperial's business model
Imperial’s 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 ExxonMob
Slide 12: Organizational priorities
Organizational priorities Focus on the things within our control • Base business operating fundamentals • Asset-specific improvement plans • Achieving full value of recent investments • Prudent scope and pace of new investments • Organizational efficiency and productivity Imperial │ 2015 │ 9
Slide 13: Personnel safety
Personnel safety Committed to a workplace where “nobody gets hurt” Workforce safety, incidents per 200,000 hours worked1 1.0 5-year rate 0.8 2014 1H 2015 0.6 0.4 0.2 0.0 Canadian Imperial industry 1Equivalent to 100 workers for one year Imperial │ 2015 │ 10
Slide 14: Business scope
Business scope Industry leadership in all aspects of the value chain Syncrude mining Kearl mining Strathcona refinery Sarnia refinery Cold Lake in situ Edmonton rail terminal Nanticoke refinery Research Fuels & Lubes marketing Sarnia chemical 2015 │ 11
Slide 15: Integration & synergies
Integration & synergies Delivering competitive advantage in all business lines Production Refining Chemical Crude oil & natural gas Petroleum products Commodities & specialties Imperial-ExxonMobil value-added capabilities Equity crude Cost-advantaged Highest value sales Optimized placed in highest f
Slide 16: Financial performance
Financial performance Demonstrates the strength of our business model Net income, $/share 5-year average, % 5 Downstream & Other Upstream 4 3 Downstream & Other 2 Upstream 1 0 2010 2011 2012 2013 2014 Imperial │ 2015 │ 13
Slide 17: Business segment profitability
Business segment profitability High performing upstream and downstream businesses Upstream, 3-year avg $/boe produced Downstream, 3-year avg $/bbl refined 20 15 15 10 10 5 5 0 0 IMO SU CVE HSE SU IMO CVE HSE Source: Barclays Research Imperial │ 2015 │ 14
Slide 18: Industry-leading capital efficiency
Industry-leading capital efficiency Maximizing investment value and life-cycle performance Return on capital employed, % 20.0 5-year average 2014 10.0 0.0 IMO CNQ HSE SU CVE Source: company publications Imperial │ 2015 │ 15
Slide 19: Unmatched shareholder distributions
Unmatched shareholder distributions Over $12 billion returned to shareholders in the last 10 years 2005-2014 distributions, $ billions 15 Share reductions Dividends 10 5 IMO SU HSE CNQ CVE Imperial │ 2015 │ 16
Slide 20: Reliable and growing dividends
Reliable and growing dividends Committed to returning cash to shareholders Annual distributions, $ per share 0.60 100+years of 0.30 consecutive payment 20 years of 0.00 consecutive growth 05 06 07 08 09 10 11 12 13 14 Dividends shown on a paid basis. Imperial │ 2015 │ 17
Slide 21: Completing unprecedented period of growth
Completing unprecedented period of growth Investments funded largely with cash from operations Average annual capex, $ billions 2010-2014 total $ billions 6 Cash from operations 20 4 Cash from asset sales 2 2 Investments 27 0 Dividends 2 2000-2009 2010-2014 2015-2020 Includes Upstream, Downstream, C
Slide 22: Production increasing significantly
Production increasing significantly 100+ kbd of additional liquids on stream in 2015 Liquids production outlook, kbd1 500 400 Kearl initial 2013 110 kbd2 300 Cold Lake Nabiye 1Q15 40 kbd 200 100 Kearl expansion 2Q15 110 kbd2 0 2010-2014 1H15 Post 2H15 annual average ramp-up 1IMO share, before royalt
Slide 23: Cash flow capacity increasing with production
Cash flow capacity increasing with production Financial resilience under a wide range of prices Annual average, $ billions 6 • Ability to cover sustaining capital requirements 4 $80 • Options to pursue selective $60 growth investments 2 $40 • Flexibility to respond to new opportunities 0 2016-2020 C
Slide 24: Rapid response to new price environment
Rapid response to new price environment Aggressively pursuing cost reductions and efficiencies Cash unit costs, $/boe1 40 Upstream Downstream Spending thresholds reset 30 Renegotiated 3rd party contracts 20 Executed price amendments Enhancing workforce productivity 10 Capturing internal ef
Slide 25: Clarify. Simplify. Focus.
Clarify. Simplify. Focus. Watch the video on Imperial’s YouTube channel Imperial │ 2015 │ 22
Slide 26: Downstream & Chemical overview
Downstream & Chemical overview Operational excellence and integration drive performance Refining Chemical Fuels & Lubes Strathcona │ Sarnia │ Nanticoke Sarnia Esso │ Mobil 1 421 kbd 94% 953 KT 100% 485 kbd 1,700 refining capacity 2014 utilization 2014 sales advantaged 2014 sales retail sites feedsto
Slide 27: Strong cash flow with selective investments
Strong cash flow with selective investments More than $7 billion of net cash generated over the past 5 years Downstream & Chemical net cash, $ billions Downstream & Chemical capex, % of depreciation 2 150 100 Edmonton 1 rail terminal 50 0 0 2010 2011 2012 2013 2014 2005-2009 2010-2014 Imperial │ 201
Slide 28: Maximizing refining value
Maximizing refining value Advantaged feeds and integrated product marketing Refinery operations, % Sales, kbd 2014 100 500 400 75 2010 300 50 200 25 100 0 0 Price-advantaged crude Capacity utilization Petroleum products Imperial │ 2015 │ 25
Slide 29: Solomon refining performance ranking
Solomon refining performance ranking Strong performance in North America, industry-leading in Canada 1st Quartile 2nd Quartile Imperial refineries Canadian industry 3rd Quartile excluding Imperial 4th Quartile Non-energy Process unit Energy cash opex utilization efficiency Source: 2014 Solomon surve
Slide 30: Non-energy unit cash opex
Non-energy unit cash opex Rigorous cost control drives improvement versus competition Relative change (2014 vs. 2012) Canadian industry excluding Imperial 20% 10% +21% Imperial 0% -6% -10% Source: Solomon Imperial │ 2015 │ 27
Slide 31: Process unit utilization
Process unit utilization Improved utilization supported by integrated marketing strategy Relative change (2014 vs. 2012) 12% 6% +11% Canadian industry excluding Imperial 0% Imperial -5% -6% Source: Solomon Imperial │ 2015 │ 28
Slide 32: Fuels Marketing excellence
Fuels Marketing excellence Leading market share in all product segments Market Market share position Wholesale 28% #1 Retail1 18% #2 Aviation 35% #1 Marine 30% #1 Asphalt 33% #1 Lubricants 26% #1 1Source: Kent Market Share, The Kent Group Ltd. All others estimated based on Statistics Canada data and
Slide 33: Retail value proposition
Retail value proposition Industry-leading performance and customer experience Retail margin Esso rank Retail measure vs. industry Overall site contribution #1 Non-fuel margin #1 Non-fuel Fuel Net site cash cost #1 Average site fuel volume* #1 Source: 2013 Essential Indicators benchmarking survey, Th
Slide 34: Retail business model
Retail business model Conducting assessment of remaining company-owned sites Company owned, Branded wholesaler agent operated owned and operated ~500 stations ~1,200 stations Imperial Agent \ Considerations Imperial 3rd party Market value Bidder operational Supplies fuel & Operates performance Suppl
Slide 35: Downstream integration & operational excellence
Downstream integration & operational excellence Watch the video on Imperial’s YouTube channel Imperial │ 2015 │ 32
Slide 36: Highly profitable chemical business
Highly profitable chemical business Top-tier polyethylene manufacturer Earnings, $ millions 250 record 200 150 record 100 50 0 2010 2011 2012 2013 2014 1H15 Imperial │ 2015 │ 33
Slide 37: Fully integrated with Sarnia refinery
Fully integrated with Sarnia refinery Diversified, low-cost feedstocks enhance profitability Feedstock, % Indexed volume & unit margin, % 100 200 Spot Unit margin Propane Marcellus Sales volume ethane 150 Mid-west Ethane Mid-west 50 Ethane 100 Refinery Refinery off gas off gas 50 0 0 2009-2014 2015+
Slide 38: Chemical gas cracker furnace project
Chemical gas cracker furnace project Improves energy efficiency, increases high value production • Capital cost ~$80M - Replaces three existing furnaces • Increases ethylene and polyethylene production - 7% additional capacity • Reduces operating costs - Improved energy efficiency • Start-up targete
Slide 39: Break
Break Imperial │ 2015 │ 36
Slide 40: Upstream overview
Upstream overview Large, long-life assets with growth potential Cold Lake Syncrude Kearl In situ portfolio Unconventional gas Oil sands research Imperial │ 2015 │ 37
Slide 41: Cold Lake: a world-class in situ operation
Cold Lake: a world-class in situ operation Best-in-class operational performance Cyclic steam stimulation │ 100% Imperial owned │ 1st production in 1985 1.8B bbls 2P reserves 1 170 kbd current production1 Large, high quality resource base Highly efficient operation Significant, long-term growth pote
Slide 42: Industry-leading reliability
Industry-leading reliability Achieved through a comprehensive, systematic approach 2014 reliability, % of capacity Cold Lake Design standardization Enhanced surveillance Preventive maintenance Imperial Wellwork productivity Peers Workforce capabilities 0 20 40 60 80 100 Source: Peters & Co. Limited
Slide 43: Competitive cost structure
Competitive cost structure Achieved through life-cycle cost discipline 2014 cash operating costs, C$/bbl Imperial Operations integrity Peers Facility reliability Cold Lake Cogeneration capacity Technical innovations Workforce discipline 0 5 10 15 20 25 Source: FirstEnergy Capital Corp. Imperial │ 20
Slide 44: Nabiye expansion project
Nabiye expansion project “Design one, build multiple” strategy Bitumen production, kbd2 • Funded in 2012 for $2 billion 40 − 280 million bbls1, 40 kbd production capacity2 − 7 pads of 24 wells each 20 − 140 kbd steam generation − 170 MW cogeneration2 • First oil achieved in 1Q15 0 1Q15 2Q15 3Q15 12P
Slide 45: Cold Lake future growth potential
Cold Lake future growth potential Midzaghe project summary submitted to AER in April 2015 • Grand Rapids formation - 500-600 million bbls resource potential1 • 55 kbd production capacity, 25-30 year life - SA-SAGD technology, successful pilot • Resource delineation, environmental assessment and cons
Slide 46: Syncrude: a pioneer in oil sands mining
Syncrude: a pioneer in oil sands mining Strategic asset with improvement potential Mining with upgrader │ 25% Imperial owned │ 1st production in 1978 1.1B bbls 2P reserves 1 70 kbd 5-year average production1 Synthetic crude production Competitive performance Intense improvement focus 1 IMO share, be
Slide 47: Competitive performance
Competitive performance Targeted efforts to improve reliability and cost structure 5-year average capacity utilization, % 100 80 60 40 20 0 Shell Syncrude Suncor CNRL Capacity 255 kbd 350 kbd 350 kbd 135 kbd Source: FirstEnergy Capital Corp. Imperial │ 2015 │ 44
Slide 48: Syncrude focus areas
Syncrude focus areas Improving resilience in low price environment 2010-2014 production loss, % • Turnaround planning and execution Other - Mid-cycle de-coking • EM/IOL best practice implementation Upgrading • Leadership development, workforce competency Cash cost distribution, % • $1.1 billion1 cas
Slide 49: Kearl: next generation oil sands mining
Kearl: next generation oil sands mining Establishing new performance standards Mining without upgrader │ 71% Imperial owned │ 1st production in 2013 3.2B bbls 2P reserves 1 220 kbd gross production Large, high-quality resource Proprietary froth treatment Environmental improvements Competitive cost s
Slide 50: Proprietary froth treatment
Proprietary froth treatment Producing pipeline-quality bitumen without an on-site upgrader Sediment and water Bitumen Dilbit Kearl “Paraffinic” Diluent froth treatment Refinery Asphaltenes Sediment and water Other mines Bitumen Synthetic crude “Naphthenic” froth treatment Onsite Refinery upgrader Im
Slide 51: Improved environmental performance
Improved environmental performance Wells-to-wheels GHGs similar to average crude refined in U.S. % 125 Production Refining Distribution Combustion 100 75 50 California Mining synthetic Venezuela Kearl Average barrel Mexico Heavy crude oil Boscan Dilbit refined in U.S. Maya Source: IHS CERA, “Compari
Slide 52: Operational update
Operational update Demonstrating ability to sustain 220 kbd targeted rate Kearl bitumen production, kbd1 220 • Initial development ramp-up issues largely resolved 165 • Lessons learned fully applied to expansion 110 • Expansion project started-up five months ahead of schedule 55 • Achieving unit cos
Slide 53: Expansion project
Expansion project “Design one, build multiple” strategy delivered intended results KID KEP Same facility design Safety - TRIR 0.51 0.17 Same major contractors Contractor work hours 34 million 24 million Construction months 36 months 28 months Full-size modules in Edmonton Each train at 50 kbd 6 mont
Slide 54: Efficient cost structure
Efficient cost structure Sustain production at capacity, drive cost efficiencies Cash operating costs, % Target: less than C$30/bbl Cost above field Property taxes Focused on: Mine operations & – Plant reliability Logistics & maintenance infrastructure – Mine equipment productivity – Maintenance int
Slide 55: Near-term focus on asset performance
Near-term focus on asset performance 40+ year asset life, 345 kbd regulatory production limit Kearl, kbd1 400 Annual regulatory limit 300 • Sustain 220 kbd targeted average production rate1 150 200 • Pursue efficiencies and low 110 cost debottlenecking 100 • Determine investments to 150 110 further
Slide 56: Market access strategy
Market access strategy Ensure efficient take-away capacity for all equity crude • Optimize use of existing systems to maximize value • Participate in multiple new pipeline opportunities • Use rail options to bridge timing and provide flexibility • Mitigate any future surplus via portfolio optimizati
Slide 57: Industry transportation costs
Industry transportation costs Significant value in minimizing overall portfolio costs Alberta to U.S. Gulf Coast, US$/bbl, indicative Imperial │ 2015 │ 54
Slide 58: Pipeline transportation
Pipeline transportation Equity production and refining requirements largely covered Pipeline use, kbd 800 • Shipping 450 kbd from Alberta on existing lines 600 New pipelines • Service improved through: - Operational changes 400 - Facility optimizations Existing • New pipeline opportunities: 200 pipe
Slide 59: Edmonton rail terminal
Edmonton rail terminal Provides significant flexibility and optimization value 210 kbd unit train capacity − Joint venture with Kinder Morgan Strategic value − Equity crude flow assurance − Mitigation of apportionment impact on refineries − Access to new Kearl markets Key milestones − Started-up in
Slide 60: Future opportunities
Future opportunities Imperial │ 2015 │ 57
Slide 61: Research priorities
Research priorities Deliver performance improvements and add long-term value Cyclic solvent process Extended reach wellbores and completions IMO Tailings dewatering Next generation $1 billion lubricants annually Non-aqueous extraction Polyethylene XOM metallocene catalysts Lower costs Improve perfor
Slide 62: Example: Cold Lake resource recovery
Example: Cold Lake resource recovery Achieved through technology, innovation and operational best practices Cold Lake demonstrated recovery, % 80 2010+ 60 2000’s 40 1990’s 1980’s 20 1970’s 0 Thermal Pilots Commercialization Megarow Limited entry Liquid addition First horizontal of cyclic steam steam
Slide 63: Large total resource base
Large total resource base 19 billion barrels of oil equivalent to support long-term growth YE 2014 resource base, billion boe1 20 Other Gas 15 Contingent Growth Resource Mining opportunities 10 On Hold Liquids Development Pending 5 Progressing Probable In situ Proved Committed 0 1IMO share, after ro
Slide 64: In situ growth opportunities
In situ growth opportunities 300+ kbd production potential, development planning ongoing Resource potential ~5 billion barrels1,2 Top-tier quality Enabling technology SAGD / SA-SAGD Potential scope 7+ phases, 55-75 kbd per phase Estimated cost ~$2 billion per phase Regulatory process Aspen applicati
Slide 65: In situ development strategy
In situ development strategy Technical progression of multiple projects to provide optionality Subsurface Surface facilities • Technical definition • Design standardization − Resource delineation program − “Design one, build multiple” • Enhancing drilling efficiency • Modular manufacturing and reduc
Slide 66: Natural gas opportunities
Natural gas opportunities Large acreage position, development optionality Resource potential 540,000 net acres ~14 TCF potential1,2 Liquids-rich Montney/Duvernay Development options Large-scale export project Drilling for North American market Plans Evaluate acreage potential Assess potential LNG pr
Slide 67: West Coast Canada LNG
West Coast Canada LNG Continuing to evaluate the competitiveness of an export project Government Continuing to scope Celtic acquisition engagement facility in February 2013 size & cost Fiscal and Resource Pipeline Liquefaction Shipping Regas Market Regulatory Evaluating Tuck Inlet site pipeline opti
Slide 68: Factors impacting pace of future growth
Factors impacting pace of future growth Project Competitiveness Technology Market Advancements Conditions Regulatory Financial Environment Considerations Imperial │ 2015 │ 65
Slide 69: Executive summary
Executive summary Deliver superior, long-term shareholder value • History of industry-leading financial and operating performance • Significant value delivered through technology, integration and synergies • Completion of growth projects greatly enhances cash flow capacity • Business environment sup
Slide 70: For more information
For more information www.imperialoil.ca Twitter /ImperialOil YouTube /ImperialOil LinkedIn /Imperial-Oil For more detailed investor information, or to receive annual and interim reports, please contact: Meredith C. Milne Manager, Investor Relations Imperial Oil Limited 237 Fourth Avenue SW Calgary,
Slide 71: Imperial
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