Imperial Oil Limited · TSX:IMO
Imperial Oil — Investor Day (November 2020)
78 slides from Imperial Oil's investor day presentation, Nov 19, 2020
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): November 19, 2020 IMPERIAL OIL LIMITED (Exact name of registrant as specified in it
Slide 2: Item 7.01 Regulation FD Disclosure
Item 7.01 Regulation FD Disclosure At 10:00 a.m. ET on November 19, 2020, Brad Corson, Imperial Oil Limited (the “company”) chairman, president and chief executive officer, and Dave Hughes, the company’s vice president, investor relations, will host the company’s 2020 Investor Day by webcast to upda
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: November 19, 2020 By: /s/ Ian Laing _____________________________________ Name
Slide 4: Investor Day
Exhibit 99.1 Investor Day November 19, 2020
Slide 5: Agenda
Agenda Topic Speaker Time Brad Corson Opening remarks 8:00 Chairman, President and CEO Environmental/Social/Governance Theresa Redburn 8:20 SVP, Commercial and Corporate Development Simon Younger Upstream outlook 8:40 SVP, Upstream Break 9:20 Jon Wetmore Downstream & Chemical outlook 9:30 VP, Downst
Slide 6: Opening remarks
Opening remarks Brad Corson Chairman, President and Chief Executive Officer
Slide 7: Well positioned for the future
A history of success Well positioned for the future Imperial │ 2020 4
Slide 8: Reflecting on the past year
Impressions to date Reflecting on the past year Strong leadership team focused on winning and driving shareholder value Impressive organizational talent and commitment High-quality assets with significant long-term potential Underpinned by integrated, resilient business model, innovative tec
Slide 9: Themes and focus areas
What you will hear today Themes and focus areas Delivering superior value to shareholders Driving down unit costs; relentless focus on reliability Pursuing low-cost debottlenecks Enhancing downstream logistics, growing high-value sales Built to be resilient throughout the cycle Strong ba
Slide 10: Imperial's COVID-19 response
Imperial’s COVID-19 response Protecting our workforce and communities; positioning for recovery Continued operations ensuring reliable energy supply Careful management of health and safety of workforce Adjusted turnaround timing, scope to reduce cost and prepare to respond to recovery Enhanc
Slide 11: Built to weather the downcycle
Managing through a challenging environment Built to weather the downcycle Focus on what we can control Take the long-term view Maintaining balance sheet strength Continued emphasis on operational flexibility Organizational energy and commitment Plans in place to accelerate out of the dow
Slide 12: Progress on capital and expense reductions
Progress on capital and expense reductions Exceeding cost and capital control commitments to date Capital expenditures Production & manufacturing expenses $B $B 2 8 -$1B, (-16%) -$0.8B, (-45%) 1 4 0 0 2020 PL 2020 OL 2019 2020 OL Non-regretted capital avoidance, deferral All business lines and s
Slide 13: Near-term view of the recovery
Near-term view of the recovery Unprecedented demand reduction due to COVID-19; recovery underway Global oil supply/demand balance mbd US$/bbl 105 80 Globally Energy demand decreased dramatically 70 Rapid recovery through summer, primarily for gasoline 100 and diesel 60 Ongoing recovery volat
Slide 14: ESG
ESG Theresa Redburn Senior Vice President, Commercial and Corporate Development
Slide 15: Responsibly meeting global energy needs
Responsibly meeting global energy needs Imperial among the best in Canada and abroad Oil and gas remain significant sources of energy Canada is first in ESG among top global reserves holders Imperial is an ESG leader in the oil and gas industry Exciting new technologies support pathways to n
Slide 16: Oil and gas will continue to supply energy needs
Oil and gas will continue to supply energy needs Global investment opportunities to meet future demand Oil and gas remain a significant source of energy under a wide range of scenarios Between $US 12 trillion and $US 17 trillion additional oil and gas investment needed by 2040 IEA world energy m
Slide 17: Canada is an ESG leader
Canada is an ESG leader The choice for responsible energy worldwide Environmental Performance Social Progress Index Worldwide Governance Index Indicators 80 100 100 40 50 50 Not ranked 0 0 0 Yale, Columbia universities rank 180 countries on Social Progress Imperative ranks 149 countries on overall W
Slide 18: Imperial is a top ESG performer
Imperial is a top ESG performer Independently judged to be among the best global oil and gas companies Source: CSRHub , February 2020, BMO Capital Markets estimates Imperial │ 2020 15
Slide 19: Imperial's strategy for a lower-carbon future
Imperial’s strategy for a lower-carbon future Inspired to improve the quality of life for Canadians and those around the world Imperial │ 2020 16
Slide 20: Reducing operated oil sands GHG intensity
Reducing operated oil sands GHG intensity Actions drive measurable near-term improvement Greater than 20% reduction in GHGi since 2013 Target to reduce operated oil sands GHGi by a further GHGi 10% by end of 2023, relative to 2016 levels Improved productivity at Kearl oil sands mine Heat rec
Slide 21: Imperial's oil sands technology competes globally
Imperial’s oil sands technology competes globally Next-generation in situ technologies are game changers Canada a leader in GHG emissions measurement and reporting Kearl oil sands mining is below the global and US upstream averages Next-generation in situ oil sands technologies will reduce GHG
Slide 22: Technology is key to the future
Technology is key to the future Enables production growth and emissions reductions Short Term Medium Term Long Term Next-generation upstream Renewables and GHGi Energy diversification technologies Ongoing Developing Evaluating • Cogeneration • Advanced in situ technologies • Blue hydrogen • Renewabl
Slide 23: Social innovation
Social innovation Creating long-term economic and social benefit Collaborating with Indigenous and community neighbours on: A common vision for progress Sustainable economic development Environmental stewardship Awarded Canadian Centre for Diversity and Inclusion Employer Initiative of the
Slide 24: Board oversees ESG risks and opportunities
Board oversees ESG risks and opportunities Diverse perspectives in pursuit of superior shareholder value ESG integration at all levels supported by Public policy and corporate responsibility committee Community collaboration and engagement committee Effective Focus on high-quality, economic
Slide 25: Imperial's triple win
Imperial’s triple win A formula for collective success and delivering real value Reduce environmental footprint Leveraging industry-leading technologies to deliver GHGi reduction solutions Helping our customers reduce their emissions Capture business efficiencies and opportunities Pursuing ene
Slide 26: Upstream Outlook
Upstream Outlook Simon Younger Senior Vice President, Upstream
Slide 27: Upstream vision
Upstream vision Best-in-class producer, maximizing cash flow Maximize value from long-life, low-decline assets Targeting industry-leading unit cost and reliability Select, disciplined capital investments High-impact innovation and digital solutions Operational excellence and responsible de
Slide 28: 2020 Upstream performance
2020 Upstream performance Demonstrating resilience through unprecedented external challenges Reduced spend $B 6 Savings Lowest-ever workplace hurts 3 Safely assured business continuity Rapid response to weak demand and low 0 realizations 2019 2020 OL Expenses reduced by ~$700 million vs. 201
Slide 29: Long-life, low-decline asset base
Long-life, low-decline asset base Stable production base; focused on selective growth Production koebd ~6.3 billion boe of proved and probable 400 reserves Over 25-year proved reserves life 300 ~415 koebd production in 2021 200 Incremental growth at Kearl and Syncrude Sustain Cold Lake vol
Slide 30: Upstream cash flow outlook
Upstream cash flow outlook Delivering value and generating strong cash from operating activities Average annual cash from operating activities $B ~$1.5 billion annual average in 2017–19 Scenarios 3 $US 60/bbl WTI Strengthened resilience to low prices 2 $US 50/bbl WTI 1 Improved cash generation
Slide 31: Upstream investment outlook
Upstream investment outlook Investing for value and select volume growth Average annual capital expenditures $B 2 Investment profile below prior outlook 2020-21 proactive reductions; capex down ~40% Growing production to ~435 kboed by 2024 Maintained optionality and capital discipline 1 Ma
Slide 32: Large portfolio of investment options
Large portfolio of investment options Selecting investments to deliver maximum value Opportunity type Representative projects NPV/I range Deep portfolio of projects $US 40-60 WTI Optionality spans Upstream Schedule optimization Digital 30 - 500 Workforce visualization Advanced metallurgy Researc
Slide 33: Accelerating innovation and modernization
Accelerating innovation and modernization Industry-leading digital technology and artificial intelligence Advanced analytics, digital workforce, increased value Digital investment principles Maximize asset recovery and production Value Data-driven decision making Capital efficient $750M/yr E
Slide 34: Digital in action
Digital in action Intense focus on cost optimization and short payback on investment Workforce visualization: $50M+/yr Autonomous haul systems: ~$US 1/bbl cost savings Schedule optimization: $15M+/yr First autonomous 797F globally to haul ore to crusher 2019 2020 Digital scaffold management: Shovel
Slide 35: Digital in action with cutting-edge applications
Digital in action with cutting-edge applications Progressing the next tranche of opportunities Internal drone inspections Kearl plant digital twin Advanced data-driven analytics Connected worker/equipment Commodity input reduction Automated fuelling Imperial │ 2020 32
Slide 36: Investing in technology to maximize value
Investing in technology to maximize value Ongoing commitment to research and development Advanced metallurgy Enhanced in-line flocculation Coarse tailings bitumen recovery Mining Enhanced Late-life Process, ELP Non-Condensable Gas, NCG Enhanced Bitumen Recovery In Situ Imperial │ 2020 33
Slide 37: Kearl 2020 performance
Kearl 2020 performance Supplemental crushers delivering significant value, demonstrating potential Production kbd COVID 2020 performance exceeding expectations 300 Adjusted turnarounds >85% plant availability IPL outage Bitumen recovery improved 2% vs. 2019 Supplemental crushers avoided >30
Slide 38: Kearl journey
Kearl journey Stable, reliable operations enabling optimization phase Production Unit P&M expenses Reliability focus delivering improvements kbd $US/bbl 300 40 Resolved significant reliability ‘bad actors’ Extraction and froth treatment upgrades Supplemental crushers enabling 240+ kbd COVID
Slide 39: Autonomous haul update
Autonomous haul update Fleet conversion improves profitability and safety First automated 797-model haul trucks in ore globally Most ultra-class autonomous trucks in oil sands 22 trucks converted, target of 25 by YE 2020 Fully-automated north mine advance Unit expense savings ~$US 1/bbl
Slide 40: Kearl in-pit tailings project
Kearl in-pit tailings project Sustaining production at lowest cost Transition to in-pit tailings when external tailings reach capacity in 2023 Safest and lowest-cost solution, minimizing land disturbance ~ $750 million capital through 2025 Extensively cost-benchmarked, competitive with indus
Slide 41: Cold Lake strategy
Cold Lake strategy Maintain strong cash flow generation and reduce GHGi Production kbd 150 Resilient cash generation through cycles Positive cash generation in 2020 100 Strong action to reduce costs; paced capital spending Maintained unit P&M expenses flat vs. 2019, 50 ~$US 13.50/bbl 0 2018-
Slide 42: Select Cold Lake capital investments
Select Cold Lake capital investments Production of 140 kbd by 2024 Infill drilling Mahkeses LASER Grand Rapids Phase 1 Access adjacent reservoir Solvent injection into existing wells SA-SAGD leveraging existing Nabiye Flexible location and timing Injection to start Dec. 2020 infrastructure
Slide 43: Syncrude strategy
Syncrude strategy Reliability focused, supported by collaboration Production kbd Strong partner engagement and collaboration 90 COVID Capturing reliability investment benefits 2019 second-best year in asset’s history 60 15% combined capex and expense reduction in 2020 vs. 2019 30 High-valu
Slide 44: Syncrude interconnect pipeline
Syncrude interconnect pipeline Maximizing value through owner collaboration Syncrude Suncor Base Mine Project commissioning Q4 2020 Mine & extraction Mine, extraction & SAGD Interconnect bitumen pipeline Asset integration drives incremental value Primary upgrading Primary upgrading (cokers) (cok
Slide 45: Future resource optionality
Future resource optionality Material and diverse portfolio of organic growth opportunities Large inventory of opportunities Aspen – rendering of central plant In situ development: Aspen, Corner, Clarke Creek, Clyden Unconventional Strategic approach to future development Minimal investment
Slide 46: Upstream summary
Upstream summary Best-in-class producer; maximizing value Focus on maximizing value from existing assets and incremental efficient growth Kearl volumes and cost improvement outpacing prior outlook Realizing ~$150 million per year in digital value Capital plan down significantly from prior ou
Slide 47: Break
Break
Slide 48: Downstream and Chemical Outlook
Downstream and Chemical Outlook Jon Wetmore Vice President, Downstream
Slide 49: Downstream strengths
Downstream strengths Leveraging assets, logistics and sales to drive cash generation Industry-leading refineries running advantaged crudes Profitable markets accessed by industry-leading logistics Product slate and sales portfolio enable broad market access Superior brands and offers attract
Slide 50: Downstream cash generation
Downstream cash generation Focus on efficiency, optimization and margin enhancement Average annual cash from operating activities Canadian demand (~% of normal) $B 2 80 - 90% 85 - 95% ~40% October 2020 October 2020 October 2020 1 75 - 85% 85 - 95% 25 - 35% June 2020 June 2020 June 2020 0 2015-16 201
Slide 51: Canadian downstream market environment
Canadian downstream market environment Advantaged markets; Imperial well-positioned Market environment Imperial position Large geography, dispersed demands Access to cost-advantaged logistics Imports have limited reach Improved product margin as market trades at import parity Structural sh
Slide 52: Canadian product margins
Canadian product margins Favourable and growing unit margins contribute to integration benefits Average monthly gasoline crack Average monthly diesel crack $US/bbl $US/bbl 80 80 Avg. Canadian gasoline crack Avg. Canadian diesel crack Avg. US gasoline crack Avg. US diesel crack 40 40 0 0 2010 2011 20
Slide 53: Canadian refining leadership
Canadian refining leadership Leader in North American refining; applying global best practices Performance Energy Non-energy Total Net cash quartile efficiency cash cost cost margin Cost leadership Top quartile Solomon performance across portfolio 1st Size leadership 2nd Largest refining foo
Slide 54: Downstream value chain
Downstream value chain Imperial’s downstream participates in the full value chain to end consumers kbd 500 Purchases Trading Marine Synthetic Other Flex B2B Gasoline Commercial 250 Light Jet Retail Retail Flex Diesel Heavy HFO Aviation Aviation 0 Asphalt Asphalt Asphalt Crudes Products Channels Bran
Slide 55: Fuels, lubricants, and asphalt sales channels
Fuels, lubricants, and asphalt sales channels Leading brands, products, offers, dealers and customers Sales volumes % Branded Wholesaler relationships in Retail 100% Efficient growth with specialist retailer partners; capital avoidance Unbranded Lubricants use globally recognized brand and fie
Slide 56: Downstream investments
Downstream investments Efficient, strategic investments in low-capital, high-return business Capital expenditures $M 700 Selective investments in refinery slate, production, efficiency and resiliency Support and enhancement of strategic logistics Efficiency capture Market opportunities, acce
Slide 57: Strathcona cogeneration
Strathcona cogeneration Increases efficiency, reduces cost and emissions ~$200 million investment 41megawatt capacity 75 - 80% of site power Up to 50% of steam ~112,000 tonnes annual GHG emissions reduction Nearly 24,000 cars removed from roads Reduces electricity price exposure Tota
Slide 58: Sarnia products pipeline
Sarnia products pipeline Secures efficient, reliable and safe capacity ~$400 million investment In service early 2022 Secures key infrastructure for growing Toronto-area fuel supply Eliminates bottleneck in growing market with structural short $40 million annual efficiency savings Imperial
Slide 59: Edmonton rail terminal
Edmonton rail terminal Efficient, strategic egress and optionality Provides strategic optionality and risk reduction Transport flexibility provides increased market access for upstream production Advantaged with low fixed costs and highly efficient and integrated supply chain Dual-service ra
Slide 60: Downstream's total package
Downstream’s total package Coast-to-coast reach, leveraging strategically advantaged assets and brands Imperial and third-party owned sites ~2100 Retail service stations ~40 Terminals 14 Airports ~160 Truck Transport sites ~80 Branded Reseller sites Pipelines 3 Refineries Rail Imperial │ 2020 57
Slide 61: Imperial's downstream advantage
Imperial’s downstream advantage Well positioned for future market success Market evolution Imperial position Pipeline capacity additions Favourable light crude refining economics WCS/MSW spreads tighten to transport parity Enbridge Mainline light/heavy balancing Benefits both upstream and
Slide 62: Imperial Chemical produces high-value products
Imperial Chemical produces high-value products High-density polyethylene used in variety of durable products Key end uses Other Spot Injection molding (pails, containers, crates) Rotational molding (storage tanks, toys) Marcellus Ethane Marcellus Mid-west Ethane Ethane Superior customer serv
Slide 63: Chemical site integration drives efficiency
Chemical site integration drives efficiency Long-term strength with increasing demands Average annual cash from Demand change from 2010 Feedstock operating activities % $M % 100 Other 80% 300 Polyethylene Demand Marcellus Mid-west US ethane Ethane GDP 50 40% 150 Refinery off gas 0% 0 0 2010 2015 202
Slide 64: Downstream and Chemical summary
Downstream and Chemical summary Sustainably advantaged assets and offers; strategically positioned for the future 100% Canadian refining Leading market share in most segments Efficient pipeline access to Canadian crude Highly integrated assets minimize costs Coast-to-coast logistics enhanc
Slide 65: Financial Outlook
Financial Outlook Dan Lyons Chief Financial Officer
Slide 66: Financial profile
Financial profile Resilient with upside leverage 10-year average, % of cash from Integrated, balanced business model operating activities Growing production, long-life assets Advantaged refining, leading fuels marketer Integrated logistics Attractive Chemical business ExxonMobil relation
Slide 67: Advantaged access to capital
Advantaged access to capital Supported by industry-leading credit rating Sept. 30, 2020 debt to capital Debt-to-capital has remained at a low % level, absolute and relative to peers 50 No additional debt to date in 2020 Multiple sources of low-cost liquidity 25 Support for key priorities – s
Slide 68: Capital allocation priorities
Capital allocation priorities Focus on returning excess cash to shareholders Dividend per share Reliable and growing dividend $ Strong balance sheet 1.00 CAGR = 11% Sustaining capital 0.80 CAGR = 5% Select investment in existing assets 0.60 Share buybacks / special dividends 0.40 0.20 Hi
Slide 69: Capital expenditure outlook
Capital expenditure outlook Focus on sustaining capital and select growth Total annual capital expenditures 2021 target of $1.2 billion $B 2 5-year average down 30% vs. prior year view Sustaining capital averages ~$1.1 billion 1 Includes larger one-time investments (MLX, Kearl tailings) Ap
Slide 70: Corporate WTI breakeven
Corporate WTI breakeven Resilience at low prices Estimated WTI breakevens Cash flow from operating activities breakeven $US 27/bbl Cash flow from operating activities and sustaining capital breakeven $US 33/bbl Cash flow from operating activities, sustaining capital and current dividend breakeven $U
Slide 71: Significant leverage to higher prices
Significant leverage to higher prices Substantial cash available for return to shareholders Cash flow from operating activities $B 5 $US 60/bbl WTI 4 $US 50/bbl WTI 3 $US 40/bbl WTI Surplus cash 2 Sustaining capital + dividend 1 0 2021-2025 period average, WCS differential varies with WTI price case
Slide 72: Summary of 2020 and 2021 guidance
Summary of 2020 and 2021 guidance Annual guidance 2020 OL 2021 FC Total capex $B 0.9 1.2 Upstream production kboed 395 415 Kearl kbd (gross) 220 255 Cold Lake kbd 135 130 Syncrude kbd 70 75 Refinery throughput kbd 340 375 Refinery utilization % 80 89 Production Imperial share, before royalties excep
Slide 73: Closing remarks
Closing remarks Brad Corson Chairman, President and Chief Executive Officer
Slide 74: The Imperial advantage
The Imperial advantage Robust through the cycle Commitment to deliver winning shareholder value High-quality, long-life assets Integration supports resilience through market cycles Industry-leading balance sheet strength Focus on operational excellence Unparalleled history of t
Slide 75: Our winning strategy
Our winning strategy Focus and deliver Focusing on the ‘core’ Get the most out of existing assets Target industry-leading reliability, cost structure Capture value from integration Progress towards ESG targets Return more cash to shareholders Deliver healthy free cash flow Strong, gr
Slide 76: Cautionary statement
Cautionary statement Statements of future events or conditions in this report, including projections, targets, expectations, estimates, and business plans are forward-looking statements. Forward-looking statements can be identified by words such as believe, anticipate, intend, propose, plan, goal, t
Slide 77: For more information
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 78: Q&A
Q&A