CALGARY, July 30 /CNW/ - Imperial Oil today announced that net income for the second quarter of 2009 was $209 million or $0.25 a share, compared with $1,148 million or $1.28 a share for the same period last year. Net income for the first six months of 2009 was $498 million or $0.58 a share, versus $1,829 million or $2.03 a share for the first half of 2008.
Earnings in the second quarter were down from the same quarter in 2008 primarily due to lower Upstream crude oil and natural gas commodity prices as a result of the global economic downturn and from decreased gains from asset sales in the Downstream. In the Upstream, lower crude oil and natural gas commodity prices were partially offset by lower royalty costs due to falling commodity prices and the impact of a weaker Canadian dollar. Earnings were also lower in the quarter due to scheduled maintenance activities at Syncrude and Cold Lake. Downstream earnings in the second quarter of 2008 included a gain of $187 million from the sale of Rainbow pipeline. Downstream earnings in the second quarter of 2009 were also lower due to higher planned refinery maintenance activities.
Operating revenues were $5,261 million in the second quarter, compared with $8,618 million in the corresponding period last year. Capital and exploration expenditures were $535 million in the second quarter, compared with $279 million during the same quarter of 2008. For the first six months of 2009, the amount was $1,029 million, versus $570 million in the same period a year ago. During the first half of 2009, the company repurchased about 12 million shares for $490 million, including shares purchased from ExxonMobil. In the second quarter of 2009, share repurchases were reduced to $61 million as cash flow from operations was used to fund growth projects such as Kearl. The company will continue to evaluate its share-purchase program in the context of its overall capital activities. On June 30, 2009, the company's balance of cash and marketable securities was $390 million, compared to $1,974 million at the end of 2008.
"Sharply lower oil and natural gas prices continued to create challenging business conditions. Through this global economic downturn, we continue to focus on the business performance elements we can control - our safety, reliability, cost discipline, and growing our resource base," said Bruce March, Imperial's chairman, president and chief executive officer. "Imperial has moved ahead on its Kearl oil sands company growth project, consistent with our long-term approach that will serve our shareholders well," added March.
Imperial Oil is one of Canada's largest corporations and a leading member of the country's petroleum industry. It is one of the country's largest producers of crude oil and natural gas, and is the largest petroleum refiner and marketer with a coast-to-coast supply network that includes about 1,900 retail service stations.
Highlights/Items of interest
Imperial Oil Resources receives award for health and safety performance
Imperial was awarded the Canadian Association of Petroleum Producers' 2009 Steward of Excellence award for significantly improving the safety performance of its well servicing operations. The company's safety strategy was effective in improving performance at a time when the well servicing contractor workforce essentially doubled in size.
Kearl oil sands project to proceed
On May 25th, Imperial Oil's board of directors approved the first phase of the Kearl oil sands project, a surface mining operation located northeast of Fort McMurray, Alberta. The Kearl project is envisioned to be developed in three phases and could ultimately produce more than 300,000 barrels of bitumen a day before royalties. The first phase of the project is expected to start up in late 2012 with total production to average approximately 110,000 barrels a day.
Horn River update
Imperial Oil Resources and ExxonMobil Canada Ltd. acquired (on a 50-50 basis) additional exploration acreage in the Horn River basin, located about 70 kilometres north of Fort Nelson, B.C. This brings the net acreage acquired by the companies since 2007 in the Horn River area to 305,000 acres.
Also, as part of a recently completed winter exploration program, Imperial drilled four single-perforation vertical test wells. The company's evaluation program of the Horn River basin is in the early stages. No conclusion on potential rates from future horizontal production wells has been made.
IMPERIAL OIL LIMITED
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FINANCIAL HIGHLIGHTS (unaudited)
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Six months
Second quarter to June 30
2009 2008 2009 2008
------------------ ------------------
Net income (U.S. GAAP, millions
of dollars)
Upstream 252 938 394 1,588
Downstream (38) 239 164 269
Chemical 8 10 11 34
Corporate and other (13) (39) (71) (62)
------------------ ------------------
Net income (U.S. GAAP) 209 1,148 498 1,829
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Cash flow from operating activities 262 1,427 (34) 1,716
Capital and exploration expenditures 535 279 1,029 570
Per-share information (dollars)
Net income - basic 0.25 1.29 0.59 2.05
Net income - diluted 0.25 1.28 0.58 2.03
Dividends 0.10 0.09 0.20 0.18
Share prices - close at June 30
Toronto Stock Exchange (Canadian
dollars) 45.12 56.16
NYSE Amex (U.S. dollars) 38.46 55.07
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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OPERATING RESULTS
-----------------
The company's net income for the second quarter of 2009 was $209 million or $0.25 a share on a diluted basis, compared with $1,148 million or $1.28 a share for the same period last year. Net income for the first six months of 2009 was $498 million or $0.58 a share on a diluted basis, versus $1,829 million or $2.03 a share for the first half of 2008.
Earnings in the second quarter were down from the same quarter in 2008 primarily due to lower Upstream crude oil and natural gas commodity prices as a result of the global economic downturn and from decreased gains from asset sales in the Downstream. In the Upstream, lower crude oil and natural gas commodity prices of about $1,110 million were partially offset by lower royalty costs due to falling commodity prices of about $275 million and the impact of a weaker Canadian dollar of about $220 million. Earnings were also lower in the quarter due to scheduled maintenance activities at Syncrude and Cold Lake. Downstream earnings in the second quarter of 2008 included a gain of $187 million from the sale of Rainbow pipeline. Downstream earnings in the second quarter of 2009 were also lower due to higher planned refinery maintenance activities of about $95 million.
For the first six months, earnings decreased primarily due to lower crude oil and natural gas commodity prices as a result of the global economic downturn. Lower upstream realizations were partially offset by lower royalty costs due to lower commodity prices and the impact of a lower Canadian dollar. Earnings in the first half of 2008 included a gain of $187 million from the sale of Rainbow pipeline.
Upstream
Net income in the second quarter was $252 million versus $938 million in the same period of 2008. Earnings decreased primarily due to lower crude oil and natural gas commodity prices of about $1,110 million. Earnings were also negatively impacted by lower Syncrude volumes of about $55 million. These factors were partially offset by lower royalty costs due to lower commodity prices of about $275 million and the impact of a lower Canadian dollar of about $220 million.
Net income for the first six months was $394 million versus $1,588 million during the same period last year. Crude oil and natural gas commodity prices were lower by about $2,050 million compared to the first six months of 2008. Earnings were also negatively impacted by lower cyclical Cold Lake heavy oil production of about $55 million, lower Syncrude volumes of about $35 million and lower conventional volumes from expected reservoir decline of about $30 million. These factors were partially offset by lower royalty costs due to lower commodity prices of about $545 million and the impact of a lower Canadian dollar of about $475 million.
The average price of Brent crude oil in U.S. dollars, a common benchmark for world oil markets, was $58.78 a barrel in the second quarter and $51.65 a barrel in the first half of 2009, down about 52 percent and 53 percent from the corresponding periods last year. The company's realizations on sales of Canadian conventional crude oil mirrored the same trend as world prices, decreasing about 50 percent in the second quarter and the first half of the year, compared to the same periods last year.
The company's average realizations for Cold Lake heavy oil also declined about 40 percent in the second quarter and first half of 2009 when compared to corresponding periods last year. The decline was less than that of lighter crude oil, due to the narrowing price spread between light crude oil and Cold Lake heavy oil.
The company's average realizations for natural gas averaged $3.48 a thousand cubic feet in the second quarter, down from $10.35 in the same quarter last year. For the six months of 2009, realizations for natural gas averaged $4.67 a thousand cubic feet, down from $9.15 in 2008.
Gross production of Cold Lake heavy oil averaged 139 thousand barrels a day during the second quarter, versus 144 thousand barrels in the same quarter last year. For the first six months, gross production was 143 thousand barrels a day this year, compared with 149 thousand barrels in the same period of 2008. Lower production in the second quarter was primarily due to scheduled maintenance at the Mahihkan plant and the cyclic nature of production at Cold Lake.
The company's share of Syncrude's gross production in the second quarter was 51 thousand barrels a day, versus 66 thousand barrels in the second quarter of 2008. During the first six months of 2009, the company's share of gross production from Syncrude averaged 60 thousand barrels a day, down from 66 thousand barrels in 2008. Planned maintenance activities were extended on one of the cokers and included design modifications to improve long-term operational performance. This was the main reason for the reduced production in the second quarter and first half of 2009. These maintenance activities were successfully completed, and the units have returned to normal operations.
Gross production of conventional crude oil averaged 25 thousand barrels and 26 thousand barrels a day in the second quarter and six months of 2009, respectively and were essentially the same when compared to corresponding periods in 2008.
Gross production of natural gas during the second quarter of 2009 decreased to 286 million cubic feet a day from 310 million cubic feet in the same period last year. In the first half of the year, gross production was 296 million cubic feet a day, down from 318 million cubic feet in the first six months of 2008. The lower production volume was primarily a result of natural reservoir decline.
In May, the company announced its board of directors approved the first phase of the Kearl oil sands project, a surface mining project located northeast of Fort McMurray, Alberta. The first phase of Kearl, expected to start up in late 2012 with total production to average approximately 110,000 barrels of bitumen a day before royalties, is anticipated to cost about $8 billion. Imperial's share of production from the first phase would be about 78,000 barrels a day.
In June, Imperial and ExxonMobil Canada, each on a 50-percent interest basis, acquired additional exploration acreage in the natural gas prone Horn River area of northeastern British Columbia. This brings the net acreage acquired by the companies since 2007 in the Horn River area to 305,000 acres. A winter drilling program was successfully completed in early 2009. Evaluation of drilling results is currently underway.
Downstream
Net income from Downstream was negative $38 million in the second quarter of 2009, compared with $239 million in the same period a year ago. Second quarter 2008 earnings included a gain of $187 million from the sale of the company's equity investment in Rainbow Pipe Line Co. Ltd. When compared to the same period in 2008, earnings in the second quarter of 2009 were negatively impacted by higher planned maintenance activities of about $95 million at the Strathcona and Nanticoke refineries. Also impacting second quarter 2009 earnings were lower industry refining margins and lower sales volumes due to the slowdown in the economy.
Six-month net income was $164 million, compared with $269 million in 2008. Earnings in the first half of 2008 included a gain of $187 million from the sale of Rainbow pipeline. Also impacting earnings in 2009 were lower sales volumes of about $45 million due to the slowdown in the economy. These factors were partially offset by higher overall downstream margins of about $65 million and the favourable impact of a weaker Canadian dollar of about $60 million.
Chemical
Net income was $8 million in the second quarter, compared with $10 million in the same quarter last year. Earnings were lower in the quarter primarily due to lower margins for polyethylene products and lower sales volumes for polyethylene and intermediate products, partially offset by higher margins for intermediate products. Six-month net income was $11 million, compared with $34 million in 2008. Earnings were negatively impacted by the slow economy in 2009, with lower margins for polyethylene and aromatic products and lower sales volumes for both polyethylene and intermediate products, partially offset by higher margins for intermediate products.
Corporate and other
Net income from Corporate and other was negative $13 million in the second quarter, compared with negative $39 million in the same period of 2008. Favourable earnings effects in the second quarter were primarily due to lower share-based compensation charges, partially offset by lower interest income from lower yields on cash balances. For the six months of 2009, net income was negative $71 million, versus negative $62 million last year. Unfavourable earnings effects in the first six months of 2009 were primarily due to lower interest income from lower yields on cash balances.
LIQUIDITY AND CAPITAL RESOURCES -------------------------------
Cash flow from operating activities was $262 million during the second quarter of 2009, compared with $1,427 million in the same period last year. Lower cash flow was primarily due to lower net income. The timing of scheduled income tax payments and the net effects of lower commodity prices on receivable and payable balances also contributed to lower cash flow. Year-to-date cash flow used in operating activities was $34 million, compared with cash flow generated from operating activities of $1,716 million in the same period last year. Lower cash flow was primarily due to lower net income and the timing of scheduled income tax payments. The impact of lower seasonal inventory builds was essentially offset by the net effects of lower commodity prices on receivable and payable balances.
Investing activities used net cash of $479 million in the second quarter and $886 million in the first half of 2009, an increase of $443 million and $612 million from the corresponding periods in 2008. Additions to property, plant and equipment were $513 million in the second quarter, compared with $262 million during the same quarter of 2008, and $924 million in the first half of 2009, compared with $513 million in the same period last year. Expenditures were primarily for advancing the Kearl oil sands project. Other investments included development drilling at Cold Lake, facilities improvements at Syncrude, exploration drilling at Horn River and development drilling at conventional fields in Western Canada. Proceeds from asset sales were $35 million in the second quarter and $37 million in the first half of 2009, compared with $228 million and $241 million in the corresponding periods of 2008. The 2008 results included proceeds from the sale of Rainbow pipeline.
In June, the company received approval from the Toronto Stock Exchange for a new normal course issuer bid to replace its existing share-purchase program that expired on June 24, 2009. The new share-purchase program enables the company to repurchase up to about 42 million shares during the period from June 25, 2009, to June 24, 2010. During the first half of 2009, the company repurchased about 12 million shares for $490 million, including shares purchased from ExxonMobil. In the second quarter of 2009, share repurchases were reduced to $61 million, as cash flow from operations was used to fund growth projects such as Kearl. The company will continue to evaluate its share-purchase program in the context of its overall capital activities.
Cash dividends of $172 million were paid in the first six months of 2009, compared with dividends of $163 million in the same period of 2008. Per-share dividends declared in the first two quarters of 2009 totaled $0.20, up from $0.18 in the same period of 2008.
The above factors led to a decrease in the company's balance of cash and marketable securities to $390 million at June 30, 2009, from $1,974 million at the end of 2008.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
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Information about market risks for the six months ended June 30, 2009 does
not differ materially from that discussed on page 33 in the company's annual
report to shareholders for the year ended December 31, 2008 and interim report
to shareholders for the quarter ended March 31, 2009 except for the following:
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Earnings sensitivity (a)
millions of dollars after tax
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Nine cents decrease (increase) in the value of the
Canadian dollar versus the U.S. dollar + (-) 495
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The sensitivity of net income to changes in the Canadian dollar versus the
U.S. dollar increased from the first quarter 2009 by about $5 million (after
tax) for each one-cent difference. This was primarily due to the narrowing
price spread between light crude oil and Cold Lake heavy oil partially offset
by a decrease in industry refining margins.
(a) The amount quoted to illustrate the impact of the sensitivity
represents a change of about 10 percent in the value of the commodity
at the end of the second quarter 2009. The sensitivity calculation
shows the impact on annual net income that results from a change in
one factor, after tax and royalties and holding all other factors
constant. While the sensitivity is applicable under current
conditions, it may not apply proportionately to larger fluctuations.
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This report may contain forward-looking information. Actual results could
differ materially due to market conditions, changes in law or government
policy, changes in operating conditions and costs, changes in project
schedules, operating performance, demand for oil and gas, commercial
negotiations or other technical and economic factors.
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IMPERIAL OIL LIMITED
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CONSOLIDATED STATEMENT OF INCOME
(U.S. GAAP, unaudited)
Six Months
Second Quarter to June 30
millions of Canadian dollars 2009 2008 2009 2008
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REVENUES AND OTHER INCOME
Operating revenues (a)(b) 5,261 8,618 9,914 15,849
Investment and other income (4) 42 241 59 273
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TOTAL REVENUES AND OTHER INCOME 5,303 8,859 9,973 16,122
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EXPENSES
Exploration 22 17 105 57
Purchases of crude oil and
products (c) 3,131 5,312 5,451 9,808
Production and manufacturing
(d)(5) 1,077 1,114 2,107 2,091
Selling and general (5) 271 324 601 619
Federal excise tax (a) 314 328 620 640
Depreciation and depletion 193 181 390 362
Financing costs 1 - 3 (3)
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TOTAL EXPENSES 5,009 7,276 9,277 13,574
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INCOME BEFORE INCOME TAXES 294 1,583 696 2,548
INCOME TAXES 85 435 198 719
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NET INCOME (3) 209 1,148 498 1,829
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NET INCOME PER COMMON SHARE
- BASIC (dollars) (7) 0.25 1.29 0.59 2.05
NET INCOME PER COMMON SHARE
- DILUTED (dollars) (7) 0.25 1.28 0.58 2.03
DIVIDENDS PER COMMON SHARE (dollars) 0.10 0.09 0.20 0.18
(a) Federal excise tax included in
operating revenues 314 328 620 640
(b) Amounts from related parties
included in operating revenues 452 628 766 1,219
(c) Amounts to related parties
included in purchases of crude
oil and products 651 1,250 1,348 2,509
(d) Amounts to related parties
included in production and
manufacturing expenses 52 40 111 81
The notes to the financial statements are an integral part of these
financial statements.
IMPERIAL OIL LIMITED
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CONSOLIDATED BALANCE SHEET
(U.S. GAAP, unaudited) As at As at
June 30 Dec.31
millions of Canadian dollars 2009 2008
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ASSETS
Current assets
Cash 390 1,974
Accounts receivable, less estimated doubtful
accounts 1,823 1,455
Inventories of crude oil and products 725 673
Materials, supplies and prepaid expenses 317 180
Deferred income tax assets 450 361
------------------
Total current assets 3,705 4,643
Long-term receivables, investments and other long-term
assets 917 881
Property, plant and equipment, 25,020 24,165
less accumulated depreciation and depletion 13,241 12,917
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Property, plant and equipment, net 11,779 11,248
Goodwill 204 204
Other intangible assets, net 58 59
------------------
TOTAL ASSETS 16,663 17,035
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LIABILITIES
Current liabilities
Notes and loans payable 109 109
Accounts payable and accrued liabilities (a)(6) 2,909 2,542
Income taxes payable 913 1,498
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Total current liabilities 3,931 4,149
Capitalized lease obligations 32 34
Other long-term obligations (6) 2,232 2,298
Deferred income tax liabilities 1,544 1,489
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TOTAL LIABILITIES 7,739 7,970
SHAREHOLDERS' EQUITY
Common shares at stated value (b)(7) 1,507 1,528
Earnings reinvested 8,343 8,484
Accumulated other comprehensive income (8) (926) (947)
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TOTAL SHAREHOLDERS' EQUITY 8,924 9,065
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 16,663 17,035
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(a) Accounts payable and accrued liabilities include
amounts to related parties of $179 million
(2008 - $127 million).
(b) Number of common shares outstanding was 848
million (2008 - 859 million).
The notes to the financial statements are an integral part of these
financial statements.
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Approved by the directors July 30, 2009
Chairman, president and Senior vice-president,
chief executive officer finance and administration, and treasurer
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IMPERIAL OIL LIMITED
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CONSOLIDATED STATEMENT OF CASH FLOWS
(U.S. GAAP, unaudited) Six Months
inflow/(outflow) Second Quarter to June 30
millions of Canadian dollars 2009 2008 2009 2008
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OPERATING ACTIVITIES
Net income 209 1,148 498 1,829
Adjustment for non-cash items:
Depreciation and depletion 193 181 390 362
(Gain)/loss on asset sales (4) (31) (221) (32) (232)
Deferred income taxes and other (71) (177) (43) (242)
Changes in operating assets and
liabilities:
Accounts receivable (244) (366) (369) (764)
Inventories and prepaids 107 103 (190) (469)
Income taxes payable (25) 370 (585) 359
Accounts payable 81 479 369 1,063
All other items - net (a) 43 (90) (72) (190)
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CASH FROM (USED IN) OPERATING
ACTIVITIES 262 1,427 (34) 1,716
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INVESTING ACTIVITIES
Additions to property, plant and
equipment and intangibles (513) (262) (924) (513)
Proceeds from asset sales 35 228 37 241
Loans to equity company (1) (2) 1 (2)
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CASH FROM (USED IN) INVESTING
ACTIVITIES (479) (36) (886) (274)
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FINANCING ACTIVITIES
Reduction in capitalized lease
obligations (1) (1) (2) (2)
Issuance of common shares under
stock option plan - 2 - 6
Common shares purchased (7) (61) (606) (490) (1,196)
Dividends paid (86) (81) (172) (163)
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CASH FROM (USED IN) FINANCING
ACTIVITIES (148) (686) (664) (1,355)
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INCREASE (DECREASE) IN CASH (365) 705 (1,584) 87
CASH AT BEGINNING OF PERIOD 755 590 1,974 1,208
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CASH AT END OF PERIOD 390 1,295 390 1,295
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(a) Includes contribution to
registered pension plans (6) (6) (167) (153)
The notes to the financial statements are an integral part of these
financial statements.
IMPERIAL OIL LIMITED
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
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1. Basis of financial statement presentation
These unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles of the United
States of America and follow the same accounting policies and methods of
computation as, and should be read in conjunction with, the most recent
annual consolidated financial statements. In the opinion of the
management, the information furnished herein reflects all known accruals
and adjustments necessary for a fair presentation of the financial
position of the company as at June 30, 2009, and December 31, 2008, and
the results of operations and changes in cash flows for the six months
ended June 30, 2009 and 2008. All such adjustments are of a normal
recurring nature. Subsequent events have been evaluated through the date
the financial statements were issued. The company's exploration and
production activities are accounted for under the "successful efforts"
method. Certain reclassifications to the prior year have been made to
conform to the 2009 presentation.
The results for the six months ended June 30, 2009, are not necessarily
indicative of the operations to be expected for the full year.
All amounts are in Canadian dollars unless otherwise indicated.
2. Accounting change for fair value measurements
Effective January 1, 2009, the company adopted the Financial Accounting
Standards Board's (FASB) Statement No. 157 (SFAS 157), "Fair Value
Measurements" for nonfinancial assets and liabilities that are measured
at fair value on a nonrecurring basis. SFAS 157 defines fair value,
establishes a framework for measuring fair value when an entity is
required to use a fair value measure for recognition or disclosure
purposes and expands the disclosures about fair value measures. The
adoption did not have a material impact on the company's financial
statements. The company previously adopted SFAS 157 for financial assets
and liabilities that are measured at fair value and for nonfinancial
assets and liabilities that are measured at fair value on a recurring
basis.
3. Business Segments
Second Quarter Upstream Downstream Chemical
millions of dollars 2009 2008 2009 2008 2009 2008
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REVENUES AND OTHER INCOME
External sales (a) 879 1,836 4,152 6,401 230 381
Intersegment sales 698 1,554 355 892 83 141
Investment and other
income 19 5 23 228 - -
-----------------------------------------------
1,596 3,395 4,530 7,521 313 522
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EXPENSES
Exploration (b) 22 17 - - - -
Purchases of crude oil
and products 468 1,261 3,566 6,209 233 429
Production and
manufacturing 630 675 400 382 47 57
Selling and genera l 1 234 243 19 19
Federal excise tax - - 314 328 - -
Depreciation and
depletion 129 118 59 59 3 3
Financing costs 1 - - (1) - -
-----------------------------------------------
TOTAL EXPENSES 1,251 2,072 4,573 7,220 302 508
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INCOME BEFORE INCOME TAXES 345 1,323 (43) 301 11 14
INCOME TAXES 93 385 (5) 62 3 4
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NET INCOME 252 938 (38) 239 8 10
-----------------------------------------------
Export sales to the United
States 422 915 322 368 111 230
Cash flows from (used in)
operating activities 38 1,025 240 417 11 18
CAPEX (b) 471 212 61 63 2 2
Corporate
Second Quarter and Other Eliminations Consolidated
millions of dollars 2009 2008 2009 2008 2009 2008
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REVENUES AND OTHER INCOME
External sales (a) - - - - 5,261 8,618
Intersegment sales - - (1,136) (2,587) - -
Investment and other
income - 8 - - 42 241
-----------------------------------------------
- 8 (1,136) (2,587) 5,303 8,859
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EXPENSES
Exploration (b) - - - - 22 17
Purchases of crude oil
and products - - (1,136) (2,587) 3,131 5,312
Production and
manufacturing - - - - 1,077 1,114
Selling and general 17 61 - - 271 324
Federal excise tax - - - - 314 328
Depreciation and
depletion 2 1 - - 193 181
Financing costs - 1 - - 1 -
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TOTAL EXPENSES 19 63 (1,136) (2,587) 5,009 7,276
-----------------------------------------------
INCOME BEFORE INCOME TAXES (19) (55) - - 294 1,583
INCOME TAXES (6) (16) - - 85 435
-----------------------------------------------
NET INCOME (13) (39) - - 209 1,148
-----------------------------------------------
Export sales to the
United States - - - - 855 1,513
Cash flows from (used in)
operating activities (27) (33) - - 262 1,427
CAPEX (b) 1 2 - - 535 279
(a) Includes crude oil sales made by Downstream in order to optimize
refining operations.
(b) Capital and exploration expenditures (CAPEX) include exploration
expenses, additions to property, plant, equipment and intangibles and
additions to capital leases.
Six Months to June 30 Upstream Downstream Chemical
millions of dollars 2009 2008 2009 2008 2009 2008
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REVENUES AND OTHER INCOME
External sales (a) 1,639 3,285 7,837 11,830 438 734
Intersegment sales 1,354 2,846 745 1,671 147 242
Investment and other
income 23 9 31 242 - 1
-----------------------------------------------
3,016 6,140 8,613 13,743 585 977
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EXPENSES
Exploration (b) 105 57 - - - -
Purchases of crude oil
and products 832 2,346 6,433 11,443 432 778
Production and
manufacturing 1,276 1,256 736 728 95 107
Selling and general 2 3 467 476 38 37
Federal excise tax - - 620 640 - -
Depreciation and
depletion 265 235 115 118 6 6
Financing costs 1 - 1 (5) - -
-----------------------------------------------
TOTAL EXPENSES 2,481 3,897 8,372 13,400 571 928
-----------------------------------------------
INCOME BEFORE INCOME TAXES 535 2,243 241 343 14 49
INCOME TAXES 141 655 77 74 3 15
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NET INCOME 394 1,588 164 269 11 34
-----------------------------------------------
Export sales to the
United States 827 1,651 559 593 220 451
Cash flows from (used in)
operating activities (192) 1,503 194 243 (3) 10
CAPEX (b) 918 467 103 95 6 4
Total assets as at
June 30 9,583 9,018 6,524 7,909 433 535
Capital employed as at
June 30 5,972 4,924 3,771 3,121 196 236
Corporate
Six Months to June 30 and Other Eliminations Consolidated
millions of dollars 2009 2008 2009 2008 2009 2008
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REVENUES AND OTHER INCOME
External sales (a) - - - - 9,914 15,849
Intersegment sales - - (2,246) (4,759) - -
Investment and other
income 5 21 - - 59 273
-----------------------------------------------
5 21 (2,246) (4,759) 9,973 16,122
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EXPENSES
Exploration (b) - - - - 105 57
Purchases of crude oil
and products - - (2,246) (4,759) 5,451 9,808
Production and
manufacturing - - - - 2,107 2,091
Selling and general 94 103 - - 601 619
Federal excise tax - - - - 620 640
Depreciation and
depletion 4 3 - - 390 362
Financing costs 1 2 - - 3 (3)
-----------------------------------------------
TOTAL EXPENSES 99 108 (2,246) (4,759) 9,277 13,574
-----------------------------------------------
INCOME BEFORE INCOME TAXES (94) (87) - - 696 2,548
INCOME TAXES (23) (25) - - 198 719
-----------------------------------------------
NET INCOME (71) (62) - - 498 1,829
-----------------------------------------------
Export sales to the
United States - - - - 1,606 2,695
Cash flows from (used in)
operating activities (33) (40) - - (34) 1,716
CAPEX (b) 2 4 - - 1,029 570
Total assets as at June 30 412 1,335 (289) (626) 16,663 18,171
Capital employed as at
June 30 (835) 243 - - 9,104 8,524
(a) Includes crude oil sales made by Downstream in order to optimize
refining operations.
(b) Capital and exploration expenditures (CAPEX) include exploration
expenses, additions to property, plant, equipment and intangibles and
additions to capital leases.
4. Investment and other income
Investment and other income includes gains and losses on asset sales as
follows:
Six Months
Second Quarter to June 30
millions of dollars 2009 2008 2009 2008
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Proceeds from asset sales 35 228 37 241
Book value of assets sold 4 7 5 9
------------------ ------------------
Gain/(loss) on asset sales, before
tax (a) 31 221 32 232
------------------ ------------------
Gain/(loss) on asset sales, after
tax (a) 25 192 26 201
------------------ ------------------
(a) The second quarter of 2008 included a gain of $219 million
($187 million, after tax) from the sale of Rainbow Pipe Line Co.
Ltd., an equity company.
5. Employee retirement benefits
The components of net benefit cost included in production and
manufacturing and selling and general expenses in the consolidated
statement of income are as follows:
Six Months
Second Quarter to June 30
millions of dollars 2009 2008 2009 2008
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Pension benefits:
Current service cost 14 23 40 47
Interest cost 79 70 152 136
Expected return on plan assets (66) (83) (134) (165)
Amortization of prior service cost 5 4 9 9
Recognized actuarial loss 28 26 56 46
------------------ ------------------
Net benefit cost 60 40 123 73
------------------ ------------------
Other post-retirement benefits:
Current service cost 1 2 2 3
Interest cost 6 6 13 12
Recognized actuarial loss/(gain) (1) 2 (1) 3
------------------ ------------------
Net benefit cost 6 10 14 18
------------------ ------------------
6. Other long-term obligations
As at As at
June 30 Dec. 31
millions of dollars 2009 2008
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Employee retirement benefits (a) 1,051 1,151
Asset retirement obligations and other
environmental liabilities (b) 712 728
Share-based incentive compensation
liabilities 260 203
Other obligations 209 216
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Total other long-term obligations 2,232 2,298
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(a) Total recorded employee retirement benefits obligations also include
$45 million in current liabilities (December 31, 2008 - $45 million).
(b) Total asset retirement obligations and other environmental
liabilities also include $84 million in current liabilities
(December 31, 2008 - $83 million).
7. Common shares
As at As at
June 30 Dec. 31
thousands of shares 2009 2008
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Authorized 1,100,000 1,100,000
Common shares outstanding 847,599 859,402
From 1995 through 2008, the company purchased shares under fourteen
12-month normal course issuer bid share repurchase programs, as well as
an auction tender. On June 25, 2009, another 12-month normal course
issuer bid program was implemented with an allowable purchase of
42.4 million shares (five percent of the total on June 15, 2009), less
shares purchased from Exxon Mobil Corporation and shares purchased by the
employee savings plan and company pension fund. The results of these
activities are as shown below:
millions of
Year Shares Dollars
June 30 Dec. 31
thousands of shares 2009 2008
-------------------------------------------------------------------------
1995 - 2007 846.1 12,811
2008 - Second Quarter 10.6 606
- Full year 44.3 2,210
2009 - Second Quarter 1.3 61
- Year-to-date 11.8 490
Cumulative purchases to date 902.2 15,511
Exxon Mobil Corporation's participation in the above share repurchase
maintained its ownership interest in Imperial at 69.6 percent.
The excess of the purchase cost over the stated value of shares purchased
has been recorded as a distribution of earnings reinvested.
The following table provides the calculation of net income per common
share:
Six Months
Second Quarter to June 30
2009 2008 2009 2008
-------------------------------------------------------------------------
Net income per common share - basic
Net income (millions of dollars) 209 1,148 498 1,829
Weighted average number of common
shares outstanding (millions of
shares) 847.8 888.1 851.9 893.9
Net income per common share (dollars) 0.25 1.29 0.59 2.05
Net income per common share
- diluted
Net income (millions of dollars) 209 1,148 498 1,829
Weighted average number of common
shares outstanding (millions of
shares) 847.8 888.1 851.9 893.9
Effect of employee share-based
awards (millions of shares) 7.1 6.5 6.9 6.4
------------------ ------------------
Weighted average number of common
shares outstanding, assuming
dilution (millions of shares) 854.9 894.6 858.8 900.3
Net income per common share (dollars) 0.25 1.28 0.58 2.03
8. Comprehensive income
Six Months
Second Quarter to June 30
millions of dollars 2009 2008 2009 2008
-------------------------------------------------------------------------
Net income 209 1,148 498 1,829
Post-retirement benefit liability
adjustment (excluding
amortization) (25) (105) (25) (105)
Amortization of post retirement
benefit liability adjustment
included in net periodic benefit
costs 24 23 47 42
------------------ ------------------
Other comprehensive income (net of
income taxes) (1) (82) 22 (63)
------------------ ------------------
Total comprehensive income 208 1,066 520 1,766
------------------ ------------------
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OPERATING STATISTICS Six Months
(unaudited) Second Quarter to June 30
2009 2008 2009 2008
-------------------------------------------------------------------------
Gross crude oil and NGL production
(thousands of barrels a day)
Cold Lake 139 144 143 149
Syncrude 51 66 60 66
Conventional 25 26 26 27
------------------ ------------------
Total crude oil production 215 236 229 242
Natural gas liquids (NGLs)
available for sale 8 10 8 11
------------------ ------------------
Total crude oil and NGL production 223 246 237 253
------------------ ------------------
Net crude oil and NGL production
(thousands of barrels a day)
Cold Lake 116 118 128 125
Syncrude 49 56 60 57
Conventional 19 19 21 19
------------------ ------------------
Total crude oil production 184 193 209 201
Natural gas liquids (NGLs)
available for sale 6 10 6 9
------------------ ------------------
Total crude oil and NGL production 190 203 215 210
------------------ ------------------
COLD LAKE BLEND SALES
(thousands of barrels a day) 180 191 189 197
NGL SALES (thousands of
barrels a day) 6 7 9 12
NATURAL GAS
(millions of cubic feet a day)
Production (gross) 286 310 296 318
Production (net) 276 251 269 256
Sales 265 279 271 287
AVERAGE REALIZATIONS AND PRICES
(Canadian dollars)
Conventional crude oil
realizations (a barrel) 60.08 118.88 53.37 106.01
NGL realizations (a barrel) 35.11 69.26 39.06 61.79
Natural gas realizations
(a thousand cubic feet) 3.48 10.35 4.67 9.15
Par crude oil price at Edmonton
(a barrel) 66.87 127.07 59.05 112.94
Heavy crude oil at Hardisty
(Bow River, a barrel) 61.82 104.15 52.81 90.90
TOTAL REFINERY THROUGHPUT
(thousands of barrels a day) 365 451 412 438
REFINERY CAPACITY UTILIZATION
(percent) 73 90 82 87
PETROLEUM PRODUCTS SALES
(thousands of barrels a day)
Gasolines 205 205 198 201
Heating, diesel and jet fuels 135 144 146 155
Heavy fuel oils 24 28 28 28
Lube oils and other products 36 47 36 42
------------------ ------------------
Net petroleum products sales 400 424 408 426
------------------ ------------------
PETROCHEMICAL SALES
(thousands of tonnes a day) 2.9 3.1 2.8 3.1
-------------------------------------------------------------------------
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SHARE OWNERSHIP, TRADING AND PERFORMANCE
(unaudited)
Six Months
Second Quarter to June 30
2009 2008 2009 2008
-------------------------------------------------------------------------
RETURN ON AVERAGE CAPITAL
EMPLOYED (a)
(rolling 4 quarters, percent) 27.8 41.6
RETURN ON AVERAGE SHAREHOLDERS'
EQUITY
(rolling 4 quarters, percent) 28.4 44.2
INTEREST COVERAGE RATIO
- EARNINGS BASIS
(rolling 4 quarters, times covered) 571.7 146.2
SHARE OWNERSHIP
Outstanding shares (thousands)
Monthly weighted average 847,816 888,116 851,920 893,926
At June 30 847,599 882,073
Number of shareholders
At June 30 13,257 13,182
SHARE PRICES
Toronto Stock Exchange
(Canadian dollars)
High 49.11 62.54 49.11 62.54
Low 40.35 52.41 35.95 45.80
Close at June 30 45.12 56.16
NYSE Amex (U.S. dollars) (b)
High 42.98 63.08 42.98 63.08
Low 33.61 51.24 28.44 44.30
Close at June 30 38.46 55.07
(a) Return on capital employed is net income excluding after-tax cost
of financing divided by the average rolling four quarters' capital
employed.
(b) Share price presented is based on consolidated U.S. market data.
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