The declining value of oil in the second quarter helped push down profits at Imperial Oil Ltd., which fell 13 per cent from the same period a year ago.
Imperial reported net earnings of $635-million, or 75 cents a share, down from $726-million or 85 cents in 2011, in a quarter where its output fell by 23,000 barrels a day, or 7.8 per cent.
It missed consensus analyst expectations by 14.11 per cent.
The earnings dip came as refinery maintenance work prevented the company from fully recovering the dramatic decline in profit at its upstream, or production, facilities, where net income fell to $360-million, just over half its level a year ago. That drop was largely due to oil prices that tumbled 17 per cent for bitumen and 19 per cent for light crude relative to 2011.
Meanwhile, Imperial’s downstream, or refining, earnings grew by $168-million, to $232-million, though some of the potential growth in that part of its business was eaten back by maintenance work that cost it $120-million – some of it, like at its Sarnia refinery, unplanned.
The company’s earnings were boosted by gains related to the sale of some assets. Without those, the company’s operating earnings came in at 70 cents per share, well below market expectations. Analysts had expected Imperial’s refining operations to be more profitable.
But Mike Dunn, an analyst with FirstEnergy Capital, said the market impact will be “likely neutral,” given the company’s cash flow was slightly ahead of expectations.
Imperial says its $10.9-billion Kearl oil sands mine remains on track to begin operations later this year, with construction 88 per cent complete. Imperial has now completed the movement of hundreds of modules constructed in South Korea, after some of the massive construction elements were held up in the U.S., where local concerns prevented their movement down a scenic mountain route.
The company also noted that it had spent money acquiring land containing tight oil, a resource that has drawn substantial industry interest and generated strong new crude volumes in the U.S.