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Press release from CNW Group

Imperial Oil announces estimated fourth quarter financial and operating results

Tuesday, January 31, 2012

Imperial Oil announces estimated fourth quarter financial and operating results09:00 EST Tuesday, January 31, 2012FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2011CALGARY, Jan. 31, 2012 /CNW/ - Fourth quarter Twelve months(millions of dollars, unless noted)20112010% 20112010%        Net income (U.S. GAAP)1,00579926 3,3712,21053Net income per common share       - assuming dilution (dollars)1.180.9426 3.952.5953        Capital and exploration expenditures1,1781,06511 4,0664,0451        Bruce March, chairman, president and chief executive officer of Imperial Oil, commented:Imperial Oil's earnings in the fourth quarter of 2011 were $1,005 million, up 26 percent from the fourth quarter of 2010. Strong operating performance in Imperial's business segments allowed us to capture higher crude oil realizations in the Upstream and improved margins in the Downstream petroleum product markets.  Another record quarterly production at Cold Lake highlighted our consistent focus on operations excellence and production reliability.  The same focus in all areas of our business is fundamental to sustaining operating performance while advancing our company growth plans.Earnings for the full year 2011 were $3,371 million, the second highest in our company's history and up $1,161 million or 53% from $2,210 million in 2010.The strength of Imperial's business model and our flexibility to manage within changing business conditions continues to serve our shareholders well. We are entering the third year of our decade-long growth strategy in which we will double our total Upstream production to about 600,000 barrels per day. Capital expenditures in 2011 were $4.1 billion and were focused on advancing the construction of the Kearl oil sands project and funded from internally generated funds.Imperial Oil is one of Canada's largest corporations and a leading member of the country's petroleum industry. The company is a major producer of crude oil and natural gas, Canada's largest petroleum refiner, a key petrochemical producer and a leading marketer with coast-to-coast supply and retail service station networks.Fourth quarter items of interest Net income was $1,005 million, compared with $799 million for the fourth quarter of 2010, an increase of 26 percent or $206 million.Net income per common share on a diluted basis was $1.18, up 26 percent from the fourth quarter of 2010.Cash generated from operating activities was $1,216 million, up 21 percent from the same period last year.Capital and exploration expenditures of $1,178 million compared with $1,065 million in the fourth quarter of 2010.Gross oil-equivalent barrels of production averaged 291,000 barrels a day versus 302,000 barrels in the same period last year with asset sales accounting for about 5,000 barrels a day.With a year-end cash balance of $1.2 billion, debt net of cash at year-end was essentially zero.Safety performance - Achieving a workplace where "nobody gets hurt" continues to be a priority. This past year saw a sustained improvement in contractor workforce safety performance but an increased employee incident rate, which will be the focus for improvement in 2012.Cold Lake achieves record annual and quarterly production - Cold Lake established a production record in 2011, averaging 160,000 barrels a day, compared to the previous annual record of 154,000 barrels a day in 2007. The fourth quarter also represented a second consecutive record quarterly production of 162,000 barrels a day. The increase is due to contributions from new wells steamed in 2010 and 2011, increased recovery as a result of technology applications and the cyclic nature of production at Cold Lake.Kearl oil sands project update - The Kearl initial development is 87 percent complete, and is progressing on schedule with expected start-up in late 2012. In response to delays in obtaining transportation permits, significant proactive efforts have been taken to successfully advance module movement to the Kearl site. Modules have been reduced in size and permits for additional U.S. interstate highway routes have been received. Re-assembly and integration into the plant facilities continues.Kearl oil sands expansion project approved - The Kearl expansion project was appropriated in December for $8.9 billion and will bring on additional production of 110,000 barrels per day by late 2015. Production from both the Kearl initial development and expansion phase will increase to a total of 290,000 barrels per day with additional mining output.  Future debottlenecking of both the initial development and expansion phases will increase output to reach the regulatory capacity of 345,000 barrels a day by the end of this decade.Capital and exploration expenditures - Cash generated by Imperial's businesses funded $4.1 billion of capital and exploration expenditures in 2011. This included, continued investment in the Kearl oil sands project and additional acreage acquisitions. In 2012, planned capital and exploration expenditures are expected to be about $5 billion as the company enters its third year of a decade-long strategy to invest about $35 to $40 billion in growth projects.Contributed to Canadian communities - Imperial contributed $15 million to communities across Canada in 2011, with a focus on education in math and sciences, environmental and energy initiatives and Aboriginal opportunities.Fourth quarter 2011 vs. fourth quarter 2010The company's net income for the fourth quarter of 2011 was $1,005 million or $1.18 a share on a diluted basis, compared with $799 million or $0.94 a share for the same period last year.Earnings in the fourth quarter were higher than the same quarter in 2010 primarily due to higher crude oil commodity prices of about $275 million, increased Cold Lake bitumen production of about $70 million and stronger downstream margins of about $65 million. These factors were partially offset by the unfavourable impacts of lower Syncrude volumes of about $100 million, increased refinery maintenance totalling about $60 million, higher royalty costs of about $55 million and lower conventional crude oil volumes of about $30 million. Fourth quarter 2011 earnings also included higher gains of $95 million on primarily Upstream natural gas asset divestments partially offset by higher share-based compensation charges of about $30 million.Upstream net income in the fourth quarter was $771 million, $245 million higher than the same period of 2010. Earnings benefited from higher crude oil commodity prices of about $275 million and increased Cold Lake bitumen production of about $70 million. These factors were partially offset by lower Syncrude volumes of about $100 million as a result of maintenance activities, higher royalty costs due to higher commodity prices of about $55 million, and lower conventional crude oil volumes of about $30 million due to natural reservoir decline. Included in fourth quarter 2011 earnings were gains of $112 million on asset divestments, about $95 million higher than the fourth quarter of 2010.The average price of Brent crude oil in U.S. dollars, a common benchmark for world oil markets, was $109.29 a barrel in the fourth quarter of 2011, up about 26 percent from the corresponding period last year. Increases in the company's average realizations in Canadian dollars on sales of conventional crude oil, synthetic crude oil and bitumen mirrored the same trend as Brent crude oil prices, compared to the same period last year.Gross production of Cold Lake bitumen averaged 162 thousand barrels a day, equalling the production record achieved in the previous quarter. Cold Lake production was up ten percent from 147 thousand barrels in the same quarter last year. Increased volumes were due to contributions from new wells steamed in 2010 and 2011, increased recoveries as a result of technology applications and the cyclic nature of production at Cold Lake.The company's share of Syncrude's gross production in the fourth quarter was 63 thousand barrels a day, versus 79 thousand barrels in the fourth quarter of 2010. Lower production was primarily the result of higher planned and unplanned maintenance activities.Gross production of conventional crude oil averaged 20 thousand barrels a day in the fourth quarter, down from 24 thousand barrels in the fourth quarter of 2010. Lower volumes were primarily due to natural reservoir decline.Gross production of natural gas during the fourth quarter of 2011 was 240 million cubic feet a day, down from 275 million cubic feet in the same period last year. The lower production volume was primarily a result of the impact of divested producing properties.In the fourth quarter, the company sold its interests in shallow gas properties in the Medicine Hat, Alberta area and the Coleville-Hoosier natural gas producing property in Saskatchewan, realizing a gain of about $72 million. Natural gas production for the company's share of the properties averaged about 52 million cubic feet a day in 2010. Also in the quarter, the company recorded a gain of about $40 million from an exchange of oil sands leases with third parties.Downstream net income was $272 million in the fourth quarter of 2011, compared with $266 million in the same period a year ago. Earnings increased primarily due to stronger overall margins of about $65 million partially offset by the unfavourable impact of higher maintenance activities on refinery operations and expenses totalling about $60 million.Chemical net income was $11 million in the fourth quarter, compared with $25 million in the same quarter last year. Earnings in the fourth quarter were negatively impacted by lower margins for polyethylene products and lower sales volume for intermediate products partially offset by higher margins for intermediate and aromatic products.Net income effects from Corporate and other were negative $49 million in the fourth quarter, compared with negative $18 million in the same period of 2010. Unfavourable effects were primarily due to changes in share-based compensation charges.Cash flow generated from operating activities was $1,216 million in the fourth quarter of 2011, an increase of $212 million from the corresponding period in 2010, and in line with the earnings increase versus the fourth quarter of 2010.Investing activities used net cash of $833 million in the fourth quarter, compared with $992 million in the same period of 2010. Cash used for property, plant and equipment additions was $1,107 million in the fourth quarter, compared with $1,045 million during the same quarter 2010. For the Upstream segment, expenditures during the quarter were primarily directed towards the advancement of the Kearl initial development and Kearl expansion oil sands projects. Other investments included advancing the Nabiye expansion project at Cold Lake, environmental and efficiency projects at Syncrude, as well as the advancement of the production pilot at Horn River and tight oil acreage acquisitions. The Downstream segment's capital expenditures were focused mainly on refinery projects to improve reliability, feedstock flexibility, energy efficiency and environmental performance. Proceeds from asset sales were $270 million in the fourth quarter, $221 million higher than the fourth quarter of 2010.The company's cash balance was $1,202 million at December 31, 2011, up $935million from $267 million at the end of 2010.Full year highlights Net income was $3,371 million, the second highest on record, and up from $2,210 million in 2010.All three operating segments achieved their second highest earnings ever in 2011.Net income per common share on a diluted basis increased to $3.95compared to $2.59 in 2010.Cash generated from operations was $4,489 million, $1,282 million higher than 2010.Capital and exploration expenditures were $4,066 million, versus $4,045 million in 2010, supporting the Kearl oil sands and other growth projects.Gross oil-equivalent barrels of production averaged 297,000barrels a day, compared to 294,000 barrels a day in 2010.Per-share dividends declared in 2011 totalled $0.44, up from $0.43 in 2010.Full year 2011 vs. full year 2010Net income in 2011 was $3,371 million or $3.95 a share on a diluted basis, versus $2,210 million or $2.59 a share in 2010.For the full year 2011, increased earnings were primarily attributable to higher crude oil commodity prices of about $925 million, stronger industry refining margins of about $590 million and increased Cold Lake bitumen production of about $260 million. These factors were partially offset by the unfavourable impacts of higher royalty costs of about $245 million, the stronger Canadian dollar of about $205 million, and lower conventional crude oil volumes of about $150 million, about $80 million of which was due to third party pipeline reliability issues. 2011 earnings also included higher gains of about $70 million on asset divestments.Upstream net income for the year was $2,457 million, up $693 million from 2010. Earnings increased primarily due to the impacts of higher crude oil commodity prices of about $925million and increased Cold Lake bitumen production of about $260 million. These factors were partially offset by the unfavourable effects of higher royalty costs of about $245 million, the stronger Canadian dollar of about $150 million and lower conventional crude oil volumes of about $150 million, of which about $80 million was a result of the second and third quarter 2011 third-party pipeline issues. Included in 2011 earnings were gains of $116 million on asset divestments, about $95 million higher than 2010.The average price of Brent crude oil in U.S. dollars, a common benchmark for Atlantic Basin oil markets, was $111.29 a barrel in 2011, up about 40 percent from the previous year. Increase in the average price of West Texas Intermediate (WTI) crude oil, a common benchmark for mid-continent North American oil markets, was limited to 19 percent due to the continued weakness in WTI crude oil markets.  Increases in the company's average realizations on sales of Canadian conventional crude oil and synthetic crude oil were in line with that of WTI. The company's average bitumen realizations in Canadian dollars in 2011 increased ten percent to $63.95 per barrel as the price spread between light crude oil and Cold Lake bitumen widened.Gross production of Cold Lake bitumen was a record 160 thousand barrels a day this year, compared with 144 thousand barrels in the 2010. Increased volumes were due to contributions from new wells steamed in 2010 and 2011, increased recoveries as a result of technology applications and the cyclic nature of production at Cold Lake.During the year, the company's share of gross production from Syncrude averaged 72 thousand barrels a day, in line with 73 thousand barrels in 2010.In 2011, gross production of conventional crude oil was 18 thousand barrels a day, compared with 23 thousand barrels in 2010. Lower volumes were primarily due to third-party pipeline downtime, which reduced production at the Norman Wells field, along with natural reservoir decline.Gross production of natural gas in 2011 was 254 million cubic feet a day, down from 280 million cubic feet in 2010. The lower production volume was primarily a result of natural reservoir decline.In 2011, Downstream net income was $884 million, an increase of $442 million over 2010. Higher earnings were primarily due to the favourable impact of stronger industry refining margins of about $590 million. This factor was partially offset by the unfavourable impacts of higher maintenance activities on refinery operations and expenses totalling about $60 million and the stronger Canadian dollar of about $55 million. Earnings in 2010 included a gain of about $25 million from sale of non-operating assets.Chemical net income in 2011 was $122 million, up $53 million from 2010. Improved margins for intermediate and aromatic products, lower costs due to lower planned maintenance activities and higher polyethylene sales volumes were the main contributors to the increase. These factors were partially offset by lower margins for polyethylene products.In 2011, net income effects from Corporate and other were negative $92 million, compared with negative $65 million in 2010. Unfavourable effects were primarily due to changes in share-based compensation charges.Key financial and operating data follow.Forward-Looking StatementsStatements in this report relating to future plans, projections, events or conditions are forward-looking statements. Actual future results, including project plans, costs, timing and capacities; financing sources; the resolution of contingencies and uncertain tax positions; the effect of changes in prices and other market conditions; and environmental and capital expenditures could differ materially depending on a number of factors, such as the outcome of commercial negotiations; changes in the supply of and demand for crude oil, natural gas, and petroleum and petrochemical products; political or regulatory events; and other factors discussed in Item 1A of the company's 2010 Form 10K.IMPERIAL OIL LIMITEDFOURTH QUARTER 2011                        Fourth Quarter Twelve Monthsmillions of Canadian dollars, unless noted 2011 2010 2011 2010           Net Income (U.S. GAAP)                  Total revenues and other income 8,124  6,936 30,714  25,092  Total expenses 6,860  5,883 26,308  22,138  Income before income taxes 1,264  1,053 4,406  2,954  Income taxes 259  254 1,035  744  Net income 1,005  799 3,371  2,210             Net income per common share (dollars) 1.19  0.95 3.98  2.61  Net income per common share - assuming dilution (dollars) 1.18  0.94 3.95  2.59           Other Financial Data  Federal excise tax included in operating revenues  335  345 1,320  1,316             Gain/(loss) on asset sales, after tax 134  30 153  80             Total assets at December 31     25,429  20,580             Total debt at December 31     1,207  756  Interest coverage ratio - earnings basis              (times covered)         260.2  370.3             Other long-term obligations at December 31     3,876  2,753               Shareholders' equity at December 31       13,321  11,177    Capital employed at December 31       14,556  11,966  Return on average capital employed (a)              (percent)     25.4  20.5                 Dividends on common stock            Total 93  93 373  364    Per common share (dollars) 0.11  0.11 0.44  0.43             Millions of common shares outstanding              At December 31       847.6  847.6      Average - assuming dilution 852.6  853.6 853.6  854.2                          (a)Return on capital employed is the net income excluding after-tax cost of financing, divided by the average of beginning and ending capital employed.  IMPERIAL OIL LIMITEDFOURTH QUARTER 2011                       Fourth Quarter Twelve Monthsmillions of Canadian dollars 2011 2010 2011 2010          Total cash and cash equivalents at period end 1,202  267 1,202  267          Net income 1,005  799 3,371  2,210Adjustment for non-cash items:         Depreciation and depletion 194  186 764  747 (Gain)/loss on asset sales (174) (37) (197) (95) Deferred income taxes and other 98  97 71  152Changes in operating assets and liabilities 93  (41) 480  193Cash flows from (used in) operating activities 1,216  1,004 4,489  3,207          Cash flows from (used in) investing activities (833) (992) (3,593) (3,709) Proceeds from asset sales 270  49 314  144          Cash flows from (used in) financing activities (101) 204 39  256                     IMPERIAL OIL LIMITEDFOURTH QUARTER 2011                       Fourth Quarter Twelve Monthsmillions of Canadian dollars 2011 2010 2011 2010          Net income (U.S. GAAP)         Upstream 771  526 2,457  1,764 Downstream 272  266 884  442 Chemical 11  25 122  69 Corporate and other (49) (18) (92) (65) Net income 1,005  799 3,371  2,210          Revenues and other income         Upstream 2,766  2,159 9,906 8,144 Downstream 6,975  6,027 26,756 21,619 Chemical 360  358 1,641 1,386 Eliminations/Other (1,977) (1,608) (7,589) (6,057) Total 8,124  6,936 30,714 25,092          Purchases of crude oil and products          Upstream 976  707 3,581 2,692 Downstream 5,630  4,698 21,642 17,169 Chemical 282  255 1,222 1,009 Eliminations (1,980) (1,608) (7,598) (6,059) Purchases of crude oil and products 4,908  4,052 18,847 14,811          Production and manufacturing expenses         Upstream 662  608 2,484  2,375 Downstream 352  334 1,451  1,413 Chemical 46  52 179  209 Eliminations - (1) - (1) Production and manufacturing expenses 1,060  993 4,114 3,996          Capital and exploration expenditures         Upstream 1,127  1,006 3,880 3,844 Downstream 46  55 166 184 Chemical 1  1 4 10 Corporate and other 4  3 16 7 Capital and exploration expenditures 1,178  1,065 4,066 4,045           Exploration expenses charged to income included above 16  20 92 191           IMPERIAL OIL LIMITEDFOURTH QUARTER 2011                      Operating statistics Fourth Quarter Twelve Months    2011 2010 2011 2010           Gross crude oil and Natural Gas Liquids (NGL) production        (thousands of barrels a day)          Cold Lake 162  147 160  144  Syncrude 63  79 72  73  Conventional 20  24 18  23  Total crude oil production 245  250 250  240  NGLs available for sale 6  6 5  7  Total crude oil and NGL production 251  256 255  247           Gross natural gas production (millions of cubic feet a day) 240  275 254  280           Gross oil-equivalent production (a)        (thousands of oil-equivalent barrels a day) 291  302 297  294           Net crude oil and NGL production (thousands of barrels a day)          Cold Lake 123  116 120  115  Syncrude 60  73 67  67  Conventional 15  18 13  17  Total crude oil production 198  207 200  199  NGLs available for sale 4  4 4  5  Total crude oil and NGL production 202  211 204  204    -    -   Net natural gas production (millions of cubic feet a day) 226  252 228  254           Net oil-equivalent production (a)        (thousands of oil-equivalent barrels a day) 240  253 242  246           Cold Lake blend sales (thousands of barrels a day) 212  190 209  188NGL Sales (thousands of barrels a day)   10  7 9  10Natural gas sales (millions of cubic feet a day)   227  270 237  264           Average realizations (Canadian dollars)          Conventional crude oil realizations (a barrel) 89.06  74.14 85.22  71.64  NGL realizations (a barrel) 60.15  58.94 59.08  50.09  Natural gas realizations (a thousand cubic feet) 3.25  3.60 3.59  4.04  Synthetic oil realizations (a barrel) 104.82  84.31 101.43  80.63  Bitumen realizations (a barrel) 72.83  58.91 63.95  58.36           Refinery throughput (thousands of barrels a day) 433  467 430  444Refinery capacity utilization (percent) 85  93 85  88           Petroleum product sales (thousands of barrels a day)          Gasolines (Mogas) 224  226 220  218  Heating, diesel and jet fuels (Distilates) 156  177 157  153  Heavy fuel oils (HFO) 37  29 29  28  Lube oils and other products (Other) 36  41 41  43  Net petroleum products sales 453  473 447  442           Petrochemical Sales (thousands of tonnes) 238  223 1,016  959                      (a)Gas converted to oil-equivalent at 6 million cubic feet = 1 thousand barrels      IMPERIAL OIL LIMITEDFOURTH QUARTER 2011                           Net income   Net income (U.S. GAAP)   per common share   (millions of Canadian dollars)   (dollars)          2007        First Quarter 774     0.82Second Quarter 712     0.76Third Quarter 816     0.88Fourth Quarter 886     0.97Year 3,188     3.43                    2008        First Quarter 681     0.76Second Quarter 1,148     1.29Third Quarter 1,389     1.57Fourth Quarter 660     0.77Year 3,878     4.39                    2009        First Quarter 289     0.34Second Quarter 209     0.25Third Quarter 547     0.64Fourth Quarter 534     0.63Year 1,579     1.86                    2010        First Quarter 476     0.56Second Quarter 517     0.61Third Quarter 418     0.49Fourth Quarter 799     0.95Year 2,210     2.61                    2011        First Quarter 781     0.92Second Quarter 726     0.86Third Quarter 859     1.01Fourth Quarter 1,005     1.19Year 3,371     3.98     For further information: 403-237-2710