Canada’s Imperial Oil Ltd. cut its 2019 spending forecast on Friday, after its net income nearly halved in the first quarter due to extreme cold weather, production cuts enforced by Alberta’s government and weak refining margins.
The company said it now expects to spend between $1.8-billion and $1.9 billion, down from its previous outlook of $2.3-billion to $2.4-billion.
Imperial, along with Husky Energy Inc., was among the strongest critics of Alberta government’s decision, as it hurt their ability to get cheap crude for their refineries. Curtailments have been reduced slightly since January and are expected to ease through the year.
As refinery throughput averaged 383,000 barrels per day, down from 408,000 barrels per day a year ago, capacity utilization reached 91 per cent, affected by several individually small reliability events, the company said.
“Furthermore, the Government of Alberta’s production curtailment order significantly affected financial performance, as improved upstream realizations were more than offset by reduced downstream margins,” Rich Kruger, Imperial’s chief executive officer, said in a statement.
Imperial, majority owned by Exxon Mobil Corp., said overall upstream gross oil-equivalent production averaged 388,000 barrels per day, up from 370,000 barrels per day in the first quarter of 2018.
Petroleum product sales during the quarter were 477,000 barrels per day, compared to 478,000 barrels per day in the year-ago quarter.
Net profit fell to $293 million (US$217.29 million), or 38 Canadian cents, in the quarter ended March 31, down from $516-million, or 62 Canadian cents, a year earlier.
It also raised its second quarter dividend by 16 per cent to 22 Canadian cents per share.
Cash flow generated from operating activities was $1.003-billion in the first quarter, up from $985-million in the corresponding period in 2018, reflecting higher working capital effects, partially offset by lower earnings.