Imperial Oil (IMO) Reports Q3 EPS of Cdn$0.00 on Revenues of Cdn$5.96B
Imperial Oil (NYSE: IMO) reported Q3 EPS of Cdn$0.00, versus Cdn$0.56 reported last year. Revenue for the quarter came in at Cdn$5.96 billion, versus Cdn$8.74 billion reported last year.
Third quarter highlights
- Net income of $3 million or $0.00 per share on a diluted basis, compared to $424 million or $0.56 per share in the third quarter of 2019, driven by lower Upstream realizations and lower margins in the Downstream, partially offset by lower production and manufacturing expenses.
- Cash flow generated from operating activities was $875 million, compared with $1,376 million in the corresponding period of 2019.
- Capital and exploration expenditures totalled $141 million, compared with $442 million in the third quarter of 2019, due to the company’s ongoing capital reduction efforts. Capital expenditures for 2020 are now expected to be about $900 million, below the company’s earlier guidance of $1.1 billion to $1.2 billion.
- Dividends paid totalled $162 million or $0.22 per share, compared to $169 million or $0.22 per share in the third quarter of 2019.
- Production averaged 365,000 gross oil-equivalent barrels per day, compared to 407,000 barrels per day in the same period of 2019. Production was primarily impacted by a third-party pipeline outage and the planned turnaround at Kearl. Production was up from 347,000 gross oil-equivalent barrels per day in the second quarter of 2020.
- Total gross bitumen production at Kearl averaged 189,000 barrels per day (134,000 barrels Imperial’s share), compared to 224,000 barrels per day (159,000 barrels Imperial’s share) in the third quarter of 2019 due to the advancement and extension of a planned turnaround at the site and a third-party pipeline outage. Production remained relatively flat compared to gross bitumen production of 190,000 barrels per day (135,000 Imperial’s share) in the second quarter of 2020.
- Gross bitumen production at Cold Lake averaged 131,000 barrels per day, compared to 142,000 barrels per day in the same period of 2019, due mainly to ongoing steam management. Production was up from 123,000 barrels per day in the second quarter of 2020, mainly due to reduced planned maintenance activities.
- The company’s share of gross production from Syncrude averaged 67,000 barrels per day, essentially in line with 69,000 barrels per day in the same period of 2019. Production was up from 50,000 barrels per day in the second quarter of 2020, driven mainly by improved demand, partly offset by the revised turnaround schedule.
- Refinery throughput averaged 341,000 barrels per day, compared to 363,000 barrels per day in the third quarter of 2019. Capacity utilization was 81 percent, compared to 86 percent in the third quarter of 2019. Reduced throughput was due to lower market demand, partially offset by reduced planned maintenance. Throughput increased significantly from 278,000 barrels per day in the second quarter of 2020, driven by stronger product demand.
- Strathcona refinery cogeneration started operation on October 1, subsequent to the end of the quarter. The newly constructed unit provides approximately 41 megawatts of power, which is approximately 75 to 80 percent of the refinery’s needs. It is anticipated to increase energy efficiency for the facility and help reduce provincial greenhouse gas emissions by approximately 112,000 tonnes per year - the equivalent of taking nearly 24,000 vehicles off the road.
- Petroleum product sales were 449,000 barrels per day, compared to 488,000 barrels per day in the third quarter of 2019, resulting from reduced demand from the COVID-19 pandemic. Petroleum product sales were up from 357,000 barrels per day in the second quarter of 2020 due to improving demand levels.
- Chemical earnings were $27 million in the quarter, compared to $38 million in the third quarter of 2019, due to lower margins.
- Imperial celebrates 140 years applying technology and innovation to responsibly develop and deliver Canada’s energy resources. On September 8, 1880, sixteen Ontario oil refiners created the Imperial Oil Company. In the years since, the company has been responsible for Canada’s first service station, the industry’s first petroleum research centre, and gave rise to the NHL’s “three stars” of the game. Today, Imperial is one of Canada’s largest integrated oil companies with extensive production, refining and marketing operations, including a market-leading retail presence with over 2,000 Esso and Mobil branded stations across the country.
“Third quarter results continue to demonstrate the positive impact of Imperial’s ongoing expense and capital discipline and the resiliency of our company,” said Brad Corson, chairman, president and chief executive officer. “The company generated $875 million of cash from operations in the third quarter, further strengthening Imperial’s balance sheet while covering quarterly capital expenditures and dividend payments.”
Production and manufacturing expenses totalled $1,246 million in the third quarter, a reduction of $355 million compared to the third quarter of 2019. Year-to-date production and manufacturing expenses of $4,098 million are $813 million lower than the prior year, enabling Imperial to already surpass the full-year expense reduction target of $500 million. Capital expenditures of $679 million for the first nine months of the year are down more than 50 percent from 2019 levels for the same period and significantly below prior guidance announced in March. “These expense and capital reductions across virtually all aspects of Imperial’s operations demonstrate our ability to rapidly respond to market conditions and capture structural cost improvements without compromising long-term value and production targets,” said Corson.
“With the completion of key turnaround activities, recent strong asset performance, and expenses running at a significantly reduced rate, Imperial has substantial momentum as we approach the end of the year - we are well-positioned for strong performance in the fourth quarter.” said Corson.
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