FORM 10-Q
UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2015
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from - to -
Commission file number 0-12014
IMPERIAL OIL LIMITED
(Exact name of registrant as specified in its charter)
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CANADA (State or other
jurisdiction of incorporation or organization) |
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98-0017682 (I.R.S. Employer
Identification No.) |
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237 Fourth Avenue S.W. Calgary,
Alberta, Canada (Address of principal executive offices) |
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T2P 3M9 (Postal Code) |
Registrant's telephone number, including area code: 1-800-567-3776
The registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 91 days.
YES þ NO ¨
The registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES þ NO ¨
The registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (see definition of "accelerated filer" and "large accelerated
filer" in Rule 12b-2 of the Securities Exchange Act of 1934).
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Large accelerated filer þ |
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Accelerated filer ¨ |
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Non-accelerated filer ¨ |
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Smaller reporting company ¨ |
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The registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).
YES ¨ NO þ
The number of common shares outstanding, as of March 31, 2015, was 847,599,011.
IMPERIAL OIL LIMITED
INDEX
In this report all dollar amounts are expressed in Canadian dollars unless otherwise stated. This report should be read in conjunction with the company's
Annual Report on Form 10-K for the year ended December 31, 2014.
Statements in this report regarding future events or conditions are forward-looking
statements. Actual results could differ materially due to the impact of market conditions, changes in law or governmental 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.
The term project as used in this release can refer to a variety of different
activities and does not necessarily have the same meaning as under government payment transparency reports.
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
IMPERIAL OIL LIMITED
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CONSOLIDATED STATEMENT OF INCOME |
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(U.S. GAAP, unaudited) |
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Three Months |
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to March 31 |
|
millions of Canadian dollars |
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2015 |
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|
2014 |
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|
|
|
|
|
REVENUES AND OTHER INCOME |
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Operating revenues (a) (b) |
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6,170 |
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9,197 |
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Investment and other income (note 3) |
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33 |
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29 |
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TOTAL REVENUES AND OTHER INCOME |
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6,203 |
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9,226 |
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EXPENSES |
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Exploration |
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17 |
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21 |
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Purchases of crude oil and products (c) |
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3,305 |
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5,542 |
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Production and manufacturing (d) |
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1,359 |
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1,476 |
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Selling and general |
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264 |
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275 |
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Federal excise tax (a) |
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377 |
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370 |
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Depreciation and depletion |
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317 |
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280 |
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Financing costs (note 5) |
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3 |
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2 |
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TOTAL EXPENSES |
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5,642 |
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7,966 |
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INCOME BEFORE INCOME TAXES |
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561 |
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1,260 |
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INCOME TAXES |
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140 |
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314 |
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NET INCOME |
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421 |
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946 |
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PER SHARE INFORMATION (Canadian dollars) |
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Net income per common share - basic (note 8) |
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0.50 |
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1.12 |
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Net income per common share - diluted (note 8) |
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0.50 |
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1.11 |
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Dividends per common share |
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0.13 |
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0.13 |
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(a) Federal excise tax included in operating revenues |
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377 |
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370 |
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(b) Amounts from related parties included in operating revenues |
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638 |
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816 |
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(c) Amounts to related parties included in purchases of crude oil and products |
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686 |
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770 |
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(d) Amounts to related parties included in production and manufacturing expenses |
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102 |
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86 |
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The information in the Notes to Consolidated Financial Statements is an integral part of these statements.
3
IMPERIAL OIL LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(U.S. GAAP, unaudited)
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Three Months to March 31 |
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millions of Canadian dollars |
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2015 |
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2014 |
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Net income |
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421 |
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946 |
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Other comprehensive income, net of income taxes |
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Post-retirement benefit liability adjustment (excluding amortization) |
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(176 |
) |
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(38 |
) |
Amortization of post-retirement benefit liability adjustment included in net periodic benefit costs |
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42 |
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38 |
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Total other comprehensive income/(loss) |
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(134 |
) |
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- |
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Comprehensive income |
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287 |
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946 |
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The information in the Notes to Consolidated Financial Statements is an integral part of these statements.
4
IMPERIAL OIL LIMITED
CONSOLIDATED BALANCE SHEET
(U.S. GAAP, unaudited)
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As at |
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As at |
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Mar 31 |
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Dec 31 |
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millions of Canadian dollars |
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2015 |
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2014 |
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ASSETS |
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Current assets |
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Cash |
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60 |
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215 |
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Accounts receivable, less estimated doubtful accounts (a) |
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1,752 |
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1,539 |
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Inventories of crude oil and products |
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1,050 |
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1,121 |
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Materials, supplies and prepaid expenses |
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466 |
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380 |
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Deferred income tax assets |
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267 |
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314 |
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Total current assets |
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3,595 |
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3,569 |
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Long-term receivables, investments and other long-term assets |
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1,467 |
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1,406 |
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Property, plant and equipment, |
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51,818 |
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50,911 |
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less accumulated depreciation and depletion |
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(15,557 |
) |
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(15,337 |
) |
Property, plant and equipment, net |
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36,261 |
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35,574 |
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Goodwill |
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224 |
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224 |
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Other intangible assets, net |
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61 |
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57 |
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TOTAL ASSETS |
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41,608 |
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40,830 |
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LIABILITIES |
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Current liabilities |
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Notes and loans payable (b) |
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1,938 |
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1,978 |
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Accounts payable and accrued liabilities (a)(note 7) |
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3,583 |
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3,969 |
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Income taxes payable |
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218 |
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34 |
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Total current liabilities |
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5,739 |
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5,981 |
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Long-term debt (c)(note 6) |
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5,610 |
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4,913 |
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Other long-term obligations (d)(note 7) |
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3,784 |
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3,565 |
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Deferred income tax liabilities |
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3,768 |
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3,841 |
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TOTAL LIABILITIES |
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18,901 |
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18,300 |
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SHAREHOLDERS' EQUITY |
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Common shares at stated value (e) |
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1,566 |
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1,566 |
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Earnings reinvested |
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23,334 |
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23,023 |
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Accumulated other comprehensive income (note 9) |
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(2,193 |
) |
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(2,059 |
) |
TOTAL SHAREHOLDERS' EQUITY |
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22,707 |
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22,530 |
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
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41,608 |
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40,830 |
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(a) |
Accounts receivable, less estimated doubtful accounts included amounts receivable from related parties of $54 million (2014 - accounts payable and accrued liabilities included amounts payable to related parties of $174
million) |
(b) |
Notes and loans payable included amounts to related parties of $75 million (2014 - $75 million) |
(c) |
Long-term debt included amounts to related parties of $5,463 million (2014 - $4,746 million) |
(d) |
Other long-term obligations include amounts to related parties of $105 million (2014 - $96 million) |
(e) |
Number of common shares authorized and outstanding were 1,100 million and 848 million, respectively (2014 - 1,100 million and 848 million, respectively) |
The information in the Notes to Consolidated Financial Statements is an integral part of these statements.
5
IMPERIAL OIL LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
(U.S. GAAP, unaudited)
inflow/(outflow)
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Three Months |
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to March 31 |
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millions of Canadian dollars |
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2015 |
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2014 |
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OPERATING ACTIVITIES |
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Net income |
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421 |
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946 |
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Adjustments for non-cash items: |
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Depreciation and depletion |
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317 |
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280 |
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(Gain)/loss on asset sales (note 3) |
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(26 |
) |
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(20 |
) |
Deferred income taxes and other |
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18 |
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5 |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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(213 |
) |
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(654 |
) |
Inventories, materials, supplies and prepaid expenses |
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(15 |
) |
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(28 |
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Income taxes payable |
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184 |
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92 |
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Accounts payable and accrued liabilities |
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(386 |
) |
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435 |
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All other items - net (a) |
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(19 |
) |
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29 |
|
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES |
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281 |
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1,085 |
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INVESTING ACTIVITIES |
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Additions to property, plant and equipment |
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(1,011 |
) |
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(1,206 |
) |
Proceeds associated with asset sales (b) |
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25 |
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75 |
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Additional investments |
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(16 |
) |
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(12 |
) |
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES |
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(1,002 |
) |
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(1,143 |
) |
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FINANCING ACTIVITIES |
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Short-term debt - net |
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(39 |
) |
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- |
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Long-term debt issued |
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717 |
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- |
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Reduction in capitalized lease obligations |
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(2 |
) |
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(2 |
) |
Dividends paid |
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(110 |
) |
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|
(110 |
) |
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES |
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566 |
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(112 |
) |
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INCREASE (DECREASE) IN CASH |
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(155 |
) |
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|
(170 |
) |
CASH AT BEGINNING OF PERIOD |
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|
215 |
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|
272 |
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CASH AT END OF PERIOD (c) |
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|
60 |
|
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|
102 |
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(a) Included contribution to registered pension plans |
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|
(63 |
) |
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(76 |
) |
(b) 2014 included $50 million deposit for the sale of producing conventional assets which closed in the
second quarter of 2014 |
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(c) Cash is composed of cash in bank and cash equivalents at cost. Cash equivalents are all highly liquid
securities with maturity of three months or less when purchased |
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The information in the Notes to Consolidated Financial Statements is an integral part of these statements.
6
IMPERIAL OIL LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
1. |
Basis of financial statement preparation |
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 filed with the U.S. Securities and Exchange Commission
in the company's 2014 Annual Report on Form 10-K. In the opinion of the company, the information furnished herein reflects all known accruals and adjustments necessary for a fair statement of the results for the periods reported herein. All such
adjustments are of a normal recurring nature. The company's exploration and production activities are accounted for under the "successful efforts" method.
The results for the three months ended March 31, 2015, are not necessarily indicative of the operations to be expected for the full year.
All amounts are in Canadian dollars unless otherwise indicated.
7
IMPERIAL OIL LIMITED
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Three Months to March 31 |
|
Upstream |
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Downstream |
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Chemical |
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millions of dollars |
|
2015 |
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2014 |
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2015 |
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2014 |
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|
2015 |
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|
2014 |
|
REVENUES AND OTHER INCOME |
|
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|
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|
|
|
|
|
|
|
|
|
|
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|
|
|
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Operating revenues (a) |
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1,212 |
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|
|
2,197 |
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|
|
4,669 |
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6,645 |
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|
289 |
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|
|
355 |
|
Intersegment sales |
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598 |
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1,068 |
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|
256 |
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|
430 |
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|
59 |
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|
102 |
|
Investment and other income |
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|
2 |
|
|
|
13 |
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|
30 |
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|
13 |
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|
1 |
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|
|
1 |
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|
|
|
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|
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|
|
|
|
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|
1,812 |
|
|
|
3,278 |
|
|
|
4,955 |
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|
|
7,088 |
|
|
|
349 |
|
|
|
458 |
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|
|
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|
|
|
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|
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EXPENSES |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Exploration |
|
|
17 |
|
|
|
21 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Purchases of crude oil and products |
|
|
838 |
|
|
|
1,405 |
|
|
|
3,195 |
|
|
|
5,416 |
|
|
|
182 |
|
|
|
319 |
|
Production and manufacturing |
|
|
950 |
|
|
|
1,029 |
|
|
|
356 |
|
|
|
386 |
|
|
|
53 |
|
|
|
61 |
|
Selling and general |
|
|
- |
|
|
|
2 |
|
|
|
221 |
|
|
|
210 |
|
|
|
22 |
|
|
|
17 |
|
Federal excise tax |
|
|
- |
|
|
|
- |
|
|
|
377 |
|
|
|
370 |
|
|
|
- |
|
|
|
- |
|
Depreciation and depletion |
|
|
259 |
|
|
|
222 |
|
|
|
52 |
|
|
|
52 |
|
|
|
3 |
|
|
|
3 |
|
Financing costs |
|
|
3 |
|
|
|
2 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EXPENSES |
|
|
2,067 |
|
|
|
2,681 |
|
|
|
4,201 |
|
|
|
6,434 |
|
|
|
260 |
|
|
|
400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES |
|
|
(255 |
) |
|
|
597 |
|
|
|
754 |
|
|
|
654 |
|
|
|
89 |
|
|
|
58 |
|
INCOME TAXES |
|
|
(66 |
) |
|
|
145 |
|
|
|
189 |
|
|
|
166 |
|
|
|
23 |
|
|
|
15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
|
(189 |
) |
|
|
452 |
|
|
|
565 |
|
|
|
488 |
|
|
|
66 |
|
|
|
43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from (used in) operating activities |
|
|
(251 |
) |
|
|
357 |
|
|
|
514 |
|
|
|
712 |
|
|
|
55 |
|
|
|
3 |
|
CAPEX (b) |
|
|
890 |
|
|
|
1,163 |
|
|
|
125 |
|
|
|
48 |
|
|
|
12 |
|
|
|
2 |
|
Total assets as at March 31 |
|
|
35,655 |
|
|
|
32,326 |
|
|
|
5,600 |
|
|
|
6,043 |
|
|
|
387 |
|
|
|
401 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months to March 31 |
|
Corporate and Other |
|
|
Eliminations |
|
|
Consolidated |
|
millions of dollars |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
REVENUES AND OTHER INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues (a) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
6,170 |
|
|
|
9,197 |
|
Intersegment sales |
|
|
- |
|
|
|
- |
|
|
|
(913 |
) |
|
|
(1,600 |
) |
|
|
- |
|
|
|
- |
|
Investment and other income |
|
|
- |
|
|
|
2 |
|
|
|
- |
|
|
|
- |
|
|
|
33 |
|
|
|
29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
2 |
|
|
|
(913 |
) |
|
|
(1,600 |
) |
|
|
6,203 |
|
|
|
9,226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
17 |
|
|
|
21 |
|
Purchases of crude oil and products |
|
|
- |
|
|
|
- |
|
|
|
(910 |
) |
|
|
(1,598 |
) |
|
|
3,305 |
|
|
|
5,542 |
|
Production and manufacturing |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,359 |
|
|
|
1,476 |
|
Selling and general |
|
|
24 |
|
|
|
48 |
|
|
|
(3 |
) |
|
|
(2 |
) |
|
|
264 |
|
|
|
275 |
|
Federal excise tax |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
377 |
|
|
|
370 |
|
Depreciation and depletion |
|
|
3 |
|
|
|
3 |
|
|
|
- |
|
|
|
- |
|
|
|
317 |
|
|
|
280 |
|
Financing costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EXPENSES |
|
|
27 |
|
|
|
51 |
|
|
|
(913 |
) |
|
|
(1,600 |
) |
|
|
5,642 |
|
|
|
7,966 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES |
|
|
(27 |
) |
|
|
(49 |
) |
|
|
- |
|
|
|
- |
|
|
|
561 |
|
|
|
1,260 |
|
INCOME TAXES |
|
|
(6 |
) |
|
|
(12 |
) |
|
|
- |
|
|
|
- |
|
|
|
140 |
|
|
|
314 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
|
(21 |
) |
|
|
(37 |
) |
|
|
- |
|
|
|
- |
|
|
|
421 |
|
|
|
946 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from (used in) operating activities |
|
|
(37 |
) |
|
|
13 |
|
|
|
- |
|
|
|
- |
|
|
|
281 |
|
|
|
1,085 |
|
CAPEX (b) |
|
|
23 |
|
|
|
21 |
|
|
|
- |
|
|
|
- |
|
|
|
1,050 |
|
|
|
1,234 |
|
Total assets as at March 31 |
|
|
439 |
|
|
|
448 |
|
|
|
(473 |
) |
|
|
(473 |
) |
|
|
41,608 |
|
|
|
38,745 |
|
(a) |
Included export sales to the United States of $801 million (2014 - $1,426 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment
|
(b) |
Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to capital leases, additional investments and acquisition |
8
IMPERIAL OIL LIMITED
3. |
Investment and other income |
Investment and other income included gains and losses on asset sales as follows:
|
|
|
|
|
|
|
|
|
|
|
Three Months to March 31 |
|
millions of dollars |
|
|
2015 |
|
|
|
2014 |
|
Proceeds from asset sales |
|
|
25 |
|
|
|
25 |
|
Book value of assets sold (a) |
|
|
(1 |
) |
|
|
5 |
|
Gain/(loss) on asset sales, before tax |
|
|
26 |
|
|
|
20 |
|
Gain/(loss) on asset sales, after tax |
|
|
23 |
|
|
|
16 |
|
(a) 2015 includes $3 million associated with the wind up of a capital lease
4. |
Employee retirement benefits |
The components of net benefit cost were as follows:
|
|
|
|
|
|
|
|
|
|
|
Three Months to March 31 |
|
millions of dollars |
|
|
2015 |
|
|
|
2014 |
|
Pension benefits: |
|
|
|
|
|
|
|
|
Current service cost |
|
|
51 |
|
|
|
38 |
|
Interest cost |
|
|
77 |
|
|
|
79 |
|
Expected return on plan assets |
|
|
(97 |
) |
|
|
(91 |
) |
Amortization of prior service cost |
|
|
4 |
|
|
|
6 |
|
Amortization of actuarial loss |
|
|
50 |
|
|
|
43 |
|
Net benefit cost |
|
|
85 |
|
|
|
75 |
|
|
|
|
Other post-retirement benefits: |
|
|
|
|
|
|
|
|
Current service cost |
|
|
4 |
|
|
|
3 |
|
Interest cost |
|
|
6 |
|
|
|
6 |
|
Amortization of actuarial loss |
|
|
3 |
|
|
|
2 |
|
Net benefit cost |
|
|
13 |
|
|
|
11 |
|
9
IMPERIAL OIL LIMITED
5. |
Financing costs and additional notes and loans payable information |
|
|
|
|
|
|
|
|
|
|
|
Three Months to March 31 |
|
millions of dollars |
|
2015 |
|
|
2014 |
|
Debt-related interest |
|
|
23 |
|
|
|
21 |
|
Capitalized interest |
|
|
(23 |
) |
|
|
(21 |
) |
|
|
|
|
|
Net interest expense |
|
|
- |
|
|
|
- |
|
Other interest |
|
|
3 |
|
|
|
2 |
|
|
|
|
|
|
Total financing costs |
|
|
3 |
|
|
|
2 |
|
|
|
|
|
|
In the first quarter of 2015, the company extended the maturity date of its existing $500 million 364-day short-term unsecured
committed bank credit facility to March 2016. The company has not drawn on the facility.
|
|
|
|
|
|
|
|
|
|
|
As at Mar 31 |
|
|
As at Dec 31 |
|
millions of dollars |
|
2015 |
|
|
2014 |
|
Long-term debt |
|
|
5,463 |
|
|
|
4,746 |
|
Capital leases |
|
|
147 |
|
|
|
167 |
|
|
|
|
|
|
|
|
|
|
Total long-term debt |
|
|
5,610 |
|
|
|
4,913 |
|
|
|
|
|
|
|
|
|
|
In the first quarter of 2015, the company increased its long-term debt by $717 million by drawing on an existing facility with
an affiliated company of Exxon Mobil Corporation. The increased debt was used to finance normal operations and capital projects.
7. |
Other long-term obligations |
|
|
|
|
|
|
|
|
|
|
|
As at Mar 31 |
|
|
As at Dec 31 |
|
millions of dollars |
|
2015 |
|
|
2014 |
|
Employee retirement benefits (a) |
|
|
1,936 |
|
|
|
1,739 |
|
Asset retirement obligations and other environmental liabilities (b) |
|
|
1,330 |
|
|
|
1,325 |
|
Share-based incentive compensation liabilities |
|
|
172 |
|
|
|
154 |
|
Other obligations |
|
|
346 |
|
|
|
347 |
|
|
|
|
|
|
|
|
|
|
Total other long-term obligations |
|
|
3,784 |
|
|
|
3,565 |
|
|
|
|
|
|
|
|
|
|
(a) |
Total recorded employee retirement benefits obligations also included $58 million in current liabilities (2014 - $58 million) |
(b) |
Total asset retirement obligations and other environmental liabilities also included $143 million in current liabilities (2014 - $143 million) |
10
IMPERIAL OIL LIMITED
|
|
|
|
|
|
|
|
|
|
|
Three Months
to March 31 |
|
|
|
2015 |
|
|
2014 |
|
|
|
|
Net income per common share - basic |
|
|
|
|
|
|
|
|
|
|
|
Net income (millions of dollars) |
|
|
421 |
|
|
|
946 |
|
|
|
|
Weighted average number of common shares outstanding (millions of shares) |
|
|
847.6 |
|
|
|
847.6 |
|
|
|
|
Net income per common share (dollars) |
|
|
0.50 |
|
|
|
1.12 |
|
|
|
|
Net income per common share - diluted |
|
|
|
|
|
|
|
|
Net income (millions of dollars) |
|
|
421 |
|
|
|
946 |
|
Weighted average number of common shares outstanding (millions of shares) |
|
|
847.6 |
|
|
|
847.6 |
|
Effect of share-based awards (millions of shares) |
|
|
2.9 |
|
|
|
2.9 |
|
Weighted average number of common shares outstanding,
assuming dilution (millions of shares) |
|
|
850.5 |
|
|
|
850.5 |
|
|
|
|
Net income per common share (dollars) |
|
|
0.50 |
|
|
|
1.11 |
|
9. |
Other comprehensive income information |
Changes in accumulated other comprehensive income:
|
|
|
|
|
|
|
|
|
millions of dollars |
|
2015 |
|
|
2014 |
|
|
|
|
Balance at January 1 |
|
|
(2,059 |
) |
|
|
(1,721 |
) |
Post-retirement benefits liability adjustment: |
|
|
|
|
|
|
|
|
Current period change excluding amounts reclassified
from accumulated other comprehensive income |
|
|
(176 |
) |
|
|
(38 |
) |
Amounts reclassified from accumulated other comprehensive income |
|
|
42 |
|
|
|
38 |
|
Balance at March 31 |
|
|
(2,193 |
) |
|
|
(1,721 |
) |
Amounts reclassified out of accumulated other comprehensive income -
before-tax income/(expense):
|
|
|
|
|
|
|
|
|
|
|
Three Months to March 31 |
|
millions of dollars |
|
2015 |
|
|
2014 |
|
Amortization of post-retirement benefits liability
adjustment included in net periodic benefit cost (a) |
|
|
(57 |
) |
|
|
(51 |
) |
(a) This accumulated other comprehensive income component is included in the computation of net periodic benefit cost (note 4)
Income tax expense/(credit) for components of other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
Three Months to March 31 |
|
millions of dollars |
|
2015 |
|
|
2014 |
|
|
|
|
Post-retirement benefits liability adjustments: |
|
|
|
|
|
|
|
|
Post-retirement benefits liability adjustment (excluding amortization) |
|
|
(61 |
) |
|
|
(13 |
) |
Amortization of post-retirement benefits liability adjustment
included in net periodic benefit cost |
|
|
15 |
|
|
|
13 |
|
|
|
|
(46 |
) |
|
|
- |
|
11
IMPERIAL OIL LIMITED
10. |
Recently Issued Accounting Standards |
In May 2014, the Financial Accounting Standards Board issued a new standard, Revenue from Contracts with Customers. The standard
establishes a single revenue recognition model for all contracts with customers, eliminates industry specific requirements and expands disclosure requirements. The standard is required to be adopted beginning January 1, 2017. Imperial is
evaluating the standard and its effect on the company's financial statements.
12
Item 2. |
Managements Discussion and Analysis of Financial Condition and Results of Operations. |
OPERATING RESULTS
First quarter 2015 vs.
first quarter 2014
The companys net income for the first quarter of 2015 was $421 million or $0.50 per share on a diluted basis, compared with
$946 million or $1.11 per share for the same period last year.
Upstream recorded a net loss in the first quarter of $189 million, compared to income of
$452 million in the same period of 2014. Earnings in the first quarter 2015 reflected the impact of lower crude oil and gas realizations of about $1,100 million. This was partially offset by lower royalties of about $200 million, the impact of a
weaker Canadian dollar of about $160 million, higher Kearl and Cold Lake volumes of about $60 million and lower energy costs of about $60 million.
West
Texas Intermediate (WTI), the main U.S. dollar benchmark crude for North America, decreased by 51 percent compared to the same quarter in 2014. The companys average first quarter 2015 Canadian dollar realizations for synthetic crude oil and
bitumen were $55.81 and $27.40 per barrel, lower by 48 and 58 percent respectively, as a result of the weaker Canadian dollar and increased heavy light differentials versus the same period in 2014. The companys average realizations on
natural gas sales of $3.15 per thousand cubic feet, in the first quarter of 2015, were lower by $3.41 per thousand cubic feet, versus the same period in 2014.
Gross production of Cold Lake bitumen averaged 152,000 barrels per day, up from 147,000 barrels from the same period last year. Incremental volume growth of
4,000 barrels per day was achieved with initial first quarter 2015 production from the Nabiye project.
The companys share of Syncrudes gross
production in the first quarter was 73,000 barrels per day, unchanged from the first quarter of 2014.
Gross production from the Kearl initial development
was 95,000 barrels per day (67,000 barrels Imperials share) compared to 70,000 barrels per day (50,000 barrels Imperials share) in the first quarter of 2014 as a result of improved reliability.
Gross production of conventional crude oil averaged 15,000 barrels per day in the first quarter, versus 22,000 barrels in the corresponding period in 2014.
The lower production volume was primarily due to the impact of properties divested during the first half of 2014.
Gross production of natural gas during
the first quarter of 2015 was 146 million cubic feet per day, down from 205 million cubic feet in the same period last year, reflecting the impact of properties divested during the first half of 2014.
Downstream net income was $565 million in the first quarter, compared to $488 million in the first quarter of 2014. Increased earnings were primarily due to
higher marketing margins and a first quarter 2015 gain of $17 million from the sale of assets, partially offset by lower refining margins.
Chemical net
income was $66 million in the first quarter, up $23 million over the same period in 2014, mainly as a result of strong polyethylene margins.
13
Net income effects from Corporate and Other were negative $21 million in the first quarter, versus negative $37
million in the same period of 2014, primarily due to lower share-based compensation charges.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow generated from operating activities was $281 million in the first quarter, versus $1,085 million in the corresponding period in 2014. Lower cash flow
was primarily due to lower earnings and working capital effects.
Investing activities used net cash of $1,002 million in the first quarter, compared with
$1,143 million in the same period of 2014. Additions to property, plant and equipment were $1,011 million in the first quarter, compared with $1,206 million during the same quarter in 2014. Expenditures during the quarter were primarily directed
towards the completion of the Cold Lake Nabiye and Kearl expansion projects.
Cash from financing activities was $566 million in the first quarter,
compared with cash used in financing activities of $112 million in the first quarter of 2014. In the first quarter, the company increased long-term debt by $717 million through its existing loan facility to finance normal operations and capital
projects. Dividends paid in the first quarter of 2015 were $110 million, unchanged from the corresponding period in 2014. Per-share dividend paid in the first quarter was $0.13, consistent with the same period of 2014.
The above factors led to a decrease in the companys balance of cash to $60 million at March 31, 2015, from $215 million at the end of 2014.
RECENTLY ISSUED ACCOUNTING STANDARDS
In May 2014,
the Financial Accounting Standards Board issued a new standard, Revenue from Contracts with Customers. The standard establishes a single revenue recognition model for all contracts with customers, eliminates industry specific requirements and
expands disclosure requirements. The standard is required to be adopted beginning January 1, 2017. Imperial is evaluating the standard and its effect on the Corporations financial statements.
14
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Information about market risks for the three months ended March 31, 2015 does not differ materially from that discussed on page 22 in the companys
Annual Report on Form 10-K for the year ended December 31, 2014 except for the following:
|
|
|
|
|
Earnings
sensitivity millions of dollars after tax |
|
|
|
|
Four dollars (U.S.) per barrel change in crude oil prices |
|
+ (-) |
|
300 |
One dollar (U.S.) per barrel change in sales margins for total petroleum
products |
|
+ (-) |
|
165 |
Seven cents
decrease (increase) in the value of the Canadian dollar versus the U.S. dollar |
|
+ (-) |
|
560 |
The sensitivity of net income to changes in crude oil prices increased from year-end 2014 by about $5 million (after tax) a
year for each one U.S. dollar change. A decrease in the value of the Canadian dollar at March 31, 2015 has increased the impact of U.S. dollar denominated crude oil prices on the companys revenue and earnings.
The sensitivity of net income to changes in sales margins for total petroleum products increased from year-end 2014 by about $15 million (after tax) a year for
each one U.S. dollar per barrel change. A decrease in the value of the Canadian dollar has also increased the impact of U.S. dollar denominated crude oil and petroleum product prices on the companys revenues and earnings.
The sensitivity of net income to changes in the Canadian dollar versus the U.S. dollar increased from year-end 2014 by about $15 million (after tax) a year for
each one-cent change, primarily due to wider downstream and Chemicals margins.
Item 4. Controls and Procedures.
As indicated in the certifications in Exhibit 31 of this report, the companys principal executive officer and principal financial officer have
evaluated the companys disclosure controls and procedures as of March 31, 2015. Based on that evaluation, these officers have concluded that the companys disclosure controls and procedures are effective in ensuring that information
required to be disclosed by the company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to them in a manner that allows for timely decisions regarding required
disclosures and are effective in ensuring that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms.
There has not been any change in the companys internal control over financial reporting during the last fiscal quarter that has materially affected, or
is reasonably likely to materially affect, the companys internal control over financial reporting.
15
PART II - OTHER INFORMATION
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds. |
Issuer Purchases of Equity Securities (1)
|
|
|
|
|
|
|
|
|
Period |
|
(a) Total
number of
shares (or units)
purchased |
|
(b) Average price paid
per share (or
unit) |
|
(c) Total number of
shares (or units)
purchased as part of
publicly
announced plans
or programs |
|
(d) Maximum number (or
approximate dollar value) of
shares (or units) that may yet be
purchased under the plans
or programs |
January
2015 (Jan 1 Jan 31) |
|
0 |
|
0 |
|
0 |
|
1,000,000 |
February
2015 (Feb 1 Feb 28) |
|
0 |
|
0 |
|
0 |
|
1,000,000 |
March
2015 (Mar 1 Mar 31) |
|
0 |
|
0 |
|
0 |
|
1,000,000 |
|
(1) |
On June 23, 2014, the company announced by news release that it had received final approval from the Toronto Stock Exchange for a new normal course issuer bid and will continue its share repurchase program. The new
program enables the company to repurchase up to a maximum of 1,000,000 common shares during the period June 25, 2014 to June 24, 2015. The program will end when the company has purchased the maximum allowable number of shares, or on
June 24, 2015. |
The company will continue to evaluate its share purchase program in the context of its overall capital activities.
(31.1) Certification by the principal executive officer of the company pursuant to Rule
13a-14(a).
(31.2) Certification by the principal financial officer of the company pursuant to Rule 13a-14(a).
(32.1) Certification by the chief executive officer of the company pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350.
(32.2) Certification by the chief financial officer of the company pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350.
16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
|
|
|
|
|
|
|
|
|
IMPERIAL OIL LIMITED (Registrant) |
|
|
|
|
|
|
|
/s/ Paul J. Masschelin |
Date: May 5, 2015 |
|
|
|
------------------------------------------------- |
|
|
|
|
(Signature) Paul J. Masschelin
Senior Vice-President, Finance and Administration and
Controller (Principal Accounting Officer) |
|
|
|
|
|
|
|
/s/ Cathryn Walker |
Date: May 5, 2015 |
|
|
|
------------------------------------------------- |
|
|
|
|
(Signature) Cathryn Walker
Assistant Corporate Secretary |
17
Exhibit (31.1)
CERTIFICATIONS
I, Richard M. Kruger,
certify that:
|
1. |
I have reviewed this quarterly report on Form 10-Q of Imperial Oil Limited; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
(c) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
(d) |
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants
most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
|
|
5. |
The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal
control over financial reporting. |
Date: May 5, 2015
|
/s/ Richard M. Kruger |
---------------------------------------------------- |
Richard M. Kruger |
Chairman of the Board, President and |
Chief Executive Officer |
(Principal Executive Officer) |
Exhibit (31.2)
CERTIFICATIONS
I, Paul J. Masschelin,
certify that:
|
1. |
I have reviewed this quarterly report on Form 10-Q of Imperial Oil Limited; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
(c) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
(d) |
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants
most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
|
|
5. |
The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal
control over financial reporting. |
Date: May 5, 2015
|
/s/ Paul J. Masschelin |
---------------------------------------------------- |
Paul J. Masschelin |
Senior Vice-President, Finance and |
Administration and Controller |
(Principal Financial Officer) |
Exhibit
(32.1)
Certification of Periodic Financial Report
Pursuant to 18 U.S.C. Section 1350
For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
the undersigned, Richard M. Kruger, the chief executive officer of Imperial Oil Limited (the Company), hereby certifies that, to his knowledge:
(i) the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2015,
as filed with the Securities and Exchange Commission (the Report), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Dated: May 5, 2015
|
|
|
/s/ Richard M. Kruger |
|
|
------------------------------------------------------ |
|
|
Richard M. Kruger |
|
|
Chairman of the Board, President and Chief
Executive Officer |
|
|
Exhibit
(32.2)
Certification of Periodic Financial Report
Pursuant to 18 U.S.C. Section 1350
For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
the undersigned, Paul J. Masschelin, the chief financial officer of Imperial Oil Limited (the Company), hereby certifies that, to his knowledge:
(i) the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2015, as
filed with the Securities and Exchange Commission (the Report), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Dated: May 5, 2015
|
|
|
/s/ Paul J. Masschelin |
|
|
------------------------------------------------------ |
|
|
Paul J. Masschelin |
|
|
Senior Vice-President, Finance and
Administration and Controller (chief financial officer) |
|
|
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