FORM 10-Q
UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 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)
|
|
|
CANADA |
|
98-0017682 |
(State or other jurisdiction of
incorporation or organization) |
|
(I.R.S. Employer
Identification No.) |
|
|
237 Fourth Avenue S.W.
Calgary, Alberta, Canada |
|
T2P 3M9 |
(Address of principal executive offices) |
|
(Postal Code) |
Registrants 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 x 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 x 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).
|
|
|
|
|
|
|
Large accelerated filer |
|
x |
|
Accelerated filer |
|
¨ |
|
|
|
|
Non-accelerated filer |
|
¨ |
|
Smaller reporting company |
|
¨ |
The registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of
1934). YES ¨ NO x
The number of common shares outstanding, as of September 30, 2015, was 847,599,011.
1
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 companys
Annual Report on Form 10-K for the year ended December 31, 2014.
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
CONSOLIDATED STATEMENT OF INCOME
(U.S. GAAP, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
Nine Months to September 30 |
|
millions of Canadian dollars |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
REVENUES AND OTHER INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues (a) (b) |
|
|
7,111 |
|
|
|
9,641 |
|
|
|
20,553 |
|
|
|
28,237 |
|
Investment and other income (note 3) |
|
|
44 |
|
|
|
17 |
|
|
|
106 |
|
|
|
696 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL REVENUES AND OTHER INCOME |
|
|
7,155 |
|
|
|
9,658 |
|
|
|
20,659 |
|
|
|
28,933 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration |
|
|
19 |
|
|
|
14 |
|
|
|
52 |
|
|
|
52 |
|
Purchases of crude oil and products (c) |
|
|
4,053 |
|
|
|
6,100 |
|
|
|
11,653 |
|
|
|
17,677 |
|
Production and manufacturing (d) |
|
|
1,351 |
|
|
|
1,358 |
|
|
|
4,105 |
|
|
|
4,224 |
|
Selling and general |
|
|
267 |
|
|
|
254 |
|
|
|
803 |
|
|
|
825 |
|
Federal excise tax (a) |
|
|
416 |
|
|
|
412 |
|
|
|
1,180 |
|
|
|
1,165 |
|
Depreciation and depletion |
|
|
400 |
|
|
|
276 |
|
|
|
1,052 |
|
|
|
836 |
|
Financing costs (note 5) |
|
|
12 |
|
|
|
(1 |
) |
|
|
20 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EXPENSES |
|
|
6,518 |
|
|
|
8,413 |
|
|
|
18,865 |
|
|
|
24,782 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES |
|
|
637 |
|
|
|
1,245 |
|
|
|
1,794 |
|
|
|
4,151 |
|
INCOME TAXES |
|
|
158 |
|
|
|
309 |
|
|
|
774 |
|
|
|
1,037 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
|
479 |
|
|
|
936 |
|
|
|
1,020 |
|
|
|
3,114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER SHARE INFORMATION (Canadian dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share - basic (note 8) |
|
|
0.56 |
|
|
|
1.10 |
|
|
|
1.20 |
|
|
|
3.67 |
|
Net income per common share - diluted (note 8) |
|
|
0.56 |
|
|
|
1.10 |
|
|
|
1.20 |
|
|
|
3.66 |
|
Dividends per common share |
|
|
0.14 |
|
|
|
0.13 |
|
|
|
0.40 |
|
|
|
0.39 |
|
|
|
|
|
|
(a) Federal excise tax included in operating revenues |
|
|
416 |
|
|
|
412 |
|
|
|
1,180 |
|
|
|
1,165 |
|
(b) Amounts from related parties included in operating revenues |
|
|
944 |
|
|
|
1,201 |
|
|
|
2,599 |
|
|
|
2,759 |
|
(c) Amounts to related parties included in purchases of crude oil and products |
|
|
867 |
|
|
|
1,111 |
|
|
|
2,520 |
|
|
|
2,939 |
|
(d) Amounts to related parties included in production and manufacturing expenses |
|
|
106 |
|
|
|
93 |
|
|
|
333 |
|
|
|
268 |
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
Nine Months to September 30 |
|
millions of Canadian dollars |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
Net income |
|
|
479 |
|
|
|
936 |
|
|
|
1,020 |
|
|
|
3,114 |
|
|
|
|
|
|
Other comprehensive income, net of income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-retirement benefit liability adjustment (excluding amortization) |
|
|
|
|
|
|
|
|
|
|
(176 |
) |
|
|
(38 |
) |
Amortization of post-retirement benefit liability adjustment included in net periodic benefit costs |
|
|
42 |
|
|
|
34 |
|
|
|
126 |
|
|
|
109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income/(loss) |
|
|
42 |
|
|
|
34 |
|
|
|
(50 |
) |
|
|
71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
521 |
|
|
|
970 |
|
|
|
970 |
|
|
|
3,185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
As at Sept 30 |
|
|
As at Dec 31 |
|
millions of Canadian dollars |
|
2015 |
|
|
2014 |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash |
|
|
366 |
|
|
|
215 |
|
Accounts receivable, less estimated doubtful accounts (a) |
|
|
1,702 |
|
|
|
1,539 |
|
Inventories of crude oil and products |
|
|
1,223 |
|
|
|
1,121 |
|
Materials, supplies and prepaid expenses |
|
|
506 |
|
|
|
380 |
|
Deferred income tax assets |
|
|
316 |
|
|
|
314 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
4,113 |
|
|
|
3,569 |
|
|
|
|
Long-term receivables, investments and other long-term assets |
|
|
1,484 |
|
|
|
1,406 |
|
|
|
|
Property, plant and equipment, |
|
|
53,615 |
|
|
|
50,911 |
|
less accumulated depreciation and depletion |
|
|
(16,050 |
) |
|
|
(15,337 |
) |
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
37,565 |
|
|
|
35,574 |
|
|
|
|
Goodwill |
|
|
224 |
|
|
|
224 |
|
Other intangible assets, net |
|
|
66 |
|
|
|
57 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
|
43,452 |
|
|
|
40,830 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Notes and loans payable (b) |
|
|
1,953 |
|
|
|
1,978 |
|
Accounts payable and accrued liabilities (a) (note 7) |
|
|
3,393 |
|
|
|
3,969 |
|
Income taxes payable |
|
|
424 |
|
|
|
34 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
5,770 |
|
|
|
5,981 |
|
|
|
|
Long-term debt (c) (note 6) |
|
|
6,473 |
|
|
|
4,913 |
|
Other long-term obligations (d) (note 7) |
|
|
3,900 |
|
|
|
3,565 |
|
Deferred income tax liabilities |
|
|
4,148 |
|
|
|
3,841 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
20,291 |
|
|
|
18,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
|
Common shares at stated value (e) |
|
|
1,566 |
|
|
|
1,566 |
|
Earnings reinvested |
|
|
23,704 |
|
|
|
23,023 |
|
Accumulated other comprehensive income (note 9) |
|
|
(2,109 |
) |
|
|
(2,059 |
) |
|
|
|
|
|
|
|
|
|
TOTAL SHAREHOLDERS EQUITY |
|
|
23,161 |
|
|
|
22,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |
|
|
43,452 |
|
|
|
40,830 |
|
|
|
|
|
|
|
|
|
|
(a) |
Accounts receivable, less estimated doubtful accounts included amounts receivable from related parties of $107 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 $5,852 million (2014 - $4,746 million) |
(d) |
Other long-term obligations include amounts to related parties of $231 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months |
|
|
|
Third Quarter |
|
|
to September 30 |
|
millions of Canadian dollars |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
479 |
|
|
|
936 |
|
|
|
1,020 |
|
|
|
3,114 |
|
Adjustments for non-cash items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and depletion |
|
|
400 |
|
|
|
276 |
|
|
|
1,052 |
|
|
|
836 |
|
(Gain)/loss on asset sales (note 3) |
|
|
(29 |
) |
|
|
(4 |
) |
|
|
(80 |
) |
|
|
(664 |
) |
Deferred income taxes and other |
|
|
86 |
|
|
|
185 |
|
|
|
358 |
|
|
|
411 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
403 |
|
|
|
104 |
|
|
|
(163 |
) |
|
|
(217 |
) |
Inventories, materials, supplies and prepaid expenses |
|
|
(65 |
) |
|
|
42 |
|
|
|
(228 |
) |
|
|
(131 |
) |
Income taxes payable |
|
|
58 |
|
|
|
(12 |
) |
|
|
390 |
|
|
|
(29 |
) |
Accounts payable and accrued liabilities |
|
|
(271 |
) |
|
|
(216 |
) |
|
|
(634 |
) |
|
|
(20 |
) |
All other items - net (a) |
|
|
43 |
|
|
|
(81 |
) |
|
|
47 |
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES |
|
|
1,104 |
|
|
|
1,230 |
|
|
|
1,762 |
|
|
|
3,314 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
|
(647 |
) |
|
|
(1,351 |
) |
|
|
(2,431 |
) |
|
|
(3,852 |
) |
Proceeds from asset sales (note 3) |
|
|
28 |
|
|
|
7 |
|
|
|
118 |
|
|
|
814 |
|
Additional investments |
|
|
|
|
|
|
(35 |
) |
|
|
(32 |
) |
|
|
(79 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES |
|
|
(619 |
) |
|
|
(1,379 |
) |
|
|
(2,345 |
) |
|
|
(3,117 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt - net |
|
|
(30 |
) |
|
|
135 |
|
|
|
(29 |
) |
|
|
(88 |
) |
Long-term debt issued |
|
|
|
|
|
|
|
|
|
|
1,106 |
|
|
|
|
|
Reduction in capitalized lease obligations |
|
|
(7 |
) |
|
|
(3 |
) |
|
|
(13 |
) |
|
|
(7 |
) |
Dividends paid |
|
|
(110 |
) |
|
|
(111 |
) |
|
|
(330 |
) |
|
|
(331 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES |
|
|
(147 |
) |
|
|
21 |
|
|
|
734 |
|
|
|
(426 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN CASH |
|
|
338 |
|
|
|
(128 |
) |
|
|
151 |
|
|
|
(229 |
) |
CASH AT BEGINNING OF PERIOD |
|
|
28 |
|
|
|
171 |
|
|
|
215 |
|
|
|
272 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AT END OF PERIOD (b) |
|
|
366 |
|
|
|
43 |
|
|
|
366 |
|
|
|
43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Included contribution to registered pension plans |
|
|
(46 |
) |
|
|
(95 |
) |
|
|
(178 |
) |
|
|
(267 |
) |
(b) |
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 |
NON-CASH TRANSACTIONS
A capital lease of approximately
$480 million was not included in Additions to property, plant and equipment or Long-term debt issued lines on the Consolidated Statement of Cash Flows.
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 companys 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 companys exploration and production activities are accounted for under the successful efforts method.
The results for the nine months ended September 30, 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
Upstream |
|
|
Downstream |
|
|
Chemical |
|
millions of dollars |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
REVENUES AND OTHER INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues (a) |
|
|
1,467 |
|
|
|
2,365 |
|
|
|
5,344 |
|
|
|
6,912 |
|
|
|
300 |
|
|
|
364 |
|
Intersegment sales |
|
|
610 |
|
|
|
1,077 |
|
|
|
239 |
|
|
|
318 |
|
|
|
60 |
|
|
|
93 |
|
Investment and other income |
|
|
4 |
|
|
|
2 |
|
|
|
40 |
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,081 |
|
|
|
3,444 |
|
|
|
5,623 |
|
|
|
7,244 |
|
|
|
360 |
|
|
|
457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration |
|
|
19 |
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of crude oil and products |
|
|
879 |
|
|
|
1,590 |
|
|
|
3,906 |
|
|
|
5,701 |
|
|
|
176 |
|
|
|
296 |
|
Production and manufacturing |
|
|
923 |
|
|
|
917 |
|
|
|
377 |
|
|
|
389 |
|
|
|
51 |
|
|
|
52 |
|
Selling and general |
|
|
1 |
|
|
|
(1 |
) |
|
|
256 |
|
|
|
234 |
|
|
|
23 |
|
|
|
17 |
|
Federal excise tax |
|
|
|
|
|
|
|
|
|
|
416 |
|
|
|
412 |
|
|
|
|
|
|
|
|
|
Depreciation and depletion |
|
|
333 |
|
|
|
219 |
|
|
|
61 |
|
|
|
52 |
|
|
|
3 |
|
|
|
3 |
|
Financing costs |
|
|
2 |
|
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EXPENSES |
|
|
2,157 |
|
|
|
2,738 |
|
|
|
5,016 |
|
|
|
6,788 |
|
|
|
253 |
|
|
|
368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES |
|
|
(76 |
) |
|
|
706 |
|
|
|
607 |
|
|
|
456 |
|
|
|
107 |
|
|
|
89 |
|
INCOME TAXES |
|
|
(24 |
) |
|
|
174 |
|
|
|
153 |
|
|
|
113 |
|
|
|
29 |
|
|
|
23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
|
(52 |
) |
|
|
532 |
|
|
|
454 |
|
|
|
343 |
|
|
|
78 |
|
|
|
66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from (used in) operating activities |
|
|
696 |
|
|
|
1,072 |
|
|
|
313 |
|
|
|
114 |
|
|
|
109 |
|
|
|
77 |
|
CAPEX (b) |
|
|
1,050 |
|
|
|
1,280 |
|
|
|
55 |
|
|
|
127 |
|
|
|
17 |
|
|
|
7 |
|
|
|
|
|
Third Quarter |
|
Corporate and Other |
|
|
Eliminations |
|
|
Consolidated |
|
millions of dollars |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
REVENUES AND OTHER INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,111 |
|
|
|
9,641 |
|
Intersegment sales |
|
|
|
|
|
|
|
|
|
|
(909 |
) |
|
|
(1,488 |
) |
|
|
|
|
|
|
|
|
Investment and other income |
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
44 |
|
|
|
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
(909 |
) |
|
|
(1,488 |
) |
|
|
7,155 |
|
|
|
9,658 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19 |
|
|
|
14 |
|
Purchases of crude oil and products |
|
|
|
|
|
|
|
|
|
|
(908 |
) |
|
|
(1,487 |
) |
|
|
4,053 |
|
|
|
6,100 |
|
Production and manufacturing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,351 |
|
|
|
1,358 |
|
Selling and general |
|
|
(12 |
) |
|
|
5 |
|
|
|
(1 |
) |
|
|
(1 |
) |
|
|
267 |
|
|
|
254 |
|
Federal excise tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
416 |
|
|
|
412 |
|
Depreciation and depletion |
|
|
3 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
400 |
|
|
|
276 |
|
Financing costs |
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 |
|
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EXPENSES |
|
|
1 |
|
|
|
7 |
|
|
|
(909 |
) |
|
|
(1,488 |
) |
|
|
6,518 |
|
|
|
8,413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES |
|
|
(1 |
) |
|
|
(6 |
) |
|
|
|
|
|
|
|
|
|
|
637 |
|
|
|
1,245 |
|
INCOME TAXES |
|
|
|
|
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
158 |
|
|
|
309 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
|
(1 |
) |
|
|
(5 |
) |
|
|
|
|
|
|
|
|
|
|
479 |
|
|
|
936 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from (used in) operating activities |
|
|
(14 |
) |
|
|
(33 |
) |
|
|
|
|
|
|
|
|
|
|
1,104 |
|
|
|
1,230 |
|
CAPEX (b) |
|
|
20 |
|
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
1,142 |
|
|
|
1,434 |
|
(a) |
Included export sales to the United States of $1,168 million (2014 - $2,092 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months to September 30
millions of dollars |
|
Upstream |
|
|
Downstream |
|
|
Chemical |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
REVENUES AND OTHER INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues (a) |
|
|
4,462 |
|
|
|
6,671 |
|
|
|
15,191 |
|
|
|
20,458 |
|
|
|
900 |
|
|
|
1,108 |
|
Intersegment sales |
|
|
1,926 |
|
|
|
3,188 |
|
|
|
763 |
|
|
|
1,118 |
|
|
|
182 |
|
|
|
310 |
|
Investment and other income |
|
|
22 |
|
|
|
658 |
|
|
|
83 |
|
|
|
34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,410 |
|
|
|
10,517 |
|
|
|
16,037 |
|
|
|
21,610 |
|
|
|
1,082 |
|
|
|
1,418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration |
|
|
52 |
|
|
|
52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of crude oil and products |
|
|
2,787 |
|
|
|
4,425 |
|
|
|
11,172 |
|
|
|
16,898 |
|
|
|
563 |
|
|
|
966 |
|
Production and manufacturing |
|
|
2,826 |
|
|
|
2,933 |
|
|
|
1,125 |
|
|
|
1,125 |
|
|
|
154 |
|
|
|
166 |
|
Selling and general |
|
|
|
|
|
|
2 |
|
|
|
720 |
|
|
|
658 |
|
|
|
65 |
|
|
|
53 |
|
Federal excise tax |
|
|
|
|
|
|
|
|
|
|
1,180 |
|
|
|
1,165 |
|
|
|
|
|
|
|
|
|
Depreciation and depletion |
|
|
865 |
|
|
|
657 |
|
|
|
169 |
|
|
|
162 |
|
|
|
8 |
|
|
|
9 |
|
Financing costs |
|
|
5 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EXPENSES |
|
|
6,535 |
|
|
|
8,072 |
|
|
|
14,366 |
|
|
|
20,008 |
|
|
|
790 |
|
|
|
1,194 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES |
|
|
(125 |
) |
|
|
2,445 |
|
|
|
1,671 |
|
|
|
1,602 |
|
|
|
292 |
|
|
|
224 |
|
INCOME TAXES |
|
|
290 |
|
|
|
604 |
|
|
|
437 |
|
|
|
405 |
|
|
|
79 |
|
|
|
58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
|
(415 |
) |
|
|
1,841 |
|
|
|
1,234 |
|
|
|
1,197 |
|
|
|
213 |
|
|
|
166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from (used in) operating activities |
|
|
181 |
|
|
|
2,062 |
|
|
|
1,368 |
|
|
|
1,074 |
|
|
|
269 |
|
|
|
154 |
|
CAPEX (b) |
|
|
2,644 |
|
|
|
3,680 |
|
|
|
276 |
|
|
|
310 |
|
|
|
33 |
|
|
|
15 |
|
Total assets as at September 30 |
|
|
36,817 |
|
|
|
33,799 |
|
|
|
5,645 |
|
|
|
6,027 |
|
|
|
386 |
|
|
|
381 |
|
|
|
|
|
Nine Months to September 30
millions of dollars |
|
Corporate and Other |
|
|
Eliminations |
|
|
Consolidated |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
REVENUES AND OTHER INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,553 |
|
|
|
28,237 |
|
Intersegment sales |
|
|
|
|
|
|
|
|
|
|
(2,871 |
) |
|
|
(4,616 |
) |
|
|
|
|
|
|
|
|
Investment and other income |
|
|
1 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
106 |
|
|
|
696 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
4 |
|
|
|
(2,871 |
) |
|
|
(4,616 |
) |
|
|
20,659 |
|
|
|
28,933 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52 |
|
|
|
52 |
|
Purchases of crude oil and products |
|
|
|
|
|
|
|
|
|
|
(2,869 |
) |
|
|
(4,612 |
) |
|
|
11,653 |
|
|
|
17,677 |
|
Production and manufacturing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,105 |
|
|
|
4,224 |
|
Selling and general |
|
|
20 |
|
|
|
116 |
|
|
|
(2 |
) |
|
|
(4 |
) |
|
|
803 |
|
|
|
825 |
|
Federal excise tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,180 |
|
|
|
1,165 |
|
Depreciation and depletion |
|
|
10 |
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
1,052 |
|
|
|
836 |
|
Financing costs |
|
|
15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EXPENSES |
|
|
45 |
|
|
|
124 |
|
|
|
(2,871 |
) |
|
|
(4,616 |
) |
|
|
18,865 |
|
|
|
24,782 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES |
|
|
(44 |
) |
|
|
(120 |
) |
|
|
|
|
|
|
|
|
|
|
1,794 |
|
|
|
4,151 |
|
INCOME TAXES |
|
|
(32 |
) |
|
|
(30 |
) |
|
|
|
|
|
|
|
|
|
|
774 |
|
|
|
1,037 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
|
(12 |
) |
|
|
(90 |
) |
|
|
|
|
|
|
|
|
|
|
1,020 |
|
|
|
3,114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from (used in) operating activities |
|
|
(56 |
) |
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
1,762 |
|
|
|
3,314 |
|
CAPEX (b) |
|
|
58 |
|
|
|
61 |
|
|
|
|
|
|
|
|
|
|
|
3,011 |
|
|
|
4,066 |
|
Total assets as at September 30 |
|
|
777 |
|
|
|
426 |
|
|
|
(173 |
) |
|
|
(391 |
) |
|
|
43,452 |
|
|
|
40,242 |
|
(a) |
Included export sales to the United States of $3,331 million (2014 - $4,888 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 |
9
IMPERIAL OIL LIMITED
3. |
Investment and other income |
Investment and other income included gains and losses on asset sales as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
Nine Months
to September 30 |
|
millions of dollars |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Proceeds from asset sales |
|
|
28 |
|
|
|
7 |
|
|
|
118 |
|
|
|
814 |
|
Book value of assets sold (a) |
|
|
(1 |
) |
|
|
3 |
|
|
|
38 |
|
|
|
150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain/(loss) on asset sales, before tax |
|
|
29 |
|
|
|
4 |
|
|
|
80 |
|
|
|
664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain/(loss) on asset sales, after tax |
|
|
26 |
|
|
|
2 |
|
|
|
65 |
|
|
|
498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
The third quarter ended September 2015 included a post close adjustment relating to conventional assets divested in 2014 |
4. |
Employee retirement benefits |
The components of net benefit cost were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
Nine Months
to September 30 |
|
millions of dollars |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Pension benefits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current service cost |
|
|
56 |
|
|
|
37 |
|
|
|
158 |
|
|
|
114 |
|
Interest cost |
|
|
77 |
|
|
|
82 |
|
|
|
231 |
|
|
|
241 |
|
Expected return on plan assets |
|
|
(101 |
) |
|
|
(95 |
) |
|
|
(294 |
) |
|
|
(277 |
) |
Amortization of prior service cost |
|
|
4 |
|
|
|
6 |
|
|
|
12 |
|
|
|
17 |
|
Amortization of actuarial loss |
|
|
50 |
|
|
|
39 |
|
|
|
149 |
|
|
|
125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net benefit cost |
|
|
86 |
|
|
|
69 |
|
|
|
256 |
|
|
|
220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other post-retirement benefits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current service cost |
|
|
4 |
|
|
|
3 |
|
|
|
12 |
|
|
|
8 |
|
Interest cost |
|
|
7 |
|
|
|
7 |
|
|
|
19 |
|
|
|
19 |
|
Amortization of actuarial loss |
|
|
3 |
|
|
|
1 |
|
|
|
9 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net benefit cost |
|
|
14 |
|
|
|
11 |
|
|
|
40 |
|
|
|
32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
IMPERIAL OIL LIMITED
5. |
Financing costs and additional notes and loans payable information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
Nine Months to September 30 |
|
millions of dollars |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Debt-related interest |
|
|
30 |
|
|
|
20 |
|
|
|
73 |
|
|
|
61 |
|
Capitalized interest |
|
|
(20 |
) |
|
|
(20 |
) |
|
|
(58 |
) |
|
|
(61 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest expense |
|
|
10 |
|
|
|
|
|
|
|
15 |
|
|
|
|
|
Other interest |
|
|
2 |
|
|
|
(1 |
) |
|
|
5 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total financing costs |
|
|
12 |
|
|
|
(1 |
) |
|
|
20 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
millions of dollars |
|
As at Sept 30 2015 |
|
|
As at Dec 31 2014 |
|
Long-term debt |
|
|
5,852 |
|
|
|
4,746 |
|
Capital leases |
|
|
621 |
|
|
|
167 |
|
|
|
|
|
|
|
|
|
|
Total long-term debt |
|
|
6,473 |
|
|
|
4,913 |
|
|
|
|
|
|
|
|
|
|
In the nine months ended September 30, 2015, the company increased its long-term debt by $1,106 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
In
July 2015, the company increased the capacity of its existing floating rate loan facility with an affiliated company of ExxonMobil from $6.25 billion to $7.75 billion. All terms and conditions of the agreement remained unchanged
In July 2015, the company entered into a long-term capital lease related to the Woodland pipeline for approximately $480 million. A commitment related to this
obligation was previously reported as a firm capital commitment in the companys 2014 Form 10-K
7. |
Other long-term obligations |
|
|
|
|
|
|
|
|
|
millions of dollars |
|
As at Sept 30 2015 |
|
|
As at Dec 31 2014 |
|
Employee retirement benefits (a) |
|
|
1,832 |
|
|
|
1,739 |
|
Asset retirement obligations and other environmental liabilities (b) |
|
|
1,531 |
|
|
|
1,325 |
|
Share-based incentive compensation liabilities |
|
|
170 |
|
|
|
154 |
|
Other obligations |
|
|
367 |
|
|
|
347 |
|
|
|
|
|
|
|
|
|
|
Total other long-term obligations |
|
|
3,900 |
|
|
|
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) |
11
IMPERIAL OIL LIMITED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months |
|
|
|
Third Quarter |
|
|
to September 30 |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Net income per common share - basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (millions of dollars) |
|
|
479 |
|
|
|
936 |
|
|
|
1,020 |
|
|
|
3,114 |
|
Weighted average number of common shares outstanding (millions of shares) |
|
|
847.6 |
|
|
|
847.6 |
|
|
|
847.6 |
|
|
|
847.6 |
|
Net income per common share (dollars) |
|
|
0.56 |
|
|
|
1.10 |
|
|
|
1.20 |
|
|
|
3.67 |
|
|
|
|
|
|
Net income per common share - diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (millions of dollars) |
|
|
479 |
|
|
|
936 |
|
|
|
1,020 |
|
|
|
3,114 |
|
Weighted average number of common shares outstanding (millions of shares) |
|
|
847.6 |
|
|
|
847.6 |
|
|
|
847.6 |
|
|
|
847.6 |
|
Effect of share-based awards (millions of shares) |
|
|
3.3 |
|
|
|
3.3 |
|
|
|
3.1 |
|
|
|
3.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding, assuming dilution (millions of shares) |
|
|
850.9 |
|
|
|
850.9 |
|
|
|
850.7 |
|
|
|
850.7 |
|
Net income per common share (dollars) |
|
|
0.56 |
|
|
|
1.10 |
|
|
|
1.20 |
|
|
|
3.66 |
|
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 |
|
|
126 |
|
|
|
109 |
|
|
|
|
|
|
|
|
|
|
Balance at September 30 |
|
|
(2,109 |
) |
|
|
(1,650 |
) |
|
|
|
|
|
|
|
|
|
Amounts reclassified out of accumulated other comprehensive income - before-tax income/(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months |
|
|
|
Third Quarter |
|
|
to September 30 |
|
millions of dollars |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Amortization of post-retirement benefits liability adjustment included in net periodic benefit cost (a) |
|
|
(57) |
|
|
|
(46) |
|
|
|
(170) |
|
|
|
(147) |
|
(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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
Nine Months
to September 30 |
|
millions of dollars |
|
2015 |
|
|
2014 |
|
|
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 |
|
|
|
12 |
|
|
|
44 |
|
|
|
38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15 |
|
|
|
12 |
|
|
|
(17 |
) |
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
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 will be adopted beginning January 1, 2018. Imperial is evaluating the
standard and its effect on the companys financial statements.
13
Item 2. |
Managements Discussion and Analysis of Financial Condition and Results of Operations. |
OPERATING RESULTS
Third quarter 2015 vs. third
quarter 2014
The companys net income for the third quarter of 2015 was $479 million or $0.56 per share on a diluted basis compared with $936
million or $1.10 per share for the same period last year.
Upstream recorded a net loss in the third quarter of $52 million, compared to net income of
$532 million in the same period of 2014. Earnings in the third quarter of 2015 reflected lower crude oil and gas realizations of about $1,250 million and higher depreciation expense of about $80 million. These factors were partially offset by higher
Kearl and Cold Lake volumes of about $280 million, the favourable impact of a weaker Canadian dollar of about $270 million and lower royalties of about $230 million.
West Texas Intermediate (WTI), the main U.S. dollar benchmark crude for North America, decreased by 52 percent compared to the same quarter in 2014. The
companys average Canadian dollar realizations for synthetic crude oil and bitumen decreased about 40 and 56 percent in the third quarter of 2015 to $61.21 and $32.61 per barrel respectively, as the decline in the benchmark crude and increased
light-heavy differentials were partially offset by the weaker Canadian dollar. The companys average realizations on sales of natural gas of $1.75 per thousand cubic feet in the third quarter of 2015, were lower by $1.83 per thousand cubic
feet, versus the same period in 2014.
Gross production of Cold Lake bitumen averaged 166,000 barrels per day in the third quarter, up from 149,000
barrels in the same period last year, primarily due to the continued ramp-up of Nabiye production.
Gross production of Kearl bitumen averaged 181,000
barrels per day in the third quarter (128,000 barrels Imperials share) up from 78,000 barrels per day (55,000 barrels Imperials share) during the third quarter of 2014, reflecting the strong start-up of the Kearl expansion project.
The companys share of gross production from Syncrude averaged 59,000 barrels per day, compared to 61,000 barrels in the third quarter of 2014.
Gross production of conventional crude oil averaged 12,000 barrels per day in the third quarter, down from 16,000 barrels in the corresponding period in 2014.
The lower production volume was primarily due to planned maintenance activity and natural reservoir decline.
Gross production of natural gas during the
third quarter of 2015 was 116 million cubic feet per day, down from 149 million cubic feet in the same period last year.
Downstream net income
was $454 million in the third quarter, $111 million higher than the third quarter of 2014. Earnings increased mainly due to the favourable impact of a weaker Canadian dollar of about $160 million, partially offset by higher refinery planned
maintenance and operating costs, mainly associated with the Edmonton Rail Terminal, of about $70 million.
Chemical net income was $78 million in the
third quarter, the highest quarterly earnings on record, up 18 percent from $66 million in the same quarter in 2014.
14
Net income effects from Corporate and Other were negative $1 million in the third quarter, compared to negative
$5 million in the same period of 2014.
Nine months 2015 vs. nine months 2014
Net income in the
first nine months of 2015 was $1,020 million, or $1.20 per share on a diluted basis and reflected a net charge, largely non-cash, of $320 million associated with the enacted Alberta corporate income tax rate increase, versus $3,114 million or $3.66
per share for the first nine months of 2014, which included a $478 million gain on the sale of conventional upstream producing assets.
Upstream recorded
a net loss of $415 million for the first nine months of 2015, compared to net income of $1,841 million in the same period of 2014. Earnings in 2015 reflected lower crude oil and gas realizations of about $3,000 million, a net charge of $327 million
associated with increased Alberta corporate income taxes and higher depreciation expense of about $130 million. Earnings in 2014 included a gain of $478 million from the divestment of conventional upstream producing assets. These factors were
partially offset by the favourable impact of a weaker Canadian dollar of about $590 million, lower royalties of about $560 million, higher liquid volumes of about $490 million, primarily Kearl and Cold Lake, and lower energy costs of about $90
million.
WTI, the main U.S. dollar benchmark crude for North America, decreased by 49 percent compared to the same period in 2014. The companys
average Canadian dollar realizations for synthetic crude oil and bitumen decreased about 41 and 49 percent in the first nine months of 2015 to $63.03 and $36.48 per barrel respectively, as the decline in benchmark crude and increased light-heavy
differentials were partially offset by the weaker Canadian dollar. The companys average realizations on sales of natural gas of $2.44 per thousand cubic feet in 2015, were lower by $2.53 per thousand cubic feet, versus the same period in 2014.
Gross production of Cold Lake bitumen averaged 160,000 barrels per day in the first nine months, up from 145,000 barrels from the same period last year,
primarily due to Nabiye production.
Gross production of Kearl bitumen averaged 136,000 barrels per day in the first nine months of 2015 (96,000 barrels
Imperials share) up from 73,000 barrels per day (52,000 barrels Imperials share), reflecting early start-up of the Kearl expansion project and improved reliability of the initial development.
During the first nine months of 2015, the companys share of gross production from Syncrude averaged 61,000 barrels per day, compared to 62,000 barrels
from the same period of 2014.
Gross production of conventional crude oil averaged 14,000 barrels per day in the first nine months of 2015, compared to
18,000 barrels during the same period of 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 nine months of 2015 was 132 million cubic feet per day, down from 171 million cubic feet in the
same period last year, reflecting the impact of divested properties.
15
Downstream net income was $1,234 million, up $37 million in the same period of 2014. Earnings increased due to
the favourable impact of a weaker Canadian dollar of about $360 million, higher fuels marketing margins and volumes of about $70 million, lower energy costs of $70 million and a 2015 gain of $17 million from the sale of assets. These factors were
partially offset by the impacts of lower refining margins of about $280 million, higher refinery planned maintenance and operating costs, mainly associated with the Edmonton Rail Terminal, of about $220 million.
Chemical net income was $213 million for the first nine months of 2015, an increase of $47 million over the same period in 2014.
For the first nine months of 2015, net income effects from Corporate & Other were negative $12 million, compared to negative $90 million in 2014,
primarily due to lower share-based compensation charges and the impact of the Alberta corporate income tax rate increase.
LIQUIDITY AND CAPITAL
RESOURCES
Cash flow generated from operating activities was $1,104 million in the third quarter, versus $1,230 million in the corresponding period
in 2014. Lower cash flow was due to lower earnings and was partially offset by favourable working capital effects.
Investing activities used net cash of
$619 million in the third quarter, compared with $1,379 million in the same period of 2014, reflecting the decline in additions to property, plant and equipment to $647 million during the third quarter, compared with $1,351 million during the same
quarter in 2014. Expenditures during the quarter were primarily in support of completion of upstream growth projects.
Cash used in financing activities
was $147 million in the third quarter, compared with cash from financing activities of $21 million in the third quarter of 2014. Dividends paid in the third quarter of 2015 were $110 million. Per-share dividend paid in the third quarter was $0.13,
consistent with the same period of 2014.
The companys cash balance was $366 million as at September 30, 2015, versus $43 million at the end of
the third quarter of 2014.
In July 2015, the company increased the capacity of its existing floating rate loan facility with an affiliated company of
ExxonMobil from $6.25 billion to $7.75 billion. Also, the company entered into a long-term capital lease related to the Woodland pipeline for approximately $480 million. A commitment related to this obligation was previously reported as a firm
capital commitment in the companys 2014 Form 10-K.
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 will be adopted beginning January 1, 2018. Imperial is evaluating the standard and its
effect on the companys financial statements.
16
FORWARD-LOOKING STATEMENTS
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.
Item 3. |
Quantitative and Qualitative Disclosures about Market Risk. |
Information about market risks for the nine
months ended September 30, 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 and Form 10-Q for the quarters ended March 31, 2015 and
June 30, 2015 except for the following:
|
|
|
Earnings sensitivity
millions of dollars after tax |
|
|
Four dollars (U.S.) per barrel change in crude
oil prices |
|
+ (-) 314 |
The sensitivity of net income to changes in crude oil prices increased from the second quarter of 2015 by about $9 million
(after tax) a year for each one U.S. dollar change. The increase was primarily the result of lower royalty costs due to lower crude oil prices.
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 September 30, 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.
17
PART II - OTHER INFORMATION
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds. |
Issuer Purchases of Equity Securities (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period |
|
Total number
of shares purchased |
|
|
Average price
paid per share |
|
|
Total number
of shares purchased as part of publicly announced plans or programs |
|
|
Maximum number of shares that may
yet be purchased under the plans or programs |
|
July 2015
(July 1 July 31) |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,000,000 |
|
August 2015
(Aug 1 Aug 31) |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,000,000 |
|
September 2015
(Sept 1 Sept 30) |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,000,000 |
|
|
(a) |
On June 22, 2015, 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, 2015 to June 24, 2016. The program will end when the company has purchased the maximum allowable number of shares, or on
June 24, 2016. |
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.
18
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.
|
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IMPERIAL OIL LIMITED
(Registrant) |
|
|
|
Date: November 3, 2015 |
|
|
|
/s/ Beverley A. Babcock |
|
|
|
|
(Signature) |
|
|
|
|
Beverley A. Babcock |
|
|
|
|
Senior Vice-President, Finance and Administration and Controller |
|
|
|
|
(Principal Accounting Officer) |
|
|
|
Date: November 3, 2015 |
|
|
|
/s/ Cathryn Walker |
|
|
|
|
(Signature) |
|
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|
Cathryn Walker |
|
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|
|
Assistant Corporate Secretary |
19
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: November 3, 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, Beverley A. Babcock, 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: November 3, 2015
|
/s/ Beverley A. Babcock |
Beverley A. Babcock |
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 September 30, 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: November 3, 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, Beverley A. Babcock, 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 September 30, 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: November 3, 2015
|
/s/ Beverley A. Babcock |
Beverley A. Babcock |
Senior Vice-President, Finance and |
Administration and Controller |
(Chief Financial Officer) |
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