Imperial announces fourth quarter 2022 financial and operating results
- Quarterly net income of $1,727 million and cash flow from operating activities of $2,797 million
- Upstream production of 441,000 gross oil-equivalent barrels per day during fourth quarter, driven by continued strength at Kearl and Cold Lake, and higher production at Syncrude
- Maintained strong refining capacity utilization, achieving best ever quarterly utilization of 101 percent
- Returned more than $2.1 billion to shareholders in the fourth quarter, including successful completion of substantial issuer bid
- Declared first quarter dividend of 44 cents per share
- Approved $720 million project to construct largest renewable diesel facility in Canada
- Announcing company-wide goal to achieve net zero (Scope 1 and 2) by 2050 in operated assets
CALGARY, Alberta–(BUSINESS WIRE)–Imperial (TSE: IMO) (NYSE American: IMO):
|
|
Fourth quarter |
|
Twelve months |
||||||||
|
millions of Canadian dollars, unless noted |
2022 |
|
2021 |
|
∆ |
|
2022 |
|
2021 |
|
∆ |
|
Net income (loss) (U.S. GAAP) |
1,727 |
|
813 |
|
+914 |
|
7,340 |
|
2,479 |
|
+4,861 |
|
Net income (loss) per common share, assuming dilution (dollars) |
2.86 |
|
1.18 |
|
+1.68 |
|
11.44 |
|
3.48 |
|
+7.96 |
|
Capital and exploration expenditures |
488 |
|
441 |
|
+47 |
|
1,490 |
|
1,140 |
|
+350 |
Imperial reported estimated net income in the fourth quarter of $1,727 million and cash flow from operating activities of $2,797 million, compared to net income of $2,031 million and cash flow from operating activities of $3,089 million in the third quarter of 2022. Fourth quarter results reflected strong operating performance across all business segments and robust diesel crack spreads, which were offset by lower upstream realizations. Full-year estimated net income was $7,340 million with cash flow from operating activities of $10,482 million.
“Our financial results this past year are the strongest in company history, driven by record operating performance across our assets,” said Brad Corson, chairman, president and chief executive officer. “Throughout 2022 our operations remained focused on ensuring a stable supply of energy products to Canadian and global markets, supporting continued economic growth and capturing significant value for our shareholders.”
Upstream production in the fourth quarter averaged 441,000 gross oil-equivalent barrels per day, bringing full-year production to 416,000 gross oil-equivalent barrels per day. At Kearl, quarterly total gross production averaged 284,000 barrels per day, in-line with the asset’s previous record quarterly production set in the fourth quarter of 2020. Kearl’s second half production was the highest in the asset’s history, fully recovering from early 2022 cold weather impacts, bringing full-year production to 242,000 total gross barrels per day. At Cold Lake, quarterly gross production averaged 141,000 barrels per day with annual production of 144,000 barrels per day, the highest full-year production since 2018. At Syncrude, quarterly production increased to 87,000 gross barrels per day following the completion of its planned turnaround in the third quarter of 2022, with full-year production of 77,000 barrels per day representing the highest annual production in Syncrude history.
In the Downstream, throughput in the fourth quarter averaged 433,000 barrels per day with capacity utilization of 101 percent, the highest quarterly utilization in company history, as Imperial continues to maximize production to meet Canadian demand. Full-year throughput averaged 418,000 barrels per day with capacity utilization of 98 percent, the highest full-year utilization in company history. Fourth quarter petroleum product sales averaged 487,000 barrels per day, with annual petroleum product sales averaging 475,000 barrels per day.
During the quarter, Imperial returned $2,145 million to shareholders, through dividend payments, accelerated completion of the company’s annual normal course issuer bid program and successful completion of the company’s $1.5 billion substantial issuer bid program in December. Throughout 2022, the company returned over $7 billion to its shareholders. “Imperial continued delivering on its long-standing commitment by returning record cash to shareholders in 2022 through our reliable and growing dividend and industry-leading share repurchase programs,” said Corson.
In January, Imperial announced it will further help Canada achieve its net zero goals by approving a $720 million renewable diesel project located at the company’s Strathcona Refinery near Edmonton. The project will be the largest of its kind in Canada, designed to produce more than one billion litres of renewable diesel annually primarily from locally sourced feedstocks and could help reduce greenhouse gas emissions by about 3 million metric tons per year, as determined in accordance with Canada’s Clean Fuel Regulations. Site preparation and initial construction work is underway with renewable diesel production expected to start in early 2025, subject to regulatory approvals.
As part of the company’s efforts to provide solutions that lower the greenhouse gas emissions intensity of our operations and provide lower life-cycle emissions products to our customers, Imperial is implementing a company-wide goal to achieve net zero emissions (Scope 1 and 2) by 2050 in its operated assets through collaboration with government and industry partners. Successful technology development and supportive fiscal and regulatory frameworks will be needed to achieve this goal. This work builds on Imperial’s previously announced net-zero goal for operated oil sands as part of the Pathways Alliance initiative, as well as the company’s 2030 emission intensity reduction goal for operated oil sands. The company plans to achieve its net zero goal by applying oil sands recovery technologies that use less steam, implementing carbon capture and storage and implementing efficiency projects including the use of lower carbon fuels at its operations.
“We continue to make progress on advancing lower-carbon solutions that support our journey to net zero, including our strategic growth investment in the Strathcona Renewable Diesel project,” said Corson. “This project will create jobs for the local economy, help our customers reduce their emissions and further enhance Imperial’s low-carbon product offering.”
Fourth quarter highlights
- Net income of $1,727 million or $2.86 per share on a diluted basis, up from $813 million or $1.18 per share in the fourth quarter of 2021.
- Cash flows from operating activities of $2,797 million, up from $1,632 million in the same period of 2021. Cash flows from operating activities excluding working capital1 of $2,452 million, up from $1,648 million in the same period of 2021.
- Capital and exploration expenditures totaled $488 million, up from $441 million in the fourth quarter of 2021.
- The company returned $2,145 million to shareholders in the fourth quarter of 2022, including $211 million in dividends paid and $1,934 million in share repurchases, through its normal course issuer bid and completion of the $1,500 million substantial issuer bid program in December.
- Production averaged 441,000 gross oil-equivalent barrels per day, compared to 445,000 gross oil-equivalent barrels per day in the same period of 2021. Adjusting for the sale of XTO Energy Canada, which closed in the third quarter of 2022, production increased by 11,000 gross oil-equivalent barrels per day compared to the same period in 2021.
- Total gross bitumen production at Kearl averaged 284,000 barrels per day (201,000 barrels Imperial’s share), in-line with the asset’s previous record quarterly production set in the fourth quarter of 2020 and up from 270,000 barrels per day (191,000 barrels Imperial’s share) in the fourth quarter of 2021.
- Gross bitumen production at Cold Lake averaged 141,000 barrels per day, compared to 142,000 barrels per day in the fourth quarter of 2021.
- The company’s share of gross production from Syncrude averaged 87,000 barrels per day, up from 79,000 barrels per day in the fourth quarter of 2021.
- Refinery throughput averaged 433,000 barrels per day, up from 416,000 barrels per day in the fourth quarter of 2021. Capacity utilization reached 101 percent, the highest quarterly utilization in company history, up from 97 percent in the fourth quarter of 2021, as the company continues to maximize production to meet Canadian demand.
- Petroleum product sales were 487,000 barrels per day, compared to 496,000 barrels per day in the fourth quarter of 2021.
- Chemical net income of $41 million in the quarter, compared to $64 million in the fourth quarter of 2021. Lower income was primarily driven by lower polyethylene margins.
- Approved $720 million project to construct largest renewable diesel facility in Canada. The project, located at Imperial’s Strathcona Refinery near Edmonton, is designed to produce more than one billion litres of renewable diesel annually, primarily from locally sourced feedstocks and could help reduce greenhouse gas emissions by about 3 million metric tonnes per year, as determined in accordance with Canada’s Clean Fuel Regulations. Site preparation and initial construction work is underway with renewable diesel production expected to start in early 2025, subject to regulatory approvals.
- Announcing company-wide goal to achieve net zero (Scope 1 and 2) by 2050 in operated assets, through collaboration with government and industry partners. This builds on Imperial’s previously announced net zero goal for operated oil sands as part of the Pathways Alliance initiative, as well as the company’s 2030 emission intensity reduction goal for its operated oil sands.
- The Pathways Alliance entered into a Carbon Sequestration Evaluation Agreement with the Government of Alberta, enabling the Alliance to immediately start a detailed evaluation of its proposed geological storage hub, which would be one of the world’s largest carbon capture and storage projects.
|
____________________ 1 non-GAAP financial measure – see attachment VI for definition and reconciliation |
Recent business environment
During the COVID-19 pandemic, industry investment to maintain and increase production capacity was restrained to preserve capital, resulting in underinvestment and supply tightness as demand for petroleum and petrochemical products recovered. Across late 2021 and the first half of 2022, this dynamic, along with supply chain constraints, and a continuation of demand recovery, led to a steady increase in oil and natural gas prices and refining margins.
Demand for petroleum and petrochemical products has grown in 2022, with the company’s financial results benefiting from stronger prices and margins. Commodity and product prices are expected to remain volatile given the current global economic uncertainty and geopolitical events affecting supply and demand.
The general rate of inflation in Canada and many other countries experienced a brief decline in the initial stage of the COVID-19 pandemic, before starting to increase steadily in 2021 due to imbalanced recoveries between supply and demand in the global economy. The underlying factors include, but are not limited to, supply chain disruptions, shipping bottlenecks, labour constraints, and side effects from monetary and fiscal expansions. Prices for services and materials continue to respond to the fast changing dynamics involving economic growth, overall inflation, commodity markets, and industry activities. The company closely monitors market trends and works to mitigate both operating and capital cost impacts in all price environments through efficient project management practices, and general productivity improvements.
Operating results
Fourth quarter 2022 vs. fourth quarter 2021
|
|
Fourth Quarter |
||
|
millions of Canadian dollars, unless noted |
2022 |
|
2021 |
|
Net income (loss) (U.S. GAAP) |
1,727 |
|
813 |
|
Net income (loss) per common share, assuming dilution (dollars) |
2.86 |
|
1.18 |
|
|
|
|
|
Upstream
Net income (loss) factor analysis
millions of Canadian dollars
|
2021 |
Price |
Volumes |
Royalty |
Other |
2022 |
|
545 |
(160) |
40 |
(50) |
156 |
531 |
Price – Lower bitumen realizations were primarily driven by the widening WTI/WCS spread. Average bitumen realizations decreased by $5.68 per barrel generally in line with WCS, and synthetic crude oil realizations increased by $22.68 per barrel.
Volumes – Higher volumes were the result of improved plant performance at Kearl and lower unplanned downtime at Syncrude, partially offset by the absence of XTO Energy Canada production following the divestment in the third quarter of 2022.
Royalty – Higher royalties primarily driven by improved commodity prices.
Other – Favourable foreign exchange impacts of about $160 million, partially offset by higher operating expenses of about $70 million, resulting primarily from higher energy prices.
Marker prices and average realizations
|
|
Fourth Quarter |
||
|
Canadian dollars, unless noted |
2022 |
|
2021 |
|
West Texas Intermediate (US$ per barrel) |
82.58 |
|
77.04 |
|
Western Canada Select (US$ per barrel) |
57.00 |
|
62.49 |
|
WTI/WCS Spread (US$ per barrel) |
25.58 |
|
14.55 |
|
Bitumen (per barrel) |
59.85 |
|
65.53 |
|
Synthetic crude oil (per barrel) |
115.22 |
|
92.54 |
|
Average foreign exchange rate (US$) |
0.74 |
|
0.79 |
Production
|
|
Fourth Quarter |
||
|
thousands of barrels per day |
2022 |
|
2021 |
|
Kearl (Imperial’s share) |
201 |
|
191 |
|
Cold Lake |
141 |
|
142 |
|
Syncrude (a) |
87 |
|
79 |
|
|
|
|
|
|
Kearl total gross production (thousands of barrels per day) |
284 |
|
270 |
|
(a) In the fourth quarter of 2022, Syncrude gross production included about 2 thousand barrels per day of bitumen and other products (2021 – 3 thousand barrels per day) that were exported to the operator’s facilities using an existing interconnect pipeline. |
|||
Higher production at Kearl was primarily driven by improved plant performance and the absence of extreme cold weather in December 2021.
Downstream
Net income (loss) factor analysis
millions of Canadian dollars
|
2021 |
Margins |
Other |
2022 |
|
250 |
720 |
218 |
1,188 |
Margins – Higher margins primarily reflect improved market conditions.
Other – Improved volumes of about $60 million, favourable foreign exchange impacts of about $60 million, absence of the prior year unfavourable out-of-period inventory adjustment of $60 million, partially offset by higher operating expenses of about $50 million.
Refinery utilization and petroleum product sales
|
|
Fourth Quarter |
||
|
thousands of barrels per day, unless noted |
2022 |
|
2021 |
|
Refinery throughput |
433 |
|
416 |
|
Refinery capacity utilization (percent) |
101 |
|
97 |
|
Petroleum product sales |
487 |
|
496 |
Improved refinery throughput in the fourth quarter of 2022 was primarily driven by economic optimization across the downstream supply chain.
Chemicals
Net income (loss) factor analysis
millions of Canadian dollars
|
2021 |
Margins |
Other |
2022 |
|
64 |
(20) |
(3) |
41 |
Corporate and other
|
|
Fourth Quarter |
||||
|
millions of Canadian dollars |
2022 |
|
|
2021 |
|
|
Net income (loss) (U.S. GAAP) |
(33 |
) |
|
(46 |
) |
Liquidity and capital resources
|
|
Fourth Quarter |
||||
|
millions of Canadian dollars |
2022 |
|
|
2021 |
|
|
Cash flow generated from (used in): |
|
|
|
||
|
Operating activities |
2,797 |
|
|
1,632 |
|
|
Investing activities |
(473 |
) |
|
(399 |
) |
|
Financing activities |
(2,151 |
) |
|
(955 |
) |
|
Increase (decrease) in cash and cash equivalents |
173 |
|
|
278 |
|
|
|
|
|
|
||
|
Cash and cash equivalents at period end |
3,749 |
|
|
2,153 |
|
Cash flow generated from operating activities primarily reflects higher Upstream realizations, improved Downstream margins, and favourable working capital impacts.
Cash flow used in investing activities primarily reflects higher additions to property, plant and equipment.
Cash flow used in financing activities primarily reflects:
|
|
Fourth Quarter |
||
|
millions of Canadian dollars, unless noted |
2022 |
|
2021 |
|
Dividends paid |
211 |
|
188 |
|
Per share dividend paid (dollars) |
0.34 |
|
0.27 |
|
Share repurchases (a) |
1,934 |
|
761 |
|
Number of shares purchased (millions) (a) |
27.3 |
|
17.5 |
| (a) Share repurchases were made under the company’s normal course issuer bid program, and substantial issuer bid that commenced on November 4, 2022 and expired on December 9, 2022. Includes shares purchased from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid, and by way of a proportionate tender under the company’s substantial issuer bid. | |||
The company completed share repurchases under its normal course issuer bid on October 21, 2022.
On November 4, 2022, the company commenced a substantial issuer bid pursuant to which it offered to purchase for cancellation up to $1.5 billion of its common shares through a modified Dutch auction and proportionate tender offer. The substantial issuer bid was completed on December 14, 2022, with the company taking up and paying for 20,689,655 common shares at a price of $72.50 per share, for an aggregate purchase of $1.5 billion and 3.4 percent of Imperial’s issued and outstanding shares at the close of business on
October 31, 2022. This included 14,399,985 shares purchased from Exxon Mobil Corporation by way of a proportionate tender to maintain its ownership percentage at approximately 69.6 percent.
Full-year 2022 vs. full-year 2021
|
|
Twelve Months |
||
|
millions of Canadian dollars, unless noted |
2022 |
|
2021 |
|
Net income (loss) (U.S. GAAP) |
7,340 |
|
2,479 |
|
Net income (loss) per common share, assuming dilution (dollars) |
11.44 |
|
3.48 |
|
Net income (loss) excluding identified items1 |
7,132 |
|
2,479 |
|
|
|
|
|
Current year results include favourable identified items1 of $208 million related to the company’s gain on the sale of interests in XTO Energy Canada.
Upstream
Net income (loss) factor analysis
millions of Canadian dollars
|
2021 |
Price |
Volumes |
Royalty |
Identified Items¹ |
Other |
2022 |
|
1,395 |
3,140 |
(80) |
(970) |
208 |
(48) |
3,645 |
Price – Higher realizations were generally in line with increases in marker prices, driven primarily by increased demand. Average bitumen realizations increased by $26.76 per barrel generally in line with WCS, and synthetic crude oil realizations increased by $43.85 per barrel.
Volumes – Lower volumes were primarily the result of downtime at Kearl in the first half of the year, partly offset by higher production at Syncrude and Cold Lake.
Royalty – Higher royalties primarily driven by improved commodity prices.
Identified Items1 – Current year results include favourable identified items1 related to the company’s gain on the sale of interests in XTO Energy Canada.
Other – Higher operating expenses of about $500 million, primarily from higher energy prices, partially offset by favourable foreign exchange impacts of about $270 million, and higher electricity sales at Cold Lake of about $60 million due to increased prices.
Marker prices and average realizations
|
|
Twelve Months |
||
|
Canadian dollars, unless noted |
2022 |
|
2021 |
|
West Texas Intermediate (US$ per barrel) |
94.36 |
|
68.05 |
|
Western Canada Select (US$ per barrel) |
76.28 |
|
54.96 |
|
WTI/WCS Spread (US$ per barrel) |
18.08 |
|
13.09 |
|
Bitumen (per barrel) |
84.67 |
|
57.91 |
|
Synthetic crude oil (per barrel) |
125.46 |
|
81.61 |
|
Average foreign exchange rate (US$) |
0.77 |
|
0.80 |
|
____________________ 1 non-GAAP financial measure – see Attachment VI for definition and reconciliation |
Production
|
|
Twelve Months |
||
|
thousands of barrels per day |
2022 |
|
2021 |
|
Kearl (Imperial’s share) |
172 |
|
186 |
|
Cold Lake |
144 |
|
140 |
|
Syncrude (a) |
77 |
|
71 |
|
|
|
|
|
|
Kearl total gross production (thousands of barrels per day) |
242 |
|
263 |
|
(a) In 2022, Syncrude gross production included about 3 thousand barrels per day of bitumen and other products (2021 – 1 thousand barrels per day) that were exported to the operator’s facilities using an existing interconnect pipeline. |
|||
Lower production at Kearl was primarily a result of downtime in the first half of the year.
Downstream
Net income (loss) factor analysis
millions of Canadian dollars
|
2021 |
Margins |
Other |
2022 |
|
895 |
2,350 |
377 |
3,622 |
Margins – Higher margins primarily reflect improved market conditions.
Other – Lower turnaround impacts of about $140 million, reflecting the absence of turnaround activities at Strathcona refinery, improved volumes of about $130 million, favourable foreign exchange impacts of about $120 million, absence of the prior year unfavourable out-of-period inventory adjustment of $74 million, partially offset by higher operating expenses of about $190 million.
Refinery utilization and petroleum product sales
|
|
Twelve Months |
||
|
thousands of barrels per day, unless noted |
2022 |
|
2021 |
|
Refinery throughput |
418 |
|
379 |
|
Refinery capacity utilization (percent) |
98 |
|
89 |
|
Petroleum product sales |
475 |
|
456 |
Improved refinery throughput in 2022 was primarily driven by increased demand and reduced turnaround activity.
Improved petroleum product sales in 2022 primarily reflects increased demand.
Chemicals
Net income (loss) factor analysis
millions of Canadian dollars
|
2021 |
Margins |
Other |
2022 |
|
361 |
(110) |
(47) |
204 |
Margins – Lower margins primarily reflect weaker industry polyethylene margins.
Corporate and other
|
|
Twelve Months |
||||
|
millions of Canadian dollars |
2022 |
|
|
2021 |
|
|
Net income (loss) (U.S. GAAP) |
(131 |
) |
|
(172 |
) |
Liquidity and capital resources
|
|
Twelve Months |
||||
|
millions of Canadian dollars |
2022 |
|
|
2021 |
|
|
Cash flow generated from (used in): |
|
|
|
||
|
Operating activities |
10,482 |
|
|
5,476 |
|
|
Investing activities |
(618 |
) |
|
(1,012 |
) |
|
Financing activities |
(8,268 |
) |
|
(3,082 |
) |
|
Increase (decrease) in cash and cash equivalents |
1,596 |
|
|
1,382 |
|
Cash flow generated from operating activities primarily reflects higher Upstream realizations, improved Downstream margins, and favourable working capital impacts.
Cash flow used in investing activities primarily reflects higher additions to property, plant and equipment, which were partially offset by proceeds from the sale of interests in XTO Energy Canada.
Cash flow used in financing activities primarily reflects:
|
|
Twelve Months |
||
|
millions of Canadian dollars, unless noted |
2022 |
|
2021 |
|
Dividends paid |
851 |
|
706 |
|
Per share dividend paid (dollars) |
1.29 |
|
0.98 |
|
Share repurchases (a) |
6,395 |
|
2,245 |
|
Number of shares purchased (millions) (a) |
93.9 |
|
56.0 |
|
(a) Share repurchases were made under the company’s normal course issuer bid program, and substantial issuer bids that commenced on May 6, 2022 and November 4, 2022, and expired on June 10, 2022 and December 9, 2022, respectively. Includes shares purchased from Exxon Mobil Corporation concurrent with, but outside of, the normal course issuer bid, and by way of a proportionate tender under the company’s substantial issuer bids. |
|||
On June 27, 2022, the company announced that it had received final approval from the Toronto Stock Exchange for a new normal course issuer bid to continue its then existing share repurchase program. The program enabled the company to purchase up to a maximum of 31,833,809 common shares during the period
June 29, 2022 to June 28, 2023. The program completed on October 21, 2022 as a result of the company purchasing the maximum allowable number of shares under the program.
On May 6, 2022, the company commenced a substantial issuer bid pursuant to which it offered to purchase for cancellation up to $2.5 billion of its common shares through a modified Dutch auction and proportionate tender offer. The substantial issuer bid was completed on June 15, 2022, with the company taking up and paying for 32,467,532 common shares at a price of $77.00 per share, for an aggregate purchase of $2.5 billion and 4.9 percent of Imperial’s issued and outstanding shares at the close of business on May 2, 2022. This included 22,597,379 shares purchased from Exxon Mobil Corporation by way of a proportionate tender to maintain its ownership percentage at approximately 69.6 percent.
On November 4, 2022, the company commenced a substantial issuer bid pursuant to which it offered to purchase for cancellation up to $1.5 billion of its common shares through a modified Dutch auction and proportionate tender offer.
Contacts
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(587) 476-4743
Media relations
(587) 476-7010
