Imperial announces fourth quarter 2023 financial and operating results
- Quarterly net income of $1,365 million
- Cash flow from operating activities of $1,311 million and cash flow from operating activities excluding working capital1 of $1,799 million
- Upstream production of 452,000 gross oil-equivalent barrels per day, highest in over 30 years when adjusted for divestment of XTO Energy Canada
- Highest ever quarterly production at Kearl of 308,000 total gross oil-equivalent barrels per day (218,000 barrels Imperial’s share)
- Started steam injection at Cold Lake Grand Rapids, which will be the first deployment in industry of solvent-assisted SAGD technology
- Strong Downstream operating performance with refinery capacity utilization of 94 percent, following completion of the largest planned turnaround in Sarnia site history
- Returned more than $2.7 billion to shareholders in the fourth quarter, including successful completion of the substantial issuer bid
- Quarterly dividend increased by 20 percent from 50 cents to 60 cents per share
- Released annual corporate Sustainability report, outlining the company’s sustainability focus areas and progress
CALGARY, Alberta–(BUSINESS WIRE)–Imperial (TSE: IMO) (NYSE American: IMO):
|
|
Fourth quarter |
Twelve months |
||||
|
millions of Canadian dollars, unless noted |
2023 |
2022 |
∆I |
2023 |
2022 |
∆I |
|
Net income (loss) (U.S. GAAP) |
1,365 |
1,727 |
(362) |
4,889 |
7,340 |
(2,451) |
|
Net income (loss) per common share, assuming dilution (dollars) |
2.47 |
2.86 |
(0.39) |
8.49 |
11.44 |
(2.95) |
|
Capital and exploration expenditures |
469 |
488 |
(19) |
1,778 |
1,490 |
+288 |
Imperial reported estimated net income in the fourth quarter of $1,365 million and cash flow from operating activities of $1,311 million, compared to net income of $1,601 million and cash flow from operating activities of $2,359 million in the third quarter of 2023. Excluding the impacts of working capital1, cash flow from operating activities was $1,799 million, compared to $1,946 million in the third quarter. Fourth quarter results reflect strong operating performance, which was more than offset by weaker commodity prices. Full-year estimated net income was $4,889 million with cash flow from operating activities of $3,734 million. Excluding the impacts of working capital1, full-year cash flow from operating activities was $6,435 million.
“Our strong 2023 financial results were underpinned by solid operational performance across all of our businesses, highlighted by record production and substantial unit cost reductions at Kearl,” said Brad Corson, chairman, president and chief executive officer. “Throughout the year, we also made significant progress on strategic investments that will help lower emissions and capture value for our shareholders, including the Grand Rapids expansion at Cold Lake and the renewable diesel facility at our Strathcona refinery.”
Upstream production in the fourth quarter averaged 452,000 gross oil-equivalent barrels per day, the highest quarterly production in over 30 years when adjusting for the divestment of XTO Energy Canada, with full-year production of 413,000 gross oil-equivalent barrels per day. At Kearl, quarterly total gross production averaged 308,000 barrels per day (218,000 barrels Imperial’s share), the highest quarterly production in the asset’s history. Kearl also delivered record full-year production of 270,000 total gross barrels per day (191,000 barrels Imperial’s share).
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|
1 non-GAAP financial measure – see Attachment VI for definition and reconciliation |
Across other Upstream assets, Cold Lake quarterly gross production averaged 139,000 barrels per day with annual production of 135,000 gross barrels per day. In December, the company began injecting steam at Cold Lake Grand Rapids Phase 1, marking the successful start-up of what will be the industry’s first-ever solvent-assisted steam-assisted gravity drainage (SA-SAGD) project. The project is expected to achieve 15,000 gross barrels per day of production at full rates and also reduce greenhouse gas emissions intensity by up to 40 percent compared to existing steam processes. The initial steam injection phase is expected to last until the end of the first quarter of 2024, with production ramping up over the following months. At Syncrude, quarterly production increased to 85,000 gross barrels per day following the completion of its planned turnaround in the third quarter of 2023, with full-year production of 76,000 barrels per day.
In the Downstream, quarterly throughput averaged 407,000 barrels per day with refinery capacity utilization of 94 percent following the successful completion of the largest planned turnaround in Sarnia site history, which was completed under budget and ahead of schedule in October. Full-year throughput also averaged 407,000 barrels per day with capacity utilization of 94 percent, achieving several full-year production records across the company’s refineries. Petroleum product sales in the quarter averaged 476,000 barrels per day with annual sales averaging 471,000 barrels per day. Work on the company’s Strathcona renewable diesel facility continues to progress, with construction of above ground tankage nearing completion. The project remains on-plan with renewable diesel production expected to begin in 2025.
During the quarter, Imperial returned $2,746 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 2023 Imperial has returned over $4.9 billion to shareholders through our reliable and growing dividend and industry-leading share repurchase program,” said Corson. “We remain confident of our company’s ability to generate robust free cash flow1 over a range of business conditions and I am pleased to announce a 20 percent increase to our quarterly dividend.”
In November, Imperial released its annual Sustainability report which highlights progress and momentum in the company’s key sustainability focus areas, including the previously announced company-wide net-zero goal in operations through collaboration with government and other industry partners. “Imperial is committed to advancing innovation and strategic partnerships to help address the significant challenge of supplying energy to Canadians in an affordable, secure and sustainable way,” said Corson.
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|
1 non-GAAP financial measure – see Attachment VI for definition and reconciliation |
Fourth quarter highlights
- Net income of $1,365 million or $2.47 per share on a diluted basis, compared to $1,727 million or $2.86 per share in the fourth quarter of 2022, primarily driven by lower commodity prices.
- Cash flows from operating activities of $1,311 million, compared to cash flows from operating activities of $2,797 million in the fourth quarter of 2022. Cash flows from operating activities excluding working capital1 of $1,799 million, compared to $2,452 million in the same period of 2022.
- Capital and exploration expenditures totalled $469 million, compared to $488 million in the fourth quarter of 2022.
- The company returned $2,746 million to shareholders in the fourth quarter of 2023, including $288 million in dividends paid, $958 million in share repurchases through its accelerated normal course issuer bid and successful completion of its $1.5 billion substantial issuer bid program in December.
- Production averaged 452,000 gross oil-equivalent barrels per day, the highest quarterly production in over 30 years when adjusting for the divestment of XTO Energy Canada, up from 441,000 gross oil-equivalent barrels per day in the same period of 2022.
- Total gross bitumen production at Kearl averaged 308,000 barrels per day (218,000 barrels Imperial’s share), the highest quarterly production in the asset’s history, up from 284,000 barrels per day (201,000 barrels Imperial’s share) in the fourth quarter of 2022. Higher production was primarily driven by improved reliability, plant capacity utilization, and increased mine equipment productivity.
- Gross bitumen production at Cold Lake averaged 139,000 barrels per day, compared to 141,000 barrels per day in the fourth quarter of 2022.
- Successfully started steam injection at the Cold Lake Grand Rapids Phase 1 (GRP1) project. The initial steam injection phase is expected to last until the end of the first quarter of 2024, with production ramping up over the following months. GRP1 will be the first SA-SAGD project in industry and is expected to achieve 15,000 gross barrels per day of production at full rates while also reducing greenhouse gas emissions intensity by up to 40 percent compared to existing cyclic steam stimulation technology.
- The company’s share of gross production from Syncrude averaged 85,000 barrels per day, compared to 87,000 barrels per day in the fourth quarter of 2022.
- Refinery throughput averaged 407,000 barrels per day, compared to 433,000 barrels per day in the fourth quarter of 2022. Capacity utilization was 94 percent, compared to 101 percent in the fourth quarter of 2022. Fourth quarter 2023 results include impacts from the planned turnaround in Sarnia, the largest in site history, which was completed under budget and ahead of schedule in October.
- Petroleum product sales were 476,000 barrels per day, compared to 487,000 barrels per day in the fourth quarter of 2022.
- Chemical net income of $17 million in the quarter, compared to $41 million in the fourth quarter of 2022. Lower net income was primarily driven by the impact of planned turnaround activities.
- Released annual Sustainability report which highlights progress and momentum in the company’s key sustainability focus areas, and complements the company’s Advancing Climate Solutions report published in the third quarter of 2023.
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|
1 non-GAAP financial measure – see Attachment VI for definition and reconciliation |
Recent business environment
Energy markets began to normalize in 2023, down from their 2022 high. While demand for liquids set a record in 2023, supply continued to grow. During the first half of 2023, the price of crude oil declined, impacted by higher inventory levels. In the second half, crude oil prices increased as a result of strong demand, tight inventory levels, and ongoing actions by OPEC+ oil producers to limit supply. In addition, the Canadian WTI/WCS spread began to weaken in the fourth quarter, but remained in line with 2022 on an annual basis. Throughout 2023, strong demand for gasoline and distillate combined with low inventories kept refining margins strong, but short of 2022 levels on an annual basis. In the fourth quarter refining margins dropped due to higher inventory and lower seasonal demand.
Operating results
Fourth quarter 2023 vs. fourth quarter 2022
|
|
Fourth Quarter |
|
|
millions of Canadian dollars, unless noted |
2023 |
2022 |
|
Net income (loss) (U.S. GAAP) |
1,365 |
1,727 |
|
Net income (loss) per common share, assuming dilution (dollars) |
2.47 |
2.86 |
Upstream
Net income (loss) factor analysis
millions of Canadian dollars
|
2022 |
Price |
Volumes |
Royalty |
Other |
2023 |
|
531 |
30 |
50 |
20 |
139 |
770 |
Price – Average bitumen realizations increased by $4.20 per barrel. Higher bitumen realizations were primarily driven by the narrowing of the WTI/WCS spread, partially offset by lower marker prices. Synthetic crude oil realizations decreased by $9.85 per barrel, generally in line with WTI.
Volumes – Higher volumes were primarily driven by improved reliability, plant capacity utilization, and mine equipment productivity at Kearl.
Other – Includes lower operating expenses of about $160 million, primarily due to lower energy prices.
Marker prices and average realizations
|
|
Fourth Quarter |
|
|
Canadian dollars, unless noted |
2023 |
2022 |
|
West Texas Intermediate (US$ per barrel) |
78.54 |
82.58 |
|
Western Canada Select (US$ per barrel) |
56.80 |
57.00 |
|
WTI/WCS Spread (US$ per barrel) |
21.74 |
25.58 |
|
Bitumen (per barrel) |
64.05 |
59.85 |
|
Synthetic crude oil (per barrel) |
105.37 |
115.22 |
|
Average foreign exchange rate (US$) |
0.73 |
0.74 |
Production
|
|
Fourth Quarter |
|
|
thousands of barrels per day |
2023 |
2022 |
|
Kearl (Imperial’s share) |
218 |
201 |
|
Cold Lake |
139 |
141 |
|
Syncrude (a) |
85 |
87 |
|
|
|
|
|
Kearl total gross production (thousands of barrels per day) |
308 |
284 |
|
(a) In the fourth quarter of 2023, Syncrude gross production included about 1 thousand barrels per day of bitumen and other products (2022 – 2 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 reliability, plant capacity utilization, and mine equipment productivity.
Downstream
Net income (loss) factor analysis
millions of Canadian dollars
|
2022 |
Margins |
Other |
2023 |
|
1,188 |
(540) |
(53) |
595 |
Margins – Lower margins primarily reflect weaker market conditions.
Refinery utilization and petroleum product sales
|
|
Fourth Quarter |
|
|
thousands of barrels per day, unless noted |
2023 |
2022 |
|
Refinery throughput |
407 |
433 |
|
Refinery capacity utilization (percent) |
94 |
101 |
|
Petroleum product sales |
476 |
487 |
Lower refinery throughput in the fourth quarter of 2023 reflects the impact of planned turnaround activities at Sarnia refinery.
Lower petroleum product sales in the fourth quarter of 2023 were primarily driven by lower wholesale customer volume.
Chemicals
Net income (loss) factor analysis
millions of Canadian dollars
|
2022 |
Margins |
Other |
2023 |
|
41 |
(10) |
(14) |
17 |
Corporate and other
|
|
Fourth Quarter |
|
|
millions of Canadian dollars |
2023 |
2022 |
|
Net income (loss) (U.S. GAAP) |
(17) |
(33) |
Liquidity and capital resources
|
|
Fourth Quarter |
|
|
millions of Canadian dollars |
2023 |
2022 |
|
Cash flows from (used in): |
|
|
|
Operating activities |
1,311 |
2,797 |
|
Investing activities |
(411) |
(473) |
|
Financing activities |
(2,752) |
(2,151) |
|
Increase (decrease) in cash and cash equivalents |
(1,852) |
173 |
|
|
|
|
|
Cash and cash equivalents at period end |
864 |
3,749 |
Cash flows from operating activities primarily reflect unfavourable working capital impacts and lower Downstream margins.
Cash flows used in investing activities primarily reflect higher proceeds from asset sales.
Cash flows used in financing activities primarily reflect:
|
|
Fourth Quarter |
|
|
millions of Canadian dollars, unless noted |
2023 |
2022 |
|
Dividends paid |
288 |
211 |
|
Per share dividend paid (dollars) |
0.50 |
0.34 |
|
Share repurchases (a) |
2,458 |
1,934 |
|
Number of shares purchased (millions) (a) |
30.8 |
27.3 |
|
(a) Share repurchases were made under the company’s normal course issuer bid program for the periods disclosed. Substantial issuer bids were undertaken and commenced on November 4, 2022 (expired on December 9, 2022), and November 3, 2023 (expired on December 8, 2023). 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. |
||
The company completed share repurchases under its normal course issuer bid on October 19, 2023.
On November 3, 2023, 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 13, 2023, with the company taking up and paying for 19,108,280 common shares at a price of $78.50 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 30, 2023. This included 13,299,349 shares purchased from Exxon Mobil Corporation by way of a proportionate tender to maintain its ownership percentage at approximately 69.6 percent.
Full-year 2023 vs. full-year 2022
|
|
Twelve Months |
|
|
millions of Canadian dollars, unless noted |
2023 |
2022 |
|
Net income (loss) (U.S. GAAP) |
4,889 |
7,340 |
|
Net income (loss) per common share, assuming dilution (dollars) |
8.49 |
11.44 |
|
Net income (loss) excluding identified items1 |
4,889 |
7,132 |
Prior year results included 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
|
2022 |
Price |
Volumes |
Royalty |
Identified Items¹ |
Other |
2023 |
|
3,645 |
(2,340) |
(70) |
690 |
(208) |
795 |
2,512 |
Price – Lower bitumen realizations were primarily driven by lower marker prices. Average bitumen realizations decreased by $17.25 per barrel, generally in line with WCS, and synthetic crude oil realizations decreased by $19.89 per barrel, generally in line with WTI.
Volumes – Lower volumes were primarily driven by steam cycle timing at Cold Lake, and the absence of XTO Energy Canada production, partially offset by improved reliability, plant capacity utilization, and mine equipment productivity at Kearl.
Royalty – Lower royalties were primarily driven by weakened commodity prices.
Identified Items1 – Prior year results included favourable identified items1 related to the company’s gain on the sale of interests in XTO Energy Canada.
Other – Includes favourable foreign exchange impacts of about $380 million, and lower operating expenses of about $380 million, primarily due to lower energy prices.
Marker prices and average realizations
|
|
Twelve Months |
|
|
Canadian dollars, unless noted |
2023 |
2022 |
|
West Texas Intermediate (US$ per barrel) |
77.60 |
94.36 |
|
Western Canada Select (US$ per barrel) |
58.97 |
76.28 |
|
WTI/WCS Spread (US$ per barrel) |
18.63 |
18.08 |
|
Bitumen (per barrel) |
67.42 |
84.67 |
|
Synthetic crude oil (per barrel) |
105.57 |
125.46 |
|
Average foreign exchange rate (US$) |
0.74 |
0.77 |
|
___________________________ |
||
|
1 non-GAAP financial measure – see Attachment VI for definition and reconciliation |
Production
|
|
Twelve Months |
|
|
thousands of barrels per day |
2023 |
2022 |
|
Kearl (Imperial’s share) |
191 |
172 |
|
Cold Lake |
135 |
144 |
|
Syncrude (a) |
76 |
77 |
|
|
|
|
|
Kearl total gross production (thousands of barrels per day) |
270 |
242 |
|
(a) In 2023, Syncrude gross production included about 1 thousand barrels per day of bitumen and other products (2022 – 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 reliability, plant capacity utilization, and mine equipment productivity.
Downstream
Net income (loss) factor analysis
millions of Canadian dollars
|
2022 |
Margins |
Other |
2023 |
|
3,622 |
(1,300) |
(21) |
2,301 |
Margins – Lower margins primarily reflect weaker market conditions.
Other – Higher turnaround impacts of about $340 million, associated with the planned turnaround activities at the Strathcona and Sarnia refineries, partially offset by favourable foreign exchange impacts of about $210 million, improved volumes of about $50 million, and lower operating expenses of about $50 million, primarily due to lower energy prices.
Refinery utilization and petroleum product sales
|
|
Twelve Months |
|
|
thousands of barrels per day, unless noted |
2023 |
2022 |
|
Refinery throughput |
407 |
418 |
|
Refinery capacity utilization (percent) |
94 |
98 |
|
Petroleum product sales |
471 |
475 |
Lower refinery throughput in 2023 reflects the impact of planned turnaround activities at Strathcona and Sarnia refineries.
Chemicals
Net income (loss) factor analysis
millions of Canadian dollars
|
2022 |
Margins |
Other |
2023 |
|
204 |
(30) |
(10) |
164 |
Corporate and other
|
|
Twelve Months |
|
|
millions of Canadian dollars |
2023 |
2022 |
|
Net income (loss) (U.S. GAAP) |
(88) |
(131) |
Liquidity and capital resources
|
|
Twelve Months |
|
|
millions of Canadian dollars |
2023 |
2022 |
|
Cash flows from (used in): |
|
|
|
Operating activities |
3,734 |
10,482 |
|
Investing activities |
(1,694) |
(618) |
|
Financing activities |
(4,925) |
(8,268) |
|
Increase (decrease) in cash and cash equivalents |
(2,885) |
1,596 |
Cash flows from operating activities primarily reflect unfavourable working capital impacts, including an income tax catch-up payment of $2.1 billion, as well as lower Upstream realizations and Downstream margins.
Cash flows used in investing activities primarily reflect the absence of proceeds from the sale of interests in XTO Energy Canada, and higher additions to property, plant and equipment.
Cash flows used in financing activities primarily reflect:
|
|
Twelve Months |
|
|
millions of Canadian dollars, unless noted |
2023 |
2022 |
|
Dividends paid |
1,103 |
851 |
|
Per share dividend paid (dollars) |
1.88 |
1.29 |
|
Share repurchases (a) |
3,800 |
6,395 |
|
Number of shares purchased (millions) (a) |
48.3 |
93.9 |
|
(a) Share repurchases were made under the company’s normal course issuer bid program for the periods disclosed. Substantial issuer bids were undertaken and commenced on May 6, 2022 (expired on June 10, 2022), November 4, 2022 (expired on December 9, 2022), and November 3, 2023 (expired on December 8, 2023). 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, 2023, 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 purchase program. The program enabled the company to purchase up to a maximum of 29,207,635 common shares during the period June 29, 2023 to June 28, 2024. The program completed on October 19, 2023 as a result of the company purchasing the maximum allowable number of shares under the program.
On November 3, 2023, 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 13, 2023, with the company taking up and paying for 19,108,280 common shares at a price of $78.50 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 30, 2023. This included 13,299,349 shares purchased from Exxon Mobil Corporation by way of a proportionate tender to maintain its ownership percentage at approximately 69.6 percent.
Key financial and operating data follow.
Forward-looking statements
Statements of future events or conditions in this report, including projections, targets, expectations, estimates, and business plans, are forward-looking statements. Similarly, discussion of emission-reduction future plans to support a net-zero future are dependent on future market factors, such as continued technological progress and policy support, and represent forward-looking statements. Forward-looking statements can be identified by words such as believe, anticipate, intend, propose, plan, goal, seek, estimate, expect, future, continue, likely, may, should, will and similar references to future periods. Forward-looking statements in this report include, but are not limited to, the impact and timing of the Cold Lake Grand Rapids phase 1 project, including expected production and reductions to greenhouse gas emissions intensity, and the timing of steam injection and production ramp-up for such project; the company’s Strathcona renewable diesel project, including timing, expected production, and the reduction to greenhouse gas emissions; other references to the company’s strategic investments helping to reduce emissions and capture value for shareholders; references to advancing innovation and strategic partnerships to help supply energy in an affordable, secure and sustainable way; and the company’s ability to generate free cash flow1.
Forward-looking statements are based on the company’s current expectations, estimates, projections and assumptions at the time the statements are made.
Contacts
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(587) 962-4401
Media Relations
(587) 476-7010
