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Energy Companies

IMPERIAL OIL LTD 2020 – 2021

Source: aenert.com

Imperial Oil Ltd is one of Canada’s largest integrated oil companies. It is active in all phases of the petroleum industry in Canada, including the exploration for, and production and sale of, crude oil and natural gas. In Canada, it is a major producer of crude oil, the largest petroleum refiner and a leading marketer of petroleum products. It is also a major producer of petrochemicals.

The company’s operations are conducted in three main segments: Upstream, Downstream and Chemical. Upstream operations include the exploration for, and production of, crude oil, natural gas, synthetic oil and bitumen. Downstream operations consist of the transportation and refining of crude oil. Chemical operations consist of the manufacturing and marketing of various petrochemicals.

In early 2020 COVID-19 pandemic spread rapidly through most areas of the world resulting in substantial reductions in consumer and business activity and significantly reduced demand for crude oil, natural gas, and petroleum products. This reduction led to increases in inventory levels and sharp declines in prices for crude oil, natural gas, and petroleum products. Through 2021, demand for petroleum and petrochemical products has continued to recover, with quarterly financial results benefiting from stronger prices when compared to the prior quarter. Average annual West Texas Intermediate (WTI) crude oil price increased to more than US$68 per barrel in 2021 compared to US$39.17 per barrel in 2020.


The following chart shows quarterly financial results of revenue and net income during 2019 – 2021 (in millions of Canadian Dollars) and share price (NYSE, USD):



Source: U.S. Securities and Exchange Commission,  Yahoo finance,
Imperial Oil/News Releases

According to the 3rd quarter report 2021 the Company recorded net income of $908 million or $1.29 per share on a diluted basis in the third quarter of 2021, up from net income of $3 million or $0.00 per share in the same period of 2020.

Upstream segment recorded net income of $524 million in the third quarter of 2021, compared to a net loss of $74 million in the same period of 2020. Improved results reflect higher realizations of about $730 million and higher volumes of about $350 million.

West Texas Intermediate (WTI) averaged US$70.52 per barrel in the third quarter of 2021, up from US$40.93 per barrel in the same quarter of 2020. Western Canada Select (WCS) averaged US$57.08 per barrel and US$31.81 per barrel for the same periods. The WTI / WCS differential averaged approximately US$13 per barrel for the third quarter of 2021, up from around US$9 in the same period of 2020.

Bitumen realizations averaged $60.44 per barrel in the third quarter of 2021, up from $35.95 per barrel in the third quarter of 2020. Synthetic crude realizations averaged $85.94 per barrel in the third quarter of 2021, up from $50.79 per barrel in the same period of 2020.



Syncrude. Credit I. Ciorici

Total gross production of Kearl bitumen averaged 274,000 barrels per day in the third quarter 2021 (194,000 barrels Imperial’s share), up from 189,000 barrels per day in the third quarter of 2020.  Gross production of Cold Lake bitumen averaged 135,000 barrels per day in the third quarter 2021, up from 131,000 barrels per day in the same period of 2020. The company’s share of gross production from Syncrude averaged 78,000 barrels per day in the third quarter 2021, up from 67,000 barrels per day in the third quarter of 2020.  Downstream segment recorded net income of $293 million in the third quarter of 2021, compared to net income of $77 million in the same period of 2020. Improved results primarily reflect higher margins of about $280 million.

Refinery output averaged 404,000 barrels per day in the third quarter of 2021, up from 341,000 barrels per day in the third quarter of 2020. Capacity utilization was 94 percent, up from 81 percent in the third quarter of 2020. Higher output was driven by increased demand. Petroleum product sales were 485,000 barrels per day, up from 449,000 barrels per day in the third quarter of 2020. Improved petroleum product sales were mainly due to increased demand. Chemical net income was $121 million in the third quarter of 2021, up from $27 million in the same quarter of 2020, primarily due to higher polyethylene margins. Net income in the first nine months of 2021 was $1,666 million, or $2.31 per share on a diluted basis, compared to a net loss of $711 million or $0.97 per share in the first nine months of 2020.

Upstream recorded net income of $850 million for the first nine months of the year, compared to a net loss of $1,126 million in the first nine months of 2020.  Downstream net income was $645 million for the first nine months of the year, up from $447 million in the same period of 2020. Results have improved due to higher margins of about $330 million, partially offset by unfavourable foreign exchange impacts of about $120 million. Refinery output averaged 367,000 barrels per day in the first nine months of 2021, up from 334,000 barrels per day in the same period of 2020. Capacity utilization was 86 percent, up from 79 percent in the same period of 2020.  Chemical net income was $297 million in the first nine months of 2021, up from $55 million in the same period of 2020, primarily due to higher polyethylene margins.

According to preliminary financial results for the 4th Quarter 2021, published in News Releases from February 2022, and  Annual Financial Report 2020, the Company´s estimated net income amounted to $2,479 million in 2021 compared to net loss of $1,857 million in 2020 and net income of $2,620 million in 2019. Estimated income per common share was $3.48 in 2021 compared to net loss of $2.53 in 2020 and net income of $2.88 in 2019.

Upstream estimated net income amounted to $1,395 million compared to net loss of $2,318 million in 2020 and net income of $1,348 million in 2019, primarily driven by average bitumen realizations increasing by $32.22 per barrel and synthetic realizations increasing by $31.85 per barrel.

Driven by higher margins Downstream estimated net income amounted to $895 million in 2021 compared to $553 million in 2020 and $961 million in 2019.

Chemical estimated net income was $361 million in 2021, the highest full-year net income in over 30 years, compared to $78 million in 2020 and $108 million in 2019.

The Company generated about $5.5 billion in cash flow from operating activities in 2021 compared to $0.8 billion in 2020 and $4.4 billion in 2019.


Gross crude oil production. Twelve Months (thousands of barrels per day):     



Source:
Imperial Oil/News Releases

Notwithstanding the difficult business environment and unfavorable negative financial results in 2020 the Company showed strong performance in 2021. On the example of Imperial Oil Ltd it can be assumed that the oil industry crises of 2020 have been basically overcome. In this regard the recent success of the Company is particularly important, as it operates in one of the most cost-expensive segments related to the extraction and processing of heavy high-viscosity oil.