Imperial Oil Limited is one of Canada’s largest integrated oil companies. It is occupied with the production and sale of crude oil and natural gas. In Canada, it is a major producer of crude oil and petrochemicals, the largest petroleum refiner and a leading marketer of petroleum products. The company has three main segments: Upstream, Downstream and Chemical. Upstream operations stand for 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, blending of refined products and the distribution and marketing of those products. Chemical operations consist of the manufacturing and marketing of various petrochemicals.
According to its Annual Financial Report, in 2019 total revenue of Imperial Oil reduced slightly to $34,002 million (Canadian Dollars) from $34,964 million (Canadian Dollars) or by 3%.
Net income in 2019 was $2,200 million, or $2.88 per share, compared to net income of $2,314 million or $2.86 per share in 2018 and presented a small reduction of 5%. 2019 results include a favourable impact of $662 million, associated with the Alberta corporate income tax rate decrease. On June 28, 2019, the Alberta government enacted a 4 percent reduction in the provincial tax rate, from 12% to 8% by 2022. To compare with results in 2018 and 2017, it is worth noting that net income in 2018 amounted to $2,314 million or $2.86 per share while net income in 2017 was $490 million or $0.58 per share and presented an increase of $1,824 million or 372% over the year. The 2017 - year results included upstream non-cash impairment charges of $566 million.
Upstream net income was $1,348 million in 2019, which includes a favourable impact associated with the decreased Alberta corporate income tax rate of $689 million. Excluding this impact, 2019 net income was $659 million, up $797 million compared to a net loss of $138 million in 2018. (Net loss in 2017 was $706 million). Improved results reflect higher crude oil realizations of about $1,000 million, as well as higher volumes of about $350 million, primarily at Syncrude and Norman Wells. Results were negatively impacted by higher royalties of about $230 million, higher operating expenses of about $190 million and lower Cold Lake volumes of about $120 million.
Total gross production of Kearl bitumen averaged 205,000 barrels per day in 2019 (145,000 barrels of which was Imperial’s share), compared to 206,000 barrels per day (Imperial’s share was 146,000 barrels) in 2018. For Imperial the production of bitumen remained at the same production level. Gross production of Cold Lake bitumen averaged 140,000 barrels per day in 2019, compared to 147,000 barrels per day in 2018 and represented a small reduction of 5% over the year.
During 2019, the company’s share of gross production from Syncrude averaged 73,000 barrels per day, up from 62,000 barrels per day in 2018 and represented an increase of 18%. Higher production was mainly due to the absence of production impacts from the 2018 power disruption.
Downstream net income was $961 million, compared to $2,366 million in 2018 and fell by 60%. Earnings were negatively impacted by lower margins of about $1,130 million, reliability events of about $150 million, including the fractionating tower incident at Sarnia, and lower sales volumes of about $130 million.
Refinery throughput averaged 353,000 barrels per day in 2019, compared to 392,000 barrels per day in 2018. Capacity utilization was 83 percent, compared to 93 percent in 2018. Reduced throughput was mainly due to higher planned turnaround activities and impacts from the Sarnia fractionating tower incident. Petroleum product sales were 475,000 barrels per day in 2019, compared to 504,000 barrels per day in 2018. Lower petroleum product sales were mainly due to lower refinery throughput.
Chemical net income was $108 million in 2019, compared to $275 million in 2018 and reduced by 60%, primarily due to lower margins.
Cash flow generated from operating activities amounted to $4,429 million in 2019, up from $3,922 million in 2018, and represented an increase of $507 million or 13%, due to the impact associated with the Alberta corporate income tax rate decrease and primarily reflecting favourable working capital effects. To compare, the cash flow from operating activities in 2017 was $2,763 million, and the flow from operating activities in 2019 was the highest since 2012.
Investing activities used net cash of $1,704 million in 2019, compared with $1,559 million used in 2018, and $781 million used in 2017, primarily reflecting higher additions to property, plant and equipment.
Cash used in financing activities was $1,995 million in 2019, compared with $2,570 million used in 2018 and $1,178 million used in 2017.At the end of 2019, total debt outstanding was $5,190 million, compared with $5,180 million at the end of 2018 and $5,207 million at the end of 2017.
During 2019, the company, under its share purchase program, purchased about 38.7 million shares for $1,373 million, including shares purchased from Exxon Mobil Corporation.Dividends paid in 2019 were $631 million and those paid in 2018 amounted to $572 million. The per share dividend paid in 2019 was $0.82, up from $0.70 or 17% in 2018. The per share dividend paid in 2018 was $0.70, up from $0.62 or 13% in 2017.