Imperial Oil Q2 Earnings Call Highlights

Imperial Oil NYSEAMERICAN: IMO reported second-quarter net income of CAD 2.19 billion, up CAD 1.24 billion from a year earlier and CAD 1.25 billion from the first quarter, as higher commodity prices lifted results across its upstream and downstream operations.

Cash flow from operating activities totaled about CAD 2.7 billion, or CAD 2.52 billion excluding working-capital effects. The company ended the quarter with more than CAD 2.8 billion in cash. Capital expenditures were CAD 531 million, including CAD 359 million directed toward sustaining work at Kearl, Cold Lake and Syncrude.

Chairman, President and CEO John Whelan said the company intends to accelerate repurchases under its normal course issuer bid, or NCIB, and expects to buy back all remaining allowable shares before year-end. Imperial paid CAD 421 million in dividends during the quarter and declared a third-quarter dividend of CAD 0.87 per share.

Upstream earnings reached CAD 1.30 billion, an increase of CAD 829 million from the first quarter, primarily due to higher crude prices. Total upstream production averaged 414,000 gross oil-equivalent barrels per day, down 5,000 barrels per day sequentially.

Whelan said planned turnaround activity at Kearl, unplanned maintenance at Cold Lake and extreme rainfall at Syncrude weighed on quarterly output. Imperial maintained its full-year gross production guidance but now expects output to fall toward the low end of its range based on first-half results.

Kearl produced 257,000 barrels per day during the quarter, down 2,000 barrels per day from the first quarter. The company completed planned work on the K1 train ahead of schedule and below budget, extending Kearl’s turnaround interval to four years. The next planned Kearl turnaround is scheduled for 2029.

Management said Kearl’s second-quarter 2025 ore grades had been unusually strong, rather than current ore grades being unusually weak. Whelan said the company remains confident in the mine’s ore quality relative to other oil sands operations. Construction on flotation columns, a secondary recovery project designed to capture additional bitumen from processed ore, is nearing completion. Commissioning is expected to begin in the third quarter, with production startup anticipated in the fourth quarter.

Imperial reiterated its objective to reduce Kearl unit operating costs to CAD 18 per barrel in 2027, after reporting costs below CAD 20 per barrel last year. Whelan also said the company remains focused on lifting Kearl production to 300,000 barrels per day through recovery, reliability and productivity improvements.

Cold Lake production averaged 149,000 barrels per day, down 6,000 barrels per day from the prior quarter because of unplanned maintenance completed in May. Imperial transferred volumes from its older Leming plant into available capacity at the Maskwacis and Mehekis plants, allowing the company to decommission the Leming plant and reduce its cost structure.

The company continues to ramp up its Leming SAGD project and is advancing an Enhanced Bitumen Recovery Technology pilot at its Aspen lease. Startup of the pilot remains targeted for 2027. Whelan said Imperial’s Aspen, Clark Creek and Corner assets could potentially double its gross operated upstream production over time, contingent on a supportive investment climate and other factors.

The company is conducting delineation drilling at Corner and Clark Creek to further assess the resources and development approach, with Enhanced Bitumen Recovery Technology expected to be the technology applied across all three assets if proven successful at Aspen. Imperial’s share of Syncrude production was 73,000 barrel...