# Imperial Oil Ltd: Form 10-Q for the period ended Mar 31, 2013

- Company: [Imperial Oil Ltd](/companies/imo.md) (CIK 49938)
- Form: 10-Q
- Filed: 2013-05-02
- Accepted by EDGAR: May 2, 2013, 06:07 ET
- Period: 2013-03-31
- Accession: 0001193125-13-193908
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/49938/000119312513193908/d514545d10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/49938/000119312513193908/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2013-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2013-01-01 to 2013-03-31 | CAD 1.39bn | us-gaap:Revenues |
| Selling, general and administrative | 3 months, 2013-01-01 to 2013-03-31 | CAD 254.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Income tax | 3 months, 2013-01-01 to 2013-03-31 | CAD 272.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2013-01-01 to 2013-03-31 | CAD 798.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2013-01-01 to 2013-03-31 | CAD 0.94 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2013-01-01 to 2013-03-31 | CAD 0.94 | us-gaap:EarningsPerShareBasic |
| Operating cash flow | 3 months, 2013-01-01 to 2013-03-31 | CAD 597.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2013-01-01 to 2013-03-31 | CAD 1.34bn | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 3 months, 2013-01-01 to 2013-03-31 | CAD 102.0m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2013-03-31 | CAD 323.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2013-03-31 | CAD 4.54bn | us-gaap:AssetsCurrent |
| Total assets | at 2013-03-31 | CAD 33.12bn | us-gaap:Assets |
| Current liabilities | at 2013-03-31 | CAD 6.88bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2013-03-31 | CAD 16.10bn | us-gaap:Liabilities |
| Long-term debt | at 2013-03-31 | CAD 2.63bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2013-03-31 | CAD 1.16bn | us-gaap:DebtCurrent |
| Shareholders' equity | at 2013-03-31 | CAD 17.02bn | us-gaap:StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest |
| Shares outstanding | at 2013-03-31 | 847,599,011 shares | dei:EntityCommonStockSharesOutstanding |

## Management's discussion and analysis

As filed, 6,749 characters.

### OPERATING RESULTS

The company’s net income for the first quarter of 2013 was $798 million or $0.94 a share on a diluted basis, compared with $1,015 million or $1.19 a share for the same period last year.

Lower first quarter earnings were primarily attributable to the impacts of lower liquids realization, higher refinery maintenance activities, lower volumes and higher maintenance costs at Syncrude and Kearl production readiness expenditures. These factors were partially offset by lower royalty costs due to lower liquids realizations and higher refining margins.

### Upstream

Net income in the first quarter was $300 million versus $542 million in the same period of 2012. Earnings decreased primarily due to lower liquids realizations of about $270 million. Other factors that contributed to lower earnings included lower volumes and higher maintenance costs at Syncrude totalling about $75 million and Kearl production readiness expenditures of about $50 million. These factors were partially offset by lower royalty costs of about $160 million due to lower liquids realizations.

Prices for most of the company’s liquids production are based on West Texas Intermediate (WTI) crude oil, a common benchmark for mid-continent North American oil markets. Compared to the corresponding period last year, the average WTI crude oil price in U.S. dollars was lower by $8.67 a barrel, about eight percent, in the first quarter of 2013. Decreases in the company’s average realizations in Canadian dollars on sales of conventional and synthetic crude oils were in line with WTI. The company’s average bitumen realization in Canadian dollars in the first quarter of 2013 decreased 34 percent to $43.63 a barrel. Supply/demand imbalances of heavier crude oils in mid-continent North American markets and industry pipeline apportionment effects widened the price spread between light crude oil and Cold Lake bitumen. The company’s average realization on natural gas sales of $3.50 a thousand cubic feet was higher by about 48 percent in the first quarter of 2013 versus the same period in 2012.

Gross production of Cold Lake bitumen averaged 164 thousand barrels a day and established a new production record in the quarter. Cold Lake production was up seven thousand barrels a day from the same period last year. Volume growth was achieved through higher reliability and strong reservoir performance.

The company’s share of Syncrude’s gross production in the first quarter was 65 thousand barrels a day, down from 74 thousand barrels in the first quarter of 2012. Higher maintenance activities were the main contributor to the lower production.

Gross production of conventional crude oil averaged 20 thousand barrels a day in the first quarter, versus the 21 thousand barrels in the corresponding period in 2012.

Gross production of natural gas during the first quarter of 2013 was 187 million cubic feet a day, down from 198 million cubic feet in the same period last year. The lower production volume was primarily the result of natural decline of conventional fields and the impact of divested properties partially offset by volume contributions from Celtic and the Horn River pilot.

On February 26, 2013, following the close of the acquisition of Celtic Exploration Ltd. (“Celtic”) by ExxonMobil Canada, Imperial Oil completed its acquisition of a 50-percent participating interest in Celtic’s assets and liabilities for $1.6 billion. Reference is made to Financial Statement “Note 10: Acquisition” for further details.

On April 27, Imperial achieved a significant milestone with the start-up of the initial development of the Kearl oil sands project.

### Downstream

Net income was $478 million in the first quarter, $23 million higher than the first quarter of 2012. Increased earnings were primarily due to the favourable impact of refining margins of about $125 million partially offset by the impact of higher maintenance activities at the Sarnia refinery of about $90 million. Earnings in the first quarter of 2012 included a gain of about $15 million from the sale of assets.

Mid-continent North America industry refining margins continued to be strong in the first quarter of 2013. Stronger industry refining margins were the result of the widened differential between product prices and cost of crude oil processed.

### Chemical

Net income was $35 million in the first quarter, unchanged from the same quarter last year.

### Corporate and Other

Net income effects from Corporate and Other were negative $15 million in the first quarter, versus the negative $17 million in the same period of 2012.

### LIQUIDITY AND CAPITAL RESOURCES

Cash flow generated from operating activities was $597 million in the first quarter, versus $1,047 million in corresponding period in 2012. Lower cash flow was primarily due to lower earnings and working capital effects.

Investing activities used net cash of $2,935 million in the first quarter, compared with $1,064 million in the same period of 2012. $1,602 million (excluding $6 million cash acquired) was expended to complete the acquisition of a 50-percent participating interest in Celtic’s assets and liabilities. Additions to property, plant and equipment were $1,345 million in the first quarter, compared with $1,145 million during the same quarter 2012. Expenditures during the quarter were primarily directed towards the advancement of Kearl expansion project. Other investments included advancing the Nabiye expansion project at Cold Lake and sustaining capital for Syncrude mining and tailing projects.

Cash from financing activities was $2,179 million in the first quarter, compared with cash used in financing activities of $140 million in the first quarter of 2012. In the first quarter, the company increased its long-term debt level by $1,595 million by drawing on an existing facility and issued additional commercial paper which increased short-term debt by $687 million. The majority of the increased debt was used to finance the acquisition. Dividends paid in the first quarter of 2013 were $102 million, $9 million higher than the corresponding period in 2012. In the first quarter, the company increased the amount of its existing stand-by long-term bank credit facility from $300 million to $500 million with the maturity date unchanged. The company has not drawn on the facility. Also in the first quarter, to further support the commercial paper program, the company entered into an unsecured committed bank credit facility in the amount of $250 million that matures in March 2014. The company has not drawn on this facility.

The above factors led to a decrease in the company’s balance of cash to $323 million at March 31, 2013, from $482 million at the end of 2012.

## Market risk

As filed, 1,125 characters.

Information about market risks for the three months ended March 31, 2013 does not differ materially from that discussed on page 23 in the company’s Annual Report on Form 10-K for the year ended December 31, 2012 except for the following:

| Earnings sensitivity millions of dollars after tax |  |  |
| --- | --- | ---: |
| Nine dollars (U.S.) a barrel change in crude oil prices | + (-) | 330 |
| Ten cents decrease (increase) in the value of the Canadian dollar versus the U.S. dollar | + (-) | 570 |

The sensitivity of net income to changes in crude oil prices decreased from year-end 2012 by about $12 million (after tax) a year for each one U.S. dollar change. The decrease was primarily a result of the impact of higher royalty costs for Syncrude and Cold Lake bitumen production due to higher prices for Syncrude and Cold Lake bitumen at the end of the first quarter of 2013.

The sensitivity of net income to changes in the Canadian dollar versus the U.S. dollar increased from year-end 2012 by about $8 million (after tax) a year for each one-cent change, primarily due to the increase in crude oil commodity prices.

## Controls and procedures

As filed, 1,077 characters.

As indicated in the certifications in Exhibit 31 of this report, the company’s principal executive officer and principal financial officer have evaluated the company’s disclosure controls and procedures as of March 31, 2013. Based on that evaluation, these officers have concluded that the company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to them in a manner that allows for timely decisions regarding required disclosures and are effective in ensuring that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There has not been any change in the company’s internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.

Filed May 2, 2013.
Source: SEC EDGAR, the filing index for accession 0001193125-13-193908. Last ingested by Listed: Nov 5, 2026, 13:58 ET. No prices; not investment advice.