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IMPERIAL OIL LTD (IMO)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 EPS beat and revenue miss vs Street: EPS was $1.86 diluted, above S&P Global consensus of $1.18*; revenue (“total revenues and other income”) was $C$11.23B, below consensus of $US$8.77B* with actual $US$8.22B*; EBITDA modestly beat at $US$1.25B* vs $US$1.18B* (bolded in tables below). Values retrieved from S&P Global.*
  • Net income of $C$949M (vs $C$1,288M in Q1 and $C$1,133M in Q2’24) on record second‑quarter upstream production of 427 Mboe/d; Kearl delivered highest‑ever second‑quarter gross production of 275 kb/d (195 kb/d Imperial’s share).
  • Downstream utilization of 87% (throughput 376 kb/d) amid planned turnarounds; Strathcona renewable diesel facility construction/commissioning completed with first production in July, expanding low‑carbon fuels optionality.
  • Capital returns: $C$367M dividends paid; NCIB renewed (up to 25,452,248 shares) and management plans to accelerate repurchases to complete the program prior year‑end—a potential stock support catalyst.

What Went Well and What Went Wrong

  • What Went Well

    • Record second‑quarter upstream production (427 Mboe/d), driven by Kearl’s best Q2 gross output (275 kb/d) and higher Syncrude volumes; “positioning the company for a strong second half of the year.”
    • Strathcona renewable diesel milestone: “start‑up of Canada’s largest renewable diesel facility… expected to deliver attractive returns and complements our integrated business model.”
    • Cash generation resilience: operating cash flow $C$1.465B with $C$2.386B cash at quarter end; petroleum product sales up to 480 kb/d, enabled by TMX expansion.

  • What Went Wrong

    • Earnings down sequentially and YoY: net income $C$949M vs $C$1,288M in Q1 and $C$1,133M in Q2’24, impacted by lower upstream realizations and downstream margin capture.
    • Downstream utilization and throughput lower YoY (87%/376 kb/d vs 89%/387 kb/d) due to unplanned downtime and turnaround activities; Chemicals earnings fell to $C$21M vs $C$65M in Q2’24 on weaker polyethylene margins.
    • Macro headwinds: crude prices declined QoQ; trade/tariff uncertainty noted as an external risk that could affect suppliers and customers despite mitigation efforts.

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Total Revenues and Other Income ($CAD Billions)$13.383 $12.517 $11.232
Net Income ($CAD Billions)$1.133 $1.288 $0.949
Diluted EPS ($CAD)$2.11 $2.52 $1.86
Cash Flows from Operating Activities ($CAD Billions)$1.629 $1.527 $1.465
Capital & Exploration Expenditures ($CAD Millions)$462 $398 $473
Segment Net Income ($CAD Millions)Q2 2024Q1 2025Q2 2025
Upstream799 731 664
Downstream294 584 322
Chemicals65 31 21
Corporate & Other(25) (58) (58)
Operating KPIsQ2 2024Q1 2025Q2 2025
Upstream Gross Oil-Equivalent Production (Mboe/d)404 418 427
Kearl Gross (kb/d)255 256 275
Cold Lake Gross (kb/d)147 154 145
Syncrude Gross (kb/d)66 73 77
Refinery Throughput (kb/d)387 397 376
Capacity Utilization (%)89 91 87
Petroleum Product Sales (kb/d)470 455 480
Unit Cash Operating Cost ($CAD per oeb)Q2 2024Q1 2025Q2 2025
Upstream32.75 31.31 29.00
Kearl30.30 29.71 26.20
Cold Lake19.59 20.56 20.61
Syncrude66.60 53.73 46.95

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ3 2025$0.60 (Q4 2024 declared) $0.72 declared Raised
NCIB share repurchasesJun 29, 2025–Jun 28, 2026NCIB renewal planned (Q1) NCIB renewed; up to 25,452,248 shares; plan to accelerate and complete by year‑end Accelerate
Strathcona renewable diesel2025 start-upMid‑2025 start-up target Construction/commissioning complete; first production in July 2025 Achieved
Leming SAGD (Cold Lake)Late 2025 first oil; ramp 2026Late 2025 start-up; ~9 kb/d peak Steam injection started end of Q2; first oil late 2025; ramp to peak in 2026 Maintained (progressed)
Kearl turnaround intervalsOngoingAnnual (prior years) Plan to double intervals to 4 years after work completed Extended

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Upstream reliability and unit costKearl record year; unit cash <$US20; Cold Lake SA‑SAGD drove costs lower Kearl best Q2; Upstream unit cash down to $29/oeb; plan to extend turnaround intervals to 4 years Improving structurally
Digital/autonomyAHS trucks +8–10% productivity; digital debottlenecking highlighted Continuous improvement and data/analytics to enable longer intervals; further reliability gains (call transcript) Ongoing deployment
Tariffs/macroTariff risk flagged; resilient cash return philosophy Volatile global trade environment; monitoring and mitigation continues Persistent uncertainty
Renewable dieselMid‑2025 start targeted First production in July; feedstock and hydrogen supply plans in place (call) Commissioned; ramp under way
Cold Lake SA‑SAGD & LemingGrand Rapids outperforming; Leming late‑2025 start Grand Rapids ~23 kb/d within 145 kb/d total; Leming steam injection started Q2 Execution progressing

Management Commentary

  • “We safely completed our heaviest planned turnaround quarter in both our Upstream and Downstream businesses, positioning the company for a strong second half of the year.” — John Whelan, CEO
  • “I am pleased to announce the start‑up of Canada's largest renewable diesel facility which will deliver high quality lower emission fuels to the Canadian transportation sector.” — John Whelan
  • “Imperial remains committed to its long‑established history of returning surplus cash to shareholders… plan to accelerate our NCIB share repurchases with a target of completing the program prior to year end.” — John Whelan

Q&A Highlights

  • Renewable diesel ramp: Management detailed feedstock arrangements and hydrogen supply, noting sufficient gray hydrogen for initial operations and optimization of inputs as ramp progresses.
  • Cost trajectory: Continued focus on reliability and maintenance optimization to lower unit cash costs across Kearl and Cold Lake; extended turnaround intervals expected to support further reductions.
  • Capital returns: NCIB execution began ratably in July with intent to accelerate and complete program by year‑end, consistent with timely return of surplus cash.
  • Leming SAGD: Steam injection began in June; first oil expected late 2025; ramp through 2026 to ~9 kb/d peak.

Estimates Context

Metric (USD)S&P Global Consensus*Actual*Outcome
Primary EPS$1.18*$1.36*Beat
Revenue$8.77B*$8.22B*Miss
EBITDA$1.18B*$1.25B*Beat
Primary EPS – # of Estimates8*——
Revenue – # of Estimates2*——

Values retrieved from S&P Global.*

Implications: EPS outperformance amid lower realizations and turnaround‑impacted downstream suggests cost discipline and upstream reliability are offsetting macro pressure; revenue miss likely reflects lower marker prices and refining downtime.

Key Takeaways for Investors

  • Cost resilience and volume momentum: Record Q2 upstream volumes with lower unit cash costs underpin earnings durability into 2H’25; Kearl interval extension should further reduce downtime/costs.
  • Downstream normalization ahead: Utilization at 87% reflects heavy turnarounds; management expects stronger 2H as maintenance passes and renewable diesel contributes.
  • Cash return catalyst: Accelerated NCIB through year‑end plus $0.72 dividend enhances total shareholder return profile.
  • Low‑carbon optionality: Renewable diesel commissioning adds defensible margin streams and compliance credits exposure, diversifying earnings.
  • Macro watch: Tariff/trade policy remains a tail risk; integration and egress advantages mitigate but monitor spreads and policy developments.
  • Cold Lake growth path: Leming on track and Grand Rapids performing supports medium‑term cost and volume improvements to the $US13/bbl unit‑cost target.
  • Estimate recalibration: Street may lift EPS/EBITDA on operational execution while trimming revenue assumptions for lower prices and planned downtime effects.*