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IMPERIAL OIL LTD (IMO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net income was $1.225B with diluted EPS of $2.37; total revenues and other income were $12.607B. Sequentially, EPS rose vs Q3 2024 ($2.33), while revenue declined; year-over-year revenue and EPS were down from Q4 2023 ($13.109B, $2.47) .
  • Cash flow remained robust: cash from operating activities was $1.789B; free cash flow was $1.385B. The company returned $1.792B to shareholders in the quarter via $317M dividends and $1.475B accelerated share repurchases, and announced a 20% dividend increase to $0.72 per share for Q1 2025 .
  • Operations were strong: upstream production averaged 460 kboe/d, the highest quarterly level in over 30 years (adjusted for XTO), while downstream capacity utilization was 95% with 411 kb/d throughput .
  • Guidance update: 2025 plan targets upstream production of 433–456 kboe/d, Kearl 280–290 kb/d, Cold Lake 150–160 kb/d, Syncrude 75–80 kb/d; downstream throughput 405–415 kb/d (94–96% utilization); Strathcona renewable diesel start-up targeted around mid-2025 .
  • Consensus estimates from S&P Global were unavailable today; as a result, estimate comparisons (beats/misses) are not provided.*

What Went Well and What Went Wrong

What Went Well

  • Record upstream production: “highest quarterly production in over 30 years” at 460 kboe/d; Kearl set a full-year record (281 kb/d gross; unit cash costs below prior target) and Cold Lake delivered strong Grand Rapids production (22 kb/d SA‑SAGD) .
  • Downstream resilience: 95% utilization in Q4 despite planned turnaround; management highlighted advantaged Canadian refining (feedstock access, logistics, strong demand) supporting earnings vs softer U.S. peers .
  • Shareholder returns and dividend hike: $1.792B returned in Q4; dividend raised to $0.72 (largest nominal increase). Management emphasized reliable, growing dividend and strong breakeven discipline .

What Went Wrong

  • Margins compressed: downstream margins declined vs prior year; petroleum product sales fell to 458 kb/d from 476 kb/d due to lower wholesale volumes .
  • Kearl quarterly production dipped year-over-year (299 kb/d vs 308 kb/d gross) even as full-year hit a record; Syncrude was lower (81 kb/d vs 85 kb/d) .
  • Macro headwinds: crude prices decreased vs Q3 and industry refining margins declined on increased supply; management also flagged tariff uncertainty as a risk, though asserted operational and integration resilience .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Total revenues and other income ($CAD mm)13,109 13,259 12,607
Net income ($CAD mm)1,365 1,237 1,225
Diluted EPS (CAD)2.47 2.33 2.37
Net income margin (%)10.4% (1,365/13,109) 9.3% (1,237/13,259) 9.7% (1,225/12,607)
Cash from operating activities ($CAD mm)1,311 1,487 1,789
CFO excl. working capital ($CAD mm, non-GAAP)1,799 1,797 1,650
Free cash flow ($CAD mm, non-GAAP)900 1,003 1,385
Shareholder returns ($CAD mm)2,752 financing CF use 1,528 returned (div + ASR) 1,792 returned (div + ASR)

Segment net income

Segment Net Income ($CAD mm)Q4 2023Q3 2024Q4 2024
Upstream770 1,027 878
Downstream595 205 356
Chemical17 28 21
Corporate & other(17) (23) (30)
Total1,365 1,237 1,225

Operational KPIs

KPIQ4 2023Q3 2024Q4 2024
Upstream gross oil-equivalent production (kb/d)452 447 460
Kearl total gross production (kb/d)308 295 299
Kearl (Imperial’s share, kb/d)218 209 212
Cold Lake (kb/d)139 147 157
Syncrude (kb/d)85 81 81
Refinery throughput (kb/d)407 389 411
Capacity utilization (%)94% 90% 95%
Petroleum product sales (kb/d)476 487 458

Estimate comparisons

  • Consensus EPS/Revenue for Q4 2024: Unavailable via S&P Global today; estimate comparisons omitted.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Upstream production (kboe/d)FY 2025N/A433–456New
Kearl gross (kb/d)FY 2025N/A280–290New
Cold Lake (kb/d)FY 2025N/A150–160New
Syncrude (kb/d)FY 2025N/A75–80New
Downstream throughput (kb/d)FY 2025N/A405–415New
Capacity utilization (%)FY 2025N/A94–96New
Strathcona Renewable DieselStart-up timingMid‑2025 target reiteratedMid‑2025 targetMaintained
Capital & exploration spend ($CAD bn)FY 2025N/A1.9–2.1New
Dividend per share (CAD)Q1 2025 vs Q4 2024$0.60$0.72Raised (+20%)

Planned 2025 turnarounds (operational impact)

  • Upstream: Kearl (Q2: ~9 kb/d; $57M), Cold Lake (Q2: ~3 kb/d; $30M), Syncrude (Q3: ~6 kb/d; $111M). Downstream & Chemical: Strathcona (Q2: ~3 kb/d; $19M), Nanticoke (Q2: ~6 kb/d; $41M), Sarnia (Q3/4: ~3 kb/d; $51M) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024; Q3 2024)Current Period (Q4 2024)Trend
Upstream unit cash costsKearl unit cash cost progress to ~USD 20; Cold Lake cost cuts with GRP1 ramp Targeting Kearl USD 18; Cold Lake trending toward USD 13 with GR at 22 kb/d Improving
Grand Rapids SA‑SAGDFirst oil; ramp to 10–12 kb/d; target 15 kb/d Sustained ~22 kb/d in Q4; well above initial plan Ahead of plan
Kearl volumes and reliabilityRecord first half; single turnaround <20 days Highest-ever annual production; many days >300 kb/d; pursuit of 300+ structurally Sustained progress
Downstream utilization/margins89–90% utilization amidst turnarounds; resilient cracks 95% utilization; resilient earnings vs U.S. peers due to advantaged crudes/logistics Strong/Stable
TMX pipeline & egressTMX startup tightened differentials; benefits to realizations Shipping regularly on TMX; tolls timing uncertain Structural tailwind; admin timing TBD
Tariffs/macroN/AManagement expects resilience if tariffs implemented; integration offsets Risk monitored
Strathcona Renewable DieselReactor installed; mid‑2025 commissioning targeted Construction on track; feedstock/hydrogen coordination; positive cash flow expected H2’25 On schedule
Pathways Alliance (CCS)Regulatory filings, FEED; fiscal support required Continued engagement; 2030 timeline challenged without clarity Progressing; policy dependency

Management Commentary

  • “Our robust financial results in 2024 were driven by outstanding operational performance…Downstream and Cold Lake performances were both at the upper end of our guidance” — Brad Corson (CEO) .
  • “We achieved the highest fourth quarter production in the past 30 years…benefits of TMX pipeline and additional egress” .
  • “Our unit cash cost reduction of nearly USD 3/bbl vs 2023; Kearl full-year unit cash costs of USD 19.67/bbl, targeting USD 18/bbl” .
  • “Largest nominal dividend increase in company history…reflects confidence in delivering guidance” .
  • “Strathcona renewable diesel construction well advanced; feedstock and hydrogen supply aligned for mid‑year start-up” .

Q&A Highlights

  • Refining resilience vs U.S. peers: advantaged crudes, strong demand, logistics to premium outlets; high utilization supported earnings despite softer cracks .
  • Cold Lake Grand Rapids: Phase 1 performance exceeded expectations at ~22 kb/d; solvent-assisted SAGD materially lowers unit costs; future phases under evaluation .
  • Capital allocation and M&A: priority on reliable, growing dividend, NCIB/SIB as needed; high bar for M&A vs organic options like Aspen; comfortable leverage .
  • TMX tolls: shipping regularly; timing uncertain; structural differential benefits realized .
  • Breakeven discipline: cash breakeven <USD 25 WTI; with sustaining capital+dividends <USD 35 WTI; supports dividend growth capacity .
  • Tariffs risk: company expects resilience given integration, crude slate flexibility; focus on lowest cost supply and market optionality .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 EPS and revenue were unavailable due to data access limits today; therefore, beat/miss analysis vs Street is not provided. Management’s narrative indicates strong operational execution offset by lower realizations and margins, but without consensus data, we cannot quantify estimate surprises.*

Key Takeaways for Investors

  • Operational momentum: Record upstream volume and 95% downstream utilization underscore execution quality; Cold Lake Grand Rapids is structurally lowering costs and boosting production .
  • Cash returns: Continued acceleration of buybacks and a 20% dividend hike signal confidence in free cash flow durability even through margin cycles .
  • Cost trajectory: Clear line of sight to further unit cash cost cuts (Kearl USD 18, Cold Lake USD 13), tightening breakevens and expanding dividend headroom .
  • Mid‑2025 catalyst: Strathcona renewable diesel commissioning could add product optionality and incremental cash flow in H2 2025, supported by local feedstock and regulatory incentives .
  • Macro risk management: TMX-driven narrower differentials aid realizations; management sees resilience to potential tariffs via integration and slate flexibility .
  • 2025 setup: Guidance implies higher volumes (433–456 kboe/d) with lighter downstream turnarounds vs 2024; production growth plus cost reductions should support sustained capital returns .
  • Watchlist: Monitor downstream margins, petroleum product sales normalization, tariff developments, and clarity on TMX tolls and Pathways policy support for CCS .

*Estimates unavailable via S&P Global today; as a result, estimate comparisons (beats/misses) are not provided.