Calgary-based Imperial Oil Ltd. returned to profitability during the first three months of 2021, lifted by higher commodity prices and improved operations.

President Brad Corson, who discussed the results during a conference call with his management team, attributed the first quarter gains to “decisive actions to weather the economic storm throughout 2020, including making fundamental improvements to cost structure and continuing to progress key projects to ensure the company was well positioned to take full advantage of market conditions as they began to improve.”

In the past year, he said, “we have emphasized a priority that we were placing on making sure that we remained well positioned for the eventual recovery as we were taking steps to respond to the business environment.

“The very positive note we ended 2020 on has continued through the first quarter of 2021, despite the continued challenges brought on by the pandemic.”

This year began with “lower than normal product demand, but we have seen commodity prices and product margins strengthen,” Corson noted. “The improved market, environment coupled with our continued strong operational and cost performance, resulted in us delivering our highest quarterly earnings since the third quarter of 2019 and the highest first quarter since 2018.”

All of the business lines “delivered positive earnings this quarter, which is great to see.”

The wells-to-wheels integrated firm, 70% owned by ExxonMobil, posted across-the-board gains from its upstream exploration and production side and its downstream refining and marketing operations.

Production averaged 432,000 boe/d, Imperial’s strongest performance in 30 years. The firm’s Kearl oilsands mine in northeast Alberta set a record of 251,000 b/d.

The first quarter also delivered significant cash flow from operating activities of over C$1 billion, reflecting strong operational performance, including the highest first quarter upstream production in 30 years and an ongoing focus on cost reductions and efficiencies. 

“While not all of this was structural, we are committed to finding more efficiencies to offset those savings that weren’t structural,” Corson said. “And we are seeing this good progress on cost reductions continue into 2021.”
To put cost reductions in perspective, he noted that, “cash operating costs in the first quarter were almost $70 million lower than in the first quarter of 2020.”

Imperial posted 1Q2021 earnings of C$392 million ($314 million) or C53 cent/share (42 cents), reversing the year-ago loss of C$188 million ($150 million) or minus C25 cents (minus 20 cents).

The upstream business recorded net income of C$79 million ($63.2 million), up dramatically from a net loss of C$608 million (minus $486.4 million) in the same period of 2020.

Refineries ran at 85% of capacity by processing 364,000 b/d in the first quarter. Retail sales dipped sequentially to 414,000 b/d from 416,000 b/d. However, improved profit margins fueled a 52% jump from 4Q2020 to C$292 million ($233.6 million).

The firm declared a dividend of C$27 cents/share (22 cents) is to be paid in the second quarter 2021. Imperial also committed to a buyback of 4% of stock or 29.4 million shares, a C$1 billion ($800 million) stockholder bonus at the current share price of C$35.50 ($28.40).