Imperial Oil (IMO) Q1 Earnings and Revenues Beat Estimates

Imperial Oil IMO reported first-quarter 2021 adjusted earnings per share of 42 cents, beating the Zacks Consensus Estimate of 37 cents and also the year-ago quarter’s profit of 5 cents. This outperformance was primarily attributable to impressive revenue contribution from the upstream unit on account of higher realizations of around $700 million.

Moreover, this Canadian integrated oil and gas player’s quarterly revenues of $5.52 billion surpassed the Zacks Consensus Estimate of $5.38 billion. Also, the top line rose from the year-ago quarter’s sales of $4.98 billion.

Segmental Information

Upstream: Revenues of C$3,493 million increased from the prior-year level of C$2,374 million. The segment reported a net income of C$79 million against a net loss of C$608 million in the year-ago quarter. This upside was attributable to higher realizations of around $700 million along with the absence of previous year’s non-cash impairment charge of $229 million associated with the revaluation of Imperial Oil’s inventory.

Net production volumes during the quarter under review averaged 393,000 barrels of oil equivalent per day (Boe/d), down from 403,000 Boe/d in the year-ago quarter. Total oil and NGL output amounted to 372,000 barrels per day (BPD) compared with 374,000 BPD in first-quarter 2020. Net oil and NGL output from Kearl and Cold Lake totalled 173,000 bpd and 112,000 bpd, respectively. Syncrude output averaged 74,000 BPD, up 4.2% from the year-earlier quarter. Net natural gas production came in at 127 million cubic feet per day (Mcf/d), lower than 172 Mcf/d in the comparable quarter last year.

Bitumen price realizations totaled C$47.19 a barrel, up from C$18.08 in the year-ago quarter. The company received an average realized price of C$67.41 per barrel of synthetic oil compared with the year-ago quarter’s C$58.94. For conventional crude oil, it received C$49.54 per barrel compared with the year-ago quarter’s C$41.49. Prices of NGL increased to C$31.16 a barrel while that of gas rose to C$3.24 per thousand cubic feet year over year.

Downstream: Revenues of C$5,305 million were down from $5,379 million in first-quarter 2020. Moreover, the segment earned a net income of C$292 million compared with C$402 million in the year-ago quarter, attributable to weak margins of about $150 million and soft sales volumes of around $60 million.

Refinery throughput in the first quarter averaged 364,000 BPD, lower than the prior-year quarter’s level of 383,000 BPD. Capacity utilization of 85% compared unfavorably with the year-earlier level of 91%. This underperformance was on account of the coronavirus-induced reduced market demand.

Chemical: Revenues of C$376 million rose from C$260 million in first-quarter 2020. Net income was recorded at C$67 million compared with the year-ago quarter’s tally of C$21 million.

Imperial Oil Limited Price, Consensus and EPS Surprise

Imperial Oil Limited Price, Consensus and EPS Surprise

Imperial Oil Limited price-consensus-eps-surprise-chart | Imperial Oil Limited Quote

Total Costs & Capex

Total expenses of C$6,486 million declined from the year-ago quarter’s C$6,945 million.

In the quarter under consideration, the company’s capital and exploration expenditures summed C$163 million, down from the year-ago quarter’s C$331 million. Of the total expenditure, 52.1% was allotted to the upstream segment.

Financial Performance

Imperial Oil’s cash flow from operating activities was C$1,045 million in the reported quarter. However, in the year-ago period, cash flow from operating activities came in at C$423 million.

Importantly, the company returned C$162 million to its shareholders through dividends in the reported quarter. It paid out 22 Canadian cents per share of dividend, which matched the year-ago figure.

As of Mar 31, the company held C$1,467 million of cash and cash equivalents. Its total debt amounted to C$5,144 million, representing a total debt-to-total capital of 19%.

Management also informed that the board of directors approved a hike in quarterly dividend payment. The new dividend of 27 Canadian cents is upped almost 23% from the prior dividend. The amount is payable Jul 1, 2021 to all its shareholders of record as of Jun 3, 2021.

Adhering to the company's long-standing obligation to its shareholders, Imperial Oil revised its existing share purchase policy to buy up to 4% of outstanding common shares (as of Jun 15, 2020) by Jun 28, 2021.

Outlook

For the ongoing year, Imperial Oil anticipates its capital expenditures to be $1.2 billion.

Zacks Rank & Other Key Picks

Imperial Oil currently sports a Zacks Rank #1 (Strong Buy). Other top-ranked players in the energy space include Whiting Petroleum Corporation WLL, Matador Resources Company MTDR and Continental Resources, Inc. CLR, each presently flaunting a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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