Imperial Oil Earnings Surpass Estimates in Q3, Revenues Miss

Imperial Oil Limited IMO reported third-quarter 2024 adjusted earnings per share of $1.71, which beat the Zacks Consensus Estimate of $1.48. This increase was driven by higher production at Kearl, strong operational efficiencies and a year-over-year reduction in total expenses. However, the bottom line declined from the year-ago quarter’s $2.06 due to lower realized prices for bitumen, synthetic oil and conventional crude.

Revenues of $9.7 billion missed the Zacks Consensus Estimate of $11.3 billion. The top line also decreased from the year-ago quarter’s $10.4 billion. This was due to weaker revenue contribution across all business segments.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Imperial returned C$1,528 million to its shareholders with C$322 million in dividend payments and C$1,206 million of accelerated share repurchases in the third quarter.

The company achieved a refinery capacity utilization of 90%, which includes the successful completion of planned turnaround activities at both Nanticoke and Strathcona.

IMO reported producing 447,000 barrels of oil equivalent per day in its upstream operations, the highest third-quarter production in more than 30 years.

Calgary-based integrated oil and gas company declared a quarterly dividend of 60 cents per share payable on Jan. 1, 2025, to its shareholders of record at the close of business on Dec. 3, 2024.

In third-quarter 2024, IMO achieved a record quarterly production at Kearl, reaching an average of 290,000 barrels per day. This high level of output indicates successful operational efficiencies and has positively impacted the company’s overall production metrics.

Imperial reported strong cash flow for the third quarter, driven by stable production volumes and improved commodity prices. The cash flow enabled the company to continue its share repurchase program and sustain dividend payments, reflecting robust financial health.

In the third quarter of 2024, Imperial delivered solid performance across its downstream operations, including refining and chemicals, despite planned maintenance activities. Strong refining margins supported earnings, although these were partially offset by downtime related to maintenance. This segment continues to provide a stabilizing effect on the company's overall earnings.

In line with its environmental, social and governance commitments, Imperial made progress on carbon reduction initiatives at the same time, advancing carbon capture utilization & storage projects and other emission-reducing strategies. These efforts are expected to support long-term alignment with environmental regulations and enhance Imperial's sustainability profile.

Imperial Oil Limited Price, Consensus and EPS Surprise

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

IMO’s Segmental Information

Upstream: Revenues of C$4.6 billion decreased from the prior-year level of C$4.8 billion. The figure also missed our projection of C$4.9 billion.

The segment reported a net income of C$1,027 million compared with C$1,028 million in the year-ago quarter. However, the figure beat our expectation of C$349 million.

Net production volume was 386,000 barrels of oil equivalent per day (Boe/d) compared with 355,000 Boe/d in the year-ago quarter.

Total oil and NGL output amounted to 442,000 barrels per day (bpd) compared with 418,000 bpd in the third quarter of 2023.

Net oil and NGL output from Kearl and Cold Lake totaled 194,000 bpd and 114,000 bpd, respectively. Syncrude output averaged 68,000 bpd, which increased from the year-ago quarter’s level of 59,000 bpd.

Net natural gas production totaled 30 million cubic feet per day (Mcf/d) compared with 30 Mcf/d in the same quarter of 2023.

Bitumen price realizations totaled C$77.24 per barrel compared with C$86.05 in the year-ago period. IMO received an average realized price of C$104.41 per barrel for synthetic oil compared with the prior-year quarter’s C$112.98.

For conventional crude oil, it received C$60.91 per barrel compared with C$76.53 in the corresponding period of 2023.

The price of NGL decreased from C$2.69 to 7 Canadian cents per thousand cubic feet year over year.

While production volumes increased in this segment, lower oil and NGL prices led to a decline in revenues, contributing to the overall revenue shortfall.

Downstream: Revenues of C$14.6 billion were down from C$15.1 billion in the prior-year quarter. The figure marginally beat our expectation of C$14.5 billion.

Net income totaled C$205 million compared with C$586 million in the year-ago period. The figure missed our expectation of C$632.4 million.

The refinery throughput in the third quarter averaged 389,000 bpd, lower than the prior-year quarter’s level of 416,000 bpd. However, the figure beat our consensus mark of 385,000 bpd.

The capacity utilization of 90% was lower than the year-ago level of 96%. The figure beat our consensus mark of 88%.

Chemical: Revenues of C$255 million declined from C$382 million in the third quarter of 2023. Moreover, the figure missed our projection of C$365 million.

Net income for this segment was C$28 million, up from the year-ago quarter’s level of C$23 million. The figure also beat our prediction of C$21.3 million.

The chemical business saw declines in revenues due to lower pricing, though net income improved year-over-year, indicating better operational efficiency.

Total Costs & Capex of IMO

Total expenses of C$11.7 billion decreased from the year-ago quarter’s C$11.8 billion. Additionally, the figure missed our projection.

In the quarter under review, IMO’s capital and exploration expenditures totaled C$486 million, up from the year-ago quarter’s C$387 million.

Financial Performance of IMO

Cash flow from operating activities was C$1.5 billion compared with C$2.4 billion in the year-ago quarter. As of Sept. 30, Imperial Oil had cash and cash equivalents of C$1.5 billion. Total debt of the company amounted to C$4 billion, with a debt-to-capitalization of 14.5%.

Outlook of IMO

IMO already disclosed a capital spending budget of C$1.7 billion for 2024. Upstream segment’s production is anticipated at 420,000-442,000 gross oil-equivalent barrels per day. Meanwhile, throughput in the Downstream segment is expected to be 385,000-400,000 barrels per day, accompanied by a capacity utilization rate of 89-92% for 2024.

IMO currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Important Energy Earnings So Far

Right in the middle of earnings season, there have been a few key energy releases so far. Let us glance through a couple of them.

Liberty Energy LBRT, the Denver-CO-based oil and gas equipment company, announced an adjusted net income of 45 cents per share, which missed the Zacks Consensus Estimate of 55 cents. This was primarily due to poor equipment and services execution and lower activity in the reported quarter. Additionally, the bottom line declined from the year-ago quarter’s reported figure of 86 cents due to a year-over-year increase in costs and expenses.

Ahead of the earnings release, LBRT’s board of directors announced a dividend of 8 cents per common share payable on Dec. 20, to its stockholders of record as of Dec. 6. This dividend represents a 14% increase from the prior regular quarterly dividend of 7 cents per share. In the quarter, Liberty returned $51 million to its shareholders through a combination of share repurchases and cash dividends.

Energy infrastructure provider, Kinder Morgan, Inc. KMI reported third-quarter adjusted earnings per share of 25 cents, which missed the Zacks Consensus Estimate of 27 cents. The bottom line was flat year over year. The weakness in quarterly results was caused by lower contributions from the Products Pipelines and CO2 business segments.

KMI also announced a quarterly cash dividend of 28.75 cents per share for the third quarter of 2024 (annualized dividend of $1.15), implying a 2% increase from the third-quarter 2023 level. The dividend is payable on Nov. 15, 2024, to its shareholders of record as of Oct. 31.

Schlumberger Limited SLB, a Houston, TX-based oil and gas equipment and services provider announced third-quarter earnings of 89 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 88 cents. The bottom line also increased from the year-ago quarter’s 78 cents. The strong quarterly earnings were primarily driven by broad-based earnings growth and margin expansion, especially in the Middle East, Asia and offshore North America. Additionally, cost optimization, greater adoption of digital solutions and contributions from long-cycle deepwater and gas projects played significant roles.

SLB reported a free cash flow of $1.81 billion in the third quarter. As of Sept. 30, the company had $4.46 billion in cash and short-term investments. At the end of the quarter, it registered a long-term debt of $11.86 billion.

Zacks Investment Research