• Second quarter earnings of $366 million with cash flow from operating activities of $852 million
• Successfully completed significant planned turnaround activities at Kearl, Syncrude and Strathcona
• Highest second quarter production in over 25 years driven by record production at Kearl
• Accelerating plans to extend intervals between planned turnarounds at Kearl, eliminating need for second annual turnaround beginning in 2021
• 2021 total gross production guidance increased by 10,000 barrels per day at Kearl and by 5,000 barrels per day at Cold Lake driven by sustained strong performance
• Highest Chemical quarterly net income in over 30 years
• Returned over $1.3 billion to shareholders through dividends and repurchase of 4% of outstanding shares
• Renewed share purchase program to repurchase up to an additional 5% of outstanding shares
• Announced the launch of the Oil Sands Pathways to Net Zero industry alliance

Imperial reported estimated net income in the second quarter of $366 million and cash flow from operating activities of $852 million, down from net income of $392 million and cash flow from operating activities of $1,045 million in the first quarter of 2021. Second quarter results reflect continued strong reliability and improved crude prices, while being impacted by the execution of significant planned turnaround activity, weaker realized margins in the Downstream and foreign exchange rates.

“The decisive actions Imperial took throughout the pandemic to accelerate structural business improvements have enabled the company to recover strongly and generate over $1.8 billion in cash flow from operating activities year-to-date, while also completing significant turnaround activity in the second quarter,” said Brad Corson, chairman, president and chief executive officer. “Imperial has significant momentum entering the second half of the year and is well positioned to continue delivering on its commitments.”

Upstream production for the second quarter averaged 401,000 gross oil-equivalent barrels per day, the highest second quarter production in over 25 years. Kearl quarterly total gross production averaged 255,000 barrels per day, achieving its second highest ever quarterly production while also executing a major planned turnaround. Subsequent to the successful completion of this turnaround, Kearl established a new single-month production record of 311,000 total gross barrels per day in June, surpassing its prior single-month record by 10,000 total gross barrels per day. At Cold Lake, the continued focus on production optimization and reliability improvements supported another strong quarter of production, averaging 142,000 gross barrels per day.

Following implementation of a multi-year reliability improvement plan and exceptional demonstrated performance, Imperial is accelerating plans to extend the interval between turnarounds at Kearl. This change eliminates the need for a second annual turnaround starting this fall and increases 2021 production guidance for Kearl to 265,000 total gross barrels per day. In addition, based on production performance and enhanced reliability, Imperial is increasing 2021 production guidance for Cold Lake to 135,000 barrels per day.

Refinery throughput in the quarter averaged 332,000 barrels per day with capacity utilization of 78 percent and petroleum product sales of 429,000 barrels per day. Results in the quarter were primarily impacted by the major planned turnaround at Strathcona refinery, which reduced throughput by approximately 70,000 barrels per day. Subsequent to the successful completion of this turnaround, overall refinery capacity utilization increased to 93 percent in the month of June.

Chemical second quarter net income was $109 million, the highest quarterly net income in over 30 years. Chemical results were primarily driven by continued strength in polyethylene margins.

During the second quarter of 2021, Imperial returned over $1.3 billion to shareholders through share repurchases and dividend payments. In June, the company announced the renewal of its share repurchase program, allowing the company to repurchase up to five percent of its outstanding shares over a 12-month period ending on June 28, 2022.

“Despite heavy turnaround activity, Imperial generated substantial free cash flow in the quarter which, together with performance in the first quarter, supported our dividend and the repurchase of four percent of our shares, returning over $1.3 billion to shareholders,” said Corson. “Looking forward, with our major turnarounds complete, we are focused on increased production, higher refinery utilization, continued capital discipline and returning cash to shareholders as demonstrated by our recent dividend increase and our launch of an additional five percent share purchase program at the end of the quarter.”

In June, Imperial and its industry peers announced the launch of the Oil Sands Pathways to Net Zero alliance. “Imperial is proud to be a founding member of this unprecedented alliance and we look forward to working together with industry and governments to support society’s ambition to achieve net zero emissions,” added Corson.

Second quarter highlights

• Net income of $366 million or $0.50 per share on a diluted basis, compared to a net loss of $526 million or $0.72 per share in the second quarter of 2020. Net income excluding identified items¹ of $366 million in the second quarter of 2021, compared to net loss excluding identified items¹ of $807 million in the same period of 2020.
• Cash flows from operating activities of $852 million, compared to cash flows used in operating activities of $816 million in the same period of 2020. Cash flows from operating activities excluding working capital¹ of $893 million, up from cash flows used in operating activities excluding working capital¹ of $575 million in the same period of 2020.
• Capital and exploration expenditures totalled $259 million, up from $207 million in the second quarter of 2020. The company continues to anticipate full-year capital and exploration expenditures of $1.2 billion in 2021.
• The company returned $1,332 million to shareholders in the second quarter of 2021, including $1,171 million in share repurchases and $161 million in dividends paid.
• Renewed share repurchase program, enabling the purchase of up to five percent of common shares outstanding, a maximum of 35,583,671 shares, during the 12-month period ending June 28, 2022, consistent with Imperial’s commitment to return surplus cash to shareholders.
• Production averaged 401,000 gross oil-equivalent barrels per day, up from 347,000 barrels per day in the same period of 2020. Increased production was driven by strong operating performance as well as the absence of prior year production balancing in-line with market demand. Quarterly production represents the highest second quarter production in over 25 years.
• Total gross bitumen production at Kearl averaged 255,000 barrels per day (181,000 barrels Imperial's share), up from 190,000 barrels per day (135,000 barrels Imperial's share) in the second quarter of 2020. Kearl achieved its second highest ever quarterly production while also completing a major planned turnaround. In June, Kearl established a new single month production record of 311,000 total gross barrels per day, surpassing the prior single-month record by 10,000 total gross barrels per day. Full-year production is now expected to be 265,000 total gross barrels per day, an increase of 10,000 total gross barrels per day above previous guidance, as Kearl transitions to a single annual turnaround beginning in 2021, one year ahead of schedule.
• Successful start-up of the first Kearl Boiler Flue Gas heat recovery unit. This technology recovers waste heat from a boiler’s combustion exhaust to pre-heat process water and has the potential to not only reduce operating costs, but also emissions by up to 30,000 tonnes/year of carbon dioxide equivalent. Imperial is currently progressing plans to apply this innovative technology on up to five additional boilers.
• Gross bitumen production at Cold Lake averaged 142,000 barrels per day, up from 123,000 barrels per day in the second quarter of 2020. Higher production was primarily due to improved reliability and lower scheduled downtime compared to the second quarter of 2020. Full-year gross production is now expected to be 135,000 barrels per day, an increase of 5,000 barrels per day above previous guidance, primarily driven by production optimization and reliability enhancements.
• The company's share of gross production from Syncrude averaged 47,000 barrels per day, compared to 50,000 barrels per day in the second quarter of 2020. Syncrude completed a major planned turnaround during the second quarter of 2021 and ramped up to full production rates early in the third quarter.
• Refinery throughput averaged 332,000 barrels per day, up from 278,000 barrels per day in the second quarter of 2020. Capacity utilization was 78 percent, up from 66 percent in the second quarter of 2020. Strathcona refinery completed a major planned turnaround during the second quarter of 2021. Subsequent to the turnaround, overall refinery capacity utilization increased to 93 percent in the month of June.
• Petroleum product sales were 429,000 barrels per day, up from 357,000 barrels per day in the second quarter of 2020. Increased sales were primarily driven by lower COVID-19 related impacts.
• Launched the redesigned Synergy Supreme premium gasoline at Esso stations across Canada. Synergy Supreme is formulated to keep engines three times cleaner and has an advanced additive package that provides enhanced engine protection.
• Chemical net income of $109 million in the quarter, the highest quarterly net income in over 30 years, up from $7 million in the second quarter of 2020. Improved results were primarily driven by continued strength in polyethylene margins.
• Announced the launch of the Oil Sands Pathways to Net Zero industry alliance. The goal of this unique alliance, working collectively with the federal and Alberta governments, is to achieve net zero greenhouse gas emissions from oil sands operations by 2050 to help Canada meet its climate goals. This alliance includes Canada’s five largest oil sands producers, representing approximately 90 percent of the country’s oil sands production.

Six months highlights

• Net income of $758 million, compared to net loss of $714 million in 2020.
• Net income per share on a diluted basis was $1.04, compared to net loss per share of $0.97 in 2020.
• Cash flow generated from operating activities was $1,897 million, compared to cash flow used in operating activities of $393 million in 2020.
• Capital and exploration expenditures totalled $422 million, compared to $538 million in 2020.
• Gross oil-equivalent production averaged 417,000 barrels per day, up from 383,000 barrels per day in 2020.
• Refinery throughput averaged 348,000 barrels per day, up from 330,000 barrels per day in 2020.
• Petroleum product sales were 421,000 barrels per day, up from 409,000 barrels per day in 2020.
• Per share dividends declared during the year totalled $0.49, up from $0.44 per share in 2020.
• Returned $1,494 million to shareholders through dividends and share purchases.

KeyFacts Energy: Imperial Oil Canada country profile