Imperial Oil cautious on ramping up operations as it reports Q2 earnings miss

Imperial Oil cautious on ramping up operations as it reports Q2 earnings miss

Imperial Oil cautious on ramping up operations as it reports Q2 earnings miss

CALGARY — The CEO of Imperial Oil Ltd. says the company will be cautious in ramping up spending despite a recovery in fuel demand following the collapse earlier this year amid the COVID-19 pandemic lockdowns.

Brad Corson said the company can’t talk about whether it will reverse this year’s spending cuts next year, but it’s unlikely spending will return to pre-COVID levels in 2021 because the market outlook remains so uncertain.

“A big question right now is what will the COVID situation look like as we finish up this year and move into next year,” he said on a conference call to discuss second-quarter results.

“Because of that, we’re going to maintain flexibility with our plans, just as we did this year.”

The caution is consistent with outlooks from the CEOs of Calgary-based rivals Suncor Energy Inc. and Husky Energy Corp. — companies that also own both oil production and refineries — on their recent second-quarter conference calls.

Corson said Imperial is well on the way to meeting its goal announced in March to cut $500 million from its 2020 capital spending plan of between $1.6 billion and $1.7 billion and find another $500 million in operating savings this year.

On Friday, Imperial reported a net loss of $526 million on revenue of $3.7 billion in the three months ended June 30, down from a net profit of $1.2 billion on revenue of $9.26 billion in the year-earlier period.

Analysts had expected a $188 million net loss and revenue of $4.24 billion, according to markets data firm Refinitiv.

Imperial, which is 69.6 per cent owned by American giant Exxon Mobil Corp., blamed the performance on lower oil prices and refinery profit margins due to the COVID-19-related economic slump.

Refinery utilization rates were about 66 per cent for the quarter thanks to demand weakness and maintenance interruptions, it said.

Corson said demand for Imperial’s gasoline and diesel have recovered to about 90 per cent of normal levels but jet fuel demand is still only at about one-third.

The company reported production of 347,000 barrels of oil equivalent per day in the second quarter, down from 400,000 boe/d a year earlier, as maintenance shutdowns at its Kearl oilsands mine were extended to better control spread of the coronavirus after an outbreak there.

Kearl’s average production of 190,000 barrels of oil per day was higher than expected due to the recent addition of supplemental ore crushers at the mine, Corson said.

The mine’s production peaked at 300,000 bpd during a two-week period between maintenance shutdowns at its two oilsands processing plants and it will be well-positioned to maximize production when the second plant is back online again in late August, he said.

The company estimates Kearl production will average about 220,000 bpd this year, down from earlier forecasts of 240,000 bpd.

Imperial Oil shares, which have fallen 37 per cent since Dec. 31, lost 96 cents or 4.4 per cent at $21.05 at afternoon trading in Toronto.

This report by The Canadian Press was first published July 31, 2020.

Companies in this story: (TSX:IMO, TSX:SU, TSX:HSE)

Dan Healing, The Canadian Press

crude oil

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

school
Rimbey Christian School building projects nearing completion

New gym, soccer field and skating rink will be open to community use as well

SARS-CoV-2 virus particles, which causes COVID-19, emerge from the surface of cells isolated from a patient in the U.S. and cultured in a lab in a 2020 electron microscope image. THE CANADIAN PRESS/AP-HO, National Institute of Allergy and Infectious Diseases - Rocky Mountain Laboratories
Alberta now has 17,743 active cases of COVID-19

Province now has 17,743 active cases

Alberta’s chief medical officer of health, Dr. Deena Hinshaw, confirmed eight additional virus-deaths Monday afternoon including one in central zone. (Photo by Chris Schwarz/Government of Alberta)
Central zone up to 1,249 active COVID-19 cases

Red Deer sits at 257 active COVID-19 cases

Kelowna RCMP Stock Image.
Bentley post office damaged, armed robbery at Subway

Sylvan Lake RCMP respond to incidents in Bentley last month

Ten-month-old Aidan Deschamps poses for a photo with his parents Amanda Sully and Adam Deschamps in this undated handout photo. Ten-month-old Aidan Deschamps was the first baby in Canada to be diagnosed with spinal muscular atrophy through Ontario’s newborn screening program. The test was added to the program six days before he was born. THE CANADIAN PRESS/HO, Children’s Hospital Eastern Ontario *MANDATORY CREDIT*
First newborn tested for spinal muscular atrophy in Canada hits new milestones

‘If Aidan had been born any earlier or anywhere else our story would be quite different’

People line up at a COVID-19 assessment centre during the COVID-19 pandemic in Scarborough, Ont., on Wednesday, December 2, 2020. Toronto and Peel region continue to be in lockdown. THE CANADIAN PRESS/Nathan Denette
COVID-19 vaccine approval could be days away as pressures mount on health-care system

Many health officials in regions across the country have reported increasing pressures on hospitals

File Photo
Sylvan Lake Town Council squashes mask bylaw

The bylaw did not make it past first reading, after a 4-3 vote defeated the motion

A logo for Netflix on a remote control is seen in Portland, Ore.,Aug. 13, 2020. Experts in taxation and media say a plan announced Monday by the government will ultimately add to the cost of digital services and goods sold by foreign companies. THE CANADIAN PRESS/AP-Jenny Kane
‘Netflix tax’ for digital media likely to raise prices for consumers, experts say

The government says Canadian companies already collect those taxes when they make digital sales

Gaming content was big on YouTube in 2020. (Black Press Media files)
What did Canadians watch on Youtube during isolation? Workouts, bird feeders

Whether it was getting fit or ‘speaking moistly,’ Canadians had time to spare this year

A teacher places the finishing touches on the welcome sign at Hunter’s Glen Junior Public School which is part of the Toronto District School Board (TDSB) during the COVID-19 pandemic in Scarborough, Ont., on Sept. 14, 2020. THE CANADIAN PRESS/Nathan Denette
Hindsight 2020: How do you preserve a year many Canadians would rather forget?

Figuring out how to preserve the story of the pandemic poses a series of challenges

Team Manitoba celebrate after defeating Team Ontario to win the Scotties Tournament of Hearts in Moose Jaw, Sask., Sunday, Feb. 23, 2020. Curling Canada wants Calgary’s Canada Olympic Park to be a curling hub for the season’s top events. THE CANADIAN PRESS/Jonathan Hayward
Calgary facility set to become curling hub during pandemic

Curling Canada has provisional approval for Calgary’s hub-city concept from Alberta Health

Most Read