Core Viewpoint - Canada's Imperial Oil plans to reduce employee roles by approximately 20% by the end of 2027 as part of its restructuring plan [1] Company Summary - Imperial Oil anticipates a significant workforce reduction, targeting a 20% decrease in employee roles [1]

Core Insights - Imperial Oil Limited (IMO) shares closed at $92.96, near its 52-week high of $93.09, reflecting a 38.6% gain over the past year, outperforming the sub-industry and broader oil and energy sector [1][9] - The company has demonstrated strong performance compared to peers such as Gibson Energy Inc., Suncor Energy Inc., and Cenovus Energy Inc., which gained 14.3%, 15%, and 4.4% respectively [2][3] Company Performance - Imperial Oil is recognized as one of Canada's most resilient energy companies, with a diversified portfolio that includes upstream, downstream, and chemicals [4] - The company achieved record upstream production averaging 427,000 barrels of oil equivalent per day (boe/d), the highest second-quarter level in over 30 years, with Kearl reaching 275,000 gross barrels per day [6][9] - The Strathcona renewable diesel facility, the largest in Canada, is expected to enhance the company's clean energy profile and long-term growth [7][10] Financial Strength - Imperial Oil has returned over C$20 billion to shareholders since 2020, including C$15 billion in buybacks, and has a strong track record of dividend growth, with a quarterly dividend of 72 Canadian cents per share [11] - The company ended the second quarter with C$2.4 billion in cash and modest debt of C$4 billion, indicating a strong balance sheet and financial flexibility [12] Growth Prospects - Future growth initiatives, such as the Leming SAGD redevelopment expected to bring first oil by late 2025, further enhance the company's medium-term outlook [12] - The backing from ExxonMobil provides Imperial Oil with unmatched financial strength and access to low-cost capital, positioning it well for long-term value creation [4][13]

Core Insights - Imperial Oil (IMO) has shown strong stock performance, increasing by 8.8% over the past month and reaching a 52-week high of $92.33, with a year-to-date gain of 47.6% compared to the Zacks Oils-Energy sector's 4.3% and the Zacks Oil and Gas - Integrated - Canadian industry's 14.6% [1] Financial Performance - The company has consistently exceeded earnings expectations, reporting an EPS of $1.34 against a consensus estimate of $1.22 in its last earnings report on August 1, 2025, although it missed revenue estimates by 23.02% [2] - For the current fiscal year, Imperial Oil is projected to achieve earnings of $5.7 per share on revenues of $38.87 billion, reflecting a -13.51% change in EPS and a 3.32% change in revenues. For the next fiscal year, expected earnings are $5.39 per share on revenues of $42.51 billion, indicating a year-over-year change of -5.44% in EPS and 9.35% in revenues [3] Valuation Metrics - The stock trades at 15.9 times current fiscal year EPS estimates, which is above the peer industry average of 15.2 times. On a trailing cash flow basis, it trades at 9.4 times compared to the peer group's average of 7.3 times, positioning Imperial Oil favorably for value investors [7] - The company holds a Value Score of A, with Growth and Momentum Scores of C, resulting in a VGM Score of B, indicating a solid value proposition [6][5] Zacks Rank - Imperial Oil has a Zacks Rank of 2 (Buy), supported by rising earnings estimates, aligning with investment strategies that favor stocks with Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, suggesting potential for further gains in the near future [8]

Core Viewpoint - Imperial Oil Limited (IMO) has experienced a significant stock price increase of 20.4% over the past six months, outperforming the broader oil and energy sector, which saw a decline of 2.2% during the same period [1] Group 1: Performance Overview - Imperial's stock performance has surpassed its peers in Canada's Oil and Gas Exploration and Production sub-industry, with Gibson Energy Inc. increasing by 11.4%, while Cenovus Energy Inc. and Canadian Natural Resources Limited saw declines of 1.6% and 0.6%, respectively [1] - The company achieved its highest second-quarter upstream production in over 30 years, averaging 427,000 oil-equivalent barrels per day, driven by strong performance from its Kearl asset [6][7] Group 2: Strategic Advantages - Imperial operates across the full value chain, including upstream exploration and production, downstream refining and marketing, and chemical manufacturing, which enhances its market position [3] - The company returned C$367 million to shareholders in the second quarter of 2025 and has returned C$20 billion since 2020, demonstrating a strong commitment to shareholder returns [5] - The completion of Canada's largest renewable diesel facility at the Strathcona refinery aligns with Imperial's long-term lower-emission energy strategy, adding diversification and long-term earnings potential [8] Group 3: Financial Strength - Imperial maintains a strong balance sheet with total debt of C$4 billion and shareholders' equity of C$25 billion as of June 30, 2025, providing financial flexibility [10] - The Trans Mountain pipeline expansion has improved market access, allowing the company to increase petroleum product sales to an average of 480,000 barrels per day in the second quarter of 2025 [9] Group 4: Challenges and Risks - The company's dependence on ExxonMobil, which owns approximately 69.6% of Imperial, may limit strategic flexibility compared to peers with more diversified shareholder bases [11] - The chemicals segment reported a decline in net income to C$21 million in the second quarter of 2025, down from C$65 million the previous year, due to weaker polyethylene margins [12] - Recent lower oil prices have impacted Imperial's net income, which was C$949 million in the second quarter of 2025, down from C$1 billion in the same period last year [15]

Core Insights - Imperial Oil Limited (IMO) reported second-quarter 2025 adjusted earnings per share of $1.34, exceeding the Zacks Consensus Estimate of $1.22, but down from $1.54 in the same quarter last year due to lower upstream price realizations, partially offset by higher production volumes [1][11] - Revenues for the quarter were $8.1 billion, missing the Zacks Consensus Estimate of $10.5 billion and down from $9.8 billion year-over-year, primarily due to weak performance in the Chemical segment [2][11] - The company returned C$367 million to shareholders through dividend payments and announced a quarterly dividend of 72 Canadian cents per share [2][3] Financial Performance - Upstream revenues were C$3.8 billion, down from C$4.6 billion year-over-year and missing expectations of C$4.8 billion, with net income of C$664 million compared to C$799 million in the prior year [4][11] - Average upstream production increased to 427,000 gross oil-equivalent barrels per day (boe/d) from 404,000 boe/d year-over-year, surpassing expectations of 416,000 boe/d [5][11] - Total gross bitumen production at Kearl averaged 275,000 barrels per day, up from 255,000 barrels per day in the second quarter of 2024, attributed to improved mine productivity [6][11] Segment Performance - Cold Lake's gross bitumen production averaged 145,000 barrels per day, a slight decrease from 147,000 barrels per day in the prior year, due to production timing and turnaround impacts [7] - The Leming SAGD project is on track, with steam injection started and first oil expected in late 2025, ramping up to a peak of around 9,000 barrels per day [8] - Chemical segment revenues were C$356 million, down from C$418 million year-over-year, with net income of C$21 million compared to C$65 million in the prior year [13] Cost and Capital Expenditures - Total expenses decreased to C$10 billion from C$11.9 billion year-over-year, also below expectations of C$13.2 billion [14] - Capital and exploration expenditures totaled C$473 million, slightly up from C$462 million in the previous year [14] Cash Flow and Debt - Cash flow from operating activities was C$1.5 billion, down from C$1.6 billion year-over-year, with cash and cash equivalents of C$2.4 billion as of June 30 [15] - Total debt amounted to C$4 billion, with a debt-to-capitalization ratio of 13.8% [15]

```markdown [PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial statements](index=4&type=section&id=Item%201.%20Financial%20statements) Imperial Oil Limited's unaudited consolidated financial statements for Q2 and H1 2025, prepared under U.S. GAAP, are presented [Consolidated statement of income](index=4&type=section&id=Consolidated%20statement%20of%20income) Revenues and Other Income (millions of Canadian dollars) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :-------------------------- | :------ | :------ | :------------ | :------------ | | Revenues | 11,208 | 13,348 | 23,674 | 25,597 | | Investment and other income | 24 | 35 | 75 | 69 | | **Total revenues and other income** | **11,232** | **13,383** | **23,749** | **25,666** | Expenses (millions of Canadian dollars) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :---------------------------------- | :------ | :------ | :------------ | :------------ | | Purchases of crude oil and products | 7,215 | 8,856 | 14,971 | 16,562 | | Production and manufacturing | 1,664 | 1,689 | 3,350 | 3,353 | | Selling and general | 251 | 221 | 510 | 467 | | Federal excise tax and fuel charge | 372 | 656 | 964 | 1,247 | | Depreciation and depletion | 478 | 456 | 1,009 | 946 | | Financing | 2 | 14 | — | 26 | | **Total expenses** | **9,988** | **11,894** | **20,817** | **22,605** | Profitability and Per Share Information (millions of Canadian dollars, unless noted) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :------------------------------------------ | :------ | :------ | :------------ | :------------ | | Income before income taxes | 1,244 | 1,489 | 2,932 | 3,061 | | Income taxes | 295 | 356 | 695 | 733 | | **Net income (loss)** | **949** | **1,133** | **2,237** | **2,328** | | Net income (loss) per common share - basic (C$) | 1.86 | 2.11 | 4.39 | 4.34 | | Net income (loss) per common share - diluted (C$) | 1.86 | 2.11 | 4.38 | 4.34 | [Consolidated statement of comprehensive income](index=5&type=section&id=Consolidated%20statement%20of%20comprehensive%20income) Comprehensive Income (millions of Canadian dollars) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :-------------------------------------------------- | :------ | :------ | :------------ | :------------ | | Net income (loss) | 949 | 1,133 | 2,237 | 2,328 | | Other comprehensive income (loss), net of income taxes | 5 | 13 | 22 | 29 | | **Comprehensive income (loss)** | **954** | **1,146** | **2,259** | **2,357** | [Consolidated balance sheet](index=6&type=section&id=Consolidated%20balance%20sheet) Assets (millions of Canadian dollars) | Metric | Jun 30, 2025 | Dec 31, 2024 | | :------------------------------------------ | :----------- | :----------- | | Cash and cash equivalents | 2,386 | 979 | | Accounts receivable - net | 5,602 | 5,758 | | Inventories of crude oil and products | 1,642 | 1,642 | | Materials, supplies and prepaid expenses | 1,028 | 975 | | **Total current assets** | **10,658** | **9,354** | | Property, plant and equipment - net | 30,668 | 30,807 | | Goodwill | 166 | 166 | | Other assets, including intangibles - net | 1,592 | 1,527 | | **Total assets** | **44,178** | **42,938** | Liabilities (millions of Canadian dollars) | Metric | Jun 30, 2025 | Dec 31, 2024 | | :------------------------------------------ | :----------- | :----------- | | Notes and loans payable | 19 | 19 | | Accounts payable and accrued liabilities | 6,710 | 6,907 | | Income taxes payable | — | 81 | | **Total current liabilities** | **6,729** | **7,007** | | Long-term debt | 3,983 | 3,992 | | Other long-term obligations | 3,901 | 3,870 | | Deferred income tax liabilities | 4,566 | 4,596 | | **Total liabilities** | **19,179** | **19,465** | Shareholders' Equity (millions of Canadian dollars) | Metric | Jun 30, 2025 | Dec 31, 2024 | | :------------------------------------------ | :----------- | :----------- | | Common shares at stated value | 942 | 942 | | Earnings reinvested | 24,249 | 22,745 | | Accumulated other comprehensive income (loss) | (192) | (214) | | **Total shareholders' equity** | **24,999** | **23,473** | | **Total liabilities and shareholders' equity** | **44,178** | **42,938** | [Consolidated statement of shareholders' equity](index=7&type=section&id=Consolidated%20statement%20of%20shareholders'%20equity) Shareholders' Equity Changes (millions of Canadian dollars) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :------------------------------------------ | :------ | :------ | :------------ | :------------ | | Earnings reinvested at beginning of period | 23,666 | 22,781 | 22,745 | 21,907 | | Net income (loss) for the period | 949 | 1,133 | 2,237 | 2,328 | | Dividends declared | (366) | (322) | (733) | (643) | | Accumulated other comprehensive income (loss) at beginning of period | (197) | (661) | (214) | (677) | | Other comprehensive income (loss) | 5 | 13 | 22 | 29 | | **Shareholders' equity at end of period** | **24,999** | **23,936** | **24,999** | **23,936** | [Consolidated statement of cash flows](index=8&type=section&id=Consolidated%20statement%20of%20cash%20flows) Cash Flows (millions of Canadian dollars) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :------------------------------------------ | :------ | :------ | :------------ | :------------ | | Cash flows from (used in) operating activities | 1,465 | 1,629 | 2,992 | 2,705 | | Cash flows from (used in) investing activities | (472) | (456) | (849) | (937) | | Cash flows from (used in) financing activities | (371) | (329) | (736) | (612) | | **Increase (decrease) in cash and cash equivalents** | **622** | **844** | **1,407** | **1,156** | | Cash and cash equivalents at beginning of period | 1,764 | 1,176 | 979 | 864 | | **Cash and cash equivalents at end of period** | **2,386** | **2,020** | **2,386** | **2,020** | [Notes to consolidated financial statements](index=9&type=section&id=Notes%20to%20consolidated%20financial%20statements) [Note 1. Basis of financial statement preparation](index=9&type=section&id=Note%201.%20Basis%20of%20financial%20statement%20preparation) - The unaudited consolidated financial statements are prepared in accordance with U.S. GAAP and follow the same accounting policies as the 2024 annual report on Form 10-K. All adjustments are normal and recurring[17](index=17&type=chunk) - Exploration and production activities are accounted for under the "successful efforts" method[18](index=18&type=chunk) - Amounts for related party revenues and purchases for Q2 and 6 months ended June 30, 2024, were revised, with impacts offsetting to zero[19](index=19&type=chunk) [Note 2. Business segments](index=10&type=section&id=Note%202.%20Business%20segments) - In Q2 2025, benzene and aromatic solvents were reclassified from the Chemicals segment to the Downstream segment. This change was deemed immaterial, so comparative periods were not recast[23](index=23&type=chunk)[26](index=26&type=chunk) Segment Net Income (Loss) (millions of Canadian dollars) | Segment | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :---------------- | :------ | :------ | :------------ | :------------ | | Upstream | 664 | 799 | 1,395 | 1,357 | | Downstream | 322 | 294 | 906 | 925 | | Chemical | 21 | 65 | 52 | 122 | | Corporate and other | (58) | (25) | (116) | (76) | | **Consolidated Net Income** | **949** | **1,133** | **2,237** | **2,328** | Segment Capital and Exploration Expenditures (CAPEX) (millions of Canadian dollars) | Segment | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :---------------- | :------ | :------ | :------------ | :------------ | | Upstream | 353 | 267 | 619 | 557 | | Downstream | 90 | 149 | 178 | 302 | | Chemical | 1 | 3 | 4 | 8 | | Corporate and other | 29 | 43 | 70 | 91 | | **Consolidated CAPEX** | **473** | **462** | **871** | **958** | [Note 3. Investment and other income](index=14&type=section&id=Note%203.%20Investment%20and%20other%20income) Gain (Loss) on Asset Sales (millions of Canadian dollars) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :-------------------------------- | :------ | :------ | :------------ | :------------ | | Proceeds from asset sales | 2 | 3 | 13 | 7 | | Book value of asset sales | 1 | 2 | 2 | 4 | | Gain (loss) on asset sales, before tax | 1 | 1 | 11 | 3 | | Gain (loss) on asset sales, after tax | 1 | 1 | 10 | 3 | [Note 4. Employee retirement benefits](index=14&type=section&id=Note%204.%20Employee%20retirement%20benefits) Net Benefit Cost (millions of Canadian dollars) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :-------------------------------- | :------ | :------ | :------------ | :------------ | | Pension benefits | 50 | 43 | 100 | 86 | | Other postretirement benefits | 3 | 7 | 6 | 15 | [Note 5. Financing costs](index=14&type=section&id=Note%205.%20Financing%20costs) Total Financing Costs (millions of Canadian dollars) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :-------------------------------- | :------ | :------ | :------------ | :------------ | | Debt-related interest | 27 | 52 | 64 | 104 | | Capitalized interest | (25) | (39) | (52) | (80) | | Net interest expense | 2 | 13 | 12 | 24 | | Other interest | — | 1 | (12) | 2 | | **Total financing** | **2** | **14** | **—** | **26** | [Note 6. Long-term debt](index=15&type=section&id=Note%206.%20Long-term%20debt) Long-term Debt (millions of Canadian dollars) | Metric | Jun 30, 2025 | Dec 31, 2024 | | :---------------- | :----------- | :----------- | | Long-term debt | 3,447 | 3,447 | | Finance leases | 536 | 545 | | **Total long-term debt** | **3,983** | **3,992** | [Note 7. Other long-term obligations](index=15&type=section&id=Note%207.%20Other%20long-term%20obligations) Other Long-term Obligations (millions of Canadian dollars) | Metric | Jun 30, 2025 | Dec 31, 2024 | | :------------------------------------------ | :----------- | :----------- | | Employee retirement benefits | 828 | 846 | | Asset retirement obligations and other environmental liabilities | 2,607 | 2,641 | | Share-based incentive compensation liabilities | 197 | 119 | | Operating lease liability | 147 | 144 | | Other obligations | 122 | 120 | | **Total other long-term obligations** | **3,901** | **3,870** | [Note 8. Financial and derivative instruments](index=16&type=section&id=Note%208.%20Financial%20and%20derivative%20instruments) - The fair value of long-term debt (**$3,447 million**, excluding finance lease obligations) was primarily a level 2 measurement as of June 30, 2025, and December 31, 2024[34](index=34&type=chunk) - The company uses commodity-based contracts, including derivatives, to manage commodity price risk and generate returns from trading. These are not accounted for under hedge accounting[35](index=35&type=chunk) Net Notional Long/(Short) Position of Derivative Instruments (thousands of barrels) | Metric | Jun 30, 2025 | Dec 31, 2024 | | :------- | :----------- | :----------- | | Crude | 4,374 | 4,260 | | Products | (1,153) | (371) | Realized and Unrealized Gain/(Loss) on Derivative Instruments (millions of Canadian dollars) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :------- | :------ | :------ | :------------ | :------------ | | Revenues | (24) | 11 | (9) | (13) | [Note 9. Common shares](index=18&type=section&id=Note%209.%20Common%20shares) - As of June 30, 2025, and December 31, 2024, the company had **509,045 thousand** common shares outstanding[41](index=41&type=chunk) - Imperial announced a new normal course issuer bid program effective June 29, 2025, to purchase up to **25,452,248** common shares (**5%** of shares on June 15, 2025) by June 28, 2026. Exxon Mobil Corporation intends to participate to maintain its **69.6%** ownership. The company plans to accelerate repurchases to complete them before year-end[41](index=41&type=chunk)[64](index=64&type=chunk)[91](index=91&type=chunk) Per Share Information and Dividends (Canadian dollars) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :------------------------------------------ | :------ | :------ | :------------ | :------------ | | Net income (loss) per common share - basic | 1.86 | 2.11 | 4.39 | 4.34 | | Net income (loss) per common share - diluted | 1.86 | 2.11 | 4.38 | 4.34 | | Dividends per common share - declared | 0.72 | 0.60 | 1.44 | 1.20 | [Note 10. Other comprehensive income (loss) information](index=19&type=section&id=Note%2010.%20Other%20comprehensive%20income%20(loss)%20information) Changes in Accumulated Other Comprehensive Income (Loss) (millions of Canadian dollars) | Metric | 2025 | 2024 | | :------------------------------------------------------------------------------------------------ | :--- | :--- | | Balance at January 1 | (214) | (677) | | Postretirement benefits liability adjustment: Current period change excluding reclassified amounts | 12 | 4 | | Amounts reclassified from accumulated other comprehensive income | 10 | 25 | | **Balance at June 30** | **(192)** | **(648)** | [Item 2. Management's discussion and analysis of financial condition and results of operations](index=20&type=section&id=Item%202.%20Management's%20discussion%20and%20analysis%20of%20financial%20condition%20and%20results%20of%20operations) Analyzes Imperial Oil Limited's financial condition and operating results for Q2 and H1 2025, covering business environment, segment performance, and liquidity [Recent business environment](index=20&type=section&id=Recent%20business%20environment) - In Q2 2025, crude oil prices decreased compared to Q1 2025, while the Canadian WTI/WCS spread narrowed due to low inventory levels[48](index=48&type=chunk) - Industry refining margins improved in Q2 2025, driven by strong seasonal demand[48](index=48&type=chunk) - The global trade environment remains volatile due to U.S. tariffs on Canadian imports and Canada's retaliatory tariffs. Uncertainty exists regarding future trade actions and their impact on Imperial, its suppliers, and customers[49](index=49&type=chunk) [Operating results](index=20&type=section&id=Operating%20results) [Second quarter 2025 vs. second quarter 2024](index=20&type=section&id=Second%20quarter%202025%20vs.%20second%20quarter%202024) [Upstream](index=20&type=section&id=Upstream%20(Q2)) - Upstream net income was impacted by lower average bitumen and synthetic crude oil realizations due to lower marker prices and a weaker Synthetic/WTI spread[51](index=51&type=chunk) - Higher volumes, primarily from Kearl (mine productivity, improved reliability) and Syncrude (timing of annual coker turnaround), partially offset the price impact[51](index=51&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - Lower royalties were primarily driven by lower commodity prices[52](index=52&type=chunk) Marker Prices and Average Realizations (US$ per barrel, unless noted) | Metric | Q2 2025 | Q2 2024 | Change | | :-------------------------- | :------ | :------ | :----- | | West Texas Intermediate (US$) | 63.69 | 80.63 | -16.94 | | Western Canada Select (US$) | 53.66 | 67.03 | -13.37 | | WTI/WCS Spread (US$) | 10.03 | 13.60 | -3.57 | | Bitumen (C$ per barrel) | 65.82 | 83.02 | -17.20 | | Synthetic crude oil (C$ per barrel) | 87.85 | 111.56 | -23.71 | Production (thousands of barrels per day) | Metric | Q2 2025 | Q2 2024 | Change | | :-------------------------- | :------ | :------ | :----- | | Kearl (Imperial's share) | 195 | 181 | +14 | | Cold Lake | 145 | 147 | -2 | | Syncrude | 77 | 66 | +11 | [Downstream](index=21&type=section&id=Downstream%20(Q2)) - Higher margins primarily reflect improved market conditions[57](index=57&type=chunk) - Lower refinery throughput was due to unplanned downtime, partially offset by lower turnaround impacts[58](index=58&type=chunk) - Petroleum product sales increased, enabled by the Trans Mountain pipeline expansion[59](index=59&type=chunk) Refinery Utilization and Petroleum Product Sales (thousands of barrels per day, unless noted) | Metric | Q2 2025 | Q2 2024 | Change | | :-------------------------- | :------ | :------ | :----- | | Refinery throughput | 376 | 387 | -11 | | Refinery capacity utilization (%) | 87 | 89 | -2 | | Petroleum product sales | 480 | 470 | +10 | [Chemicals](index=22&type=section&id=Chemicals%20(Q2)) Net Income (Loss) (millions of Canadian dollars) | Metric | Q2 2025 | Q2 2024 | | :-------------------------- | :------ | :------ | | Net income (loss) | 21 | 65 | [Corporate and other](index=22&type=section&id=Corporate%20and%20other%20(Q2)) Net Income (Loss) (millions of Canadian dollars) | Metric | Q2 2025 | Q2 2024 | | :-------------------------- | :------ | :------ | | Net income (loss) | (58) | (25) | [Six months 2025 vs. six months 2024](index=23&type=section&id=Six%20months%202025%20vs.%20six%20months%202024) [Upstream](index=23&type=section&id=Upstream%20(6%20Months)) - Average bitumen and synthetic crude oil realizations decreased due to lower marker prices, partially offset by a narrowing WTI/WCS spread and lower diluent costs[66](index=66&type=chunk) - Higher volumes were driven by Grand Rapids solvent-assisted SAGD and the timing of the annual coker turnaround at Syncrude[67](index=67&type=chunk)[72](index=72&type=chunk) - Lower royalties were primarily due to lower commodity prices[68](index=68&type=chunk) - Favorable foreign exchange impacts contributed approximately **$170 million**[69](index=69&type=chunk) Marker Prices and Average Realizations (US$ per barrel, unless noted) | Metric | 6 Months 2025 | 6 Months 2024 | Change | | :-------------------------- | :------------ | :------------ | :----- | | West Texas Intermediate (US$) | 67.52 | 78.77 | -11.25 | | Western Canada Select (US$) | 56.25 | 62.34 | -6.09 | | WTI/WCS Spread (US$) | 11.27 | 16.43 | -5.16 | | Bitumen (C$ per barrel) | 70.50 | 74.70 | -4.20 | | Synthetic crude oil (C$ per barrel) | 93.14 | 102.10 | -8.96 | Production (thousands of barrels per day) | Metric | 6 Months 2025 | 6 Months 2024 | Change | | :-------------------------- | :------------ | :------------ | :----- | | Kearl (Imperial's share) | 189 | 189 | 0 | | Cold Lake | 150 | 144 | +6 | | Syncrude | 75 | 70 | +5 | [Downstream](index=24&type=section&id=Downstream%20(6%20Months)) - Higher margins primarily reflect improved market conditions[73](index=73&type=chunk) - Unfavorable wholesale volume impacts of about **$70 million**[73](index=73&type=chunk) - Lower refinery throughput was primarily due to unplanned downtime, partially offset by lower turnaround impacts[74](index=74&type=chunk) Refinery Utilization and Petroleum Product Sales (thousands of barrels per day, unless noted) | Metric | 6 Months 2025 | 6 Months 2024 | Change | | :-------------------------- | :------------ | :------------ | :----- | | Refinery throughput | 387 | 397 | -10 | | Refinery capacity utilization (%) | 89 | 92 | -3 | | Petroleum product sales | 468 | 460 | +8 | [Chemicals](index=24&type=section&id=Chemicals%20(6%20Months)) - Lower margins primarily reflect weaker industry polyethylene margins[75](index=75&type=chunk) Net Income (Loss) (millions of Canadian dollars) | Metric | 6 Months 2025 | 6 Months 2024 | | :-------------------------- | :------------ | :------------ | | Net income (loss) | 52 | 122 | [Corporate and other](index=25&type=section&id=Corporate%20and%20other%20(6%20Months)) Net Income (Loss) (millions of Canadian dollars) | Metric | 6 Months 2025 | 6 Months 2024 | | :-------------------------- | :------------ | :------------ | | Net income (loss) | (116) | (76) | [Liquidity and capital resources](index=22&type=section&id=Liquidity%20and%20capital%20resources) [Second Quarter](index=22&type=section&id=Second%20Quarter%20(Liquidity)) - Cash flows from operating activities primarily reflect lower earnings and lower favorable working capital impacts[61](index=61&type=chunk) - Cash flows used in investing activities primarily reflect higher additions to property, plant and equipment[62](index=62&type=chunk) - Cash flows used in financing activities primarily reflect dividends paid. The company did not purchase shares in Q2 2025 or Q2 2024[63](index=63&type=chunk) Cash Flows (millions of Canadian dollars) | Metric | Q2 2025 | Q2 2024 | Change | | :------------------------------------------ | :------ | :------ | :----- | | Operating activities | 1,465 | 1,629 | -164 | | Investing activities | (472) | (456) | -16 | | Financing activities | (371) | (329) | -42 | | Increase (decrease) in cash and cash equivalents | 622 | 844 | -222 | | Cash and cash equivalents at period end | 2,386 | 2,020 | +366 | Dividends Paid (millions of Canadian dollars, unless noted) | Metric | Q2 2025 | Q2 2024 | Change | | :-------------------------- | :------ | :------ | :----- | | Dividends paid | 367 | 321 | +46 | | Per share dividend paid (dollars) | 0.72 | 0.60 | +0.12 | [Six Months](index=25&type=section&id=Six%20Months%20(Liquidity)) - Cash flows from operating activities primarily reflect lower unfavorable deferred tax and working capital impacts[77](index=77&type=chunk) - Cash flows used in investing activities primarily reflect lower additions to property, plant and equipment[78](index=78&type=chunk) - The company did not purchase any shares during the six months ended June 30, 2025, and 2024[79](index=79&type=chunk) Cash Flows (millions of Canadian dollars) | Metric | 6 Months 2025 | 6 Months 2024 | Change | | :------------------------------------------ | :------------ | :------------ | :----- | | Operating activities | 2,992 | 2,705 | +287 | | Investing activities | (849) | (937) | +88 | | Financing activities | (736) | (612) | -124 | | Increase (decrease) in cash and cash equivalents | 1,407 | 1,156 | +251 | Dividends Paid (millions of Canadian dollars, unless noted) | Metric | 6 Months 2025 | 6 Months 2024 | Change | | :-------------------------- | :------------ | :------------ | :----- | | Dividends paid | 674 | 599 | +75 | | Per share dividend paid (dollars) | 1.32 | 1.10 | +0.22 | [Forward-looking statements](index=26&type=section&id=Forward-looking%20statements) - This section identifies forward-looking statements related to future events or conditions, including projections, targets, expectations, estimates, and business plans[80](index=80&type=chunk) - Forward-looking statements are based on current expectations and assumptions, but actual future results could differ materially due to various factors such as energy demand, production rates, project execution, government policies, commodity prices, and economic conditions[81](index=81&type=chunk)[82](index=82&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking statements, as they are not guarantees of future performance and involve risks and uncertainties. Imperial undertakes no obligation to update them, except as required by law[83](index=83&type=chunk) [Item 3. Quantitative and qualitative disclosures about market risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20qualitative%20disclosures%20about%20market%20risk) Market risk disclosures for H1 2025 do not materially differ from the 2024 annual report on Form 10-K - Market risk disclosures for the six months ended June 30, 2025, are consistent with those in the 2024 annual report on Form 10-K[84](index=84&type=chunk) [Item 4. Controls and procedures](index=27&type=section&id=Item%204.%20Controls%20and%20procedures) Disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls - The company's principal executive and financial officers concluded that disclosure controls and procedures were effective as of June 30, 2025[85](index=85&type=chunk) - There have been no material changes to the company's internal control over financial reporting during the last fiscal quarter[85](index=85&type=chunk) [PART II. OTHER INFORMATION](index=28&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal proceedings](index=28&type=section&id=Item%201.%20Legal%20proceedings) Imperial Oil Limited uses a **$1 million** (U.S. dollars) threshold for disclosing environmental legal proceedings - Imperial uses a **$1 million** (U.S. dollars) threshold for disclosing environmental legal proceedings[88](index=88&type=chunk) [Item 2. Unregistered sales of equity securities and use of proceeds](index=28&type=section&id=Item%202.%20Unregistered%20sales%20of%20equity%20securities%20and%20use%20of%20proceeds) Details issuer equity security purchases, with no Q2 2025 activity, and a new program to repurchase up to **25.45 million** shares - No shares were purchased by the issuer during April, May, or June 2025[89](index=89&type=chunk) - A new normal course issuer bid program was approved on June 23, 2025, allowing the company to purchase up to **25,452,248** common shares (**5%** of total shares) from June 29, 2025, to June 28, 2026[91](index=91&type=chunk) - Exxon Mobil Corporation intends to participate in the share purchase program to maintain its **69.6%** ownership percentage. Imperial plans to accelerate share purchases to complete them prior to year-end[91](index=91&type=chunk) [Item 5. Other information](index=28&type=section&id=Item%205.%20Other%20information) No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers in Q2 2025 - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during Q2 2025[93](index=93&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including executive and financial officer certifications and Interactive Data Files - The report includes certifications by the principal executive and financial officers (Exhibits 31.1, 31.2, 32.1, 32.2)[94](index=94&type=chunk) - Interactive Data Files (formatted as Inline XBRL) and the Cover Page Interactive Data File are included as Exhibits 101 and 104[94](index=94&type=chunk) [SIGNATURES](index=30&type=section&id=SIGNATURES) - The report was signed on **August 4, 2025**, by Daniel E. Lyons (Senior vice-president, finance and administration, and controller) and Cathryn Walker (Assistant corporate secretary)[96](index=96&type=chunk) ```

Core Insights - Imperial Oil reported Q2 2025 results with historic upstream production but lower overall profits due to weaker commodity prices [1][6] - Revenue reached $11.2 billion, significantly exceeding analyst estimates of $8.91 billion, while earnings per share (EPS) was $1.86, surpassing the expected $1.19 [1][2] - Despite year-over-year declines in profit and revenue, operational gains and project launches were notable highlights [1][5] Financial Performance - Q2 2025 EPS (GAAP) was $1.86, down 11.8% from $2.11 in Q2 2024 [2] - Revenue (GAAP) was $11.2 billion, with a net income of $949 million, a decrease from $1,133 million in Q2 2024, reflecting a 16.2% decline [2][6] - Free cash flow (non-GAAP) was $993 million, down 15.3% from $1,173 million in Q2 2024 [2] Production and Operational Highlights - Gross upstream production reached 427,000 barrels per day, the highest second-quarter output in over 30 years [5] - Kearl oil sands facility set a new record with production of 275,000 barrels per day, up from 255,000 barrels per day in Q2 2024 [5] - Syncrude output increased by 16.7% to 77,000 barrels per day from 66,000 barrels per day in Q2 2024 [5] Cost Management and Efficiency - Upstream unit cash costs (non-GAAP) decreased to $29.00 per barrel from $32.75 in Q2 2024 [6] - Cold Lake production costs are targeted to reach $13 per barrel as part of ongoing cost reduction efforts [6] Project Execution and Future Outlook - Major projects include the completion of maintenance at Kearl and the initiation of steam injection at the Leming SAGD project, with first oil expected by late 2025 [7] - The Strathcona refinery's renewable diesel facility is set to provide lower-emission fuels to the Canadian transportation sector [8] - Management signaled confidence in operational momentum and emphasized priorities such as maximizing reliability and controlling unit costs [11] Dividend and Share Repurchase - The company paid $367 million in dividends, maintaining a dividend of $0.72 per share [10] - Management renewed authorization to repurchase up to 5% of shares, with plans to accelerate purchases [10] Environmental Investments - Ongoing environmental investments are projected to reach approximately $2.6 billion in 2025, crucial for compliance and brand positioning [12]

Financial Data and Key Metrics Changes - The company reported net income of $949 million, down $184 million from 2024, primarily due to lower upstream realizations, partially offset by higher production volumes [9] - Cash flow from operations was nearly $1.5 billion, with $2.4 billion in cash on hand at the end of the quarter [5][10] - Capital expenditures totaled $473 million, which is $11 million higher than 2024, primarily due to project timing [11] Business Line Data and Key Metrics Changes - Upstream earnings were $664 million, down $67 million from the first quarter, primarily due to lower realizations [9] - Downstream earnings were $322 million, down $262 million from the first quarter, mainly reflecting lower margin capture [9] - Chemical business generated earnings of $21 million, down $10 million from the first quarter [10][23] Market Data and Key Metrics Changes - Upstream production averaged 427,000 oil equivalent barrels per day, up 9,000 barrels per day versus the first quarter and up 23,000 barrels per day versus 2024 [13] - Kearl production set a second quarter record averaging 275,000 barrels per day gross, up 19,000 barrels per day versus the first quarter [14] - Petroleum product sales were 480,000 barrels per day, up 25,000 barrels per day versus 2025, enabled by the Trans Mountain pipeline expansion [22] Company Strategy and Development Direction - The company is focused on maximizing value from existing assets and selectively investing in growth opportunities, including Kearl and Coal Lake [35] - The renewable diesel facility at Strathcona has been completed, with first production beginning in July, aligning with the company's strategy of advancing responsible energy solutions [21][25] - The company plans to accelerate share repurchases through its normal course issuer bid (NCIB) [8][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to complete the NCIB without leveraging the balance sheet, citing strong cash flow projections [31] - The company remains optimistic about future investment opportunities and constructive dialogue with the federal government [7] - Management highlighted the importance of technology and operational efficiency in driving future growth and maintaining competitive advantages [41][49] Other Important Information - The company announced a third quarter dividend of $0.72 per share, consistent with the second quarter dividend [12] - The turnaround at Kearl was completed safely and successfully in under nineteen days, enabling a doubling of the turnaround interval [15] Q&A Session Summary Question: Why was the decision made to accelerate the NCIB? - Management expressed confidence in completing the NCIB without leveraging the balance sheet, supported by strong cash flow and commodity prices [31] Question: What drives the investment case for Imperial despite strong year-to-date performance? - Management emphasized their strategy of responsibly increasing cash flow and delivering unmatched shareholder returns, supported by competitive advantages and ongoing improvements in operations [35] Question: What insights have been gained from deploying autonomous technology? - Management noted that the autonomous haul system has successfully reduced unit cash costs and is part of a broader technology strategy [41] Question: What is the status of the SAGD projects at Cold Lake? - Management highlighted the competitive advantage of using solvent-assisted SAGD technology and provided updates on ongoing projects and future plans [104][108] Question: How does the Trans Mountain expansion impact refined product sales? - Management explained that the expansion provided additional supply flexibility, allowing the company to meet steady demand and enhance margins [78][81]

Financial Data and Key Metrics Changes - The company reported net income of $949 million, down $184 million from 2024, primarily due to lower upstream realizations, partially offset by higher production volumes [8][9] - Cash flow from operations was nearly $1.5 billion, with $2.4 billion in cash on hand at the end of the quarter [4][10] - Capital expenditures totaled $473 million, which is $11 million higher than 2024, primarily due to project timing [11] Business Line Data and Key Metrics Changes - Upstream earnings were $664 million, down $67 million from the first quarter, primarily due to lower realizations [9] - Downstream earnings were $322 million, down $262 million from the first quarter, mainly reflecting lower margin capture [9] - Chemical business generated earnings of $21 million, down $10 million from the first quarter [10][22] Market Data and Key Metrics Changes - Upstream production averaged 427,000 oil equivalent barrels per day, up 9,000 barrels per day versus the first quarter and up 23,000 barrels per day versus 2024 [13] - Kearl production set a second quarter record averaging 275,000 barrels per day gross, up 19,000 barrels per day versus the first quarter [14] - Petroleum product sales were 480,000 barrels per day, up 25,000 barrels per day versus 2025, enabled by the Trans Mountain pipeline expansion [21] Company Strategy and Development Direction - The company is focused on returning surplus cash to shareholders and has accelerated share repurchases through its NCIB program [7][25] - Major project milestones include the completion of the renewable diesel facility at Strathcona and the start of production in July [20][23] - The company is optimistic about future investments and government support for major projects in Canada [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate market volatility and maintain safe, reliable operations [5] - The outlook for the second half of the year is strong, with expectations for higher production volumes and further progress on unit cash cost reductions [16][24] - Management emphasized the importance of technology and operational efficiency in driving future growth [41][46] Other Important Information - The company plans to maintain a disciplined approach to capital allocation, prioritizing reliable and growing dividends [90] - The renewable diesel project aligns with the company's long-term strategy of advancing responsible energy solutions [20] Q&A Session Summary Question: Why was the decision made to accelerate the NCIB? - Management expressed confidence in completing the NCIB without leveraging the balance sheet, supported by strong cash flow and commodity prices [29][30] Question: What drives the investment case for Imperial despite strong year-to-date performance? - Management highlighted their strategy of responsibly increasing cash flow and delivering unmatched shareholder returns, supported by competitive advantages and technology [32][35] Question: Insights on the autonomous fleet technology? - Management noted the success of the autonomous haul system, which has reduced unit cash costs and is part of a broader technology strategy [40][42] Question: Status of the SAGD projects at Cold Lake? - Management discussed the competitive advantage of using solvent-assisted SAGD technology and the timeline for upcoming projects [100][105] Question: CapEx spending lower than expected, what drove that? - Management indicated that the lower spending was due to timing effects, with no change to the full-year guidance [67][69]

Core Viewpoint - Imperial Oil reported quarterly earnings of $1.34 per share, exceeding the Zacks Consensus Estimate of $1.22 per share, but down from $1.54 per share a year ago, indicating a +9.84% earnings surprise [1] Group 1: Earnings Performance - The company has surpassed consensus EPS estimates for the last four quarters [2] - Imperial Oil's revenues for the quarter ended June 2025 were $8.12 billion, missing the Zacks Consensus Estimate by 23.02%, and down from $9.78 billion year-over-year [2] - The company has not beaten consensus revenue estimates in the last four quarters [2] Group 2: Stock Performance - Imperial Oil shares have increased approximately 35.5% since the beginning of the year, compared to the S&P 500's gain of 7.8% [3] - The stock's immediate price movement will depend on management's commentary during the earnings call [3] Group 3: Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.24 on revenues of $10.2 billion, and for the current fiscal year, it is $5.57 on revenues of $37.93 billion [7] - The Zacks Industry Rank for Oil and Gas - Integrated - Canadian is in the top 40% of over 250 Zacks industries, indicating a favorable outlook [8] Group 4: Competitor Insights - Suncor Energy, a competitor in the same industry, is expected to report quarterly earnings of $0.50 per share, reflecting a year-over-year decline of -46.2% [9] - Suncor Energy's anticipated revenues are $7.65 billion, down 19.7% from the previous year [10]