Here's Why Hold Strategy Is Apt for Imperial Oil Stock Now

Core Insights - Imperial Oil Limited (IMO) has significantly outperformed its peers and benchmarks in 2025, with a stock surge of approximately 57.9%, compared to 21.8% for the Canadian Oil & Gas Exploration and Production sub-industry and only 6% for the broader Oils & Energy sector [1] Company Overview - Based in Calgary, Imperial Oil is involved in the entire oil and gas value chain, from extraction to refining and distribution, including a substantial share of Canada's jet fuel and asphalt production [3] - The company benefits from its relationship with ExxonMobil, which provides access to advanced technology and global expertise [3][10] Performance Drivers - Record upstream production was achieved in Q3 2025, with an average of 462,000 oil-equivalent barrels per day, driven by the Kearl asset [7] - Successful execution of lower-emission projects, with expectations that over 40% of production at Cold Lake will come from these technologies by 2030 [8] - The integrated business model allows Imperial Oil to hedge against market volatility, with stronger downstream margins offsetting weaker upstream realizations [12] Challenges - The chemical segment reported a decline in earnings, with Q3 earnings dropping to C$21 million from C$28 million a year ago due to weaker polyethylene margins [14] - Potential slowdown in shareholder returns in early 2026 due to reliance on commodity prices and the timing of share buybacks [16] - Long gestation period for next-generation technologies like Enhanced Bitumen Recovery Technology (EBRT), with commercial deployment not expected until early 2027 [17] - Significant exposure to volatile commodity prices, with crude oil prices averaging $64.97 per barrel in Q3 2025, down from $75.27 the previous year [18] Conclusion - Overall, Imperial Oil has demonstrated strong performance, particularly in upstream production and lower-emission projects, supported by its strategic partnership with ExxonMobil [19] - However, challenges such as weak chemical segment earnings, potential slowdowns in shareholder returns, and sensitivity to crude oil price volatility could impact future profitability [20]