Imperial Oil(US:IMO)2020-05-01 20:49Financial Data and Key Metrics Changes - The company reported a net loss of $188 million in Q1 2020, down $481 million from earnings of $293 million in Q1 2019, primarily due to non-cash charges of $301 million related to inventory revaluation [16][12] - Adjusted earnings were $113 million, compared to $293 million in the same period last year, reflecting a significant decline driven by lower commodity prices [16][12] - Cash generated from operations was $423 million, down from over $1 billion in the previous quarter, with a cash balance of $1.4 billion at the end of the quarter [18][13] Business Line Data and Key Metrics Changes - Upstream recorded a net loss of $608 million compared to net income of $96 million in the previous quarter, impacted by non-cash charges and lower realizations [17] - Downstream net income increased to $402 million from $225 million in the previous quarter, benefiting from increased crude runs and record throughput at the Strathcona refinery [17] - Chemical segment earnings were $21 million, up from a loss of $2 million in the previous quarter, due to increased margins and volumes [17] Market Data and Key Metrics Changes - Upstream production averaged 419,000 barrels of oil equivalent per day, an 8% increase from Q1 2019, with record production at Kearl [23][11] - The company expects upstream production to be negatively impacted in Q2 due to reduced demand from COVID-19 [24] - Petroleum product sales were 462,000 barrels a day, slightly up from the previous quarter, but overall demand was significantly impacted by COVID-19 [54] Company Strategy and Development Direction - The company is focused on reducing spending and modifying business plans in response to the challenging environment, with a capital spending outlook reduced by $500 million for 2020 [19][20] - The company plans to maintain its dividend at $0.22 per share, reflecting confidence in its long-term outlook despite current challenges [14] - Strategic initiatives are still being pursued to enhance competitive positioning in the long term [57][58] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the unprecedented challenges posed by the COVID-19 pandemic and OPEC+ actions, leading to significant demand reductions and price impacts [10] - The company is optimistic about a gradual recovery in demand, particularly in gasoline and diesel, while jet fuel demand remains severely impacted [82] - Management emphasized the importance of maintaining operational efficiency and cost reductions while preparing for future market recovery [57][58] Other Important Information - The company has taken several community support initiatives during the pandemic, including donations of fuel and technology to frontline workers [8][9] - COVID-19 safety measures have been implemented at all facilities, including testing and health screenings for employees [32][36] Q&A Session Summary Question: Can you quantify recent and Q2 plans for output at Kearl and Cold Lake? - Kearl's output is expected to be 150,000 barrels a day for Q2, while Cold Lake is still targeting 140,000 barrels a day for the year, though impacts are anticipated [61] Question: Is there potential for extended Kearl downtime? - The turnaround at Kearl is planned for approximately two months, with a reassessment of market conditions expected by the end of June [64][65] Question: How have supplemental crushers impacted operating costs? - The supplemental crushers have helped achieve record production and are expected to reduce operating costs by approximately $4 per barrel [71] Question: What is the current status of refinery utilization? - Refinery utilization is being adjusted daily based on demand, with one refinery undergoing a turnaround and others experiencing reduced throughput [78] Question: Are there signs of demand stabilization? - There are early signs of recovery in gasoline demand, while diesel demand is stabilizing, but jet fuel demand remains significantly depressed [82] Question: How sustainable is the $500 million cost reduction? - The reduction includes both structural efficiencies and deferred activities, with a focus on maximizing long-term sustainable benefits [102]