Estimated earnings in the first quarter of 2017 were $333 million, an increase of $434 million compared to the net loss of $101 million in the same period of 2016. The quarterly performance reflects higher global crude prices and a $151 million gain on the sale of a surplus property.
"Following a year that tested the resiliency of our company and the broader industry, our first quarter results demonstrate the strength of our people, the quality of our assets and the value of our integrated business model," said Rich Kruger, chairman, president and chief executive officer. "We are well positioned to compete throughout the business cycle."
The quarter was characterized by an emphasis on capturing integration benefits and exercising capital and operational expenditure discipline. The company's commitment to operational integrity was evidenced by exceptional environmental performance, with zero recordable spills or regulatory compliance incidents.
Imperial's Downstream business continued to deliver strong results. Petroleum product sales increased over the comparable period of 2016, attributable to the company's strategic focus on securing long-term supply agreements and building valued customer relationships. Additionally, the company launched a Speedpass+™ app for Esso retail sites. The technology rollout makes Imperial the first major fuels retailer in Canada to offer a mobile payment option at the pump and will capitalize on the growing preference for a digital customer experience.
In April, it was announced that Imperial intends to introduce the Mobil brand in Canada through the conversion of more than 200 existing unbranded third-party retail sites.
"The addition of Mobil as a fuels offering in Canada establishes yet another catalyst to expand Imperial's branded wholesaler business beyond the highly established Esso network," added Kruger.
Imperial remains committed to its priority areas of safety, reliability, operational integrity and profitability. The company will continue to generate value from its high-quality assets, while prudently pursuing new opportunities that increase shareholder value.
First quarter highlights
First quarter 2017 vs. first quarter 2016
The company's net income for the first quarter of 2017 was $333 million or $0.39 per-share on a diluted basis, an increase of $434 million compared to the net loss of $101 million or $(0.12) per-share for the same period last year.
Upstream recorded a net loss in the first quarter of $86 million, compared to a net loss of $448 million in the same period of 2016. Earnings in the first quarter of 2017 reflect the impact of higher Canadian crude oil realizations of about $600 million, partially offset by higher royalties of about $80 million, lower volumes of about $70 million and higher operating expenses of about $50 million primarily due to higher energy costs.
West Texas Intermediate (WTI) averaged US$51.78 per barrel in the first quarter of 2017, up from US$33.63 per barrel in the same quarter of 2016. Western Canada Select (WCS) averaged US$37.26 per barrel and US$19.30 per barrel respectively for the same periods. The WTI / WCS differential narrowed to 28 percent in the first quarter of 2017, from 43 percent in the same period of 2016.
The Canadian dollar averaged US$0.76 in the first quarter of 2017, an increase of US$0.03 from the first quarter of 2016.
Imperial's average Canadian dollar realizations for bitumen and synthetic crudes increased essentially in line with the North American benchmarks, adjusted for changes in exchange rates and transportation costs. Bitumen realizations averaged $36.21 per barrel for the first quarter of 2017, an increase of $24.29 per barrel versus the first quarter of 2016. Synthetic crude realizations averaged $67.79 per barrel, an increase of $21.47 per barrel for the same period of 2016.
Gross production of Cold Lake bitumen averaged 158,000 barrels per day in the first quarter, compared to 165,000 barrels per day in the same period last year, mainly due to the timing of steam cycles.
Gross production of Kearl bitumen averaged 182,000 barrels per day in the first quarter (129,000 barrels Imperial's share) compared to 194,000 barrels per day (138,000 barrels Imperial's share) during the first quarter of 2016. Lower production was the result of planned and unplanned maintenance activities.
The company's share of gross production from Syncrude averaged 66,000 barrels per day, compared to 80,000 barrels per day in the first quarter of 2016. Syncrude production was reduced by about 14,000 barrels per day mainly due to a fire at the Syncrude Mildred Lake upgrader.
Downstream net income was $380 million in the first quarter, compared to $320 million in the same period of 2016. Earnings increased mainly due to a gain of $151 million from the sale of a surplus property, partially offset by lower marketing margins of approximately $60 million.
Refinery throughput averaged 398,000 barrels per day, unchanged from the same period in 2016.
Petroleum product sales were 486,000 barrels per day, up from 469,000 barrels per day in the first quarter of 2016. Sales growth was primarily driven by the company's focus on securing long-term supply agreements.
Chemical net income was $45 million in the first quarter, compared to $49 million in the same quarter of 2016.
Net income effects from Corporate and Other were negative $6 million in the first quarter, compared to negative $22 million in the same period of 2016.
Cash flow generated from operating activities was $354 million in the first quarter, compared with $49 million in the corresponding period in 2016, reflecting higher earnings.
Investing activities generated net cash of $61 million in the first quarter, compared with $358 million used in the same period of 2016, reflecting lower additions to property, plant and equipment and higher proceeds from asset sales.
Cash used in financing activities was $134 million in the first quarter, compared with cash from financing activities of $261 million in the first quarter of 2016. Dividends paid in the first quarter of 2017 were $127 million. The per-share dividend paid in the first quarter was $0.15, up from $0.14 in the same period of 2016.
The company's cash balance was $672 million at March 31, 2017, versus $155 million at the end of the first quarter of 2016.
After more than a century, Imperial continues to be an industry leader in applying technology and innovation to responsibly develop Canada's energy resources. As Canada's largest petroleum refiner, a major producer of crude oil and natural gas, a key petrochemical producer and a leading fuels marketer from coast to coast, our company remains committed to high standards across all areas of our business.
SOURCE: Imperial Oil Limited
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