FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ü] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JuneSeptember 30, 2010
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ---— to ---—
Commission file number 0-12014
IMPERIAL OIL LIMITED
(Exact name of registrant as specified in its charter)
CANADA | 98-0017682 | |||
(State or other jurisdiction | (I.R.S. Employer | |||
of incorporation or organization) |
Identification No.) | |||
237 Fourth Avenue S.W. | ||||
Calgary, Alberta, Canada | T2P 3M9 | |||
(Address of principal executive offices) | (Postal Code) |
Registrant’s telephone number, including area code: 1-800-567-3776
The registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 91 days.
YES ü NO
The registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES ü NO
The registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (see definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Securities Exchange Act of 1934).
Large accelerated filer ü | Accelerated filer | |||||||
Non-accelerated filer | Smaller reporting company |
The registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).
YES NO ü
The number of common shares outstanding, as of JuneSeptember 30, 2010, was 847,599,011.
In this report all dollar amounts are expressed in Canadian dollars unless otherwise stated. This report should be read in conjunction with the company'scompany’s Annual Report on Form 10-K for the year ended December 31, 2009.
Statements in this report regarding future events or conditions are forward-looking statements. Actual results could differ materially due to the impact of market conditions, changes in law or governmental policy, changes in operating conditions and costs, changes in project schedules, operating performance, demand for oil and gas, commercial negotiations or other technical and economic factors.
PART I - FINANCIAL INFORMATION
Item 1. | Financial Statements. |
IMPERIAL OIL LIMITED
CONSOLIDATED STATEMENT OF INCOME
(U.S. GAAP, unaudited)
The information in the Notes to Consolidated Financial Statements is an integral part of these statements.
IMPERIAL OIL LIMITED
CONSOLIDATED BALANCE SHEET
(U.S. GAAP, unaudited)
millions of Canadian dollars | As at June 30 2010 | As at Dec.31 2009 | ||||||||||
(U.S. GAAP, unaudited)
millions of Canadian dollars | As at Sept. 30 2010 | As at Dec. 31 2009 | ||||||||||
ASSETS | ||||||||||||
Current assets | ||||||||||||
Cash | 64 | 513 | 51 | 513 | ||||||||
Accounts receivable, less estimated doubtful accounts | 1,776 | 1,714 | 1,810 | 1,714 | ||||||||
Inventories of crude oil and products | 630 | 564 | 733 | 564 | ||||||||
Materials, supplies and prepaid expenses | 301 | 247 | 255 | 247 | ||||||||
Deferred income tax assets | 457 | 467 | 460 | 467 | ||||||||
Total current assets | 3,228 | 3,505 | 3,309 | 3,505 | ||||||||
Long-term receivables, investments and other long-term assets | 750 | 854 | 763 | 854 | ||||||||
Property, plant and equipment, | 27,950 | 26,421 | 29,030 | 26,421 | ||||||||
less accumulated depreciation and depletion | 13,824 | 13,569 | 13,970 | 13,569 | ||||||||
Property, plant and equipment, net | 14,126 | 12,852 | 15,060 | 12,852 | ||||||||
Goodwill | 204 | 204 | 204 | 204 | ||||||||
Other intangible assets, net | 60 | 58 | 62 | 58 | ||||||||
TOTAL ASSETS | 18,368 | 17,473 | 19,398 | 17,473 | ||||||||
LIABILITIES | ||||||||||||
Current liabilities | ||||||||||||
Notes and loans payable | 199 | 109 | 229 | 109 | ||||||||
Accounts payable and accrued liabilities | 3,196 | 2,811 | 3,571 | 2,811 | ||||||||
Income taxes payable | 617 | 848 | 677 | 848 | ||||||||
Total current liabilities | 4,012 | 3,768 | 4,477 | 3,768 | ||||||||
Capitalized lease obligations | 29 | 31 | ||||||||||
Long-term debt (b)(6) | 228 | 31 | ||||||||||
Other long-term obligations | 2,427 | 2,839 | 2,443 | 2,839 | ||||||||
Deferred income tax liabilities | 1,507 | 1,396 | 1,504 | 1,396 | ||||||||
TOTAL LIABILITIES | 7,975 | 8,034 | 8,652 | 8,034 | ||||||||
SHAREHOLDERS' EQUITY | ||||||||||||
SHAREHOLDERS’ EQUITY | ||||||||||||
Common shares at stated value | 1,509 | 1,508 | 1,509 | 1,508 | ||||||||
Earnings reinvested | 10,064 | 9,252 | 10,389 | 9,252 | ||||||||
Accumulated other comprehensive income | (1,180) | (1,321) | (1,152 | ) | (1,321 | ) | ||||||
TOTAL SHAREHOLDERS' EQUITY | 10,393 | 9,439 | ||||||||||
TOTAL SHAREHOLDERS’ EQUITY | 10,746 | 9,439 | ||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 18,368 | 17,473 | 19,398 | 17,473 | ||||||||
(a) | Accounts payable and accrued liabilities |
(b) | Long-term debt included amounts to related parties of $200 million (2009 - nil). |
(c) | Number of common shares authorized and outstanding were 1,100 million and 848 million, respectively (2009 - 1,100 million and 848 million, respectively). |
The information in the Notes to Consolidated Financial Statements is an integral part of these statements.
IMPERIAL OIL LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
The information in the Notes to Consolidated Financial Statements is an integral part of these statements.
IMPERIAL OIL LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
1. Basis of financial statement presentation
These unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles of the United States of America and follow the same accounting policies and methods of computation as, and should be read in conjunction with, the most recent annual consolidated financial statements. In the opinion of the management, the information furnished herein reflects all known accruals and adjustments necessary for a fair presentation of the financial position of the company as at JuneSeptember 30, 2010, and December 31, 2009, and the results of operations and changes in cash flows for the sixnine months ended JuneSeptember 30, 2010 and 2009. All such adjustments are of a normal recurring nature. The company'scompany’s exploration and production activities are accounted for under the “successful efforts” method. Certain reclassifications to the prior year have been made to conform to the 2010 presentation.
The results for the sixnine months ended JuneSeptember 30, 2010, are not necessarily indicative of the operations to be expected for the full year.
All amounts are in Canadian dollars unless otherwise indicated.
2. Accounting change for variable-interest entities
Effective January 1, 2010, the company adopted the authoritative guidance for variable-interest entities (VIEs). The guidance requires the enterprise to qualitatively assess if it is the primary beneficiary of the VIE and, if so, the VIE must be consolidated. The adoption did not have any impact on the company’s consolidated financial statements.
IMPERIAL OIL LIMITED
3. Business Segments
Second Quarter | Upstream | Downstream | Chemical | |||||||||||||||||||||||||||||||||||||||||||||
Third Quarter | Upstream | Downstream | Chemical | |||||||||||||||||||||||||||||||||||||||||||||
millions of dollars | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||||||||||||||||||||||
REVENUES AND OTHER INCOME | ||||||||||||||||||||||||||||||||||||||||||||||||
Operating revenues | 1,010 | 879 | 4,816 | 4,152 | 265 | 230 | 908 | 921 | 4,655 | 4,380 | 265 | 246 | ||||||||||||||||||||||||||||||||||||
Intersegment sales | 963 | 698 | 462 | 355 | 63 | 83 | 879 | 955 | 416 | 365 | 79 | 69 | ||||||||||||||||||||||||||||||||||||
Investment and other income | 11 | 19 | 34 | 23 | 3 | (0) | 5 | 2 | 17 | 4 | - | - | ||||||||||||||||||||||||||||||||||||
1,984 | 1,596 | 5,312 | 4,530 | 331 | 313 | |||||||||||||||||||||||||||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||||||||||||||||||||||||||
Exploration | 30 | 22 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||
Purchases of crude oil and products | 653 | 468 | 4,237 | 3,566 | 234 | 233 | ||||||||||||||||||||||||||||||||||||||||||
Production and manufacturing | 573 | 630 | 389 | 400 | 50 | 47 | ||||||||||||||||||||||||||||||||||||||||||
Selling and general | 1 | 1 | 225 | 234 | 16 | 19 | ||||||||||||||||||||||||||||||||||||||||||
Federal excise tax | 0 | 0 | 322 | 314 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||
Depreciation and depletion | 131 | 129 | 56 | 59 | 3 | 3 | ||||||||||||||||||||||||||||||||||||||||||
Financing costs | 0 | 1 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||
TOTAL EXPENSES | 1,388 | 1,251 | 5,229 | 4,573 | 303 | 302 | ||||||||||||||||||||||||||||||||||||||||||
INCOME BEFORE INCOME TAXES | 596 | 345 | 83 | (43) | 28 | 11 | ||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | 150 | 93 | 15 | (5) | 6 | 3 | ||||||||||||||||||||||||||||||||||||||||||
NET INCOME | 446 | 252 | 68 | (38) | 22 | 8 | ||||||||||||||||||||||||||||||||||||||||||
Export sales to the United States | 412 | 422 | 326 | 322 | 161 | 111 | ||||||||||||||||||||||||||||||||||||||||||
Cash from (used in) operating activities | 567 | 38 | (223) | 240 | 9 | 11 | ||||||||||||||||||||||||||||||||||||||||||
CAPEX (a) | 832 | 471 | 46 | 61 | 2 | 2 | ||||||||||||||||||||||||||||||||||||||||||
Corporate | ||||||||||||||||||||||||||||||||||||||||||||||||
Second Quarter | and Other | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||||||||||
millions of dollars | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||||||||||||||||||||||||||||
REVENUES AND OTHER INCOME | ||||||||||||||||||||||||||||||||||||||||||||||||
Operating revenues | 0 | 0 | 0 | 0 | 6,091 | 5,261 | ||||||||||||||||||||||||||||||||||||||||||
Intersegment sales | 0 | 0 | (1,488) | (1,136) | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||
Investment and other income | 0 | 0 | 0 | 0 | 48 | 42 | ||||||||||||||||||||||||||||||||||||||||||
0 | 0 | (1,488) | (1,136) | 6,139 | 5,303 | 1,792 | 1,878 | 5,088 | 4,749 | 344 | 315 | |||||||||||||||||||||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||||||||||||||||||||||||||
Exploration | 0 | 0 | 0 | 0 | 30 | 22 | 54 | 21 | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Purchases of crude oil and products | 0 | 0 | (1,488) | (1,136) | 3,636 | 3,131 | 545 | 568 | 4,047 | 3,729 | 244 | 218 | ||||||||||||||||||||||||||||||||||||
Production and manufacturing | 0 | 0 | 0 | 0 | 1,012 | 1,077 | 592 | 549 | 320 | 313 | 49 | 47 | ||||||||||||||||||||||||||||||||||||
Selling and general | 23 | 17 | 0 | 0 | 265 | 271 | 2 | - | 229 | 231 | 16 | 18 | ||||||||||||||||||||||||||||||||||||
Federal excise tax | 0 | 0 | 0 | 0 | 322 | 314 | - | - | 345 | 331 | - | - | ||||||||||||||||||||||||||||||||||||
Depreciation and depletion | 2 | 2 | 0 | 0 | 192 | 193 | 128 | 133 | 54 | 55 | 3 | 4 | ||||||||||||||||||||||||||||||||||||
Financing costs | 0 | 0 | 0 | 0 | 0 | 1 | - | - | 1 | - | - | - | ||||||||||||||||||||||||||||||||||||
TOTAL EXPENSES | 25 | 19 | (1,488) | (1,136) | 5,457 | 5,009 | 1,321 | 1,271 | 4,996 | 4,659 | 312 | 287 | ||||||||||||||||||||||||||||||||||||
INCOME BEFORE INCOME TAXES | (25) | (19) | 0 | 0 | 682 | 294 | 471 | 607 | 92 | 90 | 32 | 28 | ||||||||||||||||||||||||||||||||||||
INCOME TAXES | (6) | (6) | 0 | 0 | 165 | 85 | 123 | 168 | 23 | 28 | 9 | 9 | ||||||||||||||||||||||||||||||||||||
NET INCOME | (19) | (13) | 0 | 0 | 517 | 209 | 348 | 439 | 69 | 62 | 23 | 19 | ||||||||||||||||||||||||||||||||||||
Export sales to the United States | 0 | 0 | 0 | 0 | 899 | 855 | 377 | 405 | 295 | 379 | 161 | 141 | ||||||||||||||||||||||||||||||||||||
Cash from (used in) operating activities | (29) | (27) | 0 | 0 | 324 | 262 | ||||||||||||||||||||||||||||||||||||||||||
Cash flow from (used in) operating activities | 748 | 436 | 198 | 219 | 31 | 34 | ||||||||||||||||||||||||||||||||||||||||||
CAPEX (a) | 1 | 1 | 0 | 0 | 881 | 535 | 1,151 | 504 | 45 | 64 | 1 | 6 | ||||||||||||||||||||||||||||||||||||
Third Quarter | Corporate and Other | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||||||||||
millions of dollars | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||||||||||||||||||||||||||||
REVENUES AND OTHER INCOME | ||||||||||||||||||||||||||||||||||||||||||||||||
Operating revenues | - | - | - | - | 5,828 | 5,547 | ||||||||||||||||||||||||||||||||||||||||||
Intersegment sales | - | - | (1,374 | ) | (1,389 | ) | - | - | ||||||||||||||||||||||||||||||||||||||||
Investment and other income | 1 | 8 | - | - | 23 | 14 | ||||||||||||||||||||||||||||||||||||||||||
1 | 8 | (1,374 | ) | (1,389 | ) | 5,851 | 5,561 | |||||||||||||||||||||||||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||||||||||||||||||||||||||
Exploration | - | - | - | - | 54 | 21 | ||||||||||||||||||||||||||||||||||||||||||
Purchases of crude oil and products | - | - | (1,374 | ) | (1,389 | ) | 3,462 | 3,126 | ||||||||||||||||||||||||||||||||||||||||
Production and manufacturing | - | - | - | - | 961 | 909 | ||||||||||||||||||||||||||||||||||||||||||
Selling and general | 24 | (28 | ) | - | - | 271 | 221 | |||||||||||||||||||||||||||||||||||||||||
Federal excise tax | - | - | - | - | 345 | 331 | ||||||||||||||||||||||||||||||||||||||||||
Depreciation and depletion | 2 | 2 | - | - | 187 | 194 | ||||||||||||||||||||||||||||||||||||||||||
Financing costs | 2 | - | - | - | 3 | - | ||||||||||||||||||||||||||||||||||||||||||
TOTAL EXPENSES | 28 | (26 | ) | (1,374 | ) | (1,389 | ) | 5,283 | 4,802 | |||||||||||||||||||||||||||||||||||||||
INCOME BEFORE INCOME TAXES | (27 | ) | 34 | - | - | 568 | 759 | |||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | (5 | ) | 7 | - | - | 150 | 212 | |||||||||||||||||||||||||||||||||||||||||
NET INCOME | (22 | ) | 27 | - | - | 418 | 547 | |||||||||||||||||||||||||||||||||||||||||
Export sales to the United States | - | - | - | - | 833 | 925 | ||||||||||||||||||||||||||||||||||||||||||
Cash flow from (used in) operating activities | (12 | ) | 9 | - | - | 965 | 698 | |||||||||||||||||||||||||||||||||||||||||
CAPEX (a) | 2 | 1 | - | - | 1,199 | 575 |
(a) | Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant, equipment and intangibles and additions to capital leases. |
IMPERIAL OIL LIMITED
Six Months to June 30 | Upstream | Downstream | Chemical | |||||||||||||||||||||||||||||||||||||||||||||
Nine Months to September 30 | Upstream | Downstream | Chemical | |||||||||||||||||||||||||||||||||||||||||||||
millions of dollars | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||||||||||||||||||||||
REVENUES AND OTHER INCOME | ||||||||||||||||||||||||||||||||||||||||||||||||
Operating revenues | 2,251 | 1,639 | 9,426 | 7,837 | 548 | 438 | 3,159 | 2,560 | 14,081 | 12,217 | 813 | 684 | ||||||||||||||||||||||||||||||||||||
Intersegment sales | 1,911 | 1,354 | 1,033 | 745 | 133 | 147 | 2,790 | 2,309 | 1,449 | 1,110 | 212 | 216 | ||||||||||||||||||||||||||||||||||||
Investment and other income | 31 | 23 | 45 | 31 | 3 | 0 | 36 | 25 | 62 | 35 | 3 | - | ||||||||||||||||||||||||||||||||||||
4,193 | 3,016 | 10,504 | 8,613 | 684 | 585 | 5,985 | 4,894 | 15,592 | 13,362 | 1,028 | �� | 900 | ||||||||||||||||||||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||||||||||||||||||||||||||
Exploration | 117 | 105 | 0 | 0 | 0 | 0 | 171 | 126 | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Purchases of crude oil and products | 1,440 | 832 | 8,424 | 6,433 | 510 | 432 | 1,985 | 1,400 | 12,471 | 10,162 | 754 | 650 | ||||||||||||||||||||||||||||||||||||
Production and manufacturing | 1,175 | 1,276 | 759 | 736 | 108 | 95 | 1,767 | 1,825 | 1,079 | 1,049 | 157 | 142 | ||||||||||||||||||||||||||||||||||||
Selling and general | 3 | 2 | 449 | 467 | 33 | 38 | 5 | 2 | 678 | 698 | 49 | 56 | ||||||||||||||||||||||||||||||||||||
Federal excise tax | 0 | 0 | 626 | 620 | 0 | 0 | - | - | 971 | 951 | - | - | ||||||||||||||||||||||||||||||||||||
Depreciation and depletion | 256 | 265 | 108 | 115 | 6 | 6 | 384 | 398 | 162 | 170 | 9 | 10 | ||||||||||||||||||||||||||||||||||||
Financing costs | 0 | 1 | 0 | 1 | 0 | 0 | - | 1 | 1 | 1 | - | - | ||||||||||||||||||||||||||||||||||||
TOTAL EXPENSES | 2,991 | 2,481 | 10,366 | 8,372 | 657 | 571 | 4,312 | 3,752 | 15,362 | 13,031 | 969 | 858 | ||||||||||||||||||||||||||||||||||||
INCOME BEFORE INCOME TAXES | 1,202 | 535 | 138 | 241 | 27 | 14 | 1,673 | 1,142 | 230 | 331 | 59 | 42 | ||||||||||||||||||||||||||||||||||||
INCOME TAXES | 312 | 141 | 31 | 77 | 6 | 3 | 435 | 309 | 54 | 105 | 15 | 12 | ||||||||||||||||||||||||||||||||||||
NET INCOME | 890 | 394 | 107 | 164 | 21 | 11 | 1,238 | 833 | 176 | 226 | 44 | 30 | ||||||||||||||||||||||||||||||||||||
Export sales to the United States | 918 | 827 | 624 | 559 | 326 | 220 | 1,295 | 1,232 | 919 | 938 | 487 | 361 | ||||||||||||||||||||||||||||||||||||
Cash from (used in) operating activities | 1,309 | (192) | (37) | 194 | 13 | (3) | ||||||||||||||||||||||||||||||||||||||||||
Cash flow from (used in) operating activities | 2,057 | 244 | 161 | 413 | 44 | 31 | ||||||||||||||||||||||||||||||||||||||||||
CAPEX (a) | 1,687 | 918 | 84 | 103 | 8 | 6 | 2,838 | 1,422 | 129 | 167 | 9 | 12 | ||||||||||||||||||||||||||||||||||||
Total assets as at June 30 | 11,866 | 9,583 | 6,293 | 6,524 | 423 | 433 | ||||||||||||||||||||||||||||||||||||||||||
Total assets as at September 30 | 12,754 | 9,887 | 6,401 | 6,359 | 425 | 416 | ||||||||||||||||||||||||||||||||||||||||||
Corporate | ||||||||||||||||||||||||||||||||||||||||||||||||
Six Months to June 30 | and Other | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||||||||||
Nine Months to September 30 | Corporate and Other | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||||||||||
millions of dollars | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||||||||||||||||||||||
REVENUES AND OTHER INCOME | ||||||||||||||||||||||||||||||||||||||||||||||||
Operating revenues | 0 | 0 | 0 | 0 | 12,225 | 9,914 | - | - | - | - | 18,053 | 15,461 | ||||||||||||||||||||||||||||||||||||
Intersegment sales | 0 | 0 | (3,077) | (2,246) | 0 | 0 | - | - | (4,451 | ) | (3,635 | ) | - | - | ||||||||||||||||||||||||||||||||||
Investment and other income | 1 | 5 | 0 | 0 | 80 | 59 | 2 | 13 | - | - | 103 | 73 | ||||||||||||||||||||||||||||||||||||
1 | 5 | (3,077) | (2,246) | 12,305 | 9,973 | 2 | 13 | (4,451 | ) | (3,635 | ) | 18,156 | 15,534 | |||||||||||||||||||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||||||||||||||||||||||||||
Exploration | 0 | 0 | 0 | 0 | 117 | 105 | - | - | - | - | 171 | 126 | ||||||||||||||||||||||||||||||||||||
Purchases of crude oil and products | 0 | 0 | (3,077) | (2,246) | 7,297 | 5,451 | - | - | (4,451 | ) | (3,635 | ) | 10,759 | 8,577 | ||||||||||||||||||||||||||||||||||
Production and manufacturing | 0 | 0 | 0 | 0 | 2,042 | 2,107 | - | - | - | - | 3,003 | 3,016 | ||||||||||||||||||||||||||||||||||||
Selling and general | 30 | 94 | 0 | 0 | 515 | 601 | 54 | 66 | - | - | 786 | 822 | ||||||||||||||||||||||||||||||||||||
Federal excise tax | 0 | 0 | 0 | 0 | 626 | 620 | - | - | - | - | 971 | 951 | ||||||||||||||||||||||||||||||||||||
Depreciation and depletion | 4 | 4 | 0 | 0 | 374 | 390 | 6 | 6 | - | - | 561 | 584 | ||||||||||||||||||||||||||||||||||||
Financing costs | 1 | 1 | 0 | 0 | 1 | 3 | 3 | 1 | - | - | 4 | 3 | ||||||||||||||||||||||||||||||||||||
TOTAL EXPENSES | 35 | 99 | (3,077) | (2,246) | 10,972 | 9,277 | 63 | 73 | (4,451 | ) | (3,635 | ) | 16,255 | 14,079 | ||||||||||||||||||||||||||||||||||
INCOME BEFORE INCOME TAXES | (34) | (94) | 0 | 0 | 1,333 | 696 | (61 | ) | (60 | ) | - | - | 1,901 | 1,455 | ||||||||||||||||||||||||||||||||||
INCOME TAXES | (9) | (23) | 0 | 0 | 340 | 198 | (14 | ) | (16 | ) | - | - | 490 | 410 | ||||||||||||||||||||||||||||||||||
NET INCOME | (25) | (71) | 0 | 0 | 993 | 498 | (47 | ) | (44 | ) | - | - | 1,411 | 1,045 | ||||||||||||||||||||||||||||||||||
Export sales to the United States | 0 | 0 | 0 | 0 | 1,868 | 1,606 | - | - | - | - | 2,701 | 2,531 | ||||||||||||||||||||||||||||||||||||
Cash from (used in) operating activities | (47) | (33) | 0 | 0 | 1,238 | (34) | ||||||||||||||||||||||||||||||||||||||||||
Cash flow from (used in) operating activities | (59 | ) | (24 | ) | - | - | 2,203 | 664 | ||||||||||||||||||||||||||||||||||||||||
CAPEX (a) | 2 | 2 | 0 | 0 | 1,781 | 1,029 | 4 | 3 | - | - | 2,980 | 1,604 | ||||||||||||||||||||||||||||||||||||
Total assets as at June 30 | 100 | 412 | (314) | (289) | 18,368 | 16,663 | ||||||||||||||||||||||||||||||||||||||||||
Total assets as at September 30 | 96 | 481 | (278 | ) | (321 | ) | 19,398 | 16,822 |
(a) | Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant, equipment and intangibles and additions to capital leases. |
IMPERIAL OIL LIMITED
4. Investment and other income |
Investment and other income includes gains and losses on asset sales as follows:
Second Quarter | Six Months to June 30 | Third Quarter | Nine Months to September 30 | |||||||||||||||||||||||||||||
millions of dollars | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||||||||||
Proceeds from asset sales | 54 | 35 | 60 | 37 | 35 | 8 | 95 | 45 | ||||||||||||||||||||||||
Book value of assets sold | 12 | 4 | 14 | 5 | 23 | 8 | 37 | 13 | ||||||||||||||||||||||||
Gain/(loss) on asset sales, before tax (a) | 42 | 31 | 46 | 32 | ||||||||||||||||||||||||||||
Gain/(loss) on asset sales, before tax | 12 | – | 58 | 32 | ||||||||||||||||||||||||||||
Gain/(loss) on asset sales, after tax (a) | 36 | 25 | 40 | 26 | ||||||||||||||||||||||||||||
Gain/(loss) on asset sales, after tax | 10 | – | 50 | 26 | ||||||||||||||||||||||||||||
(a) The second quarter of 2010 included a gain of $37 million ($31 million, after tax) from the sale of a non-operating real estate property.
5. Employee retirement benefits
The components of net benefit cost included in production and manufacturing and selling and general expenses in the consolidated statement of income are as follows: | ||||||||||||||||||||||||||||||||
5. Employee retirement benefits
The components of net benefit cost included in production and manufacturing and selling and general expenses in the consolidated
|
5. Employee retirement benefits
The components of net benefit cost included in production and manufacturing and selling and general expenses in the consolidated
| |||||||||||||||||||||||||||||||
Second Quarter | Six Months to June 30 | Third Quarter | Nine Months to September 30 | |||||||||||||||||||||||||||||
millions of dollars | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||||||||||
Pension benefits: | ||||||||||||||||||||||||||||||||
Current service cost | 26 | 14 | 51 | 40 | 25 | 20 | 76 | 60 | ||||||||||||||||||||||||
Interest cost | 76 | 79 | 153 | 152 | 77 | 75 | 230 | 227 | ||||||||||||||||||||||||
Expected return on plan assets | (69 | ) | (66) | (137 | ) | (134) | (69 | ) | (67 | ) | (206 | ) | (201 | ) | ||||||||||||||||||
Amortization of prior service cost | 4 | 5 | 8 | 9 | 5 | 4 | 13 | 13 | ||||||||||||||||||||||||
Recognized actuarial loss | 35 | 28 | 69 | 56 | 34 | 28 | 103 | 84 | ||||||||||||||||||||||||
Net benefit cost | 72 | 60 | 144 | 123 | 72 | 60 | 216 | 183 | ||||||||||||||||||||||||
Other post-retirement benefits: | ||||||||||||||||||||||||||||||||
Current service cost | 2 | 1 | 3 | 2 | 1 | 1 | 4 | 3 | ||||||||||||||||||||||||
Interest cost | 6 | 6 | 12 | 13 | 6 | 7 | 18 | 20 | ||||||||||||||||||||||||
Amortization of prior service cost | (1 | ) | 0 | (1 | ) | 0 | - | - | (1 | ) | - | |||||||||||||||||||||
Recognized actuarial loss/(gain) | 0 | (1) | 0 | (1) | - | - | - | (1 | ) | |||||||||||||||||||||||
Net benefit cost | 7 | 6 | 14 | 14 | 7 | 8 | 21 | 22 | ||||||||||||||||||||||||
6. Other long-term obligations
| ||||||||||||||||||||||||||||||||
6. Long-term debt
| ||||||||||||||||||||||||||||||||
As at Sept. 30 | As at Dec. 31 | |||||||||||||||||||||||||||||||
millions of dollars | As at June 30 2010 | As at Dec. 31 2009 | 2010 | 2009 | ||||||||||||||||||||||||||||
Long-term debt (a) | 200 | - | ||||||||||||||||||||||||||||||
Capital leases | 28 | 31 | ||||||||||||||||||||||||||||||
Employee retirement benefits (a) | 1,252 | 1,682 | ||||||||||||||||||||||||||||||
Asset retirement obligations and other environmental liabilities (b) | 799 | 806 | ||||||||||||||||||||||||||||||
Share-based incentive compensation liabilities | 168 | 144 | ||||||||||||||||||||||||||||||
Other obligations | 208 | 207 | ||||||||||||||||||||||||||||||
Total long-term debt | 228 | 31 | ||||||||||||||||||||||||||||||
Total other long-term obligations | 2,427 | 2,839 | ||||||||||||||||||||||||||||||
(a) | In the third quarter of 2010, the company borrowed $200 million under an existing agreement with an affiliated company of Exxon Mobil Corporation (ExxonMobil) that provides for a long-term, variable-rate loan from ExxonMobil to the company of up to $5 billion (Canadian) at interest equivalent to Canadian market rates. The agreement is effective until July 31, 2019, cancelable if ExxonMobil provides at least 370 days advance written notice. |
In the third quarter, to support the commercial paper program, the company entered into an unsecured committed bank credit facility in the amount of $200 million that matures in July 2012.
IMPERIAL OIL LIMITED
7. Other long-term obligations
As at | As at | |||||||||||
millions of dollars | 2010 | 2009 | ||||||||||
Employee retirement benefits (a) | 1,253 | 1,682 | ||||||||||
Asset retirement obligations and other environmental liabilities (b) | 796 | 806 | ||||||||||
Share-based incentive compensation liabilities | 184 | 144 | ||||||||||
Other obligations | 210 | 207 | ||||||||||
Total other long-term obligations | 2,443 | 2,839 | ||||||||||
(a) | Total recorded employee retirement benefits obligations also include $47 million in current liabilities (December 31, 2009 - $47 million). |
(b) | Total asset retirement obligations and other environmental liabilities also include $112 million in current liabilities (December 31, 2009 - $114 million). |
Subsequent to the end of the second quarter, to support the commercial paper program, the company entered into an unsecured committed bank credit facility in the amount of $200 million that matures in July 2012.
Third Quarter | Nine Months to September 30 | |||||||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||||||
Net income per common share - basic | ||||||||||||||||||||
Net income (millions of dollars) | 418 | 547 | 1,411 | 1,045 | ||||||||||||||||
Weighted average number of common shares outstanding (millions of shares) | 847.6 | 847.6 | 847.6 | 850.5 | ||||||||||||||||
Net income per common share (dollars) | 0.49 | 0.64 | 1.66 | 1.23 | ||||||||||||||||
Net income per common share - diluted | ||||||||||||||||||||
Net income (millions of dollars) | 418 | 547 | 1,411 | 1,045 | ||||||||||||||||
Weighted average number of common shares outstanding (millions of shares) | 847.6 | 847.6 | 847.6 | 850.5 | ||||||||||||||||
Effect of employee share-based awards (millions of shares) | 7.1 | 7.3 | 6.9 | 7.0 | ||||||||||||||||
Weighted average number of common shares outstanding, assuming dilution (millions of shares) | 854.7 | 854.9 | 854.5 | 857.5 | ||||||||||||||||
Net income per common share (dollars) | 0.49 | 0.64 | 1.65 | 1.22 |
9. Comprehensive income
Third Quarter | Nine Months to September 30 | |||||||||||||||||||
millions of dollars | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||
Net income | 418 | 547 | 1,411 | 1,045 | ||||||||||||||||
Post-retirement benefit liability adjustment (excluding amortization) | - | - | 84 | (25 | ) | |||||||||||||||
Amortization of post retirement benefit liability adjustment included in net periodic benefit costs | 28 | 23 | 85 | 70 | ||||||||||||||||
Other comprehensive income (net of income taxes) | 28 | 23 | 169 | 45 | ||||||||||||||||
Total comprehensive income | 446 | 570 | 1,580 | 1,090 | ||||||||||||||||
IMPERIAL OIL LIMITED
Second Quarter | Six Months to June 30 | |||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||
Net income per common share - basic | ||||||||||||
Net income (millions of dollars) | 517 | 209 | 993 | 498 | ||||||||
Weighted average number of common shares outstanding (millions of shares) | 847.6 | 847.8 | 847.6 | 851.9 | ||||||||
Net income per common share (dollars) | 0.61 | 0.25 | 1.17 | 0.59 | ||||||||
Net income per common share - diluted | ||||||||||||
Net income (millions of dollars) | 517 | 209 | 993 | 498 | ||||||||
Weighted average number of common shares outstanding (millions of shares) | 847.6 | 847.8 | 847.6 | 851.9 | ||||||||
Effect of employee share-based awards (millions of shares) | 6.9 | 7.1 | 6.7 | 6.9 | ||||||||
Weighted average number of common shares outstanding, assuming dilution (millions of shares) | 854.5 | 854.9 | 854.3 | 858.8 | ||||||||
Net income per common share (dollars) | 0.60 | 0.25 | 1.16 | 0.58 | ||||||||
8. Comprehensive income | ||||||||||||
Second Quarter | Six Months to June 30 | |||||||||||
millions of dollars | 2010 | 2009 | 2010 | 2009 | ||||||||
Net income | 517 | 209 | 993 | 498 | ||||||||
Post-retirement benefit liability adjustment (excluding amortization) | 0 | (25) | 84 | (25) | ||||||||
Amortization of post retirement benefit liability adjustment included in net periodic benefit costs | 29 | 24 | 57 | 47 | ||||||||
Other comprehensive income (net of income taxes) | 29 | (1) | 141 | 22 | ||||||||
Total comprehensive income | 546 | 208 | 1,134 | 520 | ||||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
OPERATING RESULTS
The company’s net income for the secondthird quarter of 2010 was $517$418 million or $0.60$0.49 a share on a diluted basis, compared with $209$547 million or $0.25$0.64 a share for the same period last year. Net income for the first sixnine months of 2010 was $993$1,411 million or $1.16$1.65 a share on a diluted basis, versus $498$1,045 million or $0.58$1.22 a share for the first halfnine months of 2009.
EarningsAlthough third quarter earnings were lower, underlying business operations remained strong across all segments of the company. The lower third quarter earnings were primarily attributable to planned maintenance activities at Syncrude, impacting earnings by about $90 million, and the unfavourable foreign exchange effects of a stronger Canadian dollar of about $70 million. These factors were partially offset by the combined impacts of upstream commodity prices and downstream margins totaling about $75 million. The company estimates that third-party pipeline reliability issues negatively impacted third quarter earnings by about $60 million; this effect, which will carry-over in fourth quarter results, has been reflected in the second quarter were higher thanoverall commodity price and margins factor above.
For the same quarter in 2009 with improvements in all operating segments. Earningsnine months, earnings increased primarily due to the impacts of higher crude oilupstream commodity prices of about $150$800 million, higher Syncrude volumes of about $150 million, lower refinery and Syncrude maintenance of about $85$90 million and improved downstream margins ofrefinery operations and lower refinery maintenance activities totaling about $40$75 million. These factors were partially offset by the unfavourable effects of a stronger Canadian dollar of about $330 million, higher royalty costs due to higher commodity prices of about $240 million, and lower overall downstream margins of about $110 million. Earnings in the nine months of 2010 also included higher gain of about $25 million from sale of non-operating assets.
Upstream
Net income in the third quarter was $348 million versus $439 million in the same period of 2009. Earnings decreased primarily due to higher costs and lower volumes at Syncrude, mainly a result of planned maintenance activities, totaling about $90 million. Earnings were also negatively impacted by the unfavourable foreign exchange effects of a higherstronger Canadian dollar of about $115$65 million and lower Cold Lake bitumen production and lower conventional volumes totaling about $25 million. These factors were partially offset by higher crude oil and natural gas commodity prices in the third quarter of 2010 which contributed to higher earnings of about $95 million. Third-party pipeline reliability issues in the third quarter negatively impacted the transportation of western crude oil. The company estimates the negative impact on earnings of about $45 million from lower realizations, the effect of which has been reflected in the commodity price factor above.
Net income for the nine months was $1,238 million versus $833 million during the same period last year. Higher crude oil and natural gas commodity prices in 2010 increased revenues, contributing to higher earnings of about $800 million. Earnings were also positively impacted by higher Syncrude volumes, reflecting improved reliability, of about $90 million. These factors were partially offset by the impact of a stronger Canadian dollar of about $265 million and higher royalty costs due to higher commodity prices of about $70 million. Earnings in the second quarter of 2010 also included a gain of about $30 million from the sale of a non-operating real estate property.
For the first six months, earnings increased primarily due to the impacts of higher crude oil prices of about $700 million, higher Syncrude volumes of about $150 million and lower refinery and upstream maintenance activities of about $115 million. These factors were partially offset by the unfavourable effects of a higher Canadian dollar of about $260 million, higher royalty costs due to higher commodity prices of about $250 million, and lower overall downstream margins of about $90 million. Earnings in the first half of 2010 also included a gain of about $30 million from the sale of a non-operating real estate property.
Upstream
Net income in the second quarter was $446 million, $194 million higher than the same period of 2009. Higher crude oil commodity prices in the second quarter of 2010 increased revenues, contributing to higher earnings of about $150 million. Earnings were also positively impacted by higher Syncrude volumes of about $150 million and lower Syncrude maintenance costs of about $30 million. These factors were partially offset by the unfavourable foreign exchange effects of a higher Canadian dollar of about $90 million and higher royalties due to higher commodity prices of about $70 million.
Net income for the first six months was $890 million versus $394 million during the same period last year. Higher crude oil commodity prices in 2010 increased revenues, contributing to higher earnings of about $700 million. Earnings were also positively impacted by higher Syncrude volumes of about $150 million and lower overall maintenance costs of about $50 million. These factors were partially offset by higher royalty costs due to higher commodity prices of about $250 million and the impact of a higher Canadian dollar of about $200$240 million.
The average price of Brent crude oil in U.S. dollars, a common benchmark for world oil markets, was $78.27$76.85 a barrel in the secondthird quarter and $77.30$77.15 a barrel in the first halfnine months of 2010, up about 3313 percent and 5035 percent from the corresponding periods last year. The company’s average realizations on sales of Canadian conventional crude oil and synthetic crude oil from Syncrude production also increased. The company’s average bitumen realizations were also higher in the third quarter and in the first nine months of 2010, but by less than the relative increase in light crude oil prices, reflecting a widened price spread between the lighter crude oils and Cold Lake bitumen, attributable to third-party pipeline outages.
Gross production of Cold Lake bitumen averaged 140139 thousand barrels a day during the secondthird quarter, versus 139145 thousand barrels in the same quarter last year. For the first sixnine months, gross production was 144143 thousand barrels a day this year, compared with 143144 thousand barrels in the same period of 2009. Lower volumes in both periods in 2010 were due to the cyclic nature of production at Cold Lake.
The company’s share of Syncrude’s gross production in the secondthird quarter was 8166 thousand barrels a day, versus 5178 thousand barrels in the secondthird quarter of 2009. Lower volumes in the third quarter of 2010 were the result of planned maintenance activities, which began in September 2010 and will complete in late October 2010. During the first halfnine months of the year, the company’s share of gross production from Syncrude averaged 7471 thousand barrels a day, up from 6066 thousand barrels in 2009. Increased production in the second quarter and first halfnine months of 2010 was due to lower maintenance activities.improved operational reliability.
Gross production of conventional crude oil averaged 2422 thousand barrels a day in both the secondthird quarter, and sixdown from 25 thousand barrels in the third quarter of 2009. In the first nine months of 2010,the year, gross production was 23 thousand barrels a day, compared with 25 thousand barrels in 2009. Planned maintenance activities at the Norman Wells field and was slightly lower when compared to corresponding periods in 2009 due to natural reservoir decline.decline were the main contributors to the lower production in both periods.
Gross production of natural gas during the secondthird quarter of 2010 at 289was 284 million cubic feet a day, was essentially unchangeddown slightly from 291 million cubic feet in the same period last year. In the first halfnine months of the year, gross production was 281282 million cubic feet a day, down from 296294 million cubic feet in the first sixnine months of 2009. The lower production volume was primarily a result of maintenance activities and natural reservoir decline.
The company is currently reconfiguring its Kearl project development plan to include a combination of debottlenecking and expansion to minimize facility requirements and to reduce the plant footprint. The approach will leverage our execution learnings, take advantage of the investments in infrastructure that would not need to be duplicated in the future and will utilize our successful “design one, build many” approach to replicate facilities. The overall production profile and total resource developed at Kearl remain relatively unchanged for the reconfigured project. It is expected that the capital investments’ spending profile of the first phase of the project will be higher based on the adjustments mentioned above.
Downstream
Net income was $68$69 million in the secondthird quarter of 2010, compared with negative $38$62 million in the same period a year ago. Favourable impactsImproved refinery operations as well as improved sales volumes when compared to the low levels in the third quarter of about $55 million associated with lower refinery maintenance activities and stronger overall margins of about $40 million were the main contributors to higher earnings. Second quarter earnings also benefited from a gain of2009 contributed about $25 million fromto the sale of a non-operating real estate property.earnings increase. These factors were partially offset by the unfavourable foreign exchange effects of a higher Canadian dollarlower overall margins of about $25 million.$20 million, which included the negative impact of the third-party pipeline outages.
Six-monthNine-month net income was $107$176 million, compared with $164$226 million in 2009. Lower earnings were primarily due to lower overall margins of about $90$110 million and the unfavourable effects of a higherstronger Canadian dollar of about $55$60 million. These factors were partially offset by the favourable impacts of about $65$75 million associated with improved refinery operations and lower refinery maintenance activities and $35 million gain from sale of non-operating assets.
Chemical
Net income was $22$23 million in the secondthird quarter, $14$4 million higher than the same quarter last year. Improved industry margins for polyethylene and intermediate products were partially offset by lower sales volumes for polyethylene products and higher costs due to planned maintenance activities on the Sarnia ethylene cracker. Six-monthproducts. Nine-month net income was $21$44 million, up $10$14 million from the same period in 2009. Improved industry margins were partially offset by lower sales volumes for polyethylene products and higher costs due to planned maintenance activities.
Corporate and other
Net income effects were negative $19$22 million in the secondthird quarter, compared with negative $13$27 million in the same period of 2009. The change in earnings effects was primarily due to changes in share-based compensation charges in the third quarter of 2010. For the sixnine months of 2010, net income was negative $25$47 million, versusin line with the negative $71$44 million reported last year. The changes in both periods were primarily due to the earnings effects from share-based compensation charges.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow generated from operating activities was $324$965 million during the secondthird quarter of 2010, compared with $262$698 million in the same period last year. Higher cash flow was primarily driven by higher earningsworking capital effects partially offset by funding contributions of $295 million to the company’s registered pension plan in the second quarter of 2010.lower earnings. Year-to-date cash flow generated from operating activities was $1,238$2,203 million, compared with cash flow used in operating activities of $34$664 million in the same period last year. Higher cash flow was primarily due to higher earnings. The timing of scheduled income tax paymentsearnings and other working capital effects, also contributed to higher cash flow. The above factors were partially offset by higher 2010 funding contributions to the company’s registered pension plan in 2010.plan.
Investing activities used net cash of $797$1,113 million in the secondthird quarter, an increase of $318$568 million from the corresponding period in 2009. Additions to property, plant and equipment were $851$1,147 million in the secondthird quarter, compared with $513$554 million during the same quarter 2009. For the Upstream segment, expenditures during the quarter were primarily for advancingdirected towards the advancement of the Kearl oil sands project. Other investments included development drilling at Cold Lake, exploration drilling at Horn River andas well as environmental and other projects at Syncrude. The Downstream segment’s capital expenditures were focused mainly on refinery projects to improve reliability, feedstock flexibility, energy efficiency and air emissions.
Cash from financing activities was $3$135 million in the secondthird quarter, compared with cash used in financing activities of $148$85 million in the secondthird quarter of 2009. The company issued additional commercial paper which increased short term debt by $90 million to $199 million atIn the end of the secondthird quarter, 2010. Subsequent to the end of the second quarter, to support the commercial paper program, the company entered into an unsecured committed bank credit facility in the amount of $200increased its debt level by $228 million that matures in July 2012.by drawing on existing facilities.
In June, the company received approval from the Toronto Stock Exchange for a new normal course issuer bid to replace its existing share-purchase program that expired on June 24, 2010. The new share-purchase program enables the company to repurchase up to about 42 million shares during the period from June 25, 2010, to June 24, 2011, including shares purchased for the company’s employee savings plan, the company’s employee retirement plan and from ExxonMobil. During the secondthird quarter of 2010, the company did not make any share repurchases outside ofexcept those to offset the dilutive effects from the exercise of stock options, as cash flow from operations was used to fund growth projects such as Kearl.options. The company will continue to evaluate its share-purchase program in the context of its overall capital project activities.
Cash dividends of $85$93 million were paid in the secondthird quarter of 2010 compared with dividends of $86$85 million in the same period of 2009. On April 28, 2010, the company declared a quarterly dividend of 11 cents a share, an increase of one cent a share from the previous quarter, payable on July 1, 2010. Per-share dividends declared in the first two quartersnine months of 2010 totaled $0.21,$0.32, up from $0.20$0.30 in the same period of 2009.
The above factors led to a decrease in the company’s balance of cash to $64$51 million at JuneSeptember 30, 2010, from $513 million at the end of 2009.
Item 3. | Quantitative and Qualitative Disclosures about Market Risk. |
Information about market risks for the sixnine months ended JuneSeptember 30, 2010 does not differ materially from that discussed on pagespage 23 in the company’s annual report on Form 10-K for the year ended December 31, 2009. Additional discussion of risk is highlighted in Part II, Item 1A, Risk Factors, on page 15 of thisthe Form 10-Q for the quarterly period ended JuneSeptember 30, 2010.
Item 4. | Controls and Procedures. |
As indicated in the certifications in Exhibit 31 of this report, the company’s principal executive officer and principal financial officer have evaluated the company’s disclosure controls and procedures as of JuneSeptember 30, 2010. Based on that evaluation, these officers have concluded that the company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to them in a manner that allows for timely decisions regarding required disclosures and are effective in ensuring that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
There has not been any change in the company’s internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.
Information about risk factors does not differ materially from the discussion found in Item 1A of the company’s Annual Report on Form 10-K for 2009. The company’s activities in deep water oil and gas exploration are currently limited to a 15% interest in one non-operated exploration well in the Orphan basin.limited. However, there are operational risks inherent in oil and gas exploration and production activities, as well as the potential to incur substantial financial liabilities if those risks are not effectively managed. The ability to insure such risks is limited by the capacity of the applicable insurance markets, which may not be sufficient to cover the likely cost of a major adverse operating event such as a deepwater well blowout. Accordingly, the company’s primary focus is on prevention, including through our rigorous Operations Integrity Management System. Our future results will depend on the continued effectiveness of these efforts.
Future changes to laws and regulations may have the effect of increasing the cost of, and reducing available opportunities for, offshore exploration and production.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the period AprilJuly 1, 2010 to JuneSeptember 30, 2010, the company issued 62,94911,727 common shares to employees or former employees outside the U.S.A. for $15.50 per share upon the exercise of stock options. These issuances were not registered under theSecurities Act in reliance on Regulation S thereunder.
Issuer Purchases of Equity Securities (1)(2)
Period |
(a) Total number of shares (or units) purchased |
(b) Average |
(c) Total number of shares (or units) purchased as part of publicly announced plans or programs |
(d) Maximum number (or that may yet be under the plans | ||||
April 2010 (April 1- April 30)
| 0 | N/A | 0 | 41,477,416 | ||||
May 2010 (May 1 – May 31)
| 54,699 | $40.56 | 54,699 | 41,333,989 | ||||
June 2010 (June 1 – June 30)
| 8,250 | $41.47 | 8,250 | 42,363,767 |
Period | (a) Total number of shares (or units) purchased | (b) Average price paid per share (or unit) | (c) Total number of part of publicly plans or programs | (d) Maximum number (or under the plans or | ||||
July 2010 (July 1- July 31)
| - | - | - | 42,274,061 | ||||
August 2010 (August 1 - August 31)
| - | - | - | 42,187,921 | ||||
September 2010 (Sept 1 - Sept 30)
| 11,727 | $38.3551 | 11,727 | 42,089,441 |
(1) |
|
|
On June 23, 2010, the company announced by news release that it had received final approval from the Toronto Stock Exchange for a new normal course issuer bid and will continue its share repurchase program. The new program enables the company to repurchase up to a maximum of 42,380,333 common shares, including common shares purchased for the company’s employee savings plan, the company’s employee retirement plan and from Exxon Mobil Corporation during the period June 25, 2010 to June 24, 2011. If not previously terminated, the program will end on June 24, 2011. |
The company will continue to evaluate its share purchaseshare-purchase program in the context of its overall capital activities.
(31.1) Certification by the principal executive officer of the company pursuant to Rule 13a-14(a).
(31.2) Certification by the principal financial officer of the company pursuant to Rule 13a-14(a).
(32.1) Certification by the chief executive officer and of the company pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350.
(32.2) Certification by the chief financial officer and of the company pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350.
Pursuant to the requirements of theSecurities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
IMPERIAL OIL LIMITED (Registrant) | ||||||
Date: | /s/ Paul J. Masschelin | |||||
(Signature) | ||||||
Paul J. Masschelin
| ||||||
| ||||||
| Senior Vice-President, Finance and | |||||
| ||||||
(Principal Accounting Officer) | ||||||
Date: November 3, 2010 | /s/ Brent A. Latimer | |||||
(Signature) | ||||||
Brent A. Latimer | ||||||
Assistant Secretary |
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