Imperial Oil Ltd - 2018 Earnings Update
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Imperial Oil (IMO-TSX ) is Canada's second-largest integrated oil company next to Suncor Energy Inc. (SU). Exxon Mobil Corp.(XOM-NYSE, owns 69.9% of Canadian based Imperial Oil. Imperial integrated business model, includes significant investments in Upstream, Downstream and Chemical segments. The upstream segment contributes 28% of earnings, Downstream at 63% and Chemical processing 9%. Imperial Oil has assets of $41.8B and forecast annual revenues of $38B. Exxon Mobil has assets of $348B and forecast 2018 revenues of $244B. The Aspen project, located about 45 km northeast of Fort McMurray is proceeding The project, which is expected to produce about 75,000 bbls of bitumen per day will cost $2.6B to construct. This will include the first major commercial application of next-generation oil sands recovery technology designed to lower greenhouse gas emissions intensity and water use, while improving development economics.
Upstream assets are composed of mainly long life oil sands reserves comprised of Kearl, Syncrude and Cold Lake projects. Kearl and Cold Lake each contribute about 40% of production, Syncrude – 20%. Kearl is 71% owned, Syncrude -25% and Cold Lake is 100% owned. Kearl and Cold Lake contribute about 80% of production priced based on the WCS benchmark, Syncrude prices are tied to WTI. They have a 50% interest of 650,000 acres of the Duvernay and Montney fields.
The Downstream segment serves predominantly Canadian markets with refining, logistics and marketing assets. This segment is comprised of three refineries in Canada, with aggregate distillation capacity of 423,000 barrels per day. Refining margins are driven by differences in commodity prices and are a function of the difference between what a refinery pays for its raw materials (primarily crude oil) and the market prices for the range of products produced (primarily gasoline, heating oil, diesel oil, jet fuel and fuel oil).
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