Mr. Brad Corson reports

IMPERIAL ANNOUNCES THIRD QUARTER 2023 FINANCIAL AND OPERATING RESULTS

Imperial Oil Ltd. has released its Q3 2023 financial and operating results.

Imperial reported estimated net income in the third quarter of $1,601-million, up from net income of $675-million in the second quarter of 2023, driven by strong operating performance and higher commodity prices. Quarterly cash flow from operating activities was $2,359-million, up from $885-million in the second quarter of 2023.

"Imperial delivered strong financial results in the third quarter, highlighted by record quarterly production at Kearl and strong utilization across our refining network," said Brad Corson, chairman, president and chief executive officer. "As we look to close out 2023, we remain focused on maximizing the value of our existing assets, progressing select growth opportunities, continuing to reduce our carbon intensity and returning surplus cash to shareholders."

Upstream production in the third quarter averaged 423,000 gross oil equivalent barrels per day. At Kearl, quarterly total gross production averaged 295,000 barrels per day (bbl/d) (209,000 barrels Imperial's share), the highest quarterly production in the asset's history, and also established a new single-month production record in September of 322,000 barrels per day (228,000 barrels Imperial's share). In August, Kearl completed its multiyear program to convert its 81 haul trucks to autonomous operation. Imperial is now one of the largest autonomous mine fleet operators in the world, and continues to capture productivity improvements, while also reducing costs and further enhancing operational safety. At Cold Lake, quarterly gross production averaged 128,000 barrels per day, impacted by steam-cycle timing and planned turnaround activity. As part of the turnaround scope, key equipment tie-ins for the Grand Rapids phase 1 (GRP1) project were successfully completed. The project is nearing completion and remains on target for accelerated start-up by year-end 2023. When fully operational, the project is expected to average 15,000 barrels per day of advantaged production using low-carbon solvent-assisted steam-assisted gravity drainage (SA-SAGD) technology.

In the Downstream, throughput in the quarter averaged 416,000 barrels per day with refinery capacity utilization of 96 per cent, which includes impacts associated with the planned refinery and chemical plant turnaround at the company's Sarnia site. The turnaround began in September and is progressing on plan. Petroleum product sales in the quarter were 478,000 barrels per day, capturing value from strong fuel margins.

During the quarter, Imperial returned to shareholders $292-million in dividends paid and $1,342-million through accelerated share repurchases under the company's normal course issuer bid (NCIB) program. The company completed its NCIB program in October with an additional $958-million in share repurchases.

"Our company's strong operating performance and portfolio of capital efficient investments continue to generate substantial value for our shareholders," said Mr. Corson. "Through October this year, our company has returned over $3.4-billion to shareholders, and I am pleased to announce our intention to initiate a substantial issuer bid to return up to a further $1.5-billion to shareholders in the fourth quarter of 2023."

Throughout the quarter, Imperial continued to advance key projects that support lowering greenhouse gas emissions, including start-up of the final Kearl boiler flue gas unit, continuing construction of Strathcona renewable diesel facility and successful completion of a co-processing trial at Strathcona refinery. In September, Imperial released its annual advancing climate solutions report outlining the company's progress and continuing commitment to lowering greenhouse gas emissions intensity.

"Our company has worked diligently on emission-reduction road maps and business plans to lower greenhouse gas emissions intensity in our operations, and provide lower life cycle product solutions to our customers," said Mr. Corson. "As we move forward, I am very excited about our opportunities to advance next-generation technologies as well as the world-scale Pathways carbon capture infrastructure in support of a net-zero future."

Third quarter highlights:

• Net income of $1,601-million, or $2.76 per share on a diluted basis, compared with $2,031-million, or $3.24 per share, in the third quarter of 2022. Net income excluding identified items was $1,601-million in the third quarter of 2023, compared with $1,823-million in the same period of 2022. Lower net income was primarily driven by lower commodity prices.
• Cash flows from operating activities of $2,359-million, compared with cash flows from operating activities of $3,089-million in the same period of 2022. Cash flows from operating activities excluding working capital of $1,946-million, compared with $2,543-million in the same period of 2022.
• Capital and exploration expenditures totalled $387-million, compared with $392-million in the third quarter of 2022.
• The company returned $1,634-million to shareholders in the third quarter of 2023, including $292-million in dividends paid and $1,342-million in accelerated share repurchases. Subsequent to the end of the third quarter, the company completed its NCIB program with an additional $958-million in share repurchases.
• Announced intention to initiate a substantial issuer bid to purchase for cancellation up to $1.5-billion of its common shares. The company anticipates terms and pricing will be determined, and the offer will commence, during the next two weeks.
• Production averaged 423,000 gross oil equivalent barrels per day, compared with 430,000 gross oil equivalent barrels per day in the same period of 2022. Adjusting for the sale of XTO Energy Canada, which closed in the third quarter of 2022, production increased by about 5,000 gross oil equivalent barrels per day.
• Total gross bitumen production at Kearl averaged 295,000 barrels per day (209,000 barrels Imperial's share), the highest quarterly production in the asset's history, up from 271,000 barrels per day (193,000 barrels Imperial's share) in the third quarter of 2022, and also established a new single-month production record in September of 322,000 barrels per day (228,000 barrels Imperial's share).
• Completed conversion of last remaining haul trucks at Kearl to autonomous operation. With 81 fully autonomous haul trucks now in service, Imperial is one of the largest autonomous mine fleet operators in the world. The company expects to capture significant improvements to truck productivity and work force safety while also reducing operating costs.
• Achieved successful start-up of final boiler flue gas unit at Kearl. This technology recovers waste heat from a boiler's combustion exhaust to preheat process water, and, combined, the six units have the potential to reduce greenhouse gas emissions by up to 220,000 tonnes per year.
• Continuing monitoring and assessment of expanded seepage interception system at Kearl, including additional delineation work in the area to determine if any further mitigations are required. Imperial continues to engage with local indigenous communities, and is providing site tours and access for independent testing. To date, there is no indication of adverse impacts to fish and wildlife populations, or risks to drinking water for local communities.
• Gross bitumen production at Cold Lake averaged 128,000 barrels per day, compared with 150,000 barrels per day in the third quarter of 2022. Production in the third quarter was impacted by steam-cycle timing and planned turnaround activities.
• Completed critical equipment tie-ins for the Grand Rapids phase 1 project in conjunction with planned turnaround activities at Cold Lake in the third quarter. GRP1 will be the first SA-SAGD project in the industry and is expected to reduce greenhouse gas emissions intensity by up to 40 per cent compared with existing cyclic steam stimulation technology. The project is nearing completion and remains on target to achieve accelerated start-up with steam injection anticipated by year-end 2023.
• The company's share of gross production from Syncrude averaged 75,000 barrels per day, up from 62,000 barrels per day in the third quarter of 2022, primarily driven by planned turnaround activity.
• Refinery throughput averaged 416,000 barrels per day, compared with 426,000 barrels per day in the third quarter of 2022. Capacity utilization was 96 per cent, compared with 100 per cent in the third quarter of 2022. Third quarter 2023 results include impacts from the planned turnaround in Sarnia, which began in September and is progressing on plan.
• Petroleum product sales were 478,000 barrels per day, compared with 484,000 barrels per day in the third quarter of 2022.
• Successful completion of refinery co-processing trial at Strathcona. Trials have now been completed across all company refineries. This technology has the potential to reduce carbon intensity of fuel and plastic products by co-processing vegetable oil and ethanol alongside conventional feedstock.
• Chemical net income of $23-million in the quarter, compared with $54-million in the third quarter of 2022. Lower net income was primarily driven by the impact of planned turnaround activities.
• Released annual advancing climate solutions report outlining the company's progress and continuing commitment to lowering GHG emissions. Imperial is committed to providing energy solutions in a way that helps protect people, the environment and the communities where it operates, including mitigating the risks of climate change.
• Established low-carbon solutions organization, focused on leveraging its unique capabilities to bring lower-emission technologies like renewable fuels, hydrogen, and carbon capture and storage to market, helping customers meet their sustainability goals.
• Celebrating 20 years of support for Indspire, an organization that invests in the education of first nations, Inuit and Metis people in Canada. Through this support, Indspire has provided scholarships to more than 500 indigenous students.

Recent business environment

During the first quarter of 2023, the price of crude oil declined, impacted by higher inventory levels, and the price of crude oil remained relatively flat during the second quarter. In the third quarter, crude oil prices increased as demand exceeded supply after OPEC+ oil producers further reduced oil output. In addition, the Canadian WTI/WCS (West Texas Intermediate/Western Canada Select) spread continued to recover in the third quarter, but remains weaker than 2022 on an annual basis. Similarly, 2023 refining margins remain strong but fall short of 2022 levels on an annual basis.

Operating results

Prior-year third quarter results included favourable identified items of $208-million related to the company's gain on the sale of interests in XTO Energy Canada.

On June 27, 2023, the company announced by news release that it had received final approval from the Toronto Stock Exchange for a new normal course issuer bid to continue its then-existing share purchase program. The program enabled the company to purchase up to a maximum of 29,207,635 common shares during the period June 29, 2023, to June 28, 2024. This maximum included shares purchased under the normal course issuer bid and from Exxon Mobil, concurrent with, but outside of, the normal course issuer bid. As in the past, Exxon Mobil advised the company that it intended to participate to maintain its ownership percentage at approximately 69.6 per cent. Imperial accelerated share purchases under the normal course issuer bid program during the third quarter and, subsequent to the end of the third quarter, the program completed on Oct. 19, 2023, as a result of the company purchasing the maximum allowable number of shares under the program.

On Oct. 27, 2023, the company announced its intention to launch a substantial issuer bid pursuant to which the company will offer to purchase for cancellation up to $1.5-billion of its common shares. The substantial issuer bid will be made through a modified Dutch auction, with a tender price range to be determined by the company at the time of commencement of the offer. Shares may also be tendered by way of a proportionate tender, which will result in a shareholder maintaining their proportionate share ownership. ExxonMobil has advised Imperial that it intends to make a proportionate tender in connection with the offer in order to maintain its proportionate share ownership at approximately 69.6 per cent following completion of the offer. Nothing in this report shall constitute an offer to purchase or a solicitation of an offer to sell any shares.

Additional information regarding the tender offer

The tender offer described in this communication has not yet commenced. This communication is for informational purposes only. This communication is not a recommendation to buy or sell Imperial Oil shares or any other securities, and it is neither an offer to purchase nor a solicitation of an offer to sell Imperial Oil shares or any other securities.

On the commencement date of the offer, Imperial Oil will file an offer to purchase, accompanying issuer bid circular, and related letter of transmittal and notice of guaranteed delivery with Canadian securities regulatory authorities, and mail these to the company's shareholders. The company will also file a tender offer statement on Schedule TO, including the offering documents, with the United States Securities and Exchange Commission (SEC). The offer will only be made pursuant to the offering documents filed with Canadian securities regulatory authorities and as a part of the Schedule TO. Shareholders should read carefully the offering documents because they contain important information, including the various terms of, and conditions to, the offer. Once the offer is commenced, shareholders will be able to obtain a free copy of the tender offer statement on Schedule TO, the offering documents and other documents that Imperial Oil will be filing with the SEC at the SEC's website, with Canadian securities regulatory authorities at SEDAR+, or from Imperial Oil's website.

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