Mr. Brad Corson reports

IMPERIAL ANNOUNCES FIRST QUARTER 2024 FINANCIAL AND OPERATING RESULTS

Imperial Oil Ltd. has released its financial and operating results for the first quarter of 2024.

Imperial reported estimated net income in the first quarter of $1,195-million, compared with net income of $1,365-million in the fourth quarter of 2023, reflecting an expected seasonal decrease in upstream production volume. Quarterly cash flows from operating activities were $1,076-million, compared with $1,311-million generated in the fourth quarter of 2023. Excluding the impact of working capital, cash flows from operating activities were $1,521-million, compared with $1,799-million in the fourth quarter of 2023.

"Imperial's first quarter financial results reflect the strength of our integrated business model as we delivered record first quarter production from Kearl and continued to deliver high utilization rates across our refining network," said Brad Corson, chairman, president and chief executive officer. "In addition, we progressed key projects such as our Strathcona renewable diesel facility and Cold Lake Grand Rapids, that support both volume growth and lower emissions to meet Canada's energy needs."

Upstream production in the first quarter averaged 421,000 gross oil equivalent barrels per day. At Kearl, quarterly total gross production averaged 277,000 barrels per day (196,000 barrels Imperial's share), the highest ever first quarter production in the asset's history. At Cold Lake, quarterly production averaged 142,000 gross barrels per day. The Grand Rapids phase 1 project continued to progress steam injection throughout the quarter, consistent with plans to begin ramping up production in the coming weeks. The project is expected to achieve 15,000 gross barrels at full production rates and also reduce greenhouse gas emissions intensity by up to 40 per cent compared with existing steam processes.

In the downstream, quarterly throughput averaged 407,000 barrels per day, which included the highest ever first quarter throughput at Nanticoke, with overall refinery capacity utilization of 94 per cent and petroleum product sales of 450,000 barrels per day. Based on retail market share data published in the first quarter, the Esso brand has now achieved the No. 1 market share position in Canada on a stand-alone basis, building on the company's previous No. 1 market share position when combining both Esso and Mobil brands. Throughout the quarter, the company continued to advance work on Canada's largest renewable diesel facility at its Strathcona refinery, with construction activity now under way on a number of units and progressing on plan. When complete, the project is expected to be able to produce more than one billion litres of renewable diesel annually, primarily from locally sourced and grown feedstocks, and support Canada's ambition to achieve net zero by 2050.

During the quarter, Imperial returned $278-million to shareholders through dividend payments and declared a second quarter dividend of 60 cents per share. "A reliable and growing dividend is the foundation of our shareholder returns program, and with our first quarter increase, we are now positioned to deliver 30 consecutive years of dividend growth," said Mr. Corson.

In March, regulatory filings began for the proposed Pathways Alliance carbon capture and storage project, starting with transportation network applications. Pathways Alliance members have been working together to develop and prepare these applications while discussing the project with indigenous groups, local communities, landowners and governments. "The regulatory applications represent an important milestone," said Mr. Corson. "Our industry has an important role to play in the energy transition, and Imperial remains well positioned to continue pursuing strategic opportunities to reduce emissions, provide economic benefits for local and indigenous communities, and deliver value for our shareholders."

First quarter highlights:

• Net income of $1,195-million or $2.23 per share on a diluted basis, compared with $1,248-million or $2.13 per share in the first quarter of 2023.
• Cash flows from operating activities of $1,076-million, up from cash flows used in operating activities of $821-million in the first quarter of 2023. Cash flows from operating activities excluding working capital of $1,521-million, compared with $1,554-million in the same period of 2023.
• Capital and exploration expenditures totalled $496-million, up from $429-million in the first quarter of 2023.
• The company returned $278-million to shareholders in the first quarter of 2024 through dividends paid.
• Production averaged 421,000 gross oil equivalent barrels per day, up from 413,000 gross oil equivalent barrels per day in the same period of 2023.
• Total gross bitumen production at Kearl averaged 277,000 barrels per day (196,000 barrels Imperial's share), the highest first quarter production in the asset's history, up from 259,000 barrels per day (184,000 barrels Imperial's share) in the first quarter of 2023, primarily driven by strong mine and plant performance.
• Gross bitumen production at Cold Lake averaged 142,000 barrels per day, up from 141,000 barrels per day in the first quarter of 2023.
• Further progressed steam injection at the Grand Rapids phase 1 (GRP1) project, consistent with plans to begin ramping up production in the coming weeks. GRP1 will be the first solvent-assisted SAGD (steam-assisted gravity drainage) project in the industry and is expected to achieve 15,000 gross barrels per day of production at full rates while also reducing greenhouse gas emissions intensity by up to 40 per cent compared with existing cyclic steam stimulation technology.
• The company's share of gross production from Syncrude averaged 73,000 barrels per day, compared with 76,000 barrels per day in the first quarter of 2023. Syncrude began its annual planned coker turnaround in late March, which is expected to be completed in the second quarter.
• Refinery throughput averaged 407,000 barrels per day, including highest ever first quarter throughput at Nanticoke, compared with 417,000 barrels per day in the first quarter of 2023. Capacity utilization was 94 per cent, compared with 96 per cent in the first quarter of 2023.
• Petroleum product sales were 450,000 barrels per day, compared with 455,000 barrels per day in the first quarter of 2023.
• Continued to advance work on the Strathcona renewable diesel facility, with construction activity now under way on a number of units and progressing on plan. When complete the project is expected to produce more than one billion litres of renewable diesel annually, from locally sourced and grown feedstocks, and support Canada's ambition to achieve net zero by 2050.
• Esso brand has achieved the No. 1 market share position in Canada in 2023 on a stand-alone basis according to retail market share data published in the first quarter. This builds on the company's previous position holding the No. 1 retail market share position in Canada when combining the Esso and Mobil brands.
• Following a pro-active decision to conduct preventative maintenance on the Winnipeg Products Pipeline, regular fuel supply into the region is being maintained through temporary transportation networks.
• Chemical net income of $57-million in the quarter, up from $53-million in the first quarter of 2023. Pathways Alliance files regulatory applications with the Alberta Energy Regulator for proposed carbon capture and storage project.
• Pathways Alliance has set goals to reduce emissions from oil sands operations (scope 1 and 2), working toward a goal of net zero from oil sands operations by 2050.

Recent business environment

During the first quarter of 2024, the price of crude oil remained relatively flat with the fourth quarter of 2023, as markets continued to be reasonably balanced on higher inventory levels. The Canadian WTI/WCS spread began to narrow in the first quarter, but remained in line with the 2023 full-year average. Refining margins improved in the first quarter of 2024 primarily driven by industry downtime and supply disruptions.

Price -- average bitumen realizations increased by $16.23 per barrel, primarily driven by higher marker prices and the narrowing of the WTI/WCS spread. Synthetic crude oil realizations decreased by $8.94 per barrel, due to a weaker synthetic/WTI spread.

Volumes -- higher volumes were primarily driven by strong mine and plant performance at Kearl.

Royalty -- higher royalties were primarily driven by improved commodity prices.

Higher production at Kearl was primarily driven by strong mine and plant performance.

Lower refinery throughput was primarily driven by minor maintenance activities.

We seek Safe Harbor.