Imperial Oil struggles to turn a profit despite boosting production
Imperial Oil reported a second quarter loss of $181 million, its second quarterly loss in a row.
About $170 million of that amount was attributed to the wildfire outages. Kearl production was periodically halted in May due to constraints on both the inbound diluent pipeline and the outbound product pipeline, shutdown due to precautionary measures.
Among the key highlights for the second quarter:
- Cash flow from operations rose to $443 million, up from $377 million for the previous year quarter. The Alberta wildfires cut cash flow by $195 million during the month of May.
- Total revenues fell 14.4% to $6.25 billion versus the same time last year.
- Kearl production averaged 155,000 bbl/day for the quarter, up from 130,000 bbl/day in Q2/2015. Excluding wildfire disruptions, production at Kearl would have increased 13% y/y.
- Cold Lake bitumen production averaged 163,000 bbl/day, up from 161,000 bbl/day for the previous year. Base operations declined slightly while Nibiye production was improved.
- Total quarterly production was reduced to 329,000 boe/day versus 344,000 for the previous year quarter. The wildfires shaved about 64,000 bbl/day averaged over the entire quarter, attributed exclusively to disruptions at Kearl.
- Quarterly refinery throughput averaged 246,000 bbl/day, compared to 373,000 bbl/day in Q2 of 2015. The company completed major maintenance turnarounds at both its Strathcona and Nanticoke operations, reducing throughput by 163,000 bbl/day.
- Downstream net income was cut to $71 million, versus $215 million for the previous due to the refinery outages and weaker refining margins.
- Capital expenditures continue to decline, falling to $335 million, a decrease of $484 million from Q2/2015 thanks to the completion of several major projects.
Imperial noted that production at Kearl is ramping up towards its nameplate capacity of 220,000 bbl/day. The facility did not sustain any damage from the wildfires.
The company says the business environment in the energy patch remains "challenging" and management will remain focused on reducing operating costs, avoiding any unecessary discretionary spending.
Imperial also noted its Mackenzie gas project regulatory approval has been extended by seven years, giving it up to 2022 to start construction. The company says it will evaluate whether it still wants to invest in the natural gas market but did not provide a timeline for a final investment decision. The NEB's decision to extend the project's sunset clause is subject to approval by the federal government.