Brad Corson's remarks
The past year has proved an exceptionally challenging one, not only for the company and our employees, but society at-large. Against significant headwinds, Imperial’s operational performance and cost management efforts have exceeded expectations. We set aggressive targets for capital and expense reductions in the first quarter of 2020, and we surpassed those targets. I am extremely proud of the efforts our employees have made in this environment, maintaining safe, reliable operations and ensuring the safety of themselves and their coworkers, while reliably supplying essential products to our customers.
Despite the many challenges faced in 2020, Imperial continued to deliver strong financial and operating results. The company significantly reduced capital and expense levels while achieving production records and strong safety results. Going forward, we will continue to focus on economically growing volumes, maintaining expense and capital discipline and returning cash to shareholders, as we build upon the foundational improvements of 2020.
Chairman, president and chief executive officer
Full-year earnings and cash flow
- Net loss in 2020 was $1,857 million, or $2.53 per share on a diluted basis, compared to net income of $2,200 million or $2.88 per share in 2019. Current year results reflect a non-cash impairment charge of $1,171 million after-tax, related to the company's decision to no longer develop a significant portion of its unconventional portfolio, and a favourable impact of about $115 million after-tax, associated with the Canada Emergency Wage Subsidy (CEWS), which includes Imperial's proportionate share of a joint venture. Full-year 2019 results included a favourable impact of $662 million associated with the Alberta corporate income tax rate decrease.
- Cash flow generated from operating activities was $798 million, compared to cash flow generated from operating activities of $4,429 million in 2019.
Shareholder returnReturned $923 million to shareholders through dividends and share purchases.
Capital and exploration expendituresCapital and exploration expenditures totalled $874 million, compared to $1,814 million in 2019.
Upstream recorded a net loss of $2,318 million for the year, compared to net income of $1,348 million in 2019. Results were negatively impacted by lower realizations of about $2,620 million, a non-cash impairment charge of $1,171 million, related to the company's decision to no longer develop a significant portion of its unconventional portfolio, absence of a favourable impact of $689 million associated with the Alberta corporate income tax rate decrease in 2019, and lower volumes of about $130 million. These items were partially offset by lower royalties of about $540 million, lower operating expenses of about $250 million, favourable foreign exchange impacts of about $100 million, and about $70 million associated with the CEWS received by the company which includes Imperial's proportionate share of a joint venture.
- Total gross production of Kearl bitumen averaged 222,000 barrels per day in 2020 (158,000 barrels Imperial's share), the highest annual production in the asset's history, up from 205,000 barrels per day (145,000 barrels Imperial's share) in 2019. Improved production was mainly due to the addition of supplemental crushing facilities in 2020, partially offset by the balancing of near term production with demand through the advancement and extension of planned turnaround activities.
- Gross production of Cold Lake bitumen averaged 132,000 barrels per day in 2020, compared to 140,000 barrels per day in 2019.
- During 2020, the company's share of gross production from Syncrude averaged 69,000 barrels per day, compared to 73,000 barrels per day in 2019.
Downstream net income was $553 million, compared to $961 million in 2019. Results were negatively impacted by lower margins of about $710 million, and lower sales volumes of about $290 million. These items were offset by lower operating expenses of about $190 million, lower turnaround impacts of about $190 million primarily related to reduced turnaround activity in the current year and improved reliability of about $180 million, primarily due to the absence of the Sarnia fractionation tower incident which occurred in April 2019.
- Refinery throughput averaged 340,000 barrels per day in 2020, compared to 353,000 barrels per day in 2019. Capacity utilization was 80 percent, compared to 83 percent in 2019. Lower throughput was driven by reduced demand due to the COVID-19 pandemic, partially offset by lower refinery turnaround activity and reliability events, including impacts from the Sarnia fractionation tower incident which occurred in April 2019.
- Petroleum product sales were 421,000 barrels per day in 2020, compared to 475,000 barrels per day in 2019. Lower petroleum product sales were primarily driven by reduced demand due to the COVID-19 pandemic.
- Chemical net income was $78 million in 2020, compared to $108 million in 2019, primarily reflecting lower margins.
Financial & operating
2020 financial & operating information is available in Imperial's 2020 financial and operating results.
Forward-looking statements: Statements of future events or conditions in this report, including projections, targets, expectations, estimates, and business plans are forward-looking statements. Forward-looking statements can be identified by words such as believe, anticipate, intend, propose, plan, goal, seek, project, predict, target, estimate, expect, strategy, outlook, schedule, future, continue, likely, may, should, will and similar references to future periods. Forward-looking statements in this report include the focus on economically growing volumes, maintaining expense and capital discipline and returning cash to shareholders, and building upon foundational improvements of 2020.
Forward-looking statements are based on the company's current expectations, estimates, projections and assumptions at the time the statements are made. Actual future financial and operating results, including expectations and assumptions concerning demand growth and energy source, supply and mix; commodity prices, foreign exchange rates and general market conditions; production rates, growth and mix; project plans, timing, costs, technical evaluations and capacities and the company’s ability to effectively execute on these plans and operate its assets; the ability of the company to achieve cost savings; progression of COVID-19 and its impacts on Imperial’s ability to operate its assets, including the possible shutdown of facilities due to COVID-19 outbreaks; the company’s ability to effectively execute on its business continuity plans and pandemic response activities; applicable laws and government policies, including restrictions in response to COVID-19; financing sources and capital structure; and capital and environmental expenditures could differ materially depending on a number of factors.
These factors include global, regional or local changes in supply and demand for oil, natural gas, and petroleum and petrochemical products and resulting price, differential and margin impacts, including foreign government action with respect to supply levels and prices and the impact of COVID-19 on demand; general economic conditions; availability and allocation of capital; currency exchange rates; availability and performance of third-party service providers, including in light of restrictions related to COVID-19; management effectiveness and disaster response preparedness, including business continuity plans in response to COVID-19; political or regulatory events, including changes in law or government policy such as tax laws, production curtailment and actions in response to COVID-19; environmental risks inherent in oil and gas exploration and production activities; unanticipated technical or operational difficulties; project management and schedules and timely completion of projects; operational hazards and risks; cybersecurity incidents, including increased reliance on remote working arrangements and activation of business continuity plans due to COVID-19; and other factors discussed in Item 1A risk factors and Item 7 management’s discussion and analysis of financial condition and results of operations of Imperial Oil Limited’s most recent annual report on Form 10-K and subsequent interim reports on Form 10-Q.
Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, some that are similar to other oil and gas companies and some that are unique to Imperial Oil Limited. Imperial’s actual results may differ materially from those expressed or implied by its forward-looking statements and readers are cautioned not to place undue reliance on them. Imperial undertakes no obligation to update any forward-looking statements contained herein, except as required by applicable law.