FORM10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

[✓]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2017~~2018

[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from --- to ---

Commission file number0-12014

IMPERIAL OIL LIMITED

(Exact name of registrant as specified in its charter)


CANADA		98-0017682
(State or other jurisdiction		~~(I.R.S. Employer~~
of incorporation or organization)		(I.R.S. Employer Identification No.)

505 Quarry Park Boulevard S.E.
Calgary, Alberta, Canada		T2C 5N1
(Address of principal executive offices)		(Postal Code)

Registrant’s telephone number, including area code:1-800-567-3776

The registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 91 days.

YES ✓ NO

The registrant has submitted electronically and posted on its corporate ~~Web~~web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES ✓ NO

The registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule12b-2 of the Exchange Act of 1934).

Large accelerated filer

✓

Smaller reporting company

Non-accelerated filer

Emerging growth company

Accelerated filer

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

The registrant is a shell company (as defined in Rule12b-2 of the Exchange Act of 1934).

YES NO ✓

The number of common shares outstanding, as of ~~September~~June 30, ~~2017~~2018 was ~~837,581,329.~~802,679,927.

IMPERIAL OIL LIMITED

Table of contents

In this report all dollar amounts are expressed in Canadian dollars unless otherwise stated. This report should be read in conjunction with the company’s annual report on Form10-K for the year ended December 31, ~~2016.~~2017. Note that numbers may not add due to rounding.

The term “project” as used in this report can refer to a variety of different activities and does not necessarily have the same meaning as in any government payment transparency reports.

In this report, unless the context otherwise indicates, reference to “the company” or “Imperial” includes Imperial Oil Limited and its subsidiaries.

IMPERIAL OIL LIMITED

PART I. FINANCIAL INFORMATION

Item 1. Financial statements

Consolidated statement of income (U.S. GAAP, unaudited)


																		Six Months
			Third Quarter				Nine Months to September 30						Second Quarter					to June 30
millions of Canadian dollars	millions of Canadian dollars		2017		2016		2017		2016		millions of Canadian dollars		2018		2017			2018		2017

Revenues and other income	Revenues and other income										Revenues and other income
Operating revenues(a)				7,134		6,568		21,077		17,967
Investment and other income(note 3)				24		874		270		945

Revenues(a)											Revenues(a)			9,516		6,985			17,416		13,943
Investment and other income(note 5)											Investment and other income(note 5)			27		48			61		246
Total revenues and other income	Total revenues and other income			7,158		7,442		21,347		18,912	Total revenues and other income			9,543		7,033			17,477		14,189


Expenses	Expenses										Expenses
Exploration	Exploration			7		16		29		75	Exploration			1		-			9		22
Purchases of crude oil and products(b)	Purchases of crude oil and products(b)			4,251		3,857		13,226		10,884	Purchases of crude oil and products(b)			6,537		4,642			11,317		8,975
Production and manufacturing(c)	Production and manufacturing(c)			1,338		1,261		4,238		3,842	Production and manufacturing(c)			1,646		1,495			3,077		2,840
Selling and general(c)	Selling and general(c)			219		275		626		812	Selling and general(c)			273		198			467		401
Federal excise tax	Federal excise tax			438		434		1,253		1,237	Federal excise tax			412		421			809		815
Depreciation and depletion	Depreciation and depletion			391		398		1,135		1,229	Depreciation and depletion			358		352			735		744
Financing costs(note 5)				18		19		49		52

Non-service pension and postretirement benefit(d)											Non-service pension and postretirement benefit(d)			26		33			53		66
Financing(note 7)											Financing(note 7)			26		17			49		31
Total expenses	Total expenses			6,662		6,260		20,556		18,131	Total expenses			9,279		7,158			16,516		13,894


Income (loss) before income taxes	Income (loss) before income taxes			496		1,182		791		781	Income (loss) before income taxes			264		(125	)		961		295

Income taxes	Income taxes			125		179		164		60	Income taxes			68		(48	)		249		39


Net income (loss)	Net income (loss)			371		1,003		627		721	Net income (loss)			196		(77	)		712		256


Per-share information(Canadian dollars)
Net income (loss) per common share - basic(note 8)				0.44		1.18		0.74		0.85
Net income (loss) per common share - diluted(note 8)				0.44		1.18		0.74		0.85
Dividends per common share				0.16		0.15		0.47		0.44

Per share information(Canadian dollars)											Per share information(Canadian dollars)
Net income (loss) per common share - basic(note 10)											Net income (loss) per common share - basic(note 10)			0.24		(0.09	)		0.86		0.30
Net income (loss) per common share - diluted(note 10)											Net income (loss) per common share - diluted(note 10)			0.24		(0.09	)		0.86		0.30
Dividends per common share - declared											Dividends per common share - declared			0.19		0.16			0.35		0.31
(a)		Amounts from related parties included in operating revenues.		756		448		2,801		1,457		Amounts from related parties included in revenues.		1,769		1,008			3,142		2,045
(b)		Amounts to related parties included in purchases of crude oil and products.		604		623		1,919		1,540		Amounts to related parties included in purchases of crude oil and products.		1,374		706			2,266		1,315
(c)		Amounts to related parties included in production and manufacturing, and selling and general expenses.		127		133		415		394		Amounts to related parties included in production and manufacturing, and selling and general expenses.		156		147			297		288
(d)												Prior year amounts have been reclassified. See note 2 for additional details.

The information in the notes to consolidated financial statements is an integral part of these statements.

IMPERIAL OIL LIMITED

Consolidated statement of comprehensive income (U.S. GAAP, unaudited)


														Six Months
	Third Quarter				Nine Months to September 30				Second Quarter					to June 30
millions of Canadian dollars	2017		2016		2017		2016		2018		2017			2018			2017
Net income (loss)										196		(77	)		712			256

Net income (loss)		371		1,003		627		721
Other comprehensive income (loss), net of income taxes
Post-retirement benefits liability adjustment (excluding amortization)		-		-		41		100
Postretirement benefits liability adjustment (excluding amortization)										-		-			(19	)		41

Amortization of post-retirement benefits liability adjustment included in net periodic benefit costs		34		34		106		108

Amortization of postretirement benefits liability adjustment included in net periodic benefit costs										33		36			67			72
Total other comprehensive income (loss)		34		34		147		208		33		36			48			113



Comprehensive income (loss)		405		1,037		774		929		229		(41	)		760			369

The information in the notes to consolidated financial statements is an integral part of these statements.

IMPERIAL OIL LIMITED

Consolidated balance sheet (U.S. GAAP, unaudited)


							As at			As at
							June 30			Dec 31
millions of Canadian dollars	As at Sept 30 2017			As at Dec 31 2016			2018			2017

Assets
Current assets
Cash		833			391			873			1,195
Accounts receivable, less estimated doubtful accounts(a)		1,896			2,023			2,625			2,712
Inventories of crude oil and products		989			949			1,221			1,075
Materials, supplies and prepaid expenses		441			468

Materials, supplies and prepaid expenses(b)								456			425
Total current assets		4,159			3,831			5,175			5,407
Investments and long-term receivables(b)		931			1,030			860			865
Property, plant and equipment,		53,844			53,515			53,272			52,778
less accumulated depreciation and depletion		(18,248	)		(17,182	)		(19,028	)		(18,305	)

Property, plant and equipment, net		35,596			36,333			34,244			34,473
Goodwill		186			186			186			186
Other assets, including intangibles, net		498			274

Other assets, including intangibles, net(note 9)								925			670
Total assets		41,370			41,654			41,390			41,601


Liabilities
Current liabilities
Notes and loans payable(b)		202			202
Accounts payable and accrued liabilities(a) (note 7)		3,041			3,193
Notes and loans payable(c)								202			202
Accounts payable and accrued liabilities(a) (note 9)								3,923			3,877
Income taxes payable		59			488			89			57

Total current liabilities		3,302			3,883			4,214			4,136
Long-term debt(c) (note 6)		5,013			5,032
Other long-term obligations(d) (note 7)		3,698			3,656
Long-term debt(d) (note 8)								4,992			5,005
Other long-term obligations(e) (note 9)								3,943			3,780
Deferred income tax liabilities		4,336			4,062			4,476			4,245

Total liabilities		16,349			16,633			17,625			17,166


Shareholders’ equity
Common shares at stated value(e) (note 8)		1,547			1,566
Earnings reinvested(note 9)		25,224			25,352
Accumulated other comprehensive income (loss)(note 10)		(1,750	)		(1,897	)

Common shares at stated value(f) (note 10)								1,483			1,536
Earnings reinvested(note 11)								24,049			24,714
Accumulated other comprehensive income (loss)(note 12)								(1,767	)		(1,815	)
Total shareholders’ equity		25,021			25,021			23,765			24,435


Total liabilities and shareholders’ equity		41,370			41,654			41,390			41,601

(a)	Accounts receivable, less estimated doubtful accounts included net amounts receivable from related parties of ~~$87~~$344 million ~~(2016~~(2017 - ~~$172~~$509 million).

(b)	Investments and long-term receivables included amounts from related parties of $56 million (2017 - $19 million).

(c)	Notes and loans payable included amounts to related parties of $75 million ~~(2016~~(2017 - $75 million).

~~(c)~~(d)

Long-term debt included amounts to related parties of $4,447 million ~~(2016~~(2017 - $4,447 million).

~~(d)~~(e)

Other long-term obligations included amounts to related parties of ~~$71~~$38 million ~~(2016~~(2017 - ~~$104~~$60 million).

~~(e)~~(f)

Number of common shares authorized and outstanding were 1,100 million and ~~838~~803 million, respectively ~~(2016~~(2017 - 1,100 million and ~~848~~831 million, respectively).

The information in the notes to consolidated financial statements is an integral part of these statements.

IMPERIAL OIL LIMITED

Consolidated statement of cash flows (U.S. GAAP, unaudited)

Inflow (outflow)    Third Quarter
    Nine Months
    to September 30

millions of Canadian dollars    2017 2016 2017 2016

Operating activities

Net income (loss)
   371 1,003 627 721
Adjustments fornon-cash items:

Depreciation and depletion
   391 398 1,135 1,229
(Gain) loss on asset sales(note 3)
   (6 ) (909 ) (219 ) (952 )
Deferred income taxes and other
   131 215 294 35
Changes in operating assets and liabilities:

Accounts receivable
   (297 ) 275 127 (121 )
Inventories, materials, supplies and prepaid expenses
   104 (7 ) (13 ) 112
Income taxes payable
   19 (13 ) (429 ) -
Accounts payable and accrued liabilities
   81 (241 ) (159 ) (59 )
All other items - net(a)
   43 51 320 299

Cash flows from (used in) operating activities
   837 772 1,683 1,264

Investing activities

Additions to property, plant and equipment
   (241 ) (189 ) (683 ) (893 )
Proceeds from asset sales(note 3)
   8 1,194 230 1,244
Additional investments
   (1 ) - (1 ) (1 )

Cash flows from (used in) investing activities
   (234 ) 1,005 (454 ) 350

Financing activities

Short-term debt - net
   - (1,591 ) - (1,679 )
Long-term debt - additions(note 6)
   - - - 495
Reduction in capitalized lease obligations(note 6)
   (7 ) (6 ) (20 ) (21 )
Dividends paid
   (136 ) (127 ) (390 ) (364 )
Common shares purchased(note 8)
   (250 ) - (377 ) -

Cash flows from (used in) financing activities
   (393 ) (1,724 ) (787 ) (1,569 )

Increase (decrease) in cash
   210 53 442 45
Cash at beginning of period
   623 195 391 203

Cash at end of period(b)
   833 248 833 248

(a)   Included contribution to registered pension plans.
   (78 ) (44 ) (176 ) (120 )

~~(b)~~

~~Cash is composed of cash in bank and cash equivalents at cost. Cash equivalents are all highly liquid securities with maturity of three months or less when purchased.~~

~~The information in the notes to consolidated financial statements is an integral part of these statements.~~


								Six Months
Inflow (outflow)		Second Quarter						to June 30
millions of Canadian dollars		2018			2017			2018			2017
Operating activities
Net income (loss)			196			(77	)		712			256
Adjustments fornon-cash items:
Depreciation and depletion			358			352			735			744
(Gain) loss on asset sales(note 5)			(9	)		(31	)		(19	)		(213	)
Deferred income taxes and other			24			(37	)		209			163
Changes in operating assets and liabilities:
Accounts receivable			(340	)		146			87			424
Inventories, materials, supplies and prepaid expenses			40			(45	)		(177	)		(117	)
Income taxes payable			16			16			32			(448	)
Accounts payable and accrued liabilities			439			(30	)		24			(240	)
All other items - net (a) (b)			135			198			241			277
Cash flows from (used in) operating activities			859			492			1,844			846

Investing activities
Additions to property, plant and equipment(b)			(357	)		(320	)		(728	)		(442	)
Proceeds from asset sales(note 5)			9			39			21			222
Loan to equity company			(31	)		-			(37	)		-
Cash flows from (used in) investing activities			(379	)		(281	)		(744	)		(220	)

Financing activities
Reduction in capitalized lease obligations(note 8)			(7	)		(6	)		(13	)		(13	)
Dividends paid			(132	)		(127	)		(266	)		(254	)
Common shares purchased(note 10)			(893	)		(127	)		(1,143	)		(127	)
Cash flows from (used in) financing activities			(1,032	)		(260	)		(1,422	)		(394	)

Increase (decrease) in cash			(552	)		(49	)		(322	)		232
Cash at beginning of period			1,425			672			1,195			391
Cash at end of period(c)			873			623			873			623
(a)	Included contribution to registered pension plans.		(57	)		(58	)		(101	)		(98	)
(b)	The impact of carbon emission programs are included in additions to property, plant and equipment, and all other items, net.
(c)	Cash is composed of cash in bank and cash equivalents at cost. Cash equivalents are all highly liquid securities with maturity of three months or less when purchased.
The information in the notes to consolidated financial statements is an integral part of these statements.

IMPERIAL OIL LIMITED

Notes to consolidated financial statements (unaudited)

1. Basis of financial statement preparation

These unaudited consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles ~~of the United States of America~~ (GAAP) and follow the same accounting policies and methods of computation as, and should be read in conjunction with, the most recent annual consolidated financial statements filed with the U.S. Securities and Exchange Commission (SEC) in the company’s ~~2016~~2017 annual report on Form10-K. In the opinion of the company, the information furnished herein reflects all known accruals and adjustments necessary for a fair statement of the results for the periods reported herein. All such adjustments are of a normal recurring nature. Prior year’s data has been reclassified in certain cases to conform to the current presentation basis.

The company’s exploration and production activities are accounted for under the “successful efforts” method.

The results for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, are not necessarily indicative of the operations to be expected for the full year.

All amounts are in Canadian dollars unless otherwise indicated.

IMPERIAL OIL LIMITED

2. Accounting changes

Effective January 1, 2018, Imperial adopted the Financial Accounting Standards Board’s standard,Revenue from Contracts with Customers, as amended. The standard establishes a single revenue recognition model for all contracts with customers, eliminates industry and transaction specific requirements, and expands disclosure requirements. The standard was adopted using the modified retrospective method, under which prior year results are not restated, but supplemental information is provided for any material impacts of the standard on 2018 results. The adoption of the standard did not have a material impact on any of the lines reported in the company’s consolidated financial statements. The cumulative effect of adoption of the new standard was de minimis. The company did not elect any practical expedients that require disclosure. See note 4 for additional details.

Effective January 1, 2018, Imperial adopted the Financial Accounting Standards Board’s standard update, Compensation – Retirement Benefits (Topic 715):Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The update requires separate presentation of the service cost component from other components of net benefit costs. The other components are reported in a new line on the company’s consolidated statement of income,“Non-service pension and postretirement benefit”. Imperial elected to use the practical expedient which uses the amounts disclosed in the pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements, as it is impracticable to determine the amounts capitalized in those periods. Beginning in 2018, the other components of net benefit costs are included in the Corporate and other expenses. The“Non-service pension and postretirement benefit” line reflects thenon-service costs, which primarily includes interest costs, expected return on plan assets, and amortization of actuarial gains and losses, that were previously included in “Production and manufacturing” and “Selling and general” expenses. Additionally, only the service cost component of net benefit costs is eligible for capitalization in situations where it is otherwise appropriate to capitalize employee costs in connection with the construction or production of an asset.

The impact of the retrospective presentation change on Imperial’s consolidated statement of income for the period ended June 30, 2018 is shown below.


	Second Quarter						Six Months to
millions of Canadian dollars	2017						June 30, 2017
	As reported		Change		As adjusted		As reported		Change		As adjusted
Production and manufacturing		1,525		(30)		1,495		2,900		(60)		2,840

Selling and general		201		(3)		198		407		(6)		401

Non-service pension and postretirement benefit		-		33		33		-		66		66

Effective January 1, 2018, Imperial adopted the Financial Accounting Standards Board’s standard update, Financial Instruments - Overall (Subtopic825-10):Recognition and Measurement of Financial Assets and Financial Liabilities. The standard requires investments in equity securities other than consolidated subsidiaries and equity method investments to be measured at fair value, with changes in the fair value recognized through net income. The company elected a modified approach for equity securities that do not have a readily determinable fair value. This modified approach measures investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. There was no cumulative effect related to the adoption of this standard. The carrying value of equity securities without readily determinable fair values as at June 30, 2018 were not significant to Imperial.

The standard also expanded disclosures related to financial statements. The company’s only notable financial instrument is long-term debt ($4,447 million, excluding capitalized lease obligations), where the difference between fair value and carrying value was de minimis. The fair value of long-term debt was primarily a level 2 measurement.

IMPERIAL OIL LIMITED

3. Business segments


Third Quarter	Upstream						Downstream						Chemical
Second Quarter																	Upstream						Downstream						Chemical
millions of Canadian dollars	2017			2016			2017			2016			2017		2016		2018			2017			2018			2017			2018		2017

Revenues and other income
Operating revenues(a)		1,668			1,316			5,204			4,971			262		281
Revenues(a)																		2,318			1,787			6,870			4,909			328		289
Intersegment sales		587			709			241			253			62		58		650			289			332			242			74		62
Investment and other income(note 3)		7			1			15			870			-		1

		2,262			2,026			5,460			6,094			324		340
Investment and other income(note 5)																		3			5			19			42			-		(2	)
																		2,971			2,081			7,221			5,193			402		349
Expenses
Exploration		7			16			-			-			-		-		1			-			-			-			-		-
Purchases of crude oil and products		947			861			4,014			3,827			179		188		1,573			1,026			5,803			4,014			216		193
Production and manufacturing		893			887			394			323			51		51
Selling and general		5			(1	)		167			238			19		22
Production and manufacturing(b)																		1,106			1,051			488			426			52		48
Selling and general(b)																		-			(7	)		197			185			23		19
Federal excise tax		-			-			438			434			-		-		-			-			412			421			-		-
Depreciation and depletion		330			346			53			46			3		2		300			298			49			47			4		3
Financing costs(note 5)		1			(2	)		-			-			-		-

Non-service pension and postretirement benefit(b)																		-			-			-			-			-		-
Financing(note 7)																		-			-			-			-			-		-
Total expenses		2,183			2,107			5,066			4,868			252		263		2,980			2,368			6,949			5,093			295		263

Income (loss) before income taxes		79			(81	)		394			1,226			72		77		(9	)		(287	)		272			100			107		86
Income taxes		17			(55	)		102			224			20		21		(3	)		(86	)		71			22			29		22
Net income (loss)																		(6	)		(201	)		201			78			78		64
Cash flows from (used in) operating activities																		(10	)		117			776			302			116		100
Capital and exploration expenditures(c)																		183			91			88			39			7		3

Net income (loss)		62			(26	)		292			1,002			52		56

Cash flows from (used in) operating activities		479			432			268			264			99		73
Capital and exploration expenditures(b)		92			149			55			38			5		7


Third Quarter	Corporate and Other						Eliminations						Consolidated
Second Quarter																	Corporate and other						Eliminations						Consolidated
millions of Canadian dollars	2017			2016			2017			2016			2017		2016		2018			2017			2018			2017			2018		2017

Revenues and other income
Operating revenues(a)		-			-			-			-			7,134		6,568
Revenues(a)																		-			-			-			-			9,516		6,985
Intersegment sales		-			-			(890	)		(1,020	)		-		-		-			-			(1,056	)		(593	)		-		-
Investment and other income(note 3)		2			2			-			-			24		874

		2			2			(890	)		(1,020	)		7,158		7,442
Investment and other income(note 5)																		5			3			-			-			27		48
																		5			3			(1,056	)		(593	)		9,543		7,033
Expenses
Exploration		-			-			-			-			7		16		-			-			-			-			1		-
Purchases of crude oil and products		-			-			(889	)		(1,019	)		4,251		3,857		-			-			(1,055	)		(591	)		6,537		4,642
Production and manufacturing		-			-			-			-			1,338		1,261
Selling and general		29			17			(1	)		(1	)		219		275
Production and manufacturing(b)																		-			-			-			-			1,646		1,525
Selling and general(b)																		54			6			(1	)		(2	)		273		201
Federal excise tax		-			-			-			-			438		434		-			-			-			-			412		421
Depreciation and depletion		5			4			-			-			391		398		5			4			-			-			358		352
Financing costs(note 5)		17			21			-			-			18		19

Non-service pension and postretirement benefit(b)																		26			-			-			-			26		-
Financing(note 7)																		26			17			-			-			26		17
Total expenses		51			42			(890	)		(1,020	)		6,662		6,260		111			27			(1,056	)		(593	)		9,279		7,158

Income (loss) before income taxes		(49	)		(40	)		-			-			496		1,182		(106	)		(24	)		-			-			264		(125	)
Income taxes		(14	)		(11	)		-			-			125		179		(29	)		(6	)		-			-			68		(48	)

Net income (loss)		(35	)		(29	)		-			-			371		1,003		(77	)		(18	)		-			-			196		(77	)

Cash flows from (used in) operating activities		(9	)		3			-			-			837		772		(23	)		(27	)		-			-			859		492
Capital and exploration expenditures(b)		7			11			-			-			159		205

Capital and exploration expenditures(c)																		6			10			-			-			284		143

IMPERIAL OIL LIMITED

(a)	Included export sales to the United States of ~~$1,080~~$1,561 million ~~(2016~~(2017 - ~~$941~~$1,045 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.

(b)

As part of the implementation of Accounting Standard Update, Compensation – Retirement Benefits (Topic 715), beginning January 1, 2018, Corporate and other includes allnon-service pension and postretirement benefit expense. Prior to 2018, the majority of these costs were allocated to the operating segments. See note 2 for additional details.

(c)	Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to capital leases, additional investments and acquisitions. CAPEX excludes the purchase of carbon emission credits.

IMPERIAL OIL LIMITED


Nine Months to September 30	Upstream						Downstream						Chemical
Six Months to June 30																		Upstream						Downstream						Chemical
millions of Canadian dollars	2017			2016			2017			2016			2017			2016		2018			2017			2018			2017			2018		2017

Revenues and other income
Operating revenues(a)		5,166			3,699			15,087			13,470			824			798
Revenues(a)																			4,307			3,498			12,477			9,883			632		562
Intersegment sales		1,494			1,516			792			689			191			156		1,307			907			694			551			147		129
Investment and other income(note 3)		17			22			248			919			(1	)		1

		6,677			5,237			16,127			15,078			1,014			955
Investment and other income(note 5)																			4			10			41			233			-		(1	)
																			5,618			4,415			13,212			10,667			779		690
Expenses
Exploration		29			75			-			-			-			-		9			22			-			-			-		-
Purchases of crude oil and products		3,089			2,584			12,037			10,139			573			518		2,947			2,142			10,097			8,023			418		394
Production and manufacturing		2,917			2,634			1,169			1,059			152			149
Selling and general		1			(3	)		540			729			60			63
Production and manufacturing(b)																			2,118			2,024			856			775			103		101
Selling and general(b)																			-			(4	)		370			373			44		41
Federal excise tax		-			-			1,253			1,237			-			-		-			-			809			815			-		-
Depreciation and depletion		964			1,053			148			158			9			6		618			634			100			95			7		6
Financing costs(note 5)		5			(6	)		-			-			-			-

Non-service pension and postretirement benefit(b)																			-			-			-			-			-		-
Financing(note 7)																			-			4			-			-			-		-
Total expenses		7,005			6,337			15,147			13,322			794			736		5,692			4,822			12,232			10,081			572		542

Income (loss) before income taxes		(328	)		(1,100	)		980			1,756			220			219		(74	)		(407	)		980			586			207		148
Income taxes		(103	)		(336	)		230			363			59			59		(24	)		(120	)		258			128			56		39
Net income (loss)																			(50	)		(287	)		722			458			151		109
Cash flows from (used in) operating activities																			327			425			1,366			358			199		77
Capital and exploration expenditures(c)																			389			194			145			73			11		7
Total assets as at June 30																			34,781			35,527			5,090			4,334			408		384

Net income (loss)		(225	)		(764	)		750			1,393			161			160

Cash flows from (used in) operating activities		904			32			626			1,028			176			205
Capital and exploration expenditures(b)		286			745			128			145			12			21
Total assets as at September 30		35,387			36,975			4,671			4,403			365			379


Nine Months to September 30	Corporate and Other						Eliminations						Consolidated
Six Months to June 30																		Corporate and other						Eliminations						Consolidated
millions of Canadian dollars	2017			2016			2017			2016			2017			2016		2018			2017			2018			2017			2018		2017

Revenues and other income
Operating revenues(a)		-			-			-			-			21,077			17,967
Revenues(a)																			-			-			-			-			17,416		13,943
Intersegment sales		-			-			(2,477	)		(2,361	)		-			-		-			-			(2,148	)		(1,587	)		-		-
Investment and other income(note 3)		6			3			-			-			270			945

		6			3			(2,477	)		(2,361	)		21,347			18,912
Investment and other income(note 5)																			16			4			-			-			61		246
																			16			4			(2,148	)		(1,587	)		17,477		14,189
Expenses
Exploration		-			-			-			-			29			75		-			-			-			-			9		22
Purchases of crude oil and products		-			-			(2,473	)		(2,357	)		13,226			10,884		-			-			(2,145	)		(1,584	)		11,317		8,975
Production and manufacturing		-			-			-			-			4,238			3,842
Selling and general		29			27			(4	)		(4	)		626			812
Production and manufacturing(b)																			-			-			-			-			3,077		2,900
Selling and general(b)																			56			-			(3	)		(3	)		467		407
Federal excise tax		-			-			-			-			1,253			1,237		-			-			-			-			809		815
Depreciation and depletion		14			12			-			-			1,135			1,229		10			9			-			-			735		744
Financing costs(note 5)		44			58			-			-			49			52

Non-service pension and postretirement benefit (b)																			53			-			-			-			53		-
Financing(note 7)																			49			27			-			-			49		31
Total expenses		87			97			(2,477	)		(2,361	)		20,556			18,131		168			36			(2,148	)		(1,587	)		16,516		13,894

Income (loss) before income taxes		(81	)		(94	)		-			-			791			781		(152	)		(32	)		-			-			961		295
Income taxes		(22	)		(26	)		-			-			164			60		(41	)		(8	)		-			-			249		39

Net income (loss)		(59	)		(68	)		-			-			627			721		(111	)		(24	)		-			-			712		256

Cash flows from (used in) operating activities		(23	)		(1	)		-			-			1,683			1,264		(48	)		(14	)		-			-			1,844		846
Capital and exploration expenditures(b)		29			37			-			-			455			948
Total assets as at September 30		1,283			674			(336	)		(337	)		41,370			42,094

Capital and exploration expenditures(c)																			13			22			-			-			558		296
Total assets as at June 30																			1,438			1,071			(327	)		(211	)		41,390		41,105

IMPERIAL OIL LIMITED

(a)	Included export sales to the United States of ~~$3,024~~$2,768 million ~~(2016~~(2017 - ~~$2,704~~$1,944 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.

(b)

(c)	Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to capital leases, additional investments and acquisitions. CAPEX excludes the purchase of carbon emission credits.

IMPERIAL OIL LIMITED

3.	~~Investment and other income~~

4. Accounting policy for revenue recognition

Imperial generally sells crude oil, natural gas and petroleum and chemical products under short-term agreements at prevailing market prices. In some cases, products may be sold under long-term agreements, with periodic price adjustments to reflect market conditions.

Revenue is recognized at the amount the company expects to receive when the customer has taken control, which is typically when title transfers and the customer has assumed the risks and rewards of ownership. The prices of certain sales are based on price indexes that are sometimes not available until the next period. In such cases, estimated realizations are accrued when the sale is recognized, and are finalized when final information is available. Such adjustments to revenue from performance obligations satisfied in previous periods are not significant. Payment for revenue transactions is typically due within 30 days. Future volume delivery obligations that are unsatisfied at the end of the period are expected to be fulfilled through ordinary production or purchases. These performance obligations are based on market prices at the time of the transaction and are fully constrained due to market price volatility.

“Revenues” and “Accounts receivable, less estimated doubtful accounts” primarily arise from contracts with customers. Long-term receivables are primarily fromnon-customers. Contract assets are mainly from marketing assistance programs and are not significant. Contract liabilities are mainly customer prepayments, loyalty programs and accruals of expected volume discounts, and are not significant.

5. Investment and other income

Investment and other income included gains and losses on asset sales as follows:


													Six Months
	Third Quarter				Nine Months to September 30				Second Quarter				to June 30
millions of Canadian dollars	2017		2016		2017		2016		2018		2017		2018		2017

Proceeds from asset sales		8		1,194		230		1,244		9		39		21		222
Book value of asset sales		2		285		12		292		-		9		2		10

Gain (loss) on asset sales, before tax(a) (b)		6		909		219		952

Gain (loss) on asset sales, after tax(a) (b)		5		774		191		808

Gain (loss) on asset sales, before tax(a)										9		31		19		213
Gain (loss) on asset sales, after tax(a)										8		28		15		186

(a)	The ~~nine~~six months ended ~~September~~June 30, 2017 included a gain of $174 million ($151 million after tax) ~~for~~from the sale of a surplus property in Ontario.

~~(b)~~

Third quarter and nine months ended September 30, 2016, included gains of $0.8 billion ($0.7 billion, after tax) from the sale of company-owned Esso retail sites in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia and Newfoundland.

6. Employee retirement benefits

4.	~~Employee retirement benefits~~

The components of net benefit cost were as follows:

   Third Quarter Nine Months
to September 30
  millions of Canadian dollars    2017 2016 2017 2016

  Pension benefits:

Current service cost
   54 50 163 152
Interest cost
   77 82 235 240
Expected return on plan assets
   (104 ) (101 ) (306 ) (300 )
Amortization of prior service cost
   2 2 7 7
Amortization of actuarial loss (gain)
   43 39 132 121

Net periodic benefit cost
   72 72 231 220

  Other post-retirement benefits:

Current service cost
   4 4 12 12
Interest cost
   6 7 18 20
Amortization of actuarial loss (gain)
   2 3 6 10

Net periodic benefit cost
   12 14 36 42

5.	~~Financing costs and additional notes and loans payable information~~

   Third Quarter    Nine Months
to September 30
  millions of Canadian dollars    2017    2016    2017    2016

  Debt-related interest
   24    32    73    95
  Capitalized interest
   (7)    (11)    (29)    (37)

  Net interest expense
   17    21    44    58
  Other interest
   1    (2)    5    (6)

  Total financing costs
   18    19    49    52


							Six Months
	Second Quarter						to June 30
millions of Canadian dollars	2018			2017			2018			2017
Pension benefits:
Current service cost		60			54			120			109
Interest cost		75			79			151			158
Expected return on plan assets		(100	)		(101	)		(201	)		(202	)
Amortization of prior service cost		1			2			2			5
Amortization of actuarial loss (gain)		43			45			87			89
Net periodic benefit cost		79			79			159			159

Other postretirement benefits:
Current service cost		4			4			8			8
Interest cost		6			6			11			12
Amortization of actuarial loss (gain)		1			2			3			4
Net periodic benefit cost		11			12			22			24

IMPERIAL OIL LIMITED

6.	~~Long-term debt~~

7. Financing and additional notes and loans payable information

   As at
Sept 30    As at
Dec 31
millions of Canadian dollars    2017    2016

Long-term debt
   4,447    4,447
Capital leases
   566    585

Total long-term debt
   5,013    5,032


							Six Months
	Second Quarter						to June 30
millions of Canadian dollars	2018			2017			2018			2017
Debt-related interest		32			27			62			49
Capitalized interest		(6	)		(10	)		(13	)		(22	)
Net interest expense		26			17			49			27
Other interest		-			-			-			4
Total financing		26			17			49			31

8. Long-term debt

7.	~~Other long-term obligations~~


	As at		As at
	June 30		Dec 31
millions of Canadian dollars	2018		2017
Long-term debt		4,447		4,447
Capital leases		545		558
Total long-term debt		4,992		5,005

9. Other long-term obligations


							As at			As at
		As at Sept 30		As at Dec 31			June 30			Dec 31
millions of Canadian dollars	millions of Canadian dollars	2017		2016			2018			2017

Employee retirement benefits(a)	Employee retirement benefits(a)		1,410		1,645			1,501			1,529
Asset retirement obligations and other environmental liabilities(b)	Asset retirement obligations and other environmental liabilities(b)		1,577		1,544			1,471			1,460
Share-based incentive compensation liabilities	Share-based incentive compensation liabilities		138		139			129			99
Other obligations(c)	Other obligations(c)		573		328	Other obligations(c)			842			692

Total other long-term obligations	Total other long-term obligations		3,698		3,656			3,943			3,780

(a)	Total recorded employee retirement benefits obligations also included ~~$58~~$56 million in current liabilities ~~(2016~~(2017 - ~~$58~~$56 million).

(b)	Total asset retirement obligations and other environmental liabilities also included ~~$108~~$101 million in current liabilities ~~(2016~~(2017 - ~~$108~~$101 million).

8.(c)

~~Common shares~~Included carbon emission program obligations. Carbon emission program credits are recorded under other assets, including intangibles, net.

   As of
Sept 30    As of
Dec 31
thousands of shares    2017    2016

Authorized
   1,100,000    1,100,000
Common shares outstanding
   837,581    847,599

~~From 1995 through September 2017,~~On July 3, 2018, the ~~company had a series~~Government of Ontario revoked its carbon emission cap and trade regulation, prohibiting all trading of emissions allowances. On July 25, 2018, the Government of Ontario introduced legislation proposing to repeal Ontario’s cap and trade legislation and providing the framework for the wind down of the cap and trade program. The company’s net carbon emission program credits (obligations) reflected in the Consolidated balance sheet approximately totalled $65 million at June 30, 2018. Imperial will continue to assess this financial position in light of these announcements and the anticipated legislative process.

IMPERIAL OIL LIMITED

10. Common shares


	As of		As of
	June 30		Dec 31
thousands of shares	2018		2017
Authorized		1,100,000		1,100,000
Common shares outstanding		802,680		831,242

The12-month normal course issuer bid ~~share~~program that was in place during the second quarter of 2018 came into effect in June of 2017 and was amended on April 27, 2018. The program enabled the company to purchase ~~programs. Cumulatively, 916,563 thousand~~up to a maximum of 42,326,545 common shares ~~were~~(5 percent of the total shares on June 13, 2017), which included shares purchased under ~~these programs. Exxon Mobil Corporation’s participation in these programs, including concurrent programs outside~~ the normal course issuer ~~bids, maintained~~bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid. Exxon Mobil Corporation participated to maintain its ownership ~~interest~~percentage in Imperial at approximately 69.6 percent.

The ~~current~~company announced another12-month normal course issuer bid program ~~was announced on~~effective June ~~22, 2017, under which Imperial plans to~~27, 2018 and will continue its existing share purchase program. The program enables the company to purchase up to a maximum of ~~25,395,927~~40,391,196 common shares (3(5 percent of the total shares on June 13, ~~2017),~~2018) which includes shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid. As in the past, Exxon Mobil Corporation has advised the company that it intends to participate to maintain its ownership percentage at approximately 69.6 percent. ~~The results of these activities are as shown below:~~

year    Purchased shares
thousands    Millions of
dollars

1995 - 2015
   906,544    15,708
2016 - Third quarter
   -    -
         - Full year
   1    -
2017 - Third quarter
   6,732    250
         -Year-to-date
   10,018    377

Cumulative purchase to date
   916,563    16,085

~~IMPERIAL OIL LIMITED~~

The excess of the purchase cost over the stated value of shares purchased has been recorded as a distribution of earnings reinvested.

The company’s common share activities are summarized below:


	Thousands of shares			Millions of dollars
Balance as at December 31, 2016		847,599			1,566

Issued under employee share-based awards		2			-

Purchases at stated value		(16,359	)		(30	)
Balance as at December 31, 2017		831,242			1,536

Issued under employee share-based awards		-			-

Purchases at stated value		(28,562	)		(53	)
Balance as at June 30, 2018		802,680			1,483

The following table provides the calculation of ~~net income~~basic and diluted earnings per common share:

      Nine Months
       Third Quarter    to September 30
   2017    2016    2017    2016

Net income (loss) per common share - basic

Net income (loss)(millions of Canadian dollars)
   371    1,003    627    721
Weighted average number of common shares outstanding(millions of shares)
   841.8    847.6    845.5    847.6
Net income (loss) per common share(dollars)
   0.44    1.18    0.74    0.85

Net income (loss) per common share - diluted

Net income (loss)(millions of Canadian dollars)
        371      1,003         627         721
Weighted average number of common shares outstanding(millions of shares)
   841.8    847.6    845.5    847.6
Effect of employee share-based awards(millions of shares)
   3.1    3.2    2.9    3.0

Weighted average number of common shares outstanding, assuming dilution(millions of shares)
   844.9    850.8    848.4    850.6
Net income (loss) per common share(dollars)
   0.44    1.18    0.74    0.85

9.	~~Earnings reinvested~~

   Nine Months
       Third Quarter to September 30
millions of Canadian dollars    2017 2016 2017 2016

Earnings reinvested at beginning of period
   25,224 23,160 25,352 23,687
Net income (loss) for the period
   371 1,003 627 721
Share purchases in excess of stated value
   (237 ) - (358 ) -
Dividends declared
   (134 ) (127 ) (397 ) (373 )
Earnings reinvested at end of period
   25,224 24,036 25,224 24,036


	Second Quarter					Six Months to June 30
	2018		2017			2018		2017
Net income (loss) per common share - basic
Net income (loss)(millions of Canadian dollars)		196		(77	)		712		256
Weighted average number of common shares outstanding(millions of shares)		816.1		847.0			822.6		847.3
Net income (loss) per common share(dollars)		0.24		(0.09	)		0.86		0.30

Net income (loss) per common share - diluted
Net income (loss)(millions of Canadian dollars)		196		(77	)		712		256
Weighted average number of common shares outstanding(millions of shares)		816.1		847.0			822.6		847.3
Effect of employee share-based awards(millions of shares)		2.7		2.9			2.6		2.8
Weighted average number of common shares outstanding, assuming dilution(millions of shares)		818.8		849.9			825.2		850.1

Net income (loss) per common share(dollars)		0.24		(0.09	)		0.86		0.30

IMPERIAL OIL LIMITED

~~10.~~

~~Other comprehensive income (loss) information~~

11. Earnings reinvested


	Second Quarter						Six Months to June 30
millions of Canadian dollars	2018			2017			2018			2017
Earnings reinvested at beginning of period		24,861			25,558			24,714			25,352
Net income (loss) for the period		196			(77	)		712			256
Share purchases in excess of stated value		(853	)		(121	)		(1,090	)		(121	)
Dividends declared		(155	)		(136	)		(287	)		(263	)
Earnings reinvested at end of period		24,049			25,224			24,049			25,224

12. Other comprehensive income (loss) information

Changes in accumulated other comprehensive income (loss):


millions of Canadian dollars	2017			2016			2018			2017

Balance at January 1		(1,897	)		(1,828	)		(1,815	)		(1,897	)
Post-retirement benefits liability adjustment:
Postretirement benefits liability adjustment:
Current period change excluding amounts reclassified from accumulated other comprehensive income		41			100			(19	)		41
Amounts reclassified from accumulated other comprehensive income		106			108			67			72

Balance at September 30		(1,750	)		(1,620	)

Balance at June 30								(1,767	)		(1,784	)

Amounts reclassified out of accumulated other comprehensive income (loss) -before-tax income (expense):

   Third Quarter Nine Months
to September 30
millions of Canadian dollars    2017 2016 2017 2016

Amortization of post-retirement benefits liability adjustment
included in net periodic benefit cost (a)
   (47 ) (44 ) (145 ) (138 )

(a)    This accumulated other comprehensive income component is included in the computation of net periodic benefit cost (note 4).


	Second Quarter						Six Months to June 30
millions of Canadian dollars	2018			2017			2018			2017
Amortization of postretirement benefits liability adjustment included in net periodic benefit cost(a)		(46	)		(49	)		(92	)		(98	)

(a)	This accumulated other comprehensive income component is included in the computation of net periodic benefit cost (note 6).

Income tax expense (credit) for components of other comprehensive income (loss):

   Third Quarter    Nine Months
to September 30
millions of Canadian dollars    2017    2016    2017    2016

Post-retirement benefits liability adjustments:

Post-retirement benefits liability adjustment (excluding amortization)
   -    -    16    37
Amortization of post-retirement benefits liability adjustment included in
net periodic benefit cost
   13    10    39    30

Total
   13    10    55    67


	Second Quarter				Six Months to June 30
millions of Canadian dollars	2018		2017		2018			2017
Postretirement benefits liability adjustments:
Postretirement benefits liability adjustment (excluding amortization)		-		-		(7	)		16
Amortization of postretirement benefits liability adjustment included in net periodic benefit cost		13		13		25			26
Total		13		13		18			42

13. Recently issued accounting standards

~~11.~~

~~Recently issued accounting standards~~

~~In May 2014,~~Effective January 1, 2019, Imperial will adopt the Financial Accounting Standards ~~Board (FASB) issued a new~~Board’s standard,~~Revenue from Contracts with Customers~~Leases (Topic 842). The standard establishes a single revenue recognition model for all contracts with customers, eliminates industry specific requirements and expands disclosure requirements. The standard is required to be adopted beginning January 1, 2018. The company expects to adopt the standard using the modified retrospective method, under which prior years’ results are not restated, but supplemental information on the impact of the new standard will be included in the 2018 results. The impact from the standard is not expected to have a material effect on the company’s financial statements.

~~In February 2016, the FASB issued a new standard~~, ~~Leases~~.as amended. The standard requires all leases with an initial term greater than one year be recorded on the balance sheet as a right of use asset and a lease liability. The company acquired lease accounting software to facilitate implementation, and is currently installing, configuring and testing the software. Based on leases outstanding at the end of 2017, the company estimates the operating lease right of use asset and lease ~~liability.~~liability would have been in the range of $200 million to $250 million at that time. The effect on Imperial’s consolidated balance sheet as a result of implementing the standard ~~is required to be adopted beginning~~on January 1, ~~2019. Imperial is evaluating~~2019 could differ considerably depending on operating leases commenced in 2018 as well as interest rates and other factors such as the ~~standard and its effect on~~expiry or renewal of leases during the ~~company’s financial statements and plans to adopt it in 2019.~~

year.

IMPERIAL OIL LIMITED

~~In March 2017, the FASB issued an Accounting Standards Update2017-07,~~ ~~Compensation – Retirement Benefits (Topic 715):~~~~Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~. The update requires that the service cost component of net benefit costs be reported in the same line in the income statement as other compensation costs and that the other components of net benefit costs be presented separately from the service cost component. Additionally, only the service cost component of net benefit costs will be eligible for capitalization. Imperial will adopt the update beginning January 1, 2018. As a result of Imperial’s adoption of the update, the company expects to add a new line~~Non-service~~ pension and other postretirement benefit expense to its consolidated statement of income. This line would reflect the other components of net benefit costs as described in the Accounting Standards Update and would include amounts that were previously included in Production and manufacturing expenses, and Selling and general expenses. As of January 1, 2018, these costs will no longer be considered for capitalization. The impact from this change on the company’s net income is not expected to be material. Furthermore, as part of the adoption of the update, the company expects it will include all of these costs in its Corporate and Other expenses.

~~IMPERIAL OIL LIMITED~~

Item 2.

Management’s discussion and analysis of financial condition and results of operations

Operating results

~~Third~~Second quarter ~~2017~~2018 vs. ~~third~~second quarter ~~2016~~2017

The company’s net income for the ~~third~~second quarter of ~~2017~~2018 was ~~$371~~$196 million or ~~$0.44per-share~~$0.24 per share on a diluted basis, an increase of $273 million compared to the net ~~income~~loss of ~~$1,003~~$77 million or ~~$1.18per-share~~$0.09 per share, for the same period last year. ~~Third quarter 2016 results included a $716 million gain from the sale of retail sites.~~

Upstream recorded a net ~~income~~loss in the ~~third~~second quarter of ~~$62~~$6 million compared to a net loss of ~~$26~~$201 million in the same period of ~~2016. Results in the third quarter of 2017 reflected~~2017. Improved results reflect the impact of higher Canadian crude oil realizations of about ~~$190~~$280 million, partially offset by higher royalty costs of about $50 million and higher ~~Kearl volumes~~operating expenses of about $50 ~~million. These impacts were partially offset by lower Syncrude and conventional volumes of about $80~~ million ~~including the absence of production at Norman Wells, and higher royalties of about $50 million.~~mainly associated with planned turnarounds.

West Texas Intermediate (WTI) averaged US$~~48.23~~67.91 per barrel in the ~~third~~second quarter of ~~2017,~~2018, up from US$~~44.94~~48.20 per barrel in the same quarter of ~~2016.~~2017. Western Canada Select (WCS) averaged US$~~38.29~~48.81 per barrel and US$~~31.43~~37.18 per barrel respectively for the same periods. The WTI / WCS differential ~~narrowed~~widened to ~~21 percent~~approximately US$19 per barrel in the ~~third~~second quarter of ~~2017,~~2018, from ~~30 percent~~approximately US$11 per barrel in the same period of ~~2016.~~2017.

The Canadian dollar averaged US$~~0.80~~0.78 in the ~~third~~second quarter of ~~2017,~~2018, an increase of US$~~0.03~~0.04 from the ~~third~~second quarter of ~~2016.~~2017.

Imperial’s average Canadian dollar realizations for bitumen and synthetic crudes increased generally in line with the North American benchmarks, adjusted for changes in exchange rates and transportation costs. Bitumen realizations averaged ~~$39.02~~$48.90 per barrel for the ~~third~~second quarter of ~~2017,~~2018, an increase of ~~$8.86~~$10.68 per barrel versus the ~~third~~second quarter of ~~2016.~~2017. Synthetic crude realizations averaged ~~$61.14~~$86.31 per barrel, an increase of ~~$2.17~~$21.24 per barrel for the same period of ~~2016.~~2017.

Gross production of Cold Lake bitumen averaged ~~163,000~~133,000 barrels per day in the ~~third~~second quarter, ~~up from 157,000~~compared to 160,000 barrels per day in the same period last year. ~~The higher production was mainly~~Lower volumes were primarily due to ~~the timing of the steam cycles.~~planned maintenance and production timing.

Gross production of Kearl bitumen averaged ~~182,000~~180,000 barrels per day in the ~~third~~second quarter ~~(129,000~~(128,000 barrels Imperial’s share), up from ~~159,000~~171,000 barrels per day ~~(113,000~~(121,000 barrels Imperial’s share) during the ~~third~~second quarter of ~~2016.~~2017. Higher production was mainly the result of ~~improved reliability.~~mining optimization, partially offset by planned turnaround activities.

The company’s share of gross production from Syncrude averaged ~~74,000~~50,000 barrels per day, ~~compared to 85,000~~up from 27,000 barrels per day in the ~~third~~second quarter of ~~2016. Repairs associated with~~2017. Higher production was due to the absence of the Syncrude Mildred Lake upgrader fire ~~were completed~~that occurred in ~~late July. Lower third quarter volumes reflect~~March 2017, partially offset by planned turnaround activities and a power disruption that occurred on June 20, 2018, resulting in a complete shutdown of all processing units for the ~~impact~~remainder of the ~~fire on operations, when compared~~second quarter. Recovery from the power outage is ongoing with partial production restored in July and return to ~~the same quarter~~full rates anticipated in ~~2016.~~September.

Downstream net income was ~~$292~~$201 million in the ~~third~~second quarter, up from $78 million in the second quarter of 2017. Earnings increased mainly due to stronger margins of about $390 million, partially offset by the impact of increased planned turnaround activity of about $200 million, and the impact of a stronger Canadian dollar.

Refinery throughput averaged 363,000 barrels per day, up from 358,000 barrels per day in the second quarter of 2017. Capacity utilization increased to 86 percent from 85 percent in the second quarter of 2017.

Petroleum product sales were 510,000 barrels per day, up from 486,000 barrels per day in the second quarter of 2017. Sales growth continues to be driven by optimization across the full Downstream value chain, and the expansion of Imperial’s logistics capabilities.

IMPERIAL OIL LIMITED

Chemical net income of $78 million in the second quarter matched best-ever quarterly results. Earnings increased $14 million from the same period of 2017, benefitting from increased volumes and margins.

Corporate and other expenses were $77 million in the second quarter, compared to ~~$1,002~~$18 million in the same period of ~~2016. Earnings decreased mainly~~2017, primarily due to higher share-based compensation charges. In addition, as part of the ~~absence~~implementation of ~~a $716 million gain from~~ the ~~sale~~Financial Accounting Standards Board’s update, Compensation – Retirement Benefits (Topic 715):Improving the Presentation of ~~company-owned retail sites~~Net Periodic Pension Cost and ~~higher refining turnaround activity~~Net Periodic Postretirement Benefit Cost, beginning January 1, 2018, Corporate and other includes allnon-service pension and postretirement benefit expenses. Prior to 2018, the majority of ~~about $100 million. These factors~~these costs were ~~partly offset by higher refining margins of about $140 million.~~

~~Refinery throughput averaged 385,000 barrels per day, compared~~allocated to ~~407,000 barrels per day in~~ the ~~third quarter of 2016. Reduced throughput reflects increased turnaround activity associated with the Nanticoke refinery in the third quarter 2017.~~

~~Petroleum product sales were 500,000 barrels per day, compared to 505,000 barrels per day in the third quarter of 2016.~~

operating segments.

IMPERIAL OIL LIMITED

~~Chemical net income was $52 million in the third quarter, compared to $56 million in the same quarter of 2016.~~

~~Net income effects from Corporate and Other were negative $35 million in the third quarter, compared to negative $29 million in the same period of 2016.~~

~~IMPERIAL OIL LIMITED~~

~~Nine~~Six months ~~2017~~2018 vs. ~~nine~~six months ~~2016~~2017

Net income in the first ~~nine~~six months of ~~2017~~2018 was ~~$627~~$712 million, or ~~$0.74per-share~~$0.86 per share on a diluted basis, ~~versus~~an increase of $456 million compared to a net income of ~~$721~~$256 million or ~~$0.85 per-share~~$0.30 per share in the first ~~nine~~six months of ~~2016.~~2017.

Upstream recorded a net loss of ~~$225~~$50 million in the first ~~nine~~six months of ~~2017,~~2018, compared to a net loss of ~~$764~~$287 million from the same period of ~~2016. Results reflected~~2017. Improved results reflect the impact of higher Canadian crude oil realizations of about ~~$940~~$350 million, ~~and~~partially offset by the impact of higher ~~Kearl volumes~~operating costs of about $50 ~~million. These impacts were partially offset by~~million mainly associated with planned turnarounds. Results also reflect the impact of higher royalties and the strengthening of ~~about $150 million, lower Syncrude and conventional volumes of about $130 million, including~~ the ~~absence of production at Norman Wells, higher energy costs of about $90 million, and higher operating expenses at Syncrude of about $90 million.~~Canadian dollar compared to the prior year.

West Texas Intermediate averaged US$~~49.40~~65.44 per barrel in the first ~~nine~~six months of ~~2017,~~2018, up from US$~~41.54~~49.96 per barrel in the ~~same period of 2016.~~prior year. Western Canada Select averaged US$~~37.57~~43.74 per barrel and US$~~27.74~~37.22 per barrel respectively for the same periods. The WTI / WCS differential ~~narrowed~~widened to ~~24 percent~~approximately US$22 per barrel in the first ~~nine~~six months of ~~2017,~~2018, from ~~33 percent~~approximately US$13 per barrel in the same period of ~~2016.~~2017.

~~During the first nine months of 2017, the Canadian dollar strengthened relative to the US dollar versus the same period of 2016.~~ The Canadian dollar averaged US$~~0.77~~0.78 in the first ~~nine~~six months of ~~2017,~~2018, an increase of about US$~~0.01~~0.03 from the same period of ~~2016.~~2017.

Imperial’s average Canadian dollar realizations for bitumen and synthetic crudes increased generally in line with the North American benchmarks, adjusted for changes in the exchange rate and transportation costs. Bitumen realizations averaged ~~$37.82~~$41.84 per barrel for the first ~~nine~~six months of ~~2017,~~2018, an increase of ~~$14.05~~$4.63 per barrel versus ~~the same period of 2016.~~2017. Synthetic crude realizations averaged ~~$64.37~~$81.24 per barrel, an increase of ~~$10.92~~$14.24 per barrel from the same period of ~~2016.~~2017.

Gross production of Cold Lake bitumen averaged ~~161,000~~143,000 barrels per day in the first ~~nine~~six months of ~~2017,~~2018, compared to ~~162,000~~159,000 barrels per day from the same period of ~~2016.~~2017. Lower volumes were primarily due to planned maintenance and production timing.

Gross production of Kearl bitumen averaged ~~179,000~~181,000 barrels per day in the first ~~nine~~six months of ~~2017 (127,000~~2018 (128,000 barrels Imperial’s share) up from ~~169,000~~177,000 barrels per day ~~(120,000~~(125,000 barrels Imperial’s share) from the same period of ~~2016. Increased 2017 production reflects improved reliability associated with the mining and ore preparation operations.~~2017.

During the first ~~nine~~six months of ~~2017,~~2018, the company’s share of gross production from Syncrude averaged ~~56,000~~57,000 barrels per day, ~~compared to 61,000~~up from 46,000 barrels per day from the same period of ~~2016. Syncrude year to date~~2017. Higher production was ~~impacted by~~due to the absence of the impact associated with the March 2017 fire at the Syncrude Mildred Lake upgrader, partially offset by planned turnaround activities, and ~~planned maintenance. In 2016,~~a power disruption that occurred on June 20, 2018, resulting in a complete shutdown of all processing units for the remainder of the second quarter. Recovery from the power outage is ongoing with partial production ~~was impacted by the Alberta wildfires~~restored in July and ~~planned maintenance.~~return to full rates anticipated in September.

Downstream net income was ~~$750~~$722 million, ~~compared to $1,393~~an increase of $264 million ~~from~~versus the ~~same period~~prior year. Higher earnings reflect stronger margins of ~~2016. Earnings decreased mainly due to~~about $690 million, partially offset by the impact of increased planned turnaround activity of about $200 million, the impact of a stronger Canadian dollar of about $60 million and the absence of ~~a $719~~the $151 million gain from the sale of company-owned retail sites and lower marketing margins of approximately $170 million associated with the impact of the retail divestment. These factors were partially offset by a gain of $151 million fromon the sale of a surplus property ~~and higher industry refining margins of about $90 million.~~in 2017.

Refinery throughput averaged ~~381,000~~386,000 barrels per day in the first ~~nine~~six months of ~~2017,~~2018, up from ~~351,000~~378,000 barrels per day from the same period of ~~2016.~~2017. Capacity utilization increased to 9091 percent from 8390 percent in the same period of ~~2016, reflecting reduced turnaround maintenance activity.~~2017.

Petroleum product sales were ~~492,000~~494,000 barrels per day in the first ~~nine~~six months of ~~2017,~~2018, up from ~~481,000~~486,000 barrels per day from the same period of ~~2016.~~2017. Sales growth continues to be driven by ~~strong collaboration~~optimization across ~~our downstream~~the full Downstream value chain, and the expansion of Imperial’s ~~wholesale, industrial and commercial networks.~~logistics capabilities.

Chemical net income was ~~$161~~$151 million, up from ~~$160~~$109 million ~~from~~in the first half of 2017, primarily due to higher margins and volumes.

IMPERIAL OIL LIMITED

Corporate and other expenses were $111 million for the first six months of 2018, compared to $24 million in the same period of ~~2016.~~

2017, primarily due to higher share-based compensation charges. In addition, beginning January 1, 2018, Corporate and other includes allnon-service pension and postretirement benefit expenses. Prior to 2018, the majority of these costs were allocated to the operating segments.

IMPERIAL OIL LIMITED

~~For the first nine months of 2017, net income effects from Corporate and Other were negative $59 million, versus negative $68 million from the same period of 2016.~~

~~IMPERIAL OIL LIMITED~~

Liquidity and capital resources

Cash flow generated from operating activities was ~~$837~~$859 million in the ~~third~~second quarter, ~~compared with $772~~an increase of $367 million infrom the corresponding period in ~~2016.~~2017, reflecting higher earnings.

Investing activities used net cash of ~~$234~~$379 million in the ~~third~~second quarter, compared with ~~$1,005~~$281 million ~~cash generated from investing activities~~used in the same period of ~~2016,~~2017.

Cash used in financing activities was $1,032 million in the second quarter, compared with $260 million used in the second quarter of 2017. Dividends paid in the second quarter of 2018 were $132 million. The per share dividend paid in the second quarter was $0.16, up from $0.15 in the same period of 2017. During the second quarter, the company purchased about 21.4 million shares for $893 million.

The company’s cash balance was $873 million at June 30, 2018, versus $623 million at the end of second quarter 2017.

Cash flow generated from operating activities was $1,844 million in the first six months of 2018, compared with $846 million from the same period of 2017, reflecting higher earnings and working capital effects.

Investing activities used net cash of $744 million in the first six months of 2018, compared with $220 million used in the same period of 2017, reflecting higher additions to property, plant and equipment, and lower proceeds from asset sales.

Cash used in financing activities was ~~$393~~$1,422 million in the ~~third quarter,~~first six months of 2018, compared with ~~$1,724~~$394 million ~~in the third quarter of 2016, reflecting the absence of debt repayments. Dividends paid in the third quarter of 2017 were $136 million. Theper-share~~ ~~dividend paid in the third quarter was $0.16, up from $0.15~~used in the same period of 2016. In the second quarter of 2017, Imperial resumed share purchases under its share buyback program. During the third quarter, the company purchased about 6.7 million shares for approximately $250 million.

~~The company’s cash balance was $833 million at September 30, 2017, versus $248 million at the end of the third quarter of 2016.~~

~~Cash flow generated from operating activities was $1,683 million~~2017. Dividends paid in the first ~~nine~~six months of ~~2017, compared with $1,264 million in 2016, reflecting higher earnings, excluding the impact of asset sales, partially offset by unfavourable working capital effects.~~

~~Investing activities used net cash of $454 million~~2018 were $266 million. The per share dividend paid in the first ~~nine~~six months of ~~2017, compared with cash generated~~2018 was $0.32, up from ~~investing activities of $350 million~~$0.30 from the same period of ~~2016, reflecting lower proceeds from asset sales partially offset by lower additions to property, plant and equipment.~~

Cash used in financing activities was $787 million in the first nine months of 2017, compared with $1,569 million from the same period of 2016, reflecting the absence of debt repayments. Dividends paid in the first nine months of 2017 were $390 million. The~~per-share~~ ~~dividend paid in the first nine months of 2017 was $0.46, up from $0.43 for the same period of 2016.~~

2017. During the first ~~nine~~six months of ~~2017~~2018, the company purchased about 1028.6 million shares for ~~$377~~$1,143 million, including shares purchased from Exxon Mobil Corporation.

On April 27, 2018, the company announced by news release that it had received final approval from the Toronto Stock Exchange for an amendment to its normal course issuer bid to increase the number of common shares that it may purchase. Under the amendment, the number of common shares eligible for purchase increased to a maximum of 42,326,545 common shares during the period June 27, 2017 to June 26, 2018.

On June 22, 2018, the company announced by news release that it had received final approval from the Toronto Stock Exchange for a new normal course issuer bid and will continue its existing share purchase program. The program enables the company to purchase up to a maximum of 40,391,196 common shares during the period June 27, 2018 to June 26, 2019. This maximum includes shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid. As in the past, Exxon Mobil Corporation has advised the company that it intends to participate to maintain its ownership percentage at approximately 69.6 percent. The program will end should the company purchase the maximum allowable number of shares, or on June 26, 2019.

Recently issued accounting standards

year.

IMPERIAL OIL LIMITED

Forward-looking statements

Statements in this report regarding future events or conditions are forward-looking statements. Actual future financial and operating results could differ materially due to the impact of market conditions, changes in law or governmental policy, changes in operating conditions and costs, changes in project schedules, operating performance, demand for oil and gas, commercial negotiations or other technical and economic factors.

IMPERIAL OIL LIMITED

Item 3.

~~Item 3.~~ Quantitative and qualitative disclosures about market risk

Information about market risks for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, does not differ materially from that discussed on page 2249 of the company’s annual report on Form10-K for the year ended December 31, ~~2016.~~2017. The following table details those earnings sensitivities that have been updated from the fiscalyear-end to reflect current market conditions.

Earnings Sensitivities (a)


millions of Canadian dollars after tax
One dollar (U.S.) per barrel change in heavy crude oil prices	+ (-)	75
Ten cents per thousand cubic feet decrease (increase) in natural gas prices	+ (-)	4
One cent decrease (increase) in the value of the Canadian dollar versus the U.S. dollar	+ (-)	100

(a)	Each sensitivity calculation shows the impact on net income resulting from a change in one factor, after tax and royalties and holding all other factors constant. These sensitivities have been updated to reflect current conditions. They may not apply proportionately to larger fluctuations.

Item 4.

~~Item 4.~~ Controls and procedures

As indicated in the certifications in Exhibit 31 of this report, the company’s principal executive officer and principal financial officer have evaluated the company’s disclosure controls and procedures as of ~~September~~June 30, ~~2017.~~2018. Based on that evaluation, these officers have concluded that the company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to them in a manner that allows for timely decisions regarding required disclosures and are effective in ensuring that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There has not been any change in the company’s internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.

IMPERIAL OIL LIMITED

PART II. OTHER INFORMATION

Item 1.

Legal proceedings

On May 15, 2018, Imperial entered a guilty plea in the Ontario Court of Justice with respect to committing the offence of discharging or causing or permitting the discharge of a contaminant, namely coker stabilizer thermocracked gas and coker stabilizer thermocracked gas condensate, on June 11, 2015 from Imperial’s refinery in Sarnia, Ontario into the natural environment that caused or was likely to have caused an adverse effect contrary to section 14(1) of the Environmental Protection Act, R.S.O. 1990, c.E.19, as amended. Imperial is required to pay $650,000 plus a 25 percent victim fine surcharge.

~~Item 2. Unregistered sales of equity securities and use of proceeds~~

Item 2.

Unregistered sales of equity securities and use of proceeds

Issuer purchases of equity securities

  Total number of
      shares purchased

    Average price
  paid per share
(dollars)

Total number of
  shares purchased
  as part of publicly
  announced plans
or programs

    Maximum number
of shares that may
  yet be purchased
under the plans or
programs(a)
July 2017
(Jul 1 – Jul 31)
   -    -    -    25,395,927
August 2017
(Aug 1 – Aug 31)
   3,876,648    36.42    3,876,648    21,519,279
September 2017
(Sept 1 – Sept 30)
   2,855,022    38.10    2,855,022        18,664,257 (b)


	Total number of shares purchased		Average price paid per share (Canadian dollars)		Total number of shares purchased as part of publicly announced plans or programs		Maximum number of shares that may yet be purchased under the plans or programs (a) (b)
April 2018
(April 1 - April 30)		675,513		34.13		675,513		21,373,108
May 2018
(May 1 - May 31)		10,876,173		41.39		10,876,173		10,496,935
June 2018
(June 1 - June 26) (a)		9,322,449		42.80		9,322,449		-
(June 27 - June 30) (b)		482,763		43.50		482,763		39,908,433	(c)

(a)

On June 22, 2017, the company announced by news release that it had received final approval from the Toronto Stock Exchange for a normal course issuer bid and continuation of its share purchase program. The program enabled the company to purchase up to a maximum of 25,395,927 common shares during the period June 27, 2017 to June 26, 2018, which includes shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid. Exxon Mobil Corporation participated to maintain its ownership percentage in Imperial at approximately 69.6 percent.

The program ended on June 26, 2018. Upon expiration, the company had purchased a total of 41,152,059 shares (of the maximum 42,326,545 shares available) under the program.

(b)

On June 22, 2018, the company announced by news release that it had received final approval from the Toronto Stock Exchange for a new normal course issuer bid and will continue its existing share purchase program. The program enables the company to purchase up to a maximum of ~~25,395,927~~40,391,196 common shares during the period June 27, ~~2017~~2018 to June 26, ~~2018, which~~2019. This maximum includes shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid. As in the past, Exxon Mobil Corporation has advised the company that it intends to participate to maintain its ownership percentage at approximately 69.6 percent. The program will end should the company purchase the maximum allowable number of shares, or on June 26, ~~2018.~~2019.

~~(b)~~(c)

In its most recent quarterly earnings release, the company stated that ~~fourth quarter 2017~~it currently anticipates exercising its share purchases ~~are anticipated to equal approximately $250 million.~~uniformly over the duration of the program. Purchase plans may be modified at any time without prior notice.

The company will continue to evaluate its share purchase program in the context of its overall capital activities.

IMPERIAL OIL LIMITED

Item 6. Exhibits

~~Item 6.~~	~~Exhibits~~

(31.1) Certification by the principal executive officer of the company pursuant to Rule13a-14(a).

(31.2) Certification by the principal financial officer of the company pursuant to Rule13a-14(a).

(32.1) Certification by the chief executive officer of the company pursuant to Rule13a-14(b) and 18 U.S.C. Section 1350.

(32.2) Certification by the chief financial officer of the company pursuant to Rule13a-14(b) and 18 U.S.C. Section 1350.

(101) Interactive data files.

~~(31.1)~~ ~~Certification by the principal executive officer of the company pursuant to Rule~~

~~13a-14(a).~~

~~(31.2)~~ ~~Certification by the principal financial officer of the company pursuant to Rule13a-14(a).~~

~~(32.1)~~ ~~Certification by the chief executive officer of the company pursuant to Rule13a-14(b)~~ ~~and 18 U.S.C. Section 1350.~~

~~(32.2)~~ ~~Certification by the chief financial officer of the company pursuant to Rule13a-14(b)~~ ~~and 18 U.S.C. Section 1350.~~

IMPERIAL OIL LIMITED

SIGNATURES

Pursuant to the requirements of theSecurities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		Imperial Oil Limited ~~(Registrant)~~
		(Registrant)

Date: ~~October 31, 2017~~August 1, 2018		/s/ ~~Beverley A. Babcock~~Daniel E. Lyons	------------------------------------------------
	~~(Signature)~~	(Signature)
	~~Beverley A. Babcock~~	Daniel E. Lyons
	~~Senior Vice-President, Finance and Administration and Controller~~	Senior vice-president, finance and administration, and controller
	~~(Principal Accounting Officer)~~	(Principal accounting officer)

Date: ~~October 31, 2017~~August 1, 2018		/s/ Cathryn Walker	------------------------------------------------
	~~(Signature)~~	(Signature)
		Cathryn Walker
	~~Assistant Corporate Secretary~~	Assistant corporate secretary

2426


			Page

PART I. FINANCIAL INFORMATION		3
Item 1.	Financial statements			3
	Consolidated statement of income			3
	Consolidated statement of comprehensive income			4
	Consolidated balance sheet			5
	Consolidated statement of cash flows			6
	Notes to the consolidated financial statements			7
Item 2.	Management’s discussion and analysis of financial condition and results of operations			1517
Item 3.	Quantitative and qualitative disclosures about market risk			2123
Item 4.	Controls and procedures			21

~~PART II. OTHER INFORMATION~~				22
~~Item 2.~~	~~Unregistered sales of equity securities and use of proceeds~~			22
~~Item 6.~~	~~Exhibits~~			23

~~SIGNATURES~~PART II. OTHER INFORMATION		24
Item 1. Legal proceedings		24
Item 2. Unregistered sales of equity securities and use of proceeds		24
Item 6. Exhibits		25

SIGNATURES		26


	As of Sept 30		As of Dec 31
thousands of shares	2017		2016

Authorized		1,100,000		1,100,000
Common shares outstanding		837,581		847,599


year	Purchased shares thousands		Millions of dollars

1995 - 2015		906,544		15,708
2016 - Third quarter		-		-
- Full year		1		-
2017 - Third quarter		6,732		250
-Year-to-date		10,018		377

Cumulative purchase to date		916,563		16,085


					Nine Months
	Third Quarter				to September 30
	2017		2016		2017		2016

Net income (loss) per common share - basic
Net income (loss)(millions of Canadian dollars)		371		1,003		627		721
Weighted average number of common shares outstanding(millions of shares)		841.8		847.6		845.5		847.6
Net income (loss) per common share(dollars)		0.44		1.18		0.74		0.85


Net income (loss) per common share - diluted
Net income (loss)(millions of Canadian dollars)		371		1,003		627		721
Weighted average number of common shares outstanding(millions of shares)		841.8		847.6		845.5		847.6
Effect of employee share-based awards(millions of shares)		3.1		3.2		2.9		3.0

Weighted average number of common shares outstanding, assuming dilution(millions of shares)		844.9		850.8		848.4		850.6

Net income (loss) per common share(dollars)		0.44		1.18		0.74		0.85


	Total number of shares purchased	Average price paid per share (dollars)	Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares that may yet be purchased under the plans or programs(a)
July 2017 (Jul 1 – Jul 31)	-	-	-	25,395,927
August 2017 (Aug 1 – Aug 31)	3,876,648	36.42	3,876,648	21,519,279
September 2017 (Sept 1 – Sept 30)	2,855,022	38.10	2,855,022	18,664,257 (b)