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 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)				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 9190 days.

~~YES~~ ✓ NO


YES		✓		NO

The registrant has submitted electronically ~~and posted on its corporate 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


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 ✓


YES				NO		✓

The number of common shares outstanding, as of September 30, ~~2017~~2018 was ~~837,581,329.~~792,702,836.

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)


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

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)												9,697		7,134		27,113		21,077
Investment and other income(note 5)												35		24		96		270
Total revenues and other income	Total revenues and other income			7,158		7,442		21,347		18,912		9,732		7,158		27,209		21,347


Expenses	Expenses
Exploration	Exploration			7		16		29		75		4		7		13		29
Purchases of crude oil and products(b)	Purchases of crude oil and products(b)			4,251		3,857		13,226		10,884		6,099		4,251		17,416		13,226
Production and manufacturing(c)	Production and manufacturing(c)			1,338		1,261		4,238		3,842		1,480		1,314		4,557		4,154
Selling and general(c)	Selling and general(c)			219		275		626		812		224		217		691		618
Federal excise tax	Federal excise tax			438		434		1,253		1,237		432		438		1,241		1,253
Depreciation and depletion	Depreciation and depletion			391		398		1,135		1,229		410		391		1,145		1,135
Financing costs(note 5)				18		19		49		52

Non-service pension and postretirement benefit(d)												27		26		80		92
Financing(note 7)												30		18		79		49
Total expenses	Total expenses			6,662		6,260		20,556		18,131		8,706		6,662		25,222		20,556


Income (loss) before income taxes	Income (loss) before income taxes			496		1,182		791		781		1,026		496		1,987		791

Income taxes	Income taxes			125		179		164		60		277		125		526		164


Net income (loss)	Net income (loss)			371		1,003		627		721		749		371		1,461		627


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

(a)		Amounts from related parties included in operating revenues.		756		448		2,801		1,457
(b)		Amounts to related parties included in purchases of crude oil and products.		604		623		1,919		1,540
(c)		Amounts to related parties included in production and manufacturing, and selling and general expenses.		127		133		415		394
Per share information(Canadian dollars)
Net income (loss) per common share - basic(note 10)												0.94		0.44		1.79		0.74
Net income (loss) per common share - diluted(note 10)												0.94		0.44		1.79		0.74
(a) Amounts from related parties included in revenues.												1,809		756		4,951		2,801
(b) Amounts to related parties included in purchases of crude oil and products.												1,071		604		3,337		1,919
(c) Amounts to related parties included in production and manufacturing, and selling and general expenses.												136		127		433		415
(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)


													Nine Months
	Third Quarter				Nine Months to September 30				Third Quarter				to September 30
millions of Canadian dollars	2017		2016		2017		2016		2018		2017		2018			2017
Net income (loss)										749		371		1,461			627

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

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

Postretirement benefits liability adjustment (excluding amortization)										-		-		(19	)		41
Amortization of postretirement benefits liability adjustment included in net periodic benefit costs										34		34		101			106
Total other comprehensive income (loss)		34		34		147		208		34		34		82			147



Comprehensive income (loss)		405		1,037		774		929		783		405		1,543			774

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
							Sept 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			1,148			1,195
Accounts receivable, less estimated doubtful accounts(a)		1,896			2,023			2,729			2,712
Inventories of crude oil and products		989			949			1,392			1,075
Materials, supplies and prepaid expenses		441			468			464			425

Total current assets		4,159			3,831			5,733			5,407
Investments and long-term receivables(b)		931			1,030			837			865
Property, plant and equipment,		53,844			53,515			53,592			52,778
less accumulated depreciation and depletion		(18,248	)		(17,182	)		(19,386	)		(18,305	)

Property, plant and equipment, net		35,596			36,333			34,206			34,473
Goodwill		186			186			186			186
Other assets, including intangibles, net		498			274

Other assets, including intangibles, net(note 9)								857			670
Total assets		41,370			41,654			41,819			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)								4,565			3,877
Income taxes payable		59			488			11			57

Total current liabilities		3,302			3,883			4,778			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)								4,986			5,005
Other long-term obligations(e) (note 9)								3,334			3,780
Deferred income tax liabilities		4,336			4,062			4,742			4,245

Total liabilities		16,349			16,633			17,840			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)								1,465			1,536
Earnings reinvested(note 11)								24,247			24,714
Accumulated other comprehensive income (loss)(note 12)								(1,733	)		(1,815	)
Total shareholders’ equity		25,021			25,021			23,979			24,435


Total liabilities and shareholders’ equity		41,370			41,654			41,819			41,601

(a)	Accounts receivable, less estimated doubtful accounts included net amounts receivable from related parties of ~~$87~~$385 million ~~(2016~~(2017 - ~~$172~~$509 million).

(b)	Investments and long-term receivables included amounts from related parties of $94 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~~$27 million ~~(2016~~(2017 - ~~$104~~$60 million).

~~(e)~~(f)

Number of common shares authorized and outstanding were 1,100 million and ~~838~~793 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)


																			Nine Months
Inflow (outflow)	Third Quarter						Nine Months to September 30						Third Quarter						to September 30
millions of Canadian dollars	2017			2016			2017			2016			2018			2017			2018			2017

Operating activities
Net income (loss)		371			1,003			627			721			749			371			1,461			627
Adjustments fornon-cash items:
Depreciation and depletion		391			398			1,135			1,229			364			391			1,099			1,135
(Gain) loss on asset sales(note 3)		(6	)		(909	)		(219	)		(952	)
Impairment of intangible assets(note 9)														46			-			46			-
(Gain) loss on asset sales(note 5)														(10	)		(6	)		(29	)		(219	)
Deferred income taxes and other		131			215			294			35			276			131			485			294
Changes in operating assets and liabilities:
Accounts receivable		(297	)		275			127			(121	)		(104	)		(297	)		(17	)		127
Inventories, materials, supplies and prepaid expenses		104			(7	)		(13	)		112			(179	)		104			(356	)		(13	)
Income taxes payable		19			(13	)		(429	)		-			(78	)		19			(46	)		(429	)
Accounts payable and accrued liabilities		81			(241	)		(159	)		(59	)		78			81			102			(159	)
All other items - net(a)		43			51			320			299

All other items - net(a) (b)														65			43			306			320
Cash flows from (used in) operating activities		837			772			1,683			1,264			1,207			837			3,051			1,683


Investing activities
Additions to property, plant and equipment		(241	)		(189	)		(683	)		(893	)
Proceeds from asset sales(note 3)		8			1,194			230			1,244
Additions to property, plant and equipment(b)														(327	)		(241	)		(1,055	)		(683	)
Proceeds from asset sales(note 5)														13			8			34			230
Additional investments		(1	)		-			(1	)		(1	)		-			(1	)		-			(1	)

Loan to equity company														(38	)		-			(75	)		-
Cash flows from (used in) investing activities		(234	)		1,005			(454	)		350			(352	)		(234	)		(1,096	)		(454	)


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	)
Reduction in capitalized lease obligations(note 8)														(7	)		(7	)		(20	)		(20	)
Dividends paid		(136	)		(127	)		(390	)		(364	)		(155	)		(136	)		(421	)		(390	)
Common shares purchased(note 8)		(250	)		-			(377	)		-

Common shares purchased(note 10)														(418	)		(250	)		(1,561	)		(377	)
Cash flows from (used in) financing activities		(393	)		(1,724	)		(787	)		(1,569	)		(580	)		(393	)		(2,002	)		(787	)


Increase (decrease) in cash		210			53			442			45			275			210			(47	)		442
Cash at beginning of period		623			195			391			203			873			623			1,195			391

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

Cash at end of period(c)														1,148			833			1,148			833
(a) Included contribution to registered pension plans.		(78	)		(44	)		(176	)		(120	)		(52	)		(78	)		(153	)		(176	)

~~(b)~~

(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.

Non-cash transaction

As a result of the Government of Ontario’s revocation of its cap and trade legislation, the company reclassified approximately $570 million of its Ontario carbon emission obligation from long-term liabilities to current liabilities. The impact of this reclassification was not reflected in “Accounts payable and accrued liabilities” and “All other items - net” lines on the Consolidated statement of cash flows as it was not a cash transaction.

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 months ended September 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

~~2. Business segments~~Effective January 1, 2018, Imperial adopted the Financial Accounting Standards Board’s standard,Revenue from Contracts with Customers (Topic 606), 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 September 30, 2018 is shown below.

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

Revenues and other income

Operating revenues(a)
   1,668 1,316 5,204 4,971 262    281
Intersegment sales
   587 709 241 253 62    58
Investment and other income(note 3)
   7 1 15 870 -    1

   2,262 2,026 5,460 6,094 324    340

Expenses

Exploration
   7 16 - - -    -
Purchases of crude oil and products
   947 861 4,014 3,827 179    188
Production and manufacturing
   893 887 394 323 51    51
Selling and general
   5 (1 ) 167 238 19    22
Federal excise tax
   - - 438 434 -    -
Depreciation and depletion
   330 346 53 46 3    2
Financing costs(note 5)
   1 (2 ) - - -    -

Total expenses
   2,183 2,107 5,066 4,868 252    263

Income (loss) before income taxes
   79 (81 ) 394 1,226 72    77
Income taxes
   17 (55 ) 102 224 20    21

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
millions of Canadian dollars    2017 2016 2017 2016 2017    2016

Revenues and other income

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

   2 2 (890 ) (1,020 ) 7,158    7,442

Expenses

Exploration
   - - - - 7    16
Purchases of crude oil and products
   - - (889 ) (1,019 ) 4,251    3,857
Production and manufacturing
   - - - - 1,338    1,261
Selling and general
   29 17 (1 ) (1 ) 219    275
Federal excise tax
   - - - - 438    434
Depreciation and depletion
   5 4 - - 391    398
Financing costs(note 5)
   17 21 - - 18    19

Total expenses
   51 42 (890 ) (1,020 ) 6,662    6,260

Income (loss) before income taxes
   (49 ) (40 ) - - 496    1,182
Income taxes
   (14 ) (11 ) - - 125    179

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

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


	Third Quarter					Nine Months to
millions of Canadian dollars	2017					September 30, 2017
	As reported		Change	As adjusted		As reported		Change	As adjusted
Production and manufacturing		1,338	(24)		1,314		4,238	(84)		4,154
Selling and general		219	(2)		217		626	(8)		618
Non-service pension and postretirement benefit		-	26		26		-	92		92

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 September 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
millions of Canadian dollars	2018			2017			2018			2017			2018		2017
Revenues and other income
Revenues(a)		2,489			1,668			6,880			5,204			328		262
Intersegment sales		771			587			425			241			79		62
Investment and other income(note 5)		2			7			25			15			1		-
		3,262			2,262			7,330			5,460			408		324
Expenses
Exploration		4			7			-			-			-		-
Purchases of crude oil and products		1,566			947			5,567			4,014			239		179
Production and manufacturing(b)		1,073			893			356			394			51		51
Selling and general (b)		-			5			199			167			21		19
Federal excise tax		-			-			432			438			-		-
Depreciation and depletion (c)		309			330			91			53			4		3
Non-service pension and postretirement benefit(b)		-			-			-			-			-		-
Financing(note 7)		-			1			-			-			-		-
Total expenses		2,952			2,183			6,645			5,066			315		252
Income (loss) before income taxes		310			79			685			394			93		72
Income taxes		88			17			183			102			24		20
Net income (loss)		222			62			502			292			69		52
Cash flows from (used in) operating activities		872			479			281			268			79		99
Capital and exploration expenditures(d)		257			92			105			55			8		5

Third Quarter	Corporate and other						Eliminations						Consolidated
millions of Canadian dollars	2018			2017			2018			2017			2018		2017
Revenues and other income
Revenues(a)		-			-			-			-			9,697		7,134
Intersegment sales		-			-			(1,275	)		(890	)		-		-
Investment and other income(note 5)		7			2			-			-			35		24
		7			2			(1,275	)		(890	)		9,732		7,158
Expenses
Exploration		-			-			-			-			4		7
Purchases of crude oil and products		-			-			(1,273	)		(889	)		6,099		4,251
Production and manufacturing(b)		-			-			-			-			1,480		1,338
Selling and general(b)		6			29			(2	)		(1	)		224		219
Federal excise tax		-			-			-			-			432		438
Depreciation and depletion(c)		6			5			-			-			410		391
Non-service pension and postretirement benefit(b)		27			-			-			-			27		-
Financing(note 7)		30			17			-			-			30		18
Total expenses		69			51			(1,275	)		(890	)		8,706		6,662
Income (loss) before income taxes		(62	)		(49	)		-			-			1,026		496
Income taxes		(18	)		(14	)		-			-			277		125
Net income (loss)		(44	)		(35	)		-			-			749		371
Cash flows from (used in) operating activities		(25	)		(9	)		-			-			1,207		837
Capital and exploration expenditures(d)		6			7			-			-			376		159

IMPERIAL OIL LIMITED

(a)	Included export sales to the United States of ~~$1,080~~$1,741 million ~~(2016~~(2017 - ~~$941~~$1,080 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)	The Downstream segment in 2018 included anon-cash impairment charge of $46 million, before tax, associated with the Government of Ontario’s revocation of its carbon emission cap and trade regulation.

(d)	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					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)																			6,796			5,166			19,357			15,087			960		824
Intersegment sales		1,494			1,516			792			689			191			156		2,078			1,494			1,119			792			226		191
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)																			6			17			66			248			1		(1	)
																			8,880			6,677			20,542			16,127			1,187		1,014
Expenses
Exploration		29			75			-			-			-			-		13			29			-			-			-		-
Purchases of crude oil and products		3,089			2,584			12,037			10,139			573			518		4,513			3,089			15,664			12,037			657		573
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)																			3,191			2,917			1,212			1,169			154		152
Selling and general(b)																			-			1			569			540			65		60
Federal excise tax		-			-			1,253			1,237			-			-		-			-			1,241			1,253			-		-
Depreciation and depletion		964			1,053			148			158			9			6
Financing costs(note 5)		5			(6	)		-			-			-			-

Depreciation and depletion(c)																			927			964			191			148			11		9
Non-service pension and postretirement benefit(b)																			-			-			-			-			-		-
Financing(note 7)																			-			5			-			-			-		-
Total expenses		7,005			6,337			15,147			13,322			794			736		8,644			7,005			18,877			15,147			887		794

Income (loss) before income taxes		(328	)		(1,100	)		980			1,756			220			219		236			(328	)		1,665			980			300		220
Income taxes		(103	)		(336	)		230			363			59			59		64			(103	)		441			230			80		59

Net income (loss)		(225	)		(764	)		750			1,393			161			160		172			(225	)		1,224			750			220		161

Cash flows from (used in) operating activities		904			32			626			1,028			176			205		1,199			904			1,647			626			278		176
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

Capital and exploration expenditures(d)																			646			286			250			128			19		12
Total assets as at September 30(c)																			34,570			35,387			5,426			4,671			427		365

Nine Months to September 30	Corporate and Other						Eliminations						Consolidated					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)																			-			-			-			-			27,113		21,077
Intersegment sales		-			-			(2,477	)		(2,361	)		-			-		-			-			(3,423	)		(2,477	)		-		-
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)																			23			6			-			-			96		270
																			23			6			(3,423	)		(2,477	)		27,209		21,347
Expenses
Exploration		-			-			-			-			29			75		-			-			-			-			13		29
Purchases of crude oil and products		-			-			(2,473	)		(2,357	)		13,226			10,884		-			-			(3,418	)		(2,473	)		17,416		13,226
Production and manufacturing		-			-			-			-			4,238			3,842
Selling and general		29			27			(4	)		(4	)		626			812
Production and manufacturing(b)																			-			-			-			-			4,557		4,238
Selling and general(b)																			62			29			(5	)		(4	)		691		626
Federal excise tax		-			-			-			-			1,253			1,237		-			-			-			-			1,241		1,253
Depreciation and depletion		14			12			-			-			1,135			1,229
Financing costs(note 5)		44			58			-			-			49			52

Depreciation and depletion(c)																			16			14			-			-			1,145		1,135
Non-service pension and postretirement benefit(b)																			80			-			-			-			80		-
Financing(note 7)																			79			44			-			-			79		49
Total expenses		87			97			(2,477	)		(2,361	)		20,556			18,131		237			87			(3,423	)		(2,477	)		25,222		20,556

Income (loss) before income taxes		(81	)		(94	)		-			-			791			781		(214	)		(81	)		-			-			1,987		791
Income taxes		(22	)		(26	)		-			-			164			60		(59	)		(22	)		-			-			526		164

Net income (loss)		(59	)		(68	)		-			-			627			721		(155	)		(59	)		-			-			1,461		627

Cash flows from (used in) operating activities		(23	)		(1	)		-			-			1,683			1,264		(73	)		(23	)		-			-			3,051		1,683
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(d)																			19			29			-			-			934		455
Total assets as at September 30(c)																			1,727			1,283			(331	)		(336	)		41,819		41,370

IMPERIAL OIL LIMITED

(a)	Included export sales to the United States of ~~$3,024~~$4,509 million ~~(2016~~(2017 - ~~$2,704~~$3,024 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.

(b)

(c)	The Downstream segment in 2018 included anon-cash impairment charge of $46 million, before tax, associated with the Government of Ontario’s revocation of its carbon emission cap and trade regulation.

(d)	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

3.4.	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:


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

Proceeds from asset sales		8		1,194		230		1,244		13		8		34		230
Book value of asset sales		2		285		12		292		3		2		5		12

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)										10		6		29		219
Gain (loss) on asset sales, after tax(a)										6		5		21		191

(a)	The nine months ended September 30, 2017 included a gain of $174 million ($151 million after tax) ~~for 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~~surplus property in ~~British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia and Newfoundland.~~Ontario.

4.6.	Employee retirement benefits

The components of net benefit cost were as follows:


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

Pension benefits:
Current service cost		54			50			163			152			59			54			179			163
Interest cost		77			82			235			240			76			77			227			235
Expected return on plan assets		(104	)		(101	)		(306	)		(300	)		(100	)		(104	)		(301	)		(306	)
Amortization of prior service cost		2			2			7			7			1			2			3			7
Amortization of actuarial loss (gain)		43			39			132			121			43			43			130			132

Net periodic benefit cost		72			72			231			220			79			72			238			231


Other post-retirement benefits:
Other postretirement benefits:
Current service cost		4			4			12			12			5			4			13			12
Interest cost		6			7			18			20			5			6			16			18
Amortization of actuarial loss (gain)		2			3			6			10			2			2			5			6

Net periodic benefit cost		12			14			36			42			12			12			34			36

IMPERIAL OIL LIMITED

5.7.	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

~~IMPERIAL OIL LIMITED~~


							Nine Months
	Third Quarter						to September 30
millions of Canadian dollars	2018			2017			2018			2017
Debt-related interest		36			24			98			73
Capitalized interest		(6	)		(7	)		(19	)		(29	)
Net interest expense		30			17			79			44
Other interest		-			1			-			5
Total financing		30			18			79			49

6.8.	Long-term debt


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

Long-term debt	Long-term debt		4,447		4,447		4,447		4,447
Capital leases	Capital leases		566		585		539		558

Total long-term debt	Total long-term debt		5,013		5,032		4,986		5,005

7.9.	Other long-term obligations


							As at			As at
		As at Sept 30		As at Dec 31			Sept 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			1,466			1,529
Asset retirement obligations and other environmental liabilities(b)	Asset retirement obligations and other environmental liabilities(b)		1,577		1,544			1,473			1,460
Share-based incentive compensation liabilities	Share-based incentive compensation liabilities		138		139			131			99
Other obligations(c)	Other obligations(c)		573		328	Other obligations(c)			264			692

Total other long-term obligations	Total other long-term obligations		3,698		3,656			3,334			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).

(c)	Included carbon emission program obligations. Carbon emission program credits are recorded under other assets, including intangibles, net.

On July 3, 2018, the 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. In light of these announcements and the anticipated legislative process, the company recorded anon-cash impairment charge of $46 million, before tax, associated with the company’s net carbon emission program credits (obligation) as at September 30, 2018.

IMPERIAL OIL LIMITED

10.	Common shares

8.	~~Common shares~~

   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, the company had a series of12-month~~ normal course issuer bid share purchase programs. Cumulatively, 916,563 thousand shares were purchased under these programs. Exxon Mobil Corporation’s participation in these programs, including concurrent programs outside the normal course issuer bids, maintained its ownership interest in Imperial at approximately 69.6 percent.


		As of		As of
		Sept 30		Dec 31
thousands of shares	��	2018		2017
Authorized			1,100,000		1,100,000
Common shares outstanding			792,703		831,242

The current12-month normal course issuer bid program ~~was announced on~~came into effect June ~~22, 2017,~~27, 2018, under which Imperial ~~plans to~~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			Millions of
	shares			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		(38,539	)		(71	)
Balance as at September 30, 2018		792,703			1,465

The following table provides the calculation of ~~net income~~basic and diluted earnings per common ~~share:~~share and the dividends declared by the company on its outstanding common shares:

      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


					Nine Months
	Third Quarter				to September 30
	2018		2017		2018		2017
Net income (loss) per common share - basic
Net income (loss)(millions of Canadian dollars)		749		371		1,461		627
Weighted average number of common shares outstanding(millions of shares)		797.6		841.8		814.2		845.5
Net income (loss) per common share(dollars)		0.94		0.44		1.79		0.74

Net income (loss) per common share - diluted
Net income (loss)(millions of Canadian dollars)		749		371		1,461		627
Weighted average number of common shares outstanding(millions of shares)		797.6		841.8		814.2		845.5
Effect of employee share-based awards(millions of shares)		2.9		3.1		2.7		2.9
Weighted average number of common shares outstanding, assuming dilution(millions of shares)		800.5		844.9		816.9		848.4
Net income (loss) per common share(dollars)		0.94		0.44		1.79		0.74

Dividends per common share - declared(dollars)		0.19		0.16		0.54		0.47

IMPERIAL OIL LIMITED

~~10.~~11.

Earnings reinvested


							Nine Months
	Third Quarter						to September 30
millions of Canadian dollars	2018			2017			2018			2017
Earnings reinvested at beginning of period		24,049			25,224			24,714			25,352
Net income (loss) for the period		749			371			1,461			627
Share purchases in excess of stated value		(400	)		(237	)		(1,490	)		(358	)
Dividends declared		(151	)		(134	)		(438	)		(397	)
Earnings reinvested at end of period		24,247			25,224			24,247			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			101			106

Balance at September 30		(1,750	)		(1,620	)		(1,733	)		(1,750	)

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).


							Nine Months
	Third Quarter						to September 30
millions of Canadian dollars	2018			2017			2018			2017
Amortization of postretirement benefits liability adjustment included in net periodic benefit cost(a)		(46	)		(47	)		(138	)		(145	)

(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


					Nine Months
	Third Quarter				to September 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		12		13		37			39
Total		12		13		30			55

~~11.~~13.

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 to be recorded on the balance sheet as a right of use asset and a lease liability. Imperial expects to use the transition method that applies the new lease standard at January 1, 2019 and recognizes any cumulative effect adjustment to the opening balance of the 2019 retained earnings. The company acquired lease accounting software to facilitate implementation, and is currently 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 quarter ~~2017~~2018 vs. third quarter ~~2016~~2017

The company’s net income for the third quarter of ~~2017~~2018 was ~~$371~~$749 million or ~~$0.44per-share~~$0.94 per share on a diluted basis, an increase of $378 million compared to the net income of ~~$1,003~~$371 million or ~~$1.18per-share~~$0.44 per share, for the same period ~~last year.~~2017. Third quarter ~~2016~~ results ~~included~~for 2018 include a ~~$716~~non-cash impairment charge of $33 million ~~gain from~~($0.04 per share) associated with the ~~sale~~Government of ~~retail sites.~~Ontario’s revocation of its carbon emission cap and trade regulation.

Upstream ~~recorded~~ net income was $222 million in the third quarter, ~~of $62~~up $160 million ~~compared to a net loss of $26 million in~~from 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~~$320 million and higher Kearl volumes of ~~about $50 million. These impacts were~~$120 million, partially offset by lower Syncrude ~~and conventional~~ volumes of about ~~$80~~$150 million ~~including the absence of production at Norman Wells,~~ and higher ~~royalties~~operating expenses of about ~~$50~~$70 million.

West Texas Intermediate (WTI) averaged US$~~48.23~~69.43 per barrel in the third quarter of ~~2017,~~2018, up from US$~~44.94~~48.23 per barrel in the same quarter of ~~2016.~~2017. Western Canada Select (WCS) averaged US$~~38.29~~47.49 per barrel and US$~~31.43~~38.29 per barrel respectively for the same periods. The WTI / WCS differential ~~narrowed~~widened to ~~21 percent~~approximately US$22 per barrel in the third quarter of ~~2017,~~2018, from ~~30 percent~~around US$10 per barrel in the same period of ~~2016.~~2017.

The Canadian dollar averaged US$~~0.80~~0.76 in the third quarter of ~~2017, an increase~~2018, a decrease of US$~~0.03~~0.04 from the third 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~~$50.42 per barrel for the third quarter of ~~2017,~~2018, an increase of ~~$8.86~~$11.40 per barrel versus the third quarter of ~~2016.~~2017. Synthetic crude realizations averaged ~~$61.14~~$89.70 per barrel, an increase of ~~$2.17~~$28.56 per barrel for the same period of ~~2016.~~2017.

Gross production of Cold Lake bitumen averaged ~~163,000~~150,000 barrels per day in the third quarter, ~~up from 157,000~~compared to 163,000 barrels per day in the same period last year. ~~The higher production was mainly~~Lower volumes were primarily due to ~~the~~production timing ~~of the~~associated with steam ~~cycles.~~management.

Gross production of Kearl bitumen averaged ~~182,000~~244,000 barrels per day in the third quarter ~~(129,000~~(173,000 barrels Imperial’s share), up from ~~159,000~~182,000 barrels per day ~~(113,000~~(129,000 barrels Imperial’s share) during the third quarter of ~~2016.~~2017. Higher production was mainly the result of improved ~~reliability.~~operational reliability associated with ore preparation, enhanced piping durability and feed management, partially offset by planned turnaround activity.

The company’s share of gross production from Syncrude averaged ~~74,000~~45,000 barrels per day, compared to ~~85,000~~74,000 barrels per day in the third quarter of ~~2016. Repairs associated with~~2017. Lower production was due to a site-wide power disruption that occurred on June 20, 2018, resulting in a complete shutdown of all processing units. Production was progressively restored throughout the ~~Syncrude Mildred Lake upgrader fire~~quarter and all cokers were ~~completed in late July. Lower third quarter volumes reflect the impact of the fire on operations, when compared to the same quarter in 2016.~~backon-line bymid-September.

Downstream net income was ~~$292~~$502 million in the third quarter, ~~compared to $1,002~~up $210 million infrom the ~~same period~~third quarter of ~~2016.~~2017. Earnings ~~decreased~~increased mainly due to ~~the absence of a $716 million gain from the sale of company-owned retail sites and higher refining turnaround activity of about $100 million. These factors were partly offset by higher refining~~stronger margins of about ~~$140 million.~~$220 million, partially offset by anon-cash impairment charge of $33 million associated with the Government of Ontario’s revocation of its carbon emission cap and trade regulation.

Refinery throughput averaged ~~385,000~~388,000 barrels per day, ~~compared to 407,000~~up from 385,000 barrels per day in the third quarter of ~~2016. Reduced throughput reflects~~2017. Capacity utilization increased ~~turnaround activity associated with the Nanticoke refinery~~to 92 percent from 91 percent in the third quarter of 2017.

IMPERIAL OIL LIMITED

Petroleum product sales were ~~500,000~~516,000 barrels per day, ~~compared to 505,000~~up from 500,000 barrels per day in the third quarter of ~~2016.~~

~~IMPERIAL OIL LIMITED~~

2017. Sales growth continues to be driven by optimization across the full downstream value chain, and the expansion of Imperial’s logistic capabilities.

Chemical net income was ~~$52~~$69 million in the third quarter, up $17 million from the same quarter of 2017, reflecting strong polyethylene pricing and advantaged feedstocks.

Corporate and other expenses were $44 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.~~2017. As part of the implementation of the Financial Accounting Standards Board’s update, Compensation – Retirement Benefits (Topic 715):Improving the Presentation of Net Periodic Pension Cost and 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 these costs were allocated to the operating segments.

IMPERIAL OIL LIMITED

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

Net income in the first nine months of ~~2017~~2018 was $1,461 million, or $1.79 per share on a diluted basis, an increase of $834 million compared to a net income of $627 million or $0.74~~per-share~~ ~~on a diluted basis versus net income of $721 million or $0.85 per-share~~ per share in the first nine months of ~~2016.~~2017.

Upstream ~~recorded a~~ net ~~loss of $225~~income was $172 million in the first nine months of ~~2017,~~2018, an increase of $397 million compared to a net loss of ~~$764~~$225 million from the same period of ~~2016. Results reflected~~2017. Improved results reflect the impact of higher Canadian crude oil realizations of about ~~$940~~$670 million and higher Kearl volumes of about ~~$50 million. These impacts were~~$120 million, partially offset by the impact of lower Cold Lake and Syncrude volumes of about $170 million, higher operating costs of about $120 million and higher royalties 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$60 million.

West Texas Intermediate averaged US$~~49.40~~66.77 per barrel in the first nine months of ~~2017,~~2018, up from US$~~41.54~~49.40 per barrel in the same period of ~~2016.~~2017. Western Canada Select averaged US$~~37.57~~44.98 per barrel and US$~~27.74~~37.57 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 months of ~~2017,~~2018, from ~~33 percent~~around US$12 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 months of ~~2017,~~2018, an increase of about US$0.01 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~~$45.04 per barrel for the first nine months of ~~2017,~~2018, an increase of ~~$14.05~~$7.22 per barrel versus ~~the same period of 2016.~~2017. Synthetic crude realizations averaged ~~$64.37~~$83.66 per barrel, an increase of ~~$10.92~~$19.29 per barrel from the same period of ~~2016.~~2017.

Gross production of Cold Lake bitumen averaged ~~161,000~~145,000 barrels per day in the first nine months of ~~2017,~~2018, compared to ~~162,000~~161,000 barrels per day from the same period of ~~2016.~~2017. Lower volumes were primarily due to planned maintenance and production timing associated with steam management.

Gross production of Kearl bitumen averaged ~~179,000~~202,000 barrels per day in the first nine months of ~~2017 (127,000~~2018 (144,000 barrels Imperial’s share) up from ~~169,000~~179,000 barrels per day ~~(120,000~~(127,000 barrels Imperial’s share) from the same period of ~~2016.~~2017. Increased ~~2017~~2018 production reflects improved operational reliability associated with ~~the mining and~~ ore preparation, ~~operations.~~enhanced piping durability and feed management.

During the first nine months of ~~2017,~~2018, the company’s share of gross production from Syncrude averaged ~~56,000~~53,000 barrels per day, compared to ~~61,000~~56,000 barrels per day from the same period of ~~2016.~~2017. Syncrude ~~year to date~~year-to-date production was impacted by a site-wide power disruption that occurred on June 20 resulting in a complete shutdown of all processing units. Production was progressively restored throughout the ~~March~~third quarter 2018 and all cokers were backon-line bymid-September. Production in 2017 ~~fire at~~was impacted by repairs associated with the Syncrude Mildred Lake upgrader ~~and planned maintenance. In 2016, production was impacted by the Alberta wildfires and planned maintenance.~~fire.

Downstream net income was ~~$750~~$1,224 million, ~~compared to $1,393~~an increase of $474 million ~~from~~versus the ~~same period~~prior year. Higher earnings primarily reflect stronger margins of ~~2016. Earnings decreased mainly due to~~about $910 million, partially offset by the impact of increased planned turnaround activity and reliability events of about $190 million, 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 in 2017, and ~~higher industry refining margins~~anon-cash impairment charge of ~~about $90 million.~~$33 million associated with the Government of Ontario’s revocation of its carbon emission cap and trade regulation.

Refinery throughput averaged ~~381,000~~386,000 barrels per day in the first nine months of ~~2017,~~2018, up from ~~351,000~~381,000 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~~503,000 barrels per day in the first nine months of ~~2017,~~2018, up from ~~481,000~~492,000 barrels per day from the same period of ~~2016.~~2017. Sales growth continues to be driven by ~~strong collaboration~~optimization across ~~our~~the full downstream value chain, and the expansion of Imperial’s ~~wholesale, industrial and commercial networks.~~logistics capabilities.

~~Chemical net income was $161 million, up from $160 million from the same period of 2016.~~

IMPERIAL OIL LIMITED

~~For~~Chemical net income was $220 million, an increase of $59 million versus the prior year, reflecting higher margins and volumes.

Corporate and other expenses were $155 million for the first nine months of ~~2017, net income effects from Corporate and Other were negative~~2018, compared to $59 million ~~versus negative $68 million from~~in the same period of ~~2016.~~2017. 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

Liquidity and capital resources

Cash flow generated from operating activities was $1,207 million in the third quarter, up from $837 million from the corresponding period in 2017, reflecting higher earnings.

Investing activities used net cash of $352 million in the third quarter, compared with ~~$772 million in the corresponding period in 2016.~~

~~Investing activities used net cash of~~ $234 million ~~in the third quarter, compared with $1,005 million cash generated from investing activities~~used in the same period of ~~2016,~~2017, reflecting ~~lower proceeds from asset sales.~~

Cash used in financing activities was $393 million in the third quarter, compared with $1,724 million in the third quarter of 2016, reflecting the absence of debt repayments. Dividends paid in the third quarter of 2017 were $136 million. The~~per-share~~ dividend paid in the third quarter was $0.16, up from $0.15 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 in the first nine 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 in the first nine months of 2017, compared with cash generated from investing activities of $350 million 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~~$580 million in the third quarter, compared with $393 million used in the third quarter of 2017. Dividends paid in the third quarter of 2018 were $155 million. The per share dividend paid in the third quarter was $0.19, up from $0.16 in the same period of 2017. During the third quarter, the company, under its share purchase program, purchased about 10 million shares for approximately $418 million, including shares purchased from Exxon Mobil Corporation.

The company’s cash balance was $1,148 million at September 30, 2018, versus $833 million at the end of third quarter 2017.

Cash flow generated from operating activities was $3,051 million in the first nine months of ~~2017, compared with $1,569~~2018, up from $1,683 million from the same period of ~~2016,~~2017, primarily reflecting higher earnings.

Investing activities used net cash of $1,096 million in the ~~absence~~first nine months of ~~debt repayments.~~2018, compared with $454 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 $2,002 million in the first nine months of 2018, compared with $787 million used in the same period of 2017. Dividends paid in the first nine months of ~~2017~~2018 were ~~$390~~$421 million. The~~per-share~~ per share dividend paid in the first nine months of ~~2017~~2018 was ~~$0.46,~~$0.51, up from ~~$0.43 for~~$0.46 from the same period of ~~2016.~~

2017. During the first nine months of ~~2017~~2018, the company, under its share purchase program, purchased about 1038.5 million shares for ~~$377~~approximately $1,561 million, including shares purchased from Exxon Mobil Corporation.

Recently issued accounting standards

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. Quantitative and qualitative disclosures about market risk

Information about market risks for the nine months ended September 30, ~~2017,~~2018, does not differ materially from that discussed on page 2224 of the company’s annual report on Form10-K for the year ended December 31, ~~2016.~~2017 and Form10-Q for the quarter ended June 30, 2018.

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 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 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)
July 2018
(July 1 - July 31)		3,379,344		43.72		3,379,344		36,529,089
August 2018
(August 1 - August 31)		3,540,254		41.69		3,540,254		32,988,835
September 2018
(September 1 - September 30)		3,057,493		40.09		3,057,493		29,931,342	(b)

(a)

On June 22, ~~2017,~~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)

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.

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~~November 6, 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~~November 6, 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 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


	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)