FORM10-Q

Table of Contents
UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

[✓]    

FORM
10-Q
☑
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)

15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended SeptemberJune 30, 2017

2022

OR

[]

☐
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)

15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

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

Commission file number
0-12014

IMPERIAL OIL LIMITED

(Exact name of registrant as specified in its charter)

CANADA
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
  
Calgary, Alberta, Canada
T2C 5N1
(Address of principal executive offices)  (Postal Code)

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

Thecode)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol
Name of each exchange on
which registered
NoneNone
Indicate by check mark whether 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    

The

Indicate by check mark whether 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 Regulation
S-T

(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES
✓
  NO    

The

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-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 Rule
12b-2
of the Exchange Act of 1934).

1934.

Large accelerated filer

file
r
 
✓
  Smaller reporting company 
  Non-accelerated filer
         

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��   

Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act of 1934).

YES  
  NO  
✓

The number of common shares outstanding, as of SeptemberJune 30, 20172022 was 837,581,329.

636,676,182.

Table of Contents
IMPERIAL OIL LIMITED

Table of contents

  
Page
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 flowsshareholders’ equity

   6 

Notes to the consolidated financial statementsConsolidated statement of cash flows

   7 
Item 2.
Notes to the consolidated financial statements
  8
Item 2. Management’s discussion and analysis of financial condition and results of operations   1520 
Item 3.Quantitative and qualitative disclosures about market risk   2128 
Item 4.Controls and procedures   2128 
PART II. OTHER INFORMATION   2229 
Item 2.1. Legal proceedings  29
Item 2. Unregistered sales of equity securities and use of proceeds   2229 
Item 6.Exhibits   2330 
SIGNATURES
   2431 

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 Form
10-K
for the year ended December 31, 2016.2021. 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.

2
Table of Contents
IMPERIAL OIL LIMITED

PART I. FINANCIAL INFORMATION

Item 1. Financial statements

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

        Third Quarter   

Nine Months

to September 30

 
millions of Canadian dollars  2017   2016   2017       2016    

 

 

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    

 

 

Total revenues and other income

   7,158    7,442    21,347    18,912    

 

 

Expenses

        

Exploration

   7    16    29    75    

Purchases of crude oil and products(b)

   4,251    3,857    13,226    10,884    

Production and manufacturing(c)

   1,338    1,261    4,238    3,842    

Selling and general(c)

   219    275    626    812    

Federal excise tax

   438    434    1,253    1,237    

Depreciation and depletion

   391    398    1,135    1,229    

Financing costs(note 5)

   18    19    49    52    

 

 

Total expenses

   6,662    6,260    20,556    18,131    

 

 

Income (loss) before income taxes

   496    1,182    791    781    

Income taxes

   125    179    164    60    

 

 

Net income (loss)

   371    1,003    627    721    

 

 

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    

             Six Months 
       Second Quarter         to June 30 
millions of Canadian dollars
  
2022
         2021     
2022
   2021 
Revenues and other income
          
Revenues
(a)
  
 
17,285
 
  8,007   
 
29,942
 
  14,999 
Investment and other income
(note 3)
  
 
22
 
    40   
 
51
 
  46 
Total revenues and other income
  
 
17,307
 
     8,047   
 
29,993
 
     15,045 
     
Expenses
                        
Exploration  
 
1
 
     2   
 
3
 
     4 
Purchases of crude oil and products
(b)
  
 
11,021
 
   4,867   
 
19,371
 
   8,754 
Production and manufacturing
(c)
  
 
1,908
 
   1,569   
 
3,567
 
     3,054 
Selling and general
(c)
  
 
191
 
    200   
 
416
 
     389 
Federal excise tax and fuel charge  
 
553
 
     465   
 
1,032
 
     869 
Depreciation and depletion  
 
451
 
    450   
 
877
 
     944 
Non-service
pension and postretirement benefit
  
 
5
 
  10   
 
9
 
    21 
Financing
(d) (note 5)
  
 
11
 
  13   
 
18
 
    27 
Total expenses
  
 
14,141
 
     7,576   
 
25,293
 
    14,062 
     
Income (loss) before income taxes
  
 
3,166
 
    471   
 
4,700
 
    983 
     
Income taxes
  
 
757
 
   105   
 
1,118
 
     225 
     
Net income (loss)
  
 
2,409
 
   366   
 
3,582
 
     758 
    
Per share information
(Canadian dollars)
 
                   
Net income (loss) per common share - basic
(note 9)
  
 
3.63
 
   0.51   
 
5.37
 
    1.04 
Net income (loss) per common share - diluted
(note 9)
  
 
3.63
 
    0.50   
 
5.36
 
     1.04 
(a)  Amounts from related parties included in revenues.  
 
5,175
 
     1,405   
 
9,134
 
    2,913 
(b)  Amounts to related parties included in purchases of crude oil and products.  
 
1,129
 
   666   
 
1,779
 
    1,181 
(c)   Amounts to related parties included in production and manufacturing, and selling and general expenses.  
 
116
 
   106   
 
234
 
  222 
(d)  Amounts to related parties included in financing (note 5).  
 
13
 
     10   
 
17
 
  21 
The information in the notes to consolidated financial statements is an integral part of these statements.

3
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IMPERIAL OIL LIMITED

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

   Third Quarter   

Nine Months

to September 30

 
millions of Canadian dollars  2017   2016       2017       2016    

 

 

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    

 

 

Total other comprehensive income (loss)

   34    34    147    208    

 

 
        

 

 

Comprehensive income (loss)

   405    1,037    774    929    

 

 

 Consolidated statement of comprehensive income (U.S. GAAP, unaudited)
 
 
         Six Months 
   Second Quarter     to June 30 
millions of Canadian dollars
  
 
2022
 
   2021     
 
2022
 
   2021 
Net income (loss)
  
 
2,409
 
     366   
 
3,582
 
   758 
     
Other comprehensive income (loss), net of income taxes                      
Postretirement benefits liability adjustment (excluding amortization)  
 
-
 
     -   
 
24
 
    54 
     
Amortization of postretirement benefits liability adjustment included in net benefit costs  
 
21
 
     33   
 
42
 
   66 
Total other comprehensive income (loss)
  
 
21
 
     33   
 
66
 
     120 
                         
Comprehensive income (loss)
  
 
2,430
 
     399   
 
3,648
 
   878 
The information in the notes to consolidated financial statements is an integral part of these statements.

4
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IMPERIAL OIL LIMITED

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

millions of Canadian dollars  

As at

Sept 30
2017

  

As at

Dec 31
2016

 
  

Assets

   

Current assets

   

Cash

   833   391 

Accounts receivable, less estimated doubtful accounts(a)

   1,896   2,023 

Inventories of crude oil and products

   989   949 

Materials, supplies and prepaid expenses

   441   468 
  

Total current assets

   4,159   3,831 

Investments and long-term receivables

   931   1,030 

Property, plant and equipment,

   53,844   53,515 

less accumulated depreciation and depletion

   (18,248)   (17,182) 
  

Property, plant and equipment, net

   35,596   36,333 

Goodwill

   186   186 

Other assets, including intangibles, net

   498   274 
  

Total assets

   41,370   41,654 
  

Liabilities

   

Current liabilities

   

Notes and loans payable(b)

   202   202 

Accounts payable and accrued liabilities(a) (note 7)

   3,041   3,193 

Income taxes payable

   59   488 
  

Total current liabilities

   3,302   3,883 

Long-term debt(c) (note 6)

   5,013   5,032 

Other long-term obligations(d) (note 7)

   3,698   3,656 

Deferred income tax liabilities

   4,336   4,062 
  

Total liabilities

   16,349   16,633 
  

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) 
  

Total shareholders’ equity

   25,021   25,021 
  

Total liabilities and shareholders’ equity

   41,370   41,654 
  
   As at      As at 
   June 30      Dec 31 
millions of Canadian dollars
  
 
2022
 
     2021 
Assets
      
Current assets
      
Cash  
 
2,867
 
     2,153 
Accounts receivable - net
(a)
  
 
6,839
 
     3,869 
Inventories of crude oil and products  
 
1,394
 
     1,102 
Materials, supplies and prepaid expenses  
 
789
 
     689 
Total current assets  
 
11,889
 
     7,813 
Investments and long-term receivables
(b)
  
 
754
 
     757 
Property, plant and equipment,  
 
57,222
 
     56,762 
less accumulated depreciation and depletion  
 
(26,256
) 
     (25,522) 
Property, plant and equipment, net
(note 11)
  
 
30,966
 
     31,240 
Goodwill  
 
166
 
     166 
Other assets, including intangibles - net  
 
1,117
 
     806 
Total assets
  
 
44,892
 
     40,782 
   
Liabilities
            
Current liabilities            
Notes and loans payable  
 
122
 
     122 
Accounts payable and accrued liabilities
(a) (note 7)
  
 
7,947
 
     5,184 
Income taxes payable  
 
2,018
 
     248 
Total current liabilities  
 
10,087
 
     5,554 
Long-term debt
(c) (note 6)
  
 
5,044
 
     5,054 
Other long-term obligations
(note 7)
  
 
3,453
 
     3,897 
Deferred income tax liabilities  
 
4,329
 
     4,542 
Total liabilities
  
 
22,913
 
     19,047 
   
Shareholders’ equity
            
Common shares at stated value
(d) (note 9)
  
 
1,177
 
     1,252 
Earnings reinvested  
 
21,913
 
     21,660 
Accumulated other comprehensive income (loss)
(note 10)
  
 
(1,111
) 
     (1,177) 
Total shareholders’ equity
  
 
21,979
 
     21,735 
   
Total liabilities and shareholders’ equity
  
 
44,892
 
     40,782 
(a)Accounts receivable less estimated doubtful accounts- net included net amounts receivable from related parties of $87$1,888 million (2016(2021 - $172$1,031 million).
(b)NotesInvestments and loans payablelong-term receivables included amounts tofrom related parties of $75$296 million (2016(2021 - $75$298 million).
(c)Long-term debt included amounts to related parties of $4,447 million (2016(2021 - $4,447 million).
(d)Other long-term obligations included amounts to related parties of $71 million (2016 - $104 million).
(e)Number of common shares authorized and outstanding were 1,100 million and 838637 million, respectively (2016(2021 - 1,100 million and 848678 million, respectively).

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

5
Table of Contents
IMPERIAL OIL LIMITED

Consolidated statement of cash flowsshareholders’ equity (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.

        
        
        
        
       Six Months 
   Second Quarter      to June 30 
millions of Canadian dollars
  
 
2022
 
  2021     
 
2022
 
  2021 
Common shares at stated value
(note 9)
        
At beginning of period  
 
1,237
  
  1,357  
 
1,252
  
  1,357 
Share purchases at stated value  
 
(60
) 
  (55)  
 
(75
) 
  (55) 
At end of period  
 
1,177
 
  1,302  
 
1,177
 
  1,302 
     
Earnings reinvested
                 
At beginning of period  
 
22,171
 
  22,281  
 
21,660
 
  22,050 
Net income (loss) for the period  
 
2,409
 
  366  
 
3,582
 
  758 
Share purchases in excess of stated value  
 
(2,440
) 
  (1,116)  
 
(2,874
) 
  (1,116) 
Dividends declared  
 
(227
) 
  (195)  
 
(455
) 
  (356) 
At end of period  
 
21,913
 
  21,336  
 
21,913
 
  21,336 
     
Accumulated other comprehensive income (loss)
(note 10)
                 
At beginning of period  
 
(1,132
) 
  (1,902)  
 
(1,177
) 
  (1,989) 
Other comprehensive income (loss)  
 
21
 
  33  
 
66
 
  120 
At end of period  
 
(1,111
) 
  (1,869)  
 
(1,111
) 
  (1,869) 
     
Shareholders’ equity at end of period
  
 
21,979
 
  20,769  
 
21,979
 
  20,769 
The information in the notes to consolidated financial statements is an integral part of these statements.

6
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IMPERIAL OIL LIMITED

 Consolidated statement of cash flows (U.S. GAAP, unaudited)
   
    
   
    
   
    
   
    
 
   
           Six Months 
Inflow (outflow)
   Second Quarter      to June 30 
millions of Canadian dollars
  
 
2022
 
  2021     
 
2022
 
  2021 
Operating activities
                    
Net income (loss)  
 
2,409
 
   366  
 
3,582
 
   758 
Adjustments for
non-cash
items:
                   
Depreciation and depletion  
 
451
 
   450  
 
877
 
   944 
(Gain) loss on asset sales
(note 3)
  
 
(4
) 
   (24)  
 
(24
) 
   (27) 
Deferred income taxes and other  
 
(149
) 
   76  
 
(480
) 
   136 
Changes in operating assets and liabilities:                   
Accounts receivable  
 
(1,426
) 
   (775)  
 
(2,970
) 
   (1,244) 
Inventories, materials, supplies and prepaid expenses  
 
(27
) 
   58  
 
(391
) 
   (101) 
Income taxes payable  
 
853
 
   21  
 
1,312
 
   42 
Accounts payable and accrued liabilities  
 
499
 
   655  
 
2,643
 
   1,239 
All other items - net
(c)
  
 
76
 
   25  
 
47
 
   150 
Cash flows from (used in) operating activities
  
 
2,682
 
   852  
 
4,596
 
   1,897 
     
Investing activities
                   
Additions to property, plant and equipment  
 
(333
) 
   (241)  
 
(637
) 
   (408) 
Proceeds from asset sales
(note 3) (b)
  
 
102
 
   35  
 
126
 
   42 
Loans to equity companies - net  
 
1
 
   (1)  
 
2
 
   12 
Cash flows from (used in) investing activities
  
 
(230
) 
   (207)  
 
(509
) 
   (354) 
     
Financing activities
                   
Short-term debt - net  
 
-
 
   -  
 
-
 
   (36) 
Reduction in finance lease obligations
(note 6)
  
 
(6
) 
   (4)  
 
(11
) 
   (8) 
Dividends paid  
 
(228
) 
   (161)  
 
(413
) 
   (323) 
Common shares purchased
(note 9)
  
 
(2,500
) 
   (1,171)  
 
(2,949
) 
   (1,171) 
Cash flows from (used in) financing activities
  
 
(2,734
) 
   (1,336)  
 
(3,373
) 
   (1,538) 
     
Increase (decrease) in cash
  
 
(282
) 
   (691)  
 
714
 
   5 
Cash at beginning of period
  
 
3,149
 
   1,467  
 
2,153
 
   771 
Cash at end of period
(a)
  
 
2,867
 
   776  
 
2,867
 
   776 
(a)  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.            
(b)  Included $94 million deposit for the potential sale of XTO Energy Canada (note 11).                   
(c)   Included contributions to registered pension plans.  
 
(46
) 
   (42)  
 
(96
) 
   (70) 
     
Income taxes (paid) refunded.  
 
(52
) 
   27  
 
(275
) 
   28 
Interest (paid), net of capitalization.  
 
(10
) 
   (14)  
 
(22
) 
   (27) 
The information in the notes to consolidated financial statements is an integral part of these statements.
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IMPERIAL OIL LIMITED
Notes to consolidated financial statements (unaudited)

1. Basis of financial statement preparation

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 20162021 annual report on Form
10-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 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 ninesix months ended SeptemberJune 30, 2017,2022, are not necessarily indicative of the operations to be expected for the full year.

All amounts are in Canadian dollars unless otherwise indicated.

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IMPERIAL OIL LIMITED

2. Business segments

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 

 

 
2.
Business segments
   
             
   
             
   
             
   
             
   
             
   
             
 
Second Quarter
         Upstream        Downstream        Chemical 
millions of Canadian dollars
  
 
2022
 
  2021  
 
2022
 
  2021  
 
2022
 
   2021 
Revenues and other income
                          
Revenues
(a) (b)
  
 
119
 
   2,616   
 
16,752
 
   5,015   
 
414
 
   376 
Intersegment sales  
 
5,827
 
   1,312   
 
2,024
 
   788   
 
149
 
   79 
Investment and other income
(note 3)
  
 
3
 
   6   
 
9
 
   28   
 
0-
 
   1 
   
 
5,949
 
   3,934   
 
18,785
 
   5,831   
 
563
 
   456 
Expenses
                              
Exploration  
 
1
 
   2   
 
0-
 
   0-   
 
0-
 
   0- 
Purchases of crude oil and products  
 
2,357
 
   2,044   
 
16,261
 
   4,760   
 
401
 
   240 
Production and manufacturing  
 
1,423
 
   1,166   
 
418
 
   357   
 
67
 
   46 
Selling and general  
 
0-
 
   0-   
 
153
 
   142   
 
22
 
   22 
Federal excise tax and fuel charge  
 
0-
 
   0-   
 
553
 
   465   
 
0-
 
   0- 
Depreciation and depletion  
 
395
 
   399   
 
45
 
   39   
 
4
 
   5 
Non-service
pension and postretirement benefit
  
 
-
 
   0-   
 
0-
 
   0-   
 
0-
 
   0- 
Financing
(note 5)
  
 
1
 
   0-   
 
0-
 
   0-   
 
0-
 
   0- 
Total expenses
  
 
4,177
 
   3,611   
 
17,430
 
   5,763   
 
494
 
   313 
Income (loss) before income taxes
  
 
1,772
 
   323   
 
1,355
 
   68   
 
69
 
   143 
Income tax expense (benefit)
  
 
426
 
   76   
 
322
 
   8   
 
16
 
   34 
Net income (loss)
  
 
1,346
 
   247   
 
1,033
 
   60   
 
53
 
   109 
Cash flows from (used in) operating activities
  
 
2,087
 
   595   
 
641
 
   136   
 
64
 
   111 
Capital and exploration expenditures
(c)
  
 
233
 
   130   
 
69
 
   120   
 
2
 
   2 
   
            
   
            
   
            
   
            
   
            
   
            
 
             
Second Quarter   Corporate and other       Eliminations       Consolidated 
millions of Canadian dollars  
 
2022
 
  2021  
 
2022
 
  2021  
 
2022
 
   2021 
Revenues and other income
                          
Revenues
(a) (b)
  
 
0-
 
  0-  
 
0-
 
  0-  
 
17,285
 
   8,007 
Intersegment sales  
 
0-
 
  0-  
 
(8,000
) 
  (2,179)  
 
0-
 
   0- 
Investment and other income
(note 3)
  
 
10
 
  5  
 
-
 
  0-  
 
22
 
   40 
   
 
10
 
  5  
 
(8,000
) 
  (2,179)  
 
17,307
 
   8,047 
Expenses
                          
Exploration  
 
0-
 
  0-  
 
0-
 
  0-  
 
1
 
   2 
Purchases of crude oil and products  
 
0-
 
  0-  
 
(7,998
) 
  (2,177)  
 
11,021
 
   4,867 
Production and manufacturing  
 
0-
 
  0-  
 
0-
 
  0-  
 
1,908
 
   1,569 
Selling and general  
 
18
 
  38  
 
(2
) 
  (2)  
 
191
 
   200 
Federal excise tax and fuel charge  
 
0-
 
  0-  
 
0-
 
  0-  
 
553
 
   465 
Depreciation and depletion  
 
7
 
  7  
 
0-
 
  0-  
 
451
 
   450 
Non-service pension and postretirement benefit  
 
5
 
  10  
 
0-
 
  0-  
 
5
 
   10 
Financing
(note 5)
  
 
10
 
  13  
 
0-
 
  0-  
 
11
    13 
Total expenses
  
 
40
 
  68  
 
(8,000
) 
  (2,179)  
 
14,141
 
  7,576 
Income (loss) before income taxes
  
 
(30
) 
  (63)  
 
0-
 
  0-  
 
3,166
 
   471 
Income tax expense (benefit)
  
 
(7
) 
  (13)  
 
0-
 
  0-  
 
757
 
   105 
Net income (loss)
  
 
(23
) 
  (50)  
 
0-
 
  0-  
 
2,409
 
   366 
Cash flows from (used in) operating activities
  
 
(110
) 
  10  
 
0-
 
  0-  
 
2,682
 
   852 
Capital and exploration expenditures
(c)
  
 
10
 
  7  
 
0-
 
  0-  
 
314
 
   259 
9
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IMPERIAL OIL LIMITED
(a)Included export sales to the United States of $1,080$3,871 million (2016(2021 - $941$1,544 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.
(b)
Includes approximately 13% related to revenue outside the scope of ASC 606 “Revenue from Contracts with Customers” for the three months ended June 30, 2022. Trade receivables in Accounts receivable – net reported on the Balance Sheet include both receivables within the scope of ASC 606 and those outside the scope of ASC 606. Revenue and receivables outside the scope of ASC 606 primarily relate to physically settled commodity contracts accounted for as derivatives
. Credit
quality and type of customer are generally similar
between
those revenues and receivables within the scope of ASC 606
 and those outside it
.
(c)Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to capitalfinance leases, additional investments and acquisitions.acquisitions and the company’s share of similar costs for equity companies. CAPEX excludes the purchase of carbon emission credits.

10
Table of Contents
IMPERIAL OIL
LIMITED
                                                                                                 
Six Months to June 30
         Upstream         Downstream         Chemical 
millions of Canadian dollars
  
 
2022
 
  2021   
 
2022
 
  2021   
 
2022
 
   2021 
Revenues and other income
                            
Revenues
(a) (b)
  
 
218
 
   4,758   
 
28,943
 
   9,542   
 
781
 
   699 
Intersegment sales  
 
10,258
 
   2,663   
 
3,857
 
   1,561   
 
253
 
   132 
Investment and other income
(note 3)
  
 
7
 
   6   
 
30
 
   33   
 
0-
 
   1 
   
 
10,483
 
   7,427   
 
32,830
 
   11,136   
 
1,034
 
   832 
Expenses
                              
Exploration  
 
3
 
   4   
 
0-
 
   0-   
 
0-
 
   0- 
Purchases of crude oil and products  
 
4,247
 
   3,878   
 
28,773
 
   8,780   
 
716
 
   449 
Production and manufacturing  
 
2,672
 
   2,275   
 
774
 
   683   
 
121
 
   96 
Selling and general  
 
0-
 
   0-   
 
300
 
   275   
 
45
 
   47 
Federal excise tax and fuel charge  
 
0-
 
   0-   
 
1,032
 
   869   
 
0-
 
   0- 
Depreciation and depletion  
 
768
 
   844   
 
86
 
   78   
 
9
 
   9 
Non-service pension and postretirement benefit  
 
0-
 
   0-   
 
0-
 
   0-   
 
0-
 
   0- 
Financing
(note 5)
  
 
1
 
   1   
 
0-
 
   0-   
 
0-
 
   0- 
Total expenses
  
 
7,691
 
   7,002   
 
30,965
 
   10,685   
 
891
 
   601 
Income (loss) before income taxes
  
 
2,792
 
   425   
 
1,865
 
   451   
 
143
 
   231 
Income tax expense (benefit)
  
 
664
 
   99   
 
443
 
   99   
 
34
 
   55 
Net income (loss)
  
 
2,128
 
   326   
 
1,422
 
   352   
 
109
 
   176 
Cash flows from (used in) operating activities
  
 
3,534
 
   1,126   
 
1,016
 
   598   
 
131
 
   173 
Capital and exploration expenditures
(c)
  
 
455
 
   215   
 
137
 
   188   
 
3
 
   4 
Total assets as at June 30
(note 11)
  
 
28,961
 
   31,931   
 
11,649
 
   5,352   
 
505
 
   481 
   
   
   
   
   
   
   
   
   
   
   
   
 
             
Six Months to June 30
   Corporate and other        Eliminations        Consolidated 
millions of Canadian dollars
 
 
2022
 
  2021     
 
2022
 
  2021     
 
2022
 
  2021 
Revenues and other income
                              
Revenues
(a) (b)
  
 
0-
 
  0-  
 
0-
 
  0-  
 
29,942
 
   14,999 
Intersegment sales  
 
0-
 
  0-  
 
(14,368
) 
  (4,356)  
 
0-
 
   0- 
Investment and other income
(note 3)
  
 
14
 
  6  
 
0-
 
  0-  
 
51
 
   46 
   
 
14
 
  6  
 
(14,368
) 
  (4,356)  
 
29,993
 
   15,045 
Expenses
                          
Exploration  
 
0-
 
  0-  
 
0-
 
  0-  
 
3
 
   4 
Purchases of crude oil and products  
 
0-
 
  0-  
 
(14,365
) 
  (4,353)  
 
19,371
 
   8,754 
Production and manufacturing  
 
0-
 
  0-  
 
0-
 
  0-  
 
3,567
 
   3,054 
Selling and general  
 
74
 
  70  
 
(3
) 
  (3)  
 
416
 
   389 
Federal excise tax and fuel charge  
 
0-
 
  0-  
 
0-
 
  0-  
 
1,032
 
   869 
Depreciation and depletion  
 
14
 
  13  
 
0-
 
  0-  
 
877
 
   944 
Non-service pension and postretirement benefit  
 
9
 
  21  
 
0-
 
  0-  
 
9
 
   21 
Financing
(note 5)
  
 
17
 
  26  
 
0-
 
  0-  
 
18
 
   27 
Total expenses
  
 
114
 
  130  
 
(14,368
) 
  (4,356)  
 
25,293
 
   14,062 
Income (loss) before income taxes
  
 
(100
) 
  (124)  
 
0-
 
  0-  
 
4,700
 
   983 
Income tax expense (benefit)
  
 
(23
) 
  (28)  
 
0-
 
  0-  
 
1,118
 
   225 
Net income (loss)
  
 
(77
) 
  (96)  
 
0-
 
  0-  
 
3,582
 
   758 
Cash flows from (used in) operating activities
  
 
(85
) 
  0-  
 
0-
 
  0-  
 
4,596
 
   1,897 
Capital and exploration expenditures
(c)
  
 
15
 
  15  
 
0-
 
  0-  
 
610
 
   422 
Total assets as at June 30
(note 11)

  
 
4,016
 
  1,606  
 
(239
) 
  (431)  
 
44,892
 
   38,939 
11
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IMPERIAL OIL LIMITED

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

 

 

Revenues and other income

       

Operating revenues(a)

   5,166   3,699   15,087   13,470   824   798  

Intersegment sales

   1,494   1,516   792   689   191   156  

Investment and other income(note 3)

   17   22   248   919   (1)   1  

 

 
   6,677   5,237   16,127   15,078   1,014   955  

 

 

Expenses

       

Exploration

   29   75   -   -   -   -  

Purchases of crude oil and products

   3,089   2,584   12,037   10,139   573   518  

Production and manufacturing

   2,917   2,634   1,169   1,059   152   149  

Selling and general

   1   (3)   540   729   60   63  

Federal excise tax

   -   -   1,253   1,237   -   -  

Depreciation and depletion

   964   1,053   148   158   9   6  

Financing costs(note 5)

   5   (6)   -   -   -   -  

 

 

Total expenses

   7,005   6,337   15,147   13,322   794   736  

 

 

Income (loss) before income taxes

   (328)   (1,100)   980   1,756   220   219  

Income taxes

   (103)   (336)   230   363   59   59  

 

 

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 
millions of Canadian dollars  2017  2016  2017  2016  2017  2016  

 

 

Revenues and other income

       

Operating revenues(a)

   -   -   -   -   21,077   17,967  

Intersegment sales

   -   -   (2,477)   (2,361)   -   -  

Investment and other income(note 3)

   6   3   -   -   270   945  

 

 
   6   3   (2,477)   (2,361)   21,347   18,912  

 

 

Expenses

       

Exploration

   -   -   -   -   29   75  

Purchases of crude oil and products

   -   -   (2,473)   (2,357)   13,226   10,884  

Production and manufacturing

   -   -   -   -   4,238   3,842  

Selling and general

   29   27   (4)   (4)   626   812  

Federal excise tax

   -   -   -   -   1,253   1,237  

Depreciation and depletion

   14   12   -   -   1,135   1,229  

Financing costs(note 5)

   44   58   -   -   49   52  

 

 

Total expenses

   87   97   (2,477)   (2,361)   20,556   18,131  

 

 

Income (loss) before income taxes

   (81)   (94)   -   -   791   781  

Income taxes

   (22)   (26)   -   -   164   60  

 

 

Net income (loss)

   (59)   (68)   -   -   627   721  

 

 

Cash flows from (used in) operating activities

   (23)   (1)   -   -   1,683   1,264  

Capital and exploration expenditures(b)

   29   37   -   -   455   948  

Total assets as at September 30

   1,283   674   (336)   (337)   41,370   42,094  

 

 
(a)Included export sales to the United States of $3,024$6,375 million (2016(2021 - $2,704$3,113 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.
(b)
Includes approximately 11% related to revenue outside the scope of ASC 606 “Revenue from Contracts with Customers” for the six months ended June 30, 2022. Trade receivables in Accounts receivable – net reported on the Balance Sheet include both receivables within the scope of ASC 606 and those outside the scope of ASC 606. Revenue and receivables outside the scope of ASC 606 primarily relate to physically settled commodity contracts accounted for as derivatives
. Credit
quality and type of customer are generally similar
between
those revenues and receivables within the scope of ASC 606
 and those outside it
.
(c)Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to capitalfinance leases, additional investments and acquisitions.acquisitions and the company’s share of similar costs for equity companies. CAPEX excludes the purchase of carbon emission credits.

12
Table of Contents
IMPERIAL OIL LIMITED


3.
Investment and other income

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

   Third Quarter   

Nine Months

to September 30

 
  millions of Canadian dollars  2017     2016     2017     2016   
  

  Proceeds from asset sales

   8      1,194      230      1,244   

  Book value of asset sales

   2      285      12      292   
  

  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   
  
                                                
       Second Quarter     
Six Months
to June 30
 
 millions of Canadian dollars
  
2022
  2021     
2022
  2021 
Proceeds from asset sales  
 
8
 
     35     
 
32
 
     42 
Book value of asset sales  
 
4
 
     11     
 
8
 
     15 
Gain (loss) on asset sales, before tax  
 
4
 
     24     
 
24
 
     27 
Gain (loss) on asset sales, after tax  
 
3
 
     22     
 
19
 
     24 
(a)
4.
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 in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia and Newfoundland.

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 
  

                                                
       Second Quarter     
Six Months
to June 30
 
 millions of Canadian dollars
  
2022
  2021     
2022
  2021 
Pension benefits:
        
Service cost  
 
70
 
     81     
 
140
 
     162 
Interest cost  
 
74
 
     68     
 
147
 
     136 
Expected return on plan assets  
 
(103)
 
     (107)     
 
(206)
 
     (214) 
Amortization of prior service cost  
 
4
 
     4     
 
8
 
     8 
Amortization of actuarial loss (gain)  
 
21
 
     36     
 
43
 
     72 
Net benefit cost  
 
66
 
     82     
 
132
 
     164 
     
Other postretirement benefits:                          
Service cost  
 
5
 
     7     
 
11
 
     14 
Interest cost  
 
6
 
     5     
 
12
 
     11 
Amortization of actuarial loss (gain)  
 
3
 
     4     
 
5
 
     8 
Net benefit cost  
 
14
 
     16     
 
28
 
     33 
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  
  

                                                
       Second Quarter     
Six Months
to June 30
 
 millions of Canadian dollars  
2022
  2021     
2022
  2021 
Debt-related interest  
 
20
 
     20     
 
32
 
     41 
Capitalized interest  
 
(10)
 
     (7)     
 
(15)
      (15) 
Net interest expense  
 
10
 
     13     
 
17
 
     26 
Other interest  
 
1
 
     -     
 
1
 
     1 
Total financing  
 
11
 
     13     
 
18
 
     27 

In June 2022, the company reduced its existing $500 million committed long-term line of credit to $250 million and extended the maturity date to June 30, 2023. The company also extended one of its $250 million committed long-term lines of credit to June 30, 2024. The company has not drawn on any of its outstanding $750 million of available credit facilities.
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IMPERIAL OIL LIMITED

6.
Long-term debt

     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 
  

         
   As at
June 30		     As at
Dec 31		 
  millions of Canadian dollars  
2022
     2021 
 Long-term debt  
 
4,447
 
     4,447 
 Finance leases
 
 
 
597
 
  
607
 
 Total long-term debt  
 
5,044
 
     5,054 
7.
Other long-term obligations

    
   As at
Sept 30		   As at
Dec 31		   As at
June 30		     As at
Dec 31		 
millions of Canadian dollarsmillions of Canadian dollars  2017   2016   
2022
     2021 
 

Employee retirement benefits(a)

Employee retirement benefits(a)

   1,410    1,645   
 
1,323
 
     1,362 

Asset retirement obligations and other environmental liabilities(b)

Asset retirement obligations and other environmental liabilities(b)

   1,577    1,544   
 
1,733
 
     1,713 

Share-based incentive compensation liabilities

Share-based incentive compensation liabilities

   138    139   
 
119
 
     79 
Operating lease liability
(c)
  
 
122
 
     147 

Other obligations

Other obligations

   573    328   
 
156
 
     596 
 

Total other long-term obligations

Total other long-term obligations

   3,698    3,656   
 
3,453
 
     3,897 

 
(a)Total recorded employee retirement benefits obligations also included $58$56 million in current liabilities (2016(2021 - $58$56 million).
(b)Total asset retirement obligations and other environmental liabilities also included $108$102 million in current liabilities (2016(2021 - $108$102 million).

8.(c)Common sharesTotal operating lease liability also included $86 million in current liabilities (2021 - $102 million). In addition to the total operating lease liability, additional undiscounted commitments for leases not yet commenced totalled $11 million (2021 - $5 million).

     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,

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IMPERIAL OIL LIMITED
8.
Financial and derivative instruments
Financial instruments
The fair value of the company’s financial instruments is determined by reference to various market data and other appropriate valuation techniques. There are no material differences between the fair value of the company’s financial instruments and the recorded carrying value. At June 30, 2022 and December 31, 2021, the fair value of long-term debt ($4,447 million, excluding finance lease obligations) was primarily a level 2 measurement.
Derivative instruments
The company’s size, strong capital structure and the complementary nature of the Upstream, Downstream and Chemical businesses reduce the company’s enterprise-wide risk from changes in commodity prices and currency exchange rates. In addition, the company uses commodity-based contracts, including derivative instruments to manage commodity price risk and to generate returns from trading. Commodity contracts held for trading purposes are presented in the Consolidated statement of income on a net basis in the line “Revenues”. The company does not designate derivative instruments as a hedge for hedge accounting purposes.
Credit risk associated with the company’s derivative position is mitigated by several factors, including the use of derivative clearing exchanges and the quality of and financial limits placed on derivative counterparties. The company maintains a system of controls that includes the authorization, reporting and monitoring of derivative activity.
The net notional long/(short) position of derivative instruments was:
         
   As at
June 30		   As at
Dec 31		 
 thousands of barrels  
2022
   2021 
Crude  
 
8,680
 
   7,390 
Products  
 
(930
) 
   (560) 
Realized and unrealized gain or (loss) on derivative instruments recognized in the Consolidated statement of income is included in the following lines on a
before-tax
basis:
  Second Quarter         Six Months
to June 30		 
 millions of Canadian dollars
 
2022
  2021       
2022
   2021 
Revenues  
 
(51
) 
  (9) 
 
 
 
 
 
 
(14
) 
  (9) 
Purchases of crude oil and products  
 
-
 
  (19) 
 
 
 
 
 
 
-
 
      (33) 
Total  
 
(51
) 
  (28) 
 
 
 
 
 
 
(14
) 
  (42) 
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IMPERIAL OIL LIMITED
The estimated fair value of derivative instruments, and the related hierarchy level for the fair value measurement is as follows:
                             
 At June 30, 2022
 millions of Canadian dollars
   Fair value   Effect of  Effect of  Net 
                   counterparty  collateral  carrying 
    Level 1   Level 2   Level 3   Total   netting  netting  value 
 Assets
 
                            
Derivative assets
(a)
  
 
35
 
  
 
25
 
  
 
-
 
  
 
60
 
  
 
(44
) 
 
 
(3
) 
 
 
13
 
       
 Liabilities
 
                            
Derivative liabilities
(b)
  
 
32
 
  
 
47
 
  
 
-
 
  
 
79
 
  
 
(44
) 
 
 
-
 
 
 
35
 
(a)Included in the Consolidated balance sheet line: “Materials, supplies and prepaid expenses”, “Accounts receivable - net” and “Other assets, including intangibles - net”.
(b)Included in the Consolidated balance sheet line: “Accounts payable and accrued liabilities” and “Other long-term obligations”.
                             
 At December 31, 2021 
 millions of Canadian dollars 
   Fair value   Effect of  Effect of  Net 
                   counterparty  collateral  carrying 
    Level 1   Level 2   Level 3   Total   netting  netting  value 
 Assets
                                 
Derivative assets
(a)
   24    17    -    41    (31)   -   10 
        
 Liabilities
                                 
Derivative liabilities
(b)
   31    12    -    43    (31)   (7)   5 
 (a)Included in the Consolidated balance sheet line: “Materials, supplies and prepaid expenses”, “Accounts receivable - net” and “Other assets, including intangibles - net”.
 (b)Included in the Consolidated balance sheet line: “Accounts payable and accrued liabilities” and “Other long-term obligations”.
At June 30, 2022 and December 31, 2021, the company had $16 million and $6 million, respectively, of collateral under a seriesmaster netting arrangement not offset against the derivatives on the Consolidated balance sheet in “Accounts receivable - net”, primarily related to initial margin requirements.
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IMPERIAL OIL LIMITED
9.
Common shares
           As of             As of 
   June 30     Dec 31 
 thousands of shares
  
2022
 
 
    
2021 
         
Authorized  
 
1,100,000
 
 
 
   1,100,000 
Common shares outstanding  
 
636,676
 
 
   678,080 
The
12-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.

The current12-month

normal course issuer bid program that was announcedin place during the first quarter of 2022 came into effect June 29, 2021. The program enabled the company to purchase up to a maximum of 35,583,671 common shares (5 percent of the total shares on June 22, 2017,15, 2021), which included 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 participated to maintain its ownership percentage at approximately 69.6 percent. The program completed on January 31, 2022 as a result of the company purchasing the maximum allowable number of shares under the program.
The current
12-month
normal course issuer bid program came into effect June 29, 2022 under which Imperial plans towill continue its existing share purchase program. The program enables the company to purchase up to a maximum of 25,395,92731,833,809 common shares (3(5 percent of the total shares on June 13, 2017),15, 2022) 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. Imperial plans to accelerate its share purchases under the normal course issuer bid program and anticipates repurchasing all remaining allowable shares by the end of October 2022. Purchase plans may be modified at any time without prior notice.
On May 6, 2022, the company commenced a substantial issuer bid pursuant to which it offered to purchase for cancellation up to $2.5 billion of its common shares through a modified Dutch auction and proportionate tender offer. The resultssubstantial issuer bid was completed on June 15, 2022, with the company taking up and paying for 32,467,532 common shares at a price of these activities are$77.00 per share, for an aggregate purchase of $2.5 billion and 4.9 percent of Imperial’s issued and outstanding shares 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 close of business on May 2, 2022. This included 22,597,379 shares purchased from Exxon Mobil Corporation by way of a proportionate tender to maintain its ownership percentage at approximately 69.6 percent.

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, 2020   734,077   1,357 
Issued under employee share-based awards   7   - 
Purchases at stated value   (56,004)   (105) 
Balance as at December 31, 2021   678,080   1,252 
Issued under employee share-based awards   -   - 
Purchases at stated value   (41,404)   (75) 
Balance as at June 30, 2022
  
 
636,676
 
 
 
1,177
 
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IMPERIAL OIL LIMITED
The following table provides the calculation of net incomebasic 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 
                  

share and the dividends declared by the company on its outstanding common shares:

          Six Months 
   Second Quarter      to June 30 
 
 
 
2022
   2021      
2022
   2021 
Net income (loss) per common share - basic
                   
Net income (loss)
(millions of Canadian dollars)
  
 
2,409
 
   366   
 
3,582
 
   758 
Weighted average number of common shares outstanding
(millions of shares)
  
 
663.0
 
   724.1   
 
666.7
 
   729.1 
Net income (loss) per common share
(dollars)
  
 
3.63
 
   0.51   
 
5.37
 
   1.04 
Net income (loss) per common share - diluted
                    
Net income (loss)
(millions of Canadian dollars)
  
 
2,409
 
   366   
 
3,582
 
   758 
Weighted average number of common shares outstanding
(millions of shares)
  
 
663.0
 
   724.1   
 
666.7
 
   729.1 
Effect of employee share-based awards
(millions of shares)
  
 
1.4
 
   1.7   
 
1.4
 
   1.7 
Weighted average number of common shares outstanding, assuming dilution
(millions of shares)
  
 
664.4
 
   725.8   
 
668.1
 
   730.8  
Net income (loss) per common share
(dollars)
  
 
3.63
 
   0.50   
 
5.36
 
   1.04 
Dividends per common share - declared
(dollars)
  
 
0.34
 
   0.27   
 
0.68
 
   0.49 
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IMPERIAL OIL LIMITED

10.Other comprehensive income (loss) information

10. Other comprehensive income (loss) information

Changes in accumulated other comprehensive income (loss):

millions of Canadian dollars  2017  2016 

 

 

Balance at January 1

   (1,897)   (1,828) 

Post-retirement benefits liability adjustment:

   

Current period change excluding amounts reclassified from accumulated other comprehensive
income

   41   100 

Amounts reclassified from accumulated other comprehensive income

   106   108 

 

 

Balance at September 30

   (1,750)   (1,620) 

 

 

millions of Canadian dollars
  
 
    2022
 

 2021 
Balance at January 1  
 
(1,177
) 
    (1,989) 
Postretirement benefits liability adjustment:            
Current period change excluding amounts reclassified from accumulated other comprehensive income  
 
24
 
     54 
Amounts reclassified from accumulated other comprehensive income  
 
42
 
     66 
 Balance at June 30  
 
(1,111
) 
   (1,869) 
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).

     

             Six Months  
    Second Quarter    to June 30  
millions of Canadian dollars
  
 
2022
 
  2021    
 
    2022
 
   2021  
Amortization of postretirement benefits liability adjustment included in net benefit cost
(a)
  
 
(27
) 
  (44)  
 
(55)
 
  (88)  
(a) This accumulated other comprehensive income component is included in the computation of net benefit cost (note 4).
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 
  

11.Recently issued accounting standards

In May 2014,

              Six Months 
    Second Quarter    to June 30 
millions of Canadian dollars
  
 
2022
 
   2021   
 
    2022
 
   2021 
Postretirement benefits liability adjustments:
                    
Postretirement benefits liability adjustment (excluding amortization)  
 
-
 
   -   
 
8
 
   17 
Amortization of postretirement benefits liability adjustment included in net benefit cost  
 
6
 
   11   
 
13
 
   22 
     
Total  
 
6
 
   11   
 
21
 
   39  
11. Divestment activities
Jointly with ExxonMobil Canada, Imperial signed an agreement in the Financial Accounting Standards Board (FASB) issued a new standard,Revenue from Contractssecond quarter with Customers.Whitecap Resources Inc. for the sale of its interests in XTO Energy Canada which include assets in the Montney and Duvernay areas of central Alberta, for approximately $1.9 billion ($0.9 billion Imperial’s share), subject to working capital and other adjustments. The standard establishes a single revenue recognition modeltransaction is expected to close prior to the end of the third quarter of 2022, subject to regulatory approvals. Imperial’s net assets held for all contractssale associated with customers, eliminates industry specific requirementsthis transaction include about $0.9 billion of total assets (about $0.8 billion of property, plant and expands disclosure requirements. The standard is required to be adopted beginning January 1, 2018.equipment) and about $0.1 billion total liabilities in the Upstream segment. The company estimates that total cash flow from the divestment will be approximately $0.9 billion, and expects to adopt the standard using the modified retrospective method, under which prior years’ results are not restated, but supplemental information on the impactrecognize a gain at closing of the new standard will be included in the 2018 results. The impact from the standard is not expectedapproximately $0.2 billion. Estimated gain and net cash flow could change due to have a material effect on the company’s financial statements.

In February 2016, the FASB issued a new standard, Leases. The standard requires all leases with an initial term greater than one year be recorded on the balance sheet as a lease assetmarket factors, working capital adjustments, tax impacts and lease liability. The standard is required to be adopted beginning January 1, 2019. Imperial is evaluating the standard and its effect on the company’s financial statements and plans to adopt it in 2019.

closing dates.

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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 lineNon-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 vs. third quarter 2016

The company’s

Non-GAAP
financial measures and other specified financial measures
Certain measures included in this document are not prescribed by U.S. Generally Accepted Accounting Principles (GAAP). These measures constitute
“non-GAAP
financial measures” under Securities and Exchange Commission Regulation G, and “specified financial measures” under National Instrument
52-112
Non-GAAP
and Other Financial Measures Disclosure
of the Canadian Securities Administrators.
Reconciliation of these
non-GAAP
financial measures to the most comparable GAAP measure, and other information required by these regulations, have been provided.
Non-GAAP
financial measures and specified financial measures are not standardized financial measures under GAAP and do not have a standardized definition. As such, these measures may not be directly comparable to measures presented by other companies, and should not be considered a substitute for GAAP financial measures.
Net income (loss) excluding identified items
Net income (loss) excluding identified items is a
non-GAAP
financial measure that is total net income for the third quarter(loss) excluding individually significant
non-operational
events with an absolute corporate total earnings impact of 2017 was $371at least $100 million or $0.44per-share onin a diluted basis, compared to thegiven quarter. The net income (loss) impact of $1,003an identified item for an individual segment in a given quarter may be less than $100 million when the item impacts several segments or $1.18per-share forseveral periods. The most directly comparable financial measure that is disclosed in the same period last year. Third quarter 2016 results included a $716 million gain from the sale of retail sites.

Upstream recordedfinancial statements is net income (loss) within the company’s Consolidated statement of income. Management uses these figures to improve comparability of the underlying business across multiple periods by isolating and removing significant

non-operational
events from business results. The company believes this view provides investors increased transparency into business results and trends, and provides investors with a view of the business as seen through the eyes of management. Net income (loss) excluding identified items is not meant to be viewed in isolation or as a substitute for net income (loss) as prepared in accordance with U.S. GAAP. All identified items are presented on an
after-tax
basis.
Reconciliation of net income (loss) excluding identified items
There were no identified items in the thirdsecond quarter or
year-to-date
2022 and 2021.
20
Table of $62 million, comparedContents
IMPERIAL OIL LIMITED
Current business environment
During the
COVID-19
pandemic, industry investment to maintain and increase production capacity was restrained to preserve capital, resulting in underinvestment and supply tightness as demand for petroleum and petrochemical products recovered. Across late 2021 and the first half of 2022, this dynamic, along with supply chain constraints and a continuation of demand recovery, led to a net losssteady increase in oil and natural gas prices and refining margins. In the first half of $26 million2022, tightness in the same periodoil and natural gas markets was further exacerbated by Russia’s invasion of 2016. ResultsUkraine and subsequent sanctions imposed upon business and other activities in the third quarterRussia. The price of 2017 reflected the impact of higher Canadian crude oil and certain regional natural gas indicators increased to levels not seen for several years. By the end of the second quarter, high prices had led to a tempering of demand for some products. Commodity and product prices are expected to remain volatile given the current global economic and geopolitical uncertainty affecting supply and demand.
Operating results
Second quarter 2022 vs. second quarter 2021
   Second Quarter 
millions of Canadian dollars, unless noted
  
 
2022
 
               2021  
Net income (loss) (U.S. GAAP)
  
 
2,409
 
   366  
Net income (loss) per common share, assuming dilution
(dollars)
  
 
3.63
 
   0.50  
Upstream
Net income (loss) factor analysis
millions of Canadian dollars
Price – Higher realizations of about $190 million and higher Kearl volumes 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.

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

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

Imperial’s average Canadian dollar realizations for bitumen and synthetic crudes increased generally in line with the North American benchmarks, adjusted for changesincreases in exchange ratesmarker prices, driven primarily by increased demand and transportation costs. Bitumensupply chain constraints. Average bitumen realizations averaged $39.02increased by $55.01 per barrel forgenerally in line with WCS, and synthetic crude oil realizations increased by $63.87 per barrel generally in line with WTI.

Volumes – Higher volumes primarily driven by the thirdtiming of turnaround activities at Syncrude, partially offset by downtime at Kearl.
Royalty – Higher royalties primarily driven by improved commodity prices.
Other – Includes higher operating expenses of about $180 million, primarily higher energy prices, partially offset by favourable foreign exchange impacts of about $60 million.
Marker prices and average realizations
   Second Quarter 
Canadian dollars, unless noted
  
 
2022
 
   2021 
West Texas Intermediate (US$ per barrel)
  
 
108.52
 
           66.17 
Western Canada Select (US$ per barrel)
  
 
95.80
 
   54.64  
WTI/WCS Spread (US$ per barrel)
  
 
12.72
 
   11.53 
Bitumen
(per barrel)
  
 
112.27
 
   57.26 
Synthetic crude oil
(per barrel)
  
 
144.67
 
   80.80 
Average foreign exchange rate (US$)
  
 
0.78
 
   0.81 
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IMPERIAL OIL LIMITED
Production
    Second Quarter 
thousands of barrels per day
  
 
2022
 
           2021 
Kearl
(Imperial’s share)
  
 
159
 
   181 
Cold Lake
  
 
144
 
   142 
Syncrude
(a)
  
 
81
 
   47 
           
Kearl total gross production
(thousands of barrels per day)
  
 
224
 
   255 
(a) In the second quarter of 2017, an increase of $8.86 per barrel versus the third quarter of 2016. Synthetic crude realizations averaged $61.14 per barrel, an increase of $2.17 per barrel for the same period of 2016.

Gross2022, Syncrude gross production of Cold Lake bitumen averaged 163,000included about 2 thousand barrels per day in the third quarter, up from 157,000of bitumen (2021 - rounded to 0 thousand barrels per day inday) that was exported to the same period last year. The higheroperator’s facilities using an existing interconnect pipeline.

Lower production at Kearl was mainly due toprimarily a result of downtime.
Higher production at Syncrude was primarily a result of the timing of the steam cycles.

Gross productionturnaround activities.

Downstream
Net income (loss) factor analysis
millions of Kearl bitumen averaged 182,000 barrels per day in the third quarter (129,000 barrels Imperial’s share) up from 159,000 barrels per day (113,000 barrels Imperial’s share) during the third quarterCanadian dollars
Margins – Higher margins primarily reflect improved market conditions.
Other – Includes lower turnaround impacts of 2016. Higher production was mainly the result of improved reliability.

The company’s share of gross production from Syncrude averaged 74,000 barrels per day, compared to 85,000 barrels per day in the third quarter of 2016. Repairs associated with the Syncrude Mildred Lake upgrader fire 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.

Downstream net income was $292about $130 million, in the third quarter, compared to $1,002 million in the same period of 2016. Earnings decreased mainly due toreflecting 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 margins of about $140 million.

Refinery throughput averaged 385,000 barrels per day, compared to 407,000 barrels per day in the third quarter of 2016. Reduced throughput reflects increased turnaround activity associated with the Nanticokeactivities at Strathcona 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.

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 months 2017 vs. nine months 2016

Net income in the first nine months of 2017 was $627 million, or $0.74per-share on a diluted basis versus net income of $721 million or $0.85 per-share in the first nine months of 2016.

Upstream recorded a net loss of $225 million in the first nine months of 2017, compared to a net loss of $764 million from the same period of 2016. Results reflected the impact of higher Canadian crude oil realizations of about $940 million and higher Kearl volumes of about $50 million. These impacts were partially offset by higher royaltiesoperating expenses of about $150$70 million, lower Syncrude and conventional volumes of about $130 million, including the absence of production at Norman Wells,primarily higher energy costs of about $90 million, and higher operating expenses at Syncrude of about $90 million.

West Texas Intermediate averaged US$49.40 per barrelcosts.

Refinery utilization and petroleum product sales
 
    Second Quarter 
thousands of barrels per day, unless noted
  
 
2022
 
             2021 
Refinery throughput
  
 
412
 
   332  
Refinery capacity utilization
(percent)
  
 
96
 
   78 
Petroleum product sales
  
 
480
 
   429 
Improved refinery throughput in the first nine monthssecond quarter of 2017, up from US$41.54 per barrel2022 was primarily driven by reduced turnaround activity and increased demand.
Improved petroleum product sales in the same periodsecond quarter of 2016. Western Canada Select averaged US$37.57 per barrel and US$27.74 per barrel respectively for the same periods. The WTI / WCS differential narrowed to 24 percent in the first nine months of 2017, from 33 percent in the same period of 2016.

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 in the first nine months of 2017, an increase of about US$0.01 from the same period of 2016.

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 per barrel for the first nine months of 2017, an increase of $14.05 per barrel versus the same period of 2016. Synthetic crude realizations averaged $64.37 per barrel, an increase of $10.92 per barrel from the same period of 2016.

Gross production of Cold Lake bitumen averaged 161,000 barrels per day in the first nine months of 2017, compared to 162,000 barrels per day from the same period of 2016.

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

During the first nine months of 2017, the company’s share of gross production from Syncrude averaged 56,000 barrels per day, compared to 61,000 barrels per day from the same period of 2016. Syncrude year to date production was impacted by the March 2017 fire at the Syncrude Mildred Lake upgrader and planned maintenance. In 2016, production was impacted by the Alberta wildfires and planned maintenance.

Downstream net income was $750 million, compared to $1,393 million from the same period of 2016. Earnings decreased2022 were mainly due to the absenceincreased demand.

Chemicals
Net income (loss) factor analysis
millions of a $719 million gain from the saleCanadian dollars
22
Table 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 from the sale of a surplus property and higher industry refining margins of about $90 million.

Refinery throughput averaged 381,000 barrels per day in the first nine months of 2017, up from 351,000 barrels per day from the same period of 2016. Capacity utilization increased to 90 percent from 83 percent in the same period of 2016, reflecting reduced turnaround maintenance activity.

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

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

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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

other

    Second Quarter 
millions of Canadian dollars
  
 
2022  
 
           2021  
Net income (loss) (U.S. GAAP)
  
 
    (23) 
 
        (50) 
Liquidity and capital resources

                               
    Second Quarter 
millions of Canadian dollars
  
 
2022
 
          2021 
Cash flow generated from (used in):
         
Operating activities
  
 
2,682
 
  852 
Investing activities
  
 
(230
) 
  (207) 
Financing activities
  
 
(2,734
) 
  (1,336) 
Increase (decrease) in cash and cash equivalents
  
 
(282
) 
  (691) 
   
Cash and cash equivalents at period end
  
 
2,867
 
  776 
Cash flow generated from operating activities was $837 millionprimarily reflects higher Upstream realizations and improved Downstream margins.
Cash flow used 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 in the same period of 2016, reflecting lower proceeds from asset sales.

primarily reflects higher additions to property, plant and equipment.

Cash flow used in financing activities primarily reflects:
   
      
   
      
 
    Second Quarter 
millions of Canadian dollars, unless noted
  
 
2022 
 
           2021 
Dividends paid
  
 
228 
 
   161 
Per share dividend paid
(dollars)
  
 
0.34 
 
     0.22  
Share repurchases
(a)
  
 
2,500 
 
   1,171 
Number of shares purchased
(millions)
(a)
  
 
32.5 
 
   29.5 
(a) Share repurchases were made under the company’s substantial issuer bid that commenced on May 6, 2022 and expired on June 10, 2022. Includes shares purchased from Exxon Mobil Corporation by way of a proportionate tender to maintain its ownership percentage at approximately 69.6 percent.
 
On May 6, 2022, the company commenced a substantial issuer bid pursuant to which it offered to purchase for cancellation up to $2.5 billion of its common shares through a modified Dutch auction and proportionate tender offer. The substantial issuer bid was $393 millioncompleted on June 15, 2022, with the company taking up and paying for 32,467,532 common shares at a price of $77.00 per share, for an aggregate purchase of $2.5 billion and 4.9 percent of Imperial’s issued and outstanding shares as the close of business on May 2, 2022. This included 22,597,379 shares purchased from Exxon Mobil Corporation by way of a proportionate tender to maintain its ownership percentage at approximately 69.6 percent.
On June 27, 2022, 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 31,833,809 common shares during the period June 29, 2022 to June 28, 2023. 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 third quarter, comparedpast, 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 28, 2023. Imperial plans to accelerate its share purchases under the normal course issuer bid program, and anticipates repurchasing all remaining allowable shares by the end of October 2022. Purchase plans may be modified at any time without prior notice.
In June 2022, the company reduced its existing $500 million committed long-term line of credit to $250 million and extended the maturity date to June 30, 2023. The company also extended one of its $250 million committed long-term lines of credit to June 30, 2024. The company has not drawn on any of its outstanding $750 million of available credit facilities.
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IMPERIAL OIL LIMITED
Six months 2022 vs. six months 2021
    Six Months 
millions of Canadian dollars, unless noted
  
 
2022
 
             2021 
Net income
(loss) (U.S. GAAP)
  
 
3,582
 
   758 
Net income (loss) per common share, assuming dilution
(dollars)
  
 
5.36
 
     1.04  
Upstream
Net income (loss) factor analysis
millions of Canadian dollars
Price – Higher realizations were generally in line with $1,724increases in marker prices, driven primarily by increased demand and supply chain constraints. Average bitumen realizations increased by $49.08 per barrel generally in line with WCS, and synthetic crude oil realizations increased by $58.99 per barrel generally in line with WTI.
Volumes – Lower volumes primarily driven by downtime at Kearl, partially offset by the timing of turnaround activities at Syncrude.
Royalty – Higher royalties primarily driven by improved commodity prices.
Other – Includes higher operating expenses of about $220 million, inprimarily higher energy prices, partially offset by favourable foreign exchange impacts of about $60 million.
Average realizations and marker prices
    Six Months 
Canadian dollars, unless noted
  
 
2022
 
             2021 
West Texas Intermediate
(US$ per barrel)
  
 
101.77
 
   62.22 
Western Canada Select
(US$ per barrel)
  
 
88.13
 
   50.14 
WTI/WCS Spread
(US$ per barrel)
  
 
13.64
 
   12.08 
Bitumen
(per barrel)
  
 
101.53
 
   52.45 
Synthetic crude oil
(per barrel)
  
 
131.41
 
   72.42 
Average foreign exchange rate
(US$)
  
 
0.79
 
   0.80 
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IMPERIAL OIL LIMITED
Production
    Six Months 
thousands of barrels per day
  
 
2022
 
           2021 
Kearl
(Imperial’s share)
  
 
146
 
   180 
Cold Lake
  
 
142
 
   141 
Syncrude
(a)
  
 
79
 
   63 
           
Kearl total gross production
(thousands of barrels per day)
  
 
205
 
   253 
(a) In 2022, Syncrude gross production included about 2 thousand barrels per day of bitumen (2021 - rounded to 0 thousand barrels per day) that was exported to the third quarteroperator’s facilities using an existing interconnect pipeline.
Lower production at Kearl was primarily a result of 2016,downtime.
Higher production at Syncrude was primarily a result of the timing of turnaround activities.
Downstream
Net income (loss) factor analysis
millions of Canadian dollars
Margins – Higher margins primarily reflect improved market conditions.
Other – Includes lower turnaround impacts of about $130 million, reflecting the absence of debt repayments. Dividends paidturnaround activities at Strathcona refinery, partially offset by higher operating expenses of about $90 million, primarily higher energy costs.
Refinery utilization and petroleum product sales
 
    Six Months 
thousands of barrels per day, unless noted
  
 
2022
 
             2021 
Refinery throughput
  
 
406
 
   348 
Refinery capacity utilization
(percent)
  
 
95
 
   81 
Petroleum product sales
  
 
464
 
   421 
Improved refinery throughput in the third quarter2022 was primarily driven by reduced turnaround activity and increased demand.
Improved petroleum product sales in 2022 primarily reflects increased demand.
Chemicals
Net income (loss) factor analysis
millions of 2017 were $136 million. Theper-share dividend paid in the third quarter was $0.16, up from $0.15 in the same periodCanadian dollars
25
Table 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.

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IMPERIAL OIL LIMITED
Corporate and other
   Six Months 
millions of Canadian dollars
  
 
2022
 
           2021 
Net income (loss) (U.S. GAAP)
  
 
(77)
 
        (96) 
Liquidity and capital resources
   Six Months 
millions of Canadian dollars
  
 
2022
 
          2021 
Cash flow generated from (used in):
   
Operating activities
  
 
4,596
 
  1,897 
Investing activities
  
 
(509
) 
  (354) 
Financing activities
  
 
(3,373
) 
  (1,538) 
Increase (decrease) in cash and cash equivalents
  
 
714
 
  5 
Cash flow generated from operating activities was $1,683 million in the first nine months of 2017, compared with $1,264 million in 2016, reflectingprimarily reflects higher earnings, excluding the impact of asset sales, partially offset by unfavourableUpstream realizations, improved Downstream margins and favourable working capital effects.

Investing activitiesimpacts.

Cash flow 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 lowerprimarily reflects higher additions to property, plant and equipment.

Cash flow used in financing activities was $787 million in the first nine monthsprimarily reflects:
   Six Months 
millions of Canadian dollars, unless noted
  
 
2022
 
           2021 
Dividends paid
  
 
413
 
   323 
Per share dividend paid
(dollars)
  
 
0.61
 
     0.44  
Share repurchases
(a)
  
 
2,949
 
   1,171 
Number of shares purchased
(millions) (a)
  
 
41.4
 
   29.5 
(a) Share repurchases were made under the company’s normal course issuer bid program and substantial issuer bid that commenced on May 6, 2022 and expired on June 10, 2022. Includes shares purchased from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid, and by way of a proportionate tender under the company’s substantial issuer bid.
 
26
Table 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. Theper-share dividend paid in the first nine months of 2017 was $0.46, up from $0.43 for the same period of 2016.

During the first nine months of 2017 the company purchased about 10 million shares for $377 million, including shares purchased from Exxon Mobil Corporation.

Recently issued accounting standards

In May 2014, the Financial Accounting Standards Board (FASB) issued a new standard,Revenue from Contracts with Customers. 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. The standard requires all leases with an initial term greater than one year be recorded on the balance sheet as a lease asset and lease liability. The standard is required to be adopted beginning January 1, 2019. Imperial is evaluating the standard and its effect on the company’s financial statements and plans to adopt it in 2019.

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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 lineNon-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.

Forward-looking statements

Statements in this report regardingof future events or conditions in this report, including projections, targets, expectations, estimates, and business plans are forward-looking statements. Forward-looking statements can be identified by words such as believe, anticipate, intend, propose, plan, goal, seek, project, predict, target, estimate, expect, strategy, outlook, schedule, future, continue, likely, may, should, will and similar references to future periods. Forward-looking statements in this release include, but are not limited to, references to the use of derivative instruments and effectiveness of risk mitigation; purchases under the normal course issuer bid, including plans to accelerate completion by the end of October 2022; the sale of XTO Energy Canada and expected closing timing, adjustments and estimated cash flow and gain; and the expectation of commodity and product price volatility.
Forward-looking statements are based on the company’s current expectations, estimates, projections and assumptions at the time the statements are made. Actual future financial and operating results, including expectations and assumptions concerning demand growth and energy source, supply and mix; production rates, growth and mix; project plans, timing, costs, technical evaluations and capacities and the company’s ability to effectively execute on these plans and operate its assets; for shareholder returns, assumptions such as cash flow forecasts, financing sources and capital structure, participation of the company’s majority shareholder and the results of periodic and ongoing evaluation of alternate uses of capital; capital and environmental expenditures; that regulatory approvals related to the sale of XTO Energy Canada will be received in a timely manner and the sale will close as anticipated; the adoption and impact of new facilities or technologies on reductions to GHG emissions intensity; receipt of regulatory approvals; applicable laws and government policies, including with respect to climate change and GHG emissions reductions; progression of
COVID-19
and its impacts on Imperial’s ability to operate its assets; and commodity prices, foreign exchange rates and general market conditions could differ materially duedepending on a number of factors.
These factors include global, regional or local changes in supply and demand for oil, natural gas, and petroleum and petrochemical products and resulting price, differential and margin impacts, including foreign government action with respect to supply levels and prices, the impact of market conditions,
COVID-19
on demand and the occurrence of wars; availability and allocation of capital; unanticipated technical or operational difficulties; operational hazards and risks; the receipt, in a timely manner, of regulatory and third-party approvals; project management and schedules and timely completion of projects; management effectiveness and disaster response preparedness, including business continuity plans in response to
COVID-19;
availability and performance of third-party service providers, including in light of restrictions related to
COVID-19;
the results of research programs and new technologies, and ability to bring new technologies to commercial scale on a cost-competitive basis; environmental risks inherent in oil and gas exploration and production activities; political or regulatory events, including changes in law or governmentalgovernment policy changessuch as tax laws, production curtailment and actions in operating conditionsresponse to
COVID-19;
cybersecurity incidents, including increased reliance on remote working arrangements; currency exchange rates; general economic conditions; and costs, changesother factors discussed in project schedules, operatingItem 1A risk factors and Item 7 management’s discussion and analysis of financial condition and results of operations of Imperial Oil Limited’s most recent annual report on Form
10-K
and subsequent interim reports.
Forward-looking statements are not guarantees of future performance demand forand involve a number of risks and uncertainties, some that are similar to other oil and gas commercial negotiationscompanies and some that are unique to Imperial. Imperial’s actual results may differ materially from those expressed or other technicalimplied by its forward-looking statements and economic factors.

readers are cautioned not to place undue reliance on them. Imperial undertakes no obligation to update any forward-looking statements contained herein, except as required by applicable law.

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.
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IMPERIAL OIL LIMITED

Item 3. Quantitative and qualitative disclosures about market risk

Information about market risks for the ninesix months ended SeptemberJune 30, 2017,2022, does not differ materially from that discussed on page 2233 of the company’s annual report on Form
10-K
for the year ended December 31, 2016.

2021 and on page 23 of the Form 10-Q for the quarter ended March 31, 2022.

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 SeptemberJune 30, 2017.2022. 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.

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IMPERIAL OIL LIMITED

PART II. OTHER INFORMATION

Item 1.  Legal proceedings
Imperial has elected to use a $1 million threshold for disclosing environmental proceedings.

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) (c)		 
 
 
 
 
April 2022
  
 
-
 
  
 
-
 
  
 
-
 
  
 
-
 
(April 1 - April 30)
        
May 2022
  
 
-
 
  
 
-
 
  
 
-
 
  
 
-
 
(May 1 - May 31)
        
June 2022
  
 
32,467,532
 
  
 
77.00
 
  
 
32,467,532
 
  
 
-
 
(June 1 - June 28)
        
(June 29 - June 30)
  
 
-
 
  
 
-
 
  
 
-
 
  
 
31,833,809
 
(a)
On June 22, 2017,23, 2021, the company announced by news release that it had received final approval from the Toronto Stock Exchange for a normal course issuer bid to continue its existing share purchase program. The program enabled the company to purchase up to a maximum of 35,583,671 common shares during the period June 29, 2021 to June 28, 2022. This maximum included 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 at approximately 69.6 percent. The program ended on January 31, 2022 as a result of the company purchasing the maximum allowable number of shares under the program.
(b)
On June 27, 2022, 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 25,395,92731,833,809 common shares during the period June 27, 201729, 2022 to June 26, 2018, which28, 2023. 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, 2018.28, 2023. Imperial plans to accelerate its share purchases under the normal course issuer bid program and anticipates repurchasing all remaining allowable shares by the end of October 2022.
(b)(c)In its most recent quarterly earnings release,
On May 6, 2022, the company stated that fourth quarter 2017commenced a substantial issuer bid pursuant to which it offered to purchase for cancellation up to $2.5 billion of its common shares through a modified Dutch auction and proportionate tender offer. The substantial issuer bid was completed on June 15, 2022, with the company taking up and paying for 32,467,532 common shares at a price of $77.00 per share, purchases are anticipatedfor an aggregate purchase of $2.5 billion and 4.9 percent of Imperial’s issued and outstanding shares as the close of business on May 2, 2022. This included 22,597,379 shares purchased from Exxon Mobil Corporation by way of a proportionate tender to equalmaintain its ownership percentage at approximately $250 million. Purchase plans may be modified at any time without prior notice.69.6 percent.

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

Purchase plans may be modified at any time without prior notice.

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IMPERIAL OIL LIMITED

Item 6.
Exhibits

(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 Rule
13a-14(a).

(32.1) Certification by the chief executive officer of the company pursuant to Rule
13a-14(b)
and 18 U.S.C. Section 1350.

(32.2) Certification by the chief financial officer of the company pursuant to Rule
13a-14(b)
and 18 U.S.C. Section 1350.

(101) Interactive Data Files (formatted as Inline XBRL).
(104) Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
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IMPERIAL OIL LIMITED

SIGNATURES

Pursuant to the requirements of the
Securities 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 3, 2022

/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
  (Principal Accounting Officer) administration, and controller
(Principal accounting officer)
Date: October 31, 2017  

August 3, 2022

/s/ Cathryn Walker

  (Signature) (Signature)
 Cathryn Walker
  Assistant Corporate Secretary Assistant corporate secretary

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