2019 Identification No.) Revenues and other income Revenues(a) Investment and other income(note 5) Total revenues and other income Expenses Exploration Purchases of crude oil and products(b) Production and manufacturing(c) Selling and general(c) Federal excise tax Depreciation and depletion Non-service pension and postretirement benefit(d) Financing(note 7) Total expenses Income (loss) before income taxes Income taxes Net income (loss) Per share information(Canadian dollars) (a) Amounts from related parties included in revenues. (b) Amounts to related parties included in purchases of crude oil and products. (c) (d) millions of Canadian dollars Net income (loss) Other comprehensive income (loss), net of income taxes Postretirement benefits liability adjustment (excluding amortization) Amortization of postretirement benefits liability adjustment Total other comprehensive income (loss) Comprehensive income (loss) Assets Cash Accounts receivable, less estimated doubtful accounts(a) Inventories of crude oil and products Materials, supplies and prepaid expenses(b) less accumulated depreciation and depletion Notes and loans payable(c) Accounts payable and accrued liabilities(a) (note 9) Income taxes payable Depreciation and depletion (Gain) loss on asset sales(note 5) Deferred income taxes and other Accounts receivable Inventories, materials, supplies and prepaid expenses Income taxes payable Accounts payable and accrued liabilities All other items - net (a) (b) As reported As adjusted As reported As adjusted Production and manufacturing Selling and general Non-service pension and postretirement benefit Revenues and other income Revenues(a) Intersegment sales Investment and other income(note 5) Expenses Exploration Purchases of crude oil and products Production and manufacturing(b) Selling and general(b) Federal excise tax Depreciation and depletion Non-service pension and postretirement benefit(b) Financing(note 7) Total expenses Income (loss) before income taxes Income taxes Net income (loss) Cash flows from (used in) operating activities Capital and exploration expenditures(c) Revenues and other income Revenues(a) Intersegment sales Investment and other income(note 5) Expenses Exploration Purchases of crude oil and products Production and manufacturing(b) Selling and general(b) Federal excise tax Depreciation and depletion Non-service pension and postretirement benefit(b) Financing(note 7) Total expenses Income (loss) before income taxes Income taxes Net income (loss) Cash flows from (used in) operating activities Capital and exploration expenditures(c) Revenues and other income Revenues(a) Intersegment sales Investment and other income(note 5) Expenses Exploration Purchases of crude oil and products Production and manufacturing(b) Selling and general(b) Federal excise tax Depreciation and depletion Non-service pension and postretirement benefit(b) Financing(note 7) Total expenses Income (loss) before income taxes Income taxes Net income (loss) Cash flows from (used in) operating activities Capital and exploration expenditures(c) Total assets as at June 30 Revenues and other income Revenues(a) Intersegment sales Investment and other income(note 5) Expenses Exploration Purchases of crude oil and products Production and manufacturing(b) Selling and general(b) Federal excise tax Depreciation and depletion Non-service pension and postretirement benefit (b) Financing(note 7) Total expenses Income (loss) before income taxes Income taxes Net income (loss) Cash flows from (used in) operating activities Capital and exploration expenditures(c) Total assets as at June 30 Gain (loss) on asset sales, after tax(a) Current service cost Interest cost Expected return on plan assets Amortization of prior service cost Amortization of actuarial loss (gain) Net periodic benefit cost Current service cost Interest cost Amortization of actuarial loss (gain) Net periodic benefit cost Total financing Total long-term debt Total other long-term obligations Common shares outstanding Balance as at June 30, 2018 Six Months to June 30 Weighted average number of common shares outstanding, assuming dilution(millions of shares) Net income (loss) per common share(dollars) share and the dividends declared by the company on its outstanding common shares: Six Months to June 30 Balance at January 1 Postretirement benefits liability adjustment: Current period change excluding amounts reclassified Amounts reclassified from accumulated other comprehensive income Balance at June 30 Six Months to June 30 Amortization of postretirement benefits liability adjustment Six Months to June 30 Postretirement benefits liability adjustment (excluding amortization) Amortization of postretirement benefits liability adjustment included 2018 of 2018. Second quarter 2019 results include a favourable impact, largely million. 2018. of 2018. due to improved reliability. disruption. Sarnia tower incident. 2018. Reduced throughput was mainly due to the impact of a planned turnaround and the tower incident at Sarnia, partially offset by the absence of the 2018 planned turnaround at Strathcona. lower refinery throughput. 2018 2018. 2019 results include a favourable impact, largely about $80 million. 2018. in 2018. in 2018. The company’s average Canadian dollar realizations for synthetic crude declined generally in line with WTI, adjusted for changes in exchange rates and transportation costs. Synthetic crude realizations averaged $74.77 per barrel, compared to $81.24 per barrel from the same period in 2018. 2018. 2018. Higher production was mainly due to improved reliability. disruption. $70 million. 2018. Reduced throughput was mainly due to the impact of a planned turnaround and the tower incident at Sarnia, partially offset by the absence of the 2018 planned turnaround at Strathcona. 2018. earnings partially offset by working capital effects. 2018. million following the increase of its share purchase program. 2018. earnings. program. 2020. 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. Quantitative and qualitative disclosures about market risk Controls and procedures Average price paid (Canadian dollars) Total number of as part of publicly announced plans or programs Maximum number yet be purchased under the plans or programs (a) (b) April 2018 (April 1 - April 30) May 2018 (May 1 - May 31) June 2018 (June 1 - June 26) (a) (June 27 - June 30) (b)2018CANADA 98-0017682 Calgary, Alberta, Canada T2C 5N1 9190 days. and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulationand post such files). 20182019 was 802,679,927. Page 3 3 3 4 5 6 7 8 1719 2325 2325 2426 242425 26 27 28 2017.2018. Note that numbers may not add due to rounding.Item 1. Financial statements Six Months Second Quarter to June 30 millions of Canadian dollars 2018 2017 2018 2017 9,516 6,985 17,416 13,943 27 48 61 246 9,543 7,033 17,477 14,189 1 - 9 22 6,537 4,642 11,317 8,975 1,646 1,495 3,077 2,840 273 198 467 401 412 421 809 815 358 352 735 744 26 33 53 66 26 17 49 31 9,279 7,158 16,516 13,894 264 (125 ) 961 295 68 (48 ) 249 39 196 (77 ) 712 256 Net income (loss) per common share - basic(note 10) 0.24 (0.09 ) 0.86 0.30 Net income (loss) per common share - diluted(note 10) 0.24 (0.09 ) 0.86 0.30 Dividends per common share - declared 0.19 0.16 0.35 0.31 1,769 1,008 3,142 2,045 1,374 706 2,266 1,315 Amounts to related parties included in production and manufacturing, and selling and general expenses. 156 147 297 288 Prior year amounts have been reclassified. See note 2 for additional details.
to June 30 Six Months Second Quarter to June 30 2018 2017 2018 2017 196 (77 ) 712 256 - - (19 ) 41
included in net periodic benefit costs 33 36 67 72 33 36 48 113 229 (41 ) 760 369
to June 30 ) As at As at June 30 Dec 31 millions of Canadian dollars 2018 2017 Current assets 873 1,195 2,625 2,712 1,221 1,075 456 425 Total current assets 5,175 5,407 Investments and long-term receivables(b) 860 865 Property, plant and equipment, 53,272 52,778 (19,028 ) (18,305 ) Property, plant and equipment, net 34,244 34,473 Goodwill 186 186 Other assets, including intangibles, net(note 9) 925 670 Total assets 41,390 41,601 Liabilities Current liabilities 202 202 3,923 3,877 89 57 Total current liabilities 4,214 4,136 Long-term debt(d) (note 8) 4,992 5,005 Other long-term obligations(e) (note 9) 3,943 3,780 Deferred income tax liabilities 4,476 4,245 Total liabilities 17,625 17,166 Shareholders’ equity Common shares at stated value(f) (note 10) 1,483 1,536 Earnings reinvested(note 11) 24,049 24,714 Accumulated other comprehensive income (loss)(note 12) (1,767 ) (1,815 ) Total shareholders’ equity 23,765 24,435 Total liabilities and shareholders’ equity 41,390 41,601
June 30
Dec 31 ) ) (a) Accounts receivable, less estimated doubtful accounts included net amounts receivable from related parties of $344$1,200 million (2017(2018 - $509$666 million).(b) Investments and long-term receivables included amounts from related parties of $56$249 million (2017(2018 - $19$146 million).(c) Notes and loans payable included amounts to related parties of $75 million (2017(2018 - $75 million).(d) Long-term debt included amounts to related parties of $4,447 million (2017(2018 - $4,447 million).(e) Other long-term obligations included amounts to related parties of $38$0 million (2017(2018 - $60$15 million).(f) Number of common shares authorized and outstanding were 1,100 million and 803763 million, respectively (2017(2018 - 1,100 million and 831783 million, respectively).
to June 30 ) ) ) ) ) ) ) ) ) ) Six Months Inflow (outflow) Second Quarter to June 30 millions of Canadian dollars 2018 2017 2018 2017 Operating activities Net income (loss) 196 (77 ) 712 256 Adjustments fornon-cash items: 358 352 735 744 (9 ) (31 ) (19 ) (213 ) 24 (37 ) 209 163 Changes in operating assets and liabilities: (340 ) 146 87 424 40 (45 ) (177 ) (117 ) 16 16 32 (448 ) 439 (30 ) 24 (240 ) 135 198 241 277 Cash flows from (used in) operating activities 859 492 1,844 846 Investing activities Additions to property, plant and equipment(b) (357 ) (320 ) (728 ) (442 ) Proceeds from asset sales(note 5) 9 39 21 222 Loan to equity company (31 ) - (37 ) - Cash flows from (used in) investing activities (379 ) (281 ) (744 ) (220 ) Financing activities Reduction in capitalized lease obligations(note 8) (7 ) (6 ) (13 ) (13 ) Dividends paid (132 ) (127 ) (266 ) (254 ) Common shares purchased(note 10) (893 ) (127 ) (1,143 ) (127 ) Cash flows from (used in) financing activities (1,032 ) (260 ) (1,422 ) (394 ) Increase (decrease) in cash (552 ) (49 ) (322 ) 232 Cash at beginning of period 1,425 672 1,195 391 Cash at end of period(c) 873 623 873 623 (a) Included contribution to registered pension plans. (57 ) (58 ) (101 ) (98 ) (b) The impact of carbon emission programs are included in additions to property, plant and equipment, and all other items, net. (c) Cash is composed of cash in bank and cash equivalents at cost. Cash equivalents are all highly liquid securities with maturity of three months or less when purchased. The information in the notes to consolidated financial statements is an integral part of these statements.
to June 30 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) (57 ) ) ) 20172018 annual report on Form Prior year’s data has been reclassified in certain cases to conform to the current presentation basis.2018,2019, are not necessarily indicative of the operations to be expected for the full year.IMPERIAL OIL LIMITED2018,2019, Imperial adopted the Financial Accounting Standards Board’s standard,Revenue from Contracts with Customers,establishesrequires all leases to be recorded on the balance sheet as a single revenueright of use asset and a lease liability. The company used a transition method that applies the new lease standard at January 1, 2019. The company applied a policy election to exclude short-term leases from the balance sheet recognition model for alland also elected certain practical expedients at adoption. As permitted, Imperial did not reassess whether existing contracts with customers, eliminates industry and transaction specific requirements, and expands disclosure requirements. The standard was adopted usingare or contain leases, the modified retrospective method, under which prior year results are not restated, but supplemental information is providedlease classification for any material impactsexisting leases, initial direct costs for any existing lease and whether existing land easements and right of the standard on 2018 results. Theway, which were not previously accounted for as leases, are or contain a lease. At adoption of the standard did not have a material impactlease accounting change, on any of the lines reported in the company’s consolidated financial statements. The cumulative effect of adoption of the new standard was de minimis. The company did not elect any practical expedients that require disclosure. See note 4 for additional details.Effective January 1, 2018, Imperial adopted2019, an operating lease liability of $298 million was recorded and the Financial Accounting Standards Board’s standard update, Compensation – Retirement Benefits (Topic 715):Improving the Presentationoperating lease right of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The update requires separate presentation of the service cost component from other components of net benefit costs. The other components are reported in a new line on the company’s consolidated statement of income,“Non-service pension and postretirement benefit”. Imperial elected to use the practical expedient which uses the amounts disclosed in the pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements, as it is impracticable to determine the amounts capitalized in those periods. Beginning in 2018, the other components of net benefit costs are included in the Corporate and other expenses. The“Non-service pension and postretirement benefit” line reflects thenon-service costs, which primarily includes interest costs, expected return on plan assets, and amortization of actuarial gains and losses, that were previously included in “Production and manufacturing” and “Selling and general” expenses. Additionally, only the service cost component of net benefit costs is eligible for capitalization in situations where it is otherwise appropriate to capitalize employee costs in connection with the construction or production of an asset.The impact of the retrospective presentation change on Imperial’s consolidated statement of income for the period ended June 30, 2018 is shown below. Second Quarter Six Months to millions of Canadian dollars 2017 June 30, 2017 Change Change 1,525 (30) 1,495 2,900 (60) 2,840 201 (3) 198 407 (6) 401 - 33 33 - 66 66 Effective January 1, 2018, Imperial adopted the Financial Accounting Standards Board’s standard update, Financial Instruments - Overall (Subtopic825-10):Recognition and Measurement of Financial Assets and Financial Liabilities. The standard requires investments in equity securities other than consolidated subsidiaries and equity method investments to be measured at fair value, with changes in the fair value recognized through net income. The company elected a modified approach for equity securities that do not have a readily determinable fair value. This modified approach measures investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.asset was $298 million. There was no cumulative earnings effect related to the adoptionadjustment.Second Quarter Upstream Downstream Chemical millions of Canadian dollars 2018 2017 2018 2017 2018 2017 2,318 1,787 6,870 4,909 328 289 650 289 332 242 74 62 3 5 19 42 - (2 ) 2,971 2,081 7,221 5,193 402 349 1 - - - - - 1,573 1,026 5,803 4,014 216 193 1,106 1,051 488 426 52 48 - (7 ) 197 185 23 19 - - 412 421 - - 300 298 49 47 4 3 - - - - - - - - - - - - 2,980 2,368 6,949 5,093 295 263 (9 ) (287 ) 272 100 107 86 (3 ) (86 ) 71 22 29 22 (6 ) (201 ) 201 78 78 64 (10 ) 117 776 302 116 100 183 91 88 39 7 3 Second Quarter Corporate and other Eliminations Consolidated millions of Canadian dollars 2018 2017 2018 2017 2018 2017 - - - - 9,516 6,985 - - (1,056 ) (593 ) - - 5 3 - - 27 48 5 3 (1,056 ) (593 ) 9,543 7,033 - - - - 1 - - - (1,055 ) (591 ) 6,537 4,642 - - - - 1,646 1,525 54 6 (1 ) (2 ) 273 201 - - - - 412 421 5 4 - - 358 352 26 - - - 26 - 26 17 - - 26 17 111 27 (1,056 ) (593 ) 9,279 7,158 (106 ) (24 ) - - 264 (125 ) (29 ) (6 ) - - 68 (48 ) (77 ) (18 ) - - 196 (77 ) (23 ) (27 ) - - 859 492 6 10 - - 284 143 Intersegment sales ) ) ) ) ) ) ) ) ) ) ) ) ) (a) Included export sales to the United States of $1,561$(2017(2018 - $1,045 $(b) As part of the implementation of Accounting Standard Update, Compensation – Retirement Benefits (Topic 715), beginning January 1, 2018, Corporate and other includes allnon-service pension and postretirement benefit expense. Prior to 2018, the majority of these costs were allocated to the operating segments. See note 2 for additional details.(c)Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to capitalfinance leases, additional investments and acquisitions. CAPEX excludes the purchase of carbon emission credits.Six Months to June 30 Upstream Downstream Chemical millions of Canadian dollars 2018 2017 2018 2017 2018 2017 4,307 3,498 12,477 9,883 632 562 1,307 907 694 551 147 129 4 10 41 233 - (1 ) 5,618 4,415 13,212 10,667 779 690 9 22 - - - - 2,947 2,142 10,097 8,023 418 394 2,118 2,024 856 775 103 101 - (4 ) 370 373 44 41 - - 809 815 - - 618 634 100 95 7 6 - - - - - - - 4 - - - - 5,692 4,822 12,232 10,081 572 542 (74 ) (407 ) 980 586 207 148 (24 ) (120 ) 258 128 56 39 (50 ) (287 ) 722 458 151 109 327 425 1,366 358 199 77 389 194 145 73 11 7 34,781 35,527 5,090 4,334 408 384 Six Months to June 30 Corporate and other Eliminations Consolidated millions of Canadian dollars 2018 2017 2018 2017 2018 2017 - - - - 17,416 13,943 - - (2,148 ) (1,587 ) - - 16 4 - - 61 246 16 4 (2,148 ) (1,587 ) 17,477 14,189 - - - - 9 22 - - (2,145 ) (1,584 ) 11,317 8,975 - - - - 3,077 2,900 56 - (3 ) (3 ) 467 407 - - - - 809 815 10 9 - - 735 744 53 - - - 53 - 49 27 - - 49 31 168 36 (2,148 ) (1,587 ) 16,516 13,894 (152 ) (32 ) - - 961 295 (41 ) (8 ) - - 249 39 (111 ) (24 ) - - 712 256 (48 ) (14 ) - - 1,844 846 13 22 - - 558 296 1,438 1,071 (327 ) (211 ) 41,390 41,105 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) (a) Included export sales to the United States of $2,768$(2017(2018 - $1,944 $(b) As part of the implementation of Accounting Standard Update, Compensation – Retirement Benefits (Topic 715), beginning January 1, 2018, Corporate and other includes allnon-service pension and postretirement benefit expense. Prior to 2018, the majority of these costs were allocated to the operating segments. See note 2 for additional details.(c)Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to capitalfinance leases, additional investments and acquisitions. CAPEX excludes the purchase of carbon emission credits.(c) Effective January 1, 2019, Imperial adopted the Financial Accounting Standards Board’s standard, (d) The company removed $570 million from Total assets and corresponding liabilities associated with the Government of Ontario’s revocation of its cap and trade legislation. Accounting policy for revenue recognitionImperial generally sells crude oil, natural gas and petroleum and chemical products under short-term agreements at prevailing market prices. In some cases, products may be sold under long-term agreements, with periodic price adjustments to reflect market conditions.Revenue is recognized at the amount the company expects to receive when the customer has taken control, which is typically when title transfers and the customer has assumed the risks and rewards of ownership. The prices of certain sales are based on price indexes that are sometimes not available until the next period. In such cases, estimated realizations are accrued when the sale is recognized, and are finalized when final information is available. Such adjustments to revenue from performance obligations satisfied in previous periods are not significant. Payment for revenue transactions is typically due within 30 days. Future volume delivery obligations that are unsatisfied at the end of the period are expected to be fulfilled through ordinary production or purchases. These performance obligations are based on market prices at the time of the transaction and are fully constrained due to market price volatility.“Revenues” and “Accounts receivable, less estimated doubtful accounts” primarily arise from contracts with customers. Long-term receivables are primarily fromnon-customers. Contract assets are mainly from marketing assistance programs and are not significant. Contract liabilities are mainly customer prepayments, loyalty programs and accruals of expected volume discounts, and are not significant.5. Investment and other income Six Months Second Quarter to June 30 millions of Canadian dollars 2018 2017 2018 2017 Proceeds from asset sales 9 39 21 222 Book value of asset sales - 9 2 10 Gain (loss) on asset sales, before tax(a) 9 31 19 213 8 28 15 186 (a)The six months ended June 30, 2017 included a gain of $174 million ($151 million after tax) from the sale of surplus property in Ontario.6. Six Months Second Quarter to June 30 millions of Canadian dollars 2018 2017 2018 2017 Pension benefits: 60 54 120 109 75 79 151 158 (100 ) (101 ) (201 ) (202 ) 1 2 2 5 43 45 87 89 79 79 159 159 Other postretirement benefits: 4 4 8 8 6 6 11 12 1 2 3 4 11 12 22 24 IMPERIAL OIL LIMITED7. ) ) ) ) ) Six Months Second Quarter to June 30 millions of Canadian dollars 2018 2017 2018 2017 Debt-related interest 32 27 62 49 Capitalized interest (6 ) (10 ) (13 ) (22 ) Net interest expense 26 17 49 27 Other interest - - - 4 26 17 49 31 8. ) ) ) ) As at As at June 30 Dec 31 millions of Canadian dollars 2018 2017 Long-term debt 4,447 4,447 Capital leases 545 558 4,992 5,005
June 30
Dec 31 (a) Maturity analysis of finance lease liabilities is disclosed in note 8. millions of Canadian dollars Operating
leases Finance
leases Operating
leases Finance
leases Operating lease cost 37 74 Short-term and other (net of sublease rental income) 25 40 Amortization of right of use assets 14 27 Interest on lease liabilities 10 20 Total lease cost 62 24 114 47 millions of Canadian dollars Operating
leases Finance
leases Right of use assets Included in Other assets, including intangibles, net 261 Included in Property, plant and equipment, net 574 Total right of use assets 261 574 Lease liability due within one year Included in Accounts payable and accrued liabilities 118 38 Included in Notes and loans payable 25 Long-term lease liability Included in Other long-term obligations 141 - Included in Long-term debt 521 Total lease liability 259 584 millions of Canadian dollars, unless noted Operating
leases Finance
leases Maturity analysis of lease liabilities 2019 remaining months 68 55 2020 94 71 2021 46 50 2022 15 49 2023 13 48 2024 11 47 2025 and beyond 30 1,086 Total lease payments 277 1,406 Discount to present value (18 ) (822 ) Total lease liability 259 584 4 41 2.7 7.5 millions of Canadian dollars Operating
leases Finance
leases Operating
leases Finance
leases Cash paid for amounts included in the measurement of lease liabilities Cash flows from operating activities 37 73 Cash flows from financing activities 28 35 Non-cash right of use assets recorded for lease liabilities 298 In exchange for new lease liabilities during the period 34
Dec 31
2018 2019 (a) Net rental cost under cancelable and As at As at June 30 Dec 31 millions of Canadian dollars 2018 2017 Employee retirement benefits(a) 1,501 1,529 Asset retirement obligations and other environmental liabilities(b) 1,471 1,460 Share-based incentive compensation liabilities 129 99 Other obligations(c) 842 692 3,943 3,780 (a) Total recorded employee retirement benefits obligations also included $56$(2017(2018 - $56 $(b) Total asset retirement obligations and other environmental liabilities also included $101$(2017(2018 - $101 $(c) Included carbon emission program obligations. Carbon emission program credits areEffective January 1, 2019, Imperial adopted the Financial Accounting Standards Board’s standard,under other assets, including intangibles, net.on the balance sheet as a right of use asset and liability. The long-term lease liability for operating leases is included in Other long-term obligations (see note 8).On July 3,Governmentfair value of Ontario revoked its carbon emission cap and trade regulation, prohibiting all tradinglong-term debt ($10. As of As of June 30 Dec 31 thousands of shares 2018 2017 Authorized 1,100,000 1,100,000 802,680 831,242
June 30
2018 20182019 came into effect in June of 2017 and was amended on April 27, 2018. The program enabled the company to purchase up to a maximum of 42,326,54540,391,196 common shares (5(2017)2018), 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. Exxon Mobil Corporation participated to maintain its ownership percentage in Imperial at approximately 69.6 percent.company announced anothercurrenteffectivecame into effect June 27, 2018 and2019, under which Imperial will continue its existing share purchase program. The program enables the company to purchase up to a maximum of 40,391,19638,211,086 common shares (5 percent of the total shares on June 13, 2018)2019) 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. Thousands of
shares Millions of
dollars Balance as at December 31, 2016 847,599 1,566 Issued under employee share-based awards 2 - Purchases at stated value (16,359 ) (30 ) Balance as at December 31, 2017 831,242 1,536 Issued under employee share-based awards - - Purchases at stated value (28,562 ) (53 ) 802,680 1,483 ) ) ) ) share: Second Quarter 2018 2017 2018 2017 Net income (loss) per common share - basic Net income (loss)(millions of Canadian dollars) 196 (77 ) 712 256 Weighted average number of common shares outstanding(millions of shares) 816.1 847.0 822.6 847.3 Net income (loss) per common share(dollars) 0.24 (0.09 ) 0.86 0.30 Net income (loss) per common share - diluted Net income (loss)(millions of Canadian dollars) 196 (77 ) 712 256 Weighted average number of common shares outstanding(millions of shares) 816.1 847.0 822.6 847.3 Effect of employee share-based awards(millions of shares) 2.7 2.9 2.6 2.8 818.8 849.9 825.2 850.1 0.24 (0.09 ) 0.86 0.30 11. Earnings reinvested Second Quarter millions of Canadian dollars 2018 2017 2018 2017 Earnings reinvested at beginning of period 24,861 25,558 24,714 25,352 Net income (loss) for the period 196 (77 ) 712 256 Share purchases in excess of stated value (853 ) (121 ) (1,090 ) (121 ) Dividends declared (155 ) (136 ) (287 ) (263 ) Earnings reinvested at end of period 24,049 25,224 24,049 25,224 millions of Canadian dollars 2018 2017 (1,815 ) (1,897 )
from accumulated other comprehensive income (19 ) 41 67 72 (1,767 ) (1,784 ) ) ) ) ) ) Second Quarter millions of Canadian dollars 2018 2017 2018 2017
included in net periodic benefit cost(a) (46 ) (49 ) (92 ) (98 ) ) ) ) ) (a) This accumulated other comprehensive income component is included in the computation of net periodic benefit cost, (note 6)5). Second Quarter millions of Canadian dollars 2018 2017 2018 2017 Postretirement benefits liability adjustments: - - (7 ) 16
in net periodic benefit cost 13 13 25 26 Total 13 13 18 42 ) 2019,2020, Imperial will adopt the Financial Accounting Standards Board’s standard,Leasesupdate,842)326)all leases with an initial term greater than one yeara valuation allowance for credit losses be recordedrecognized for certain financial assets that reflects the current expected credit loss over the asset’s contractual life. The valuation allowance considers the risk of loss, even if remote and considers past events, current conditions and expectations of the future. Imperial is evaluating the standard and its effect on the balance sheet as a rightcompany’s financial statements.20182019 vs. second quarter 201720182019 was $1,212 million or $1.57 per share on a diluted basis, up from net income of $196 million or $0.24 per share on a diluted basis, an increase of $273 million compared to the net loss of $77 million or $0.09 per share, forin the same period last year.recorded a net lossincome was $985 million in the second quarter, reflecting the favourable impact associated with the decreased Alberta corporate income tax rate of $6$689 million. Excluding this impact, second quarter 2019 net income was $296 million, an increase of $302 million compared to a net loss of $201$6 million in the same period of 2017.2018. Improved results reflect higher volumes of about $310 million, primarily at Syncrude, Kearl and Norman Wells, as well as the impact of higher Canadian crude oil realizations of about $280 million, partially offset$80 million. Results were negatively impacted by higher royalty costs of about $50 million and higher operating expenses of about $60 million and higher royalties of about $50 million mainly associated with planned turnarounds.67.9159.91 per barrel in the second quarter of 2018, up2019, down from US$48.2067.91 per barrel in the same quarter of 2017.2018. Western Canada Select (WCS) averaged US$48.8149.31 per barrel and US$37.1848.81 per barrel respectively for the same periods. The WTI / WCS differential widenednarrowed during the second quarter of 2019 to average approximately US$11 per barrel for the quarter, compared to around US$19 per barrel in the same period of 2018.2018,2019, up from approximately US$11$48.90 per barrel in the same period of 2017.The Canadian dollar averaged US$0.78 in the second quarter of 2018, an increase of US$0.04 from the second quarter of 2017.Imperial’s2018. The company’s average Canadian dollar realizations for bitumen and synthetic crudes increasedcrude declined generally in line with WTI in the North American benchmarks,quarter, adjusted for changes in exchange rates and transportation costs. BitumenSynthetic crude realizations averaged $48.90$79.96 per barrel forin the second quarter of 2018, an increase of $10.68 per barrel versus the second quarter of 2017. Synthetic crude realizations averaged2019, compared to $86.31 per barrel an increase of $21.24 per barrel forin the same period of 2017.133,000135,000 barrels per day in the second quarter, compared to 160,000up from 133,000 barrels per day in the same period last year. Lower volumes were primarily due to planned maintenance and production timing.180,000207,000 barrels per day in the second quarter (128,000(147,000 barrels Imperial’s share), up from 171,000180,000 barrels per day (121,000(128,000 barrels Imperial’s share) duringin the second quarter of 2017.2018. Higher production was mainly the result of mining optimization, partially offset by planned turnaround activities.50,00080,000 barrels per day, up from 27,00050,000 barrels per day in the second quarter of 2017.2018. Higher production was mainly due to the absence of the Syncrude Mildred Lake upgrader fire that occurred in March 2017, partially offset by planned turnaround activities and a power disruption that occurred on June 20, 2018, resulting in a complete shutdown of all processing units for the remainder of the second quarter. Recoveryimpacts from the 2018 power outage is ongoing with partial production restored in July and return to full rates anticipated in September.$201$258 million in the second quarter, up from $78$201 million in the second quarter of 2017.2018. Earnings increased mainlyprimarily due to stronger marginslower net turnaround impacts of about $390$150 million partially offset by the impact of increased planned turnaround activityreliability events of about $200$70 million, andincluding the impact of a stronger Canadian dollar.363,000344,000 barrels per day, up from 358,000compared to 363,000 barrels per day in the second quarter of 2017.2018. Capacity utilization increasedwas 81 percent, compared to 86 percent from 85 percent in the second quarter of 2017.510,000477,000 barrels per day, up from 486,000compared to 510,000 barrels per day in the second quarter of 2017. Sales growth continues2018. Lower petroleum product sales were mainly due to be driven by optimization across the full Downstream value chain, and the expansion of Imperial’s logistics capabilities.IMPERIAL OIL LIMITEDof $78 million in the second quarter matched best-ever quarterly results. Earnings increased $14 million from the same period of 2017, benefitting from increased volumes and margins.Corporate and other expenses were $77was $38 million in the second quarter, compared to $18$78 million from the same quarter of 2018, primarily reflecting lower margins.2017, primarily due to higher share-based compensation charges. In addition, as part2018.20182019 vs. six months 201720182019 was $712$1,505 million, or $0.86$1.94 per share on a diluted basis, an increase of $456 million compared to aup from net income of $256$712 million or $0.30$0.86 per share in the first six months of 2017.recordednet income was $1,043 million for the first six months of the year, reflecting the favourable impact associated with the decreased Alberta corporate income tax rate of $689 million. Excluding this impact, 2019 net income was $354 million, an increase of $404 million compared to a net loss of $50 million in the first six months of 2018, compared to a net loss of $287 million from the same period of 2017.2018. Improved results reflect higher volumes of about $330 million, primarily at Syncrude, Kearl and Norman Wells, as well as the impact of higher Canadian crude oil realizations of about $350$260 million partially offsetand favourable foreign exchange impacts of about $60 million. Results were negatively impacted by the impact of higher operating costsexpenses of about $50$180 million mainly associated with planned turnarounds. Results also reflect the impact ofand higher royalties and the strengthening of the Canadian dollar compared to the prior year.65.4457.45 per barrel in the first six months of 2018, up2019, down from US$49.9665.44 per barrel in the prior year.same period of 2018. Western Canada Select averaged US$43.7445.88 per barrel and US$37.2243.74 per barrel respectively for the same periods. The WTI / WCS differential widenednarrowed to average approximately US$2212 per barrel in the first six months of 2018,2019, from approximatelyaround US$1322 per barrel in the same period of 2017.0.780.75 in the first six months of 2018, an increase2019, a decrease of about US$0.03$0.03 from the same period of 2017.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 $41.84 per barrel for the first six months of 2018,2019, supported primarily by lower diluent costs and an increase of $4.63in WCS. Bitumen realizations averaged $53.20 per barrel, versus 2017. Synthetic crude realizations averaged $81.24 per barrel, an increase of $14.24up from $41.84 per barrel from the same period of 2017.143,000140,000 barrels per day in the first six months of 2018,2019, compared to 159,000143,000 barrels per day fromin the same period of 2017. Lower volumes were primarily due to planned maintenance and production timing.181,000193,000 barrels per day in the first six months of 2018 (128,0002019 (137,000 barrels Imperial’s share) up from 177,000181,000 barrels per day (125,000(128,000 barrels Imperial’s share) fromin the same period of 2017.2018,2019, the company’s share of gross production from Syncrude averaged 57,00079,000 barrels per day, up from 46,00057,000 barrels per day fromin the same period of 2017.2018. Higher production was mainly due to the absence of the impact associated with the March 2017 fire at the Syncrude Mildred Lake upgrader, partially offset by planned turnaround activities and a power disruption that occurred on June 20, 2018, resulting in a complete shutdown of all processing units for the remainder of the second quarter. Recoveryimpacts from the 2018 power outage is ongoing with partial production restored in July and return to full rates anticipated in September.an increasefor the same period of $264 million versus the prior year. Higher earnings reflect stronger2018. Earnings were negatively impacted by lower margins of about $690$210 million, reliability events of about $130 million, including the Sarnia tower incident, and lower sales volumes of about $70 million. These factors were partially offset by the impact of increased plannedlower net turnaround activityimpacts of about $200$150 million the impact of a stronger Canadian dollarand favourable foreign exchange effects of about $60 million and the absence of the $151 million gain on the sale of a surplus property in 2017.386,000364,000 barrels per day in the first six months of 2018, up from 378,0002019, compared to 386,000 barrels per day fromin the same period of 2017.2018. Capacity utilization increasedwas 86 percent, compared to 91 percent from 90 percent in the same period of 2017.494,000477,000 barrels per day in the first six months of 2018, up from 486,0002019, compared to 494,000 barrels per day fromin the same period of 2017. Sales growth continues2018. Lower petroleum product sales were mainly due to be driven by optimization across the full Downstream value chain, and the expansionlower refinery throughput.$151$72 million up from $109 million in the first half of 2017, primarily due to higher margins and volumes.IMPERIAL OIL LIMITEDCorporate and other expenses were $111 million for the first six months of 2018,2019, compared to $24$151 million in the same period of 2017,2018, primarily due to higher share-based compensation charges. In addition, beginning January 1, 2018, reflecting lower margins.includes allnon-service pension and postretirement benefit expenses. Priorexpenses were $125 million in the first six months of 2019, compared to 2018,$111 million in the majoritysame period of these costs were allocated to the operating segments.$859$1,026 million in the second quarter, an increase of $367up from $859 million fromin the corresponding period in 2017,2018, reflecting higher earnings.$379$429 million in the second quarter, compared with $281$379 million used in the same period of 2017.$1,032$521 million in the second quarter, compared with $260$1,032 million used in the second quarter of 2017.2018. Dividends paid in the second quarter of 20182019 were $132$147 million. The per share dividend paid in the second quarter was $0.16,$0.19, up from $0.15$0.16 in the same period of 2017.2018. During the second quarter, the company, under its share purchase program, purchased about 9.8 million shares for $368 million, including shares purchased from Exxon Mobil Corporation. In the second quarter of 2018, the company purchased about 21.4 million shares for $893 million.$873$1,087 million at June 30, 2018,2019, versus $623$873 million at the end of second quarter 2017.$1,844$2,029 million in the first six months of 2018, compared with $8462019, up from $1,844 million fromin the same period of 2017,2018, primarily reflecting higher earnings and working capital effects.$744$892 million in the first six months of 2018,2019, compared with $220$744 million used in 2018, primarily reflecting higher additions to property, plant and equipment.2017, reflecting higher additions to property, plant and equipment, and lower proceeds from asset sales.Cash used in financing activities was $1,422 million in the first six months of 2018, compared with $394 million used in the same period of 2017.2018. Dividends paid in the first six months of 20182019 were $266$296 million. The per share dividend paid in the first six months of 20182019 was $0.32,$0.38, up from $0.30 from$0.32 in the same period of 2017.2018. During the first six months of 2019, the company, under its share purchase program, purchased about 19.8 million shares for $729 million, including shares purchased from Exxon Mobil Corporation. In the first six months of 2018, the company purchased about 28.6 million shares for $1,143 million including shares purchased from Exxon Mobil Corporation.On April 27, 2018,following the company announced by news release that it had received final approval from the Toronto Stock Exchange for an amendment toincrease of its normal course issuer bid to increase the number of common shares that it may purchase. Under the amendment, the number of common shares eligible forshare purchase increased to a maximum of 42,326,545 common shares during the period June 27, 2017 to June 26, 2018.22, 2018,21, 2019, the company announced by news release that it had received final approval from the Toronto Stock Exchange for a new normal course issuer bid and will continue its existing share purchase program. The program enables the company to purchase up to a maximum of 40,391,19638,211,086 common shares during the period June 27, 20182019 to June 26, 2019.2020. This maximum includes shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid. As in the past, Exxon Mobil Corporation has advised the company that it intends to participate to maintain its ownership percentage at approximately 69.6 percent. The program will end should the company purchase the maximum allowable number of shares, or on June 26, 2019.2019,2020, Imperial will adopt the Financial Accounting Standards Board’s standard,Leasesupdate,842)326)all leases with an initial term greater than one yeara valuation allowance for credit losses be recordedrecognized for certain financial assets that reflects the current expected credit loss over the asset’s contractual life. The valuation allowance considers the risk of loss, even if remote and considers past events, current conditions and expectations of the future. Imperial is evaluating the standard and its effect on the balance sheet as a rightcompany’s financial statements.in this report regardingof future events or conditions in this report, including projections, targets, expectations, estimates, and business plans are forward-looking statements. Disclosure related to the share purchase program and capital activities constitute forward-looking statements. Forward-looking statements are based on the company’s current expectations, estimates, projections and assumptions at the time the statements are made. Actual future financial and operating results, including expectations and assumptions concerning demand growth and energy source, supply and mix; commodity prices and foreign exchange rates; production rates, growth and mix; applicable laws and government policies; financing sources; and capital and environmental expenditures could differ materially due todepending on a number of factors. These factors include changes in the impactsupply of market conditions,and demand for crude oil, natural gas, and petroleum and petrochemical products and resulting price and margin impacts; transportation for accessing markets; political or regulatory events, including changes in law or governmental policy, changesgovernment policy; environmental risks inherent in operating conditions and costs, changes in project schedules, operating performance, demand for oil and gas commercial negotiationsexploration and production activities; environmental regulation; currency exchange rates; availability and allocation of capital; unanticipated operational disruptions; project management and schedules; operational hazards and risks; cybersecurity incidents; disaster response preparedness; and other factors discussed in Item 1A risk factors and Item 7 management’s discussion and analysis of financial condition and results of operations of Imperial Oil Limited’s most recent annual report on Formother technicalimplied by its forward-looking statements and economic factors.Item 3. 2018,2019, does not differ materially from that discussed on page 4925 of the company’s annual report on Form2017. The following table details those earnings sensitivities that have been updated from the fiscalyear-end to reflect current market conditions.Earnings Sensitivities (a)millions of Canadian dollars after taxOne dollar (U.S.) per barrel change in heavy crude oil prices+ (-)75Ten cents per thousand cubic feet decrease (increase) in natural gas prices+ (-)4One cent decrease (increase) in the value of the Canadian dollar versus the U.S. dollar+ (-) 100
2018.(a)Each sensitivity calculation shows the impact on net income resulting from a change in one factor, after tax and royalties and holding all other factors constant. These sensitivities have been updated to reflect current conditions. They may not apply proportionately to larger fluctuations.Item 4. 2018.2019. 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.Item 1.Legal proceedingsOn May 15, 2018, Imperial entered a guilty plea in the Ontario Court of Justice with respect to committing the offence of discharging or causing or permitting the discharge of a contaminant, namely coker stabilizer thermocracked gas and coker stabilizer thermocracked gas condensate, on June 11, 2015 from Imperial’s refinery in Sarnia, Ontario into the natural environment that caused or was likely to have caused an adverse effect contrary to section 14(1) of the Environmental Protection Act, R.S.O. 1990, c.E.19, as amended. Imperial is required to pay $650,000 plus a 25 percent victim fine surcharge.Item 2. Unregistered sales of equity securities and use of proceeds Total number of
shares purchased
per share
shares purchased
of shares that may 675,513 34.13 675,513 21,373,108 10,876,173 41.39 10,876,173 10,496,935 9,322,449 42.80 9,322,449 - 482,763 43.50 482,763 39,908,433 (c)
shares purchased
per share
shares purchased
as part of publicly
announced plans
or programs
of shares that may
yet be purchased
under the plans or
programs (a) On June 22, 2017, the company announced by news release that it had received final approval from the Toronto Stock Exchange for a Theand continuationprogram that was in place during the second quarter of its share purchase program.2019, came into effect on June 27, 2018. The program enabled the company to purchase up to a maximum of 25,395,92740,391,196 common shares during(5 percent of the periodtotal shares on June 27, 2017 to June 26, 2018,13, 2018), which includesincluded shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid. Exxon Mobil Corporation participated to maintain its ownership percentage in Imperial at approximately 69.6 percent.On April 27, 2018, the company announced by news release that it had received final approval from the Toronto Stock Exchange for an amendment to its normal course issuer bid to increase the number of common shares that it may purchase. Under the amendment, the number of common shares eligible for purchase increased to a maximum of 42,326,545 common shares during the period June 27, 2017 to June 26, 2018. No other provisions of the normal course issuer bid were changed.2018.2019. Upon expiration, the company had purchased a total of 41,152,059 shares (of the maximum 42,326,54540,391,196 shares available)allowed under the program.(b) On June 22, 2018,21, 2019, the company announced by news release that it had received final approval from the Toronto Stock Exchange for a new normal course issuer bid and will continue its existing share purchase program. The program enables the company to purchase up to a maximum of 40,391,19638,211,086 common shares during the period June 27, 20182019 to June 26, 2019.2020. This maximum includes shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid. As in the past, Exxon Mobil Corporation has advised the company that it intends to participate to maintain its ownership percentage at approximately 69.6 percent. The program will end should the company purchase the maximum allowable number of shares, or on June 26, 2019.2020.(c) In its most recent quarterly earnings release, the company stated that it currently anticipates exercising its share purchases uniformly over the duration of the program. Purchase plans may be modified at any time without prior notice. Item 6. (Registrant)Date: August 1, 2018/s/ Daniel E. Lyons------------------------------------------------ (Signature) Daniel E. Lyons Senior vice-president, finance andadministration, and controller (Principal accounting officer)Date: August 1, 2018/s/ ------------------------------------------------ (Signature)Cathryn Walker26