FORM

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

[

✓

]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2020~~2021

[

]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 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)

Registrant’s telephone number,

including

area code:

1-800-567-3776

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol	Name of each exchange on which registered
None		None

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 90 days.

YES

✓

The registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

YES

✓

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.


Large accelerated filer	✓	Smaller reporting company
Non-accelerated filer		Emerging growth company
Accelerated filer

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

The registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act of 1934).

YES

✓

The number of common shares outstanding, as of June 30, ~~2020~~2021 was ~~734,076,755.~~704,578,328.

IMPERIAL OIL LIMITED

Table of contents

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 shareholders’ equity			6
Consolidated statement of cash flows			7
Notes to the consolidated financial statements			8
Item 2. Management’s discussion and analysis of financial condition and results of operations			18 19
Item 3. Quantitative and qualitative disclosures about market risk			26 24
Item 4. Controls and procedures			26
24

PART II. OTHER INFORMATION			27 25
Item ~~1A. Risk factors~~1. Legal proceedings			27 25
Item 2. Unregistered sales of equity securities and use of proceeds			28 25
Item 6. Exhibits			29
26

SIGNATURES			30 27

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, ~~2019.~~2020. 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.

Table of Contents

IMPERIAL OIL LIMITED

PART I. FINANCIAL INFORMATION

Item 1.

Financial statements

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

       Six Months
       Second Quarter     to June 30
millions of Canadian dollars
2020
2019
2020
2019
Revenues and other income

Revenues
(a)


3,666

9,228

10,330

17,193
Investment and other income
(note 4)


44

33

70

50
Total revenues and other income


3,710

9,261

10,400

17,243
Expenses

Exploration


3

5

4

38
Purchases of crude oil and products
(b) (note 13)


2,115

5,662

6,341

10,557
Production and manufacturing
(c)


1,273

1,715

2,852

3,310
Selling and general
(c)


183

236

349

449
Federal excise tax and fuel charge


369

463

820

857
Depreciation and depletion
(note 13)


413

392

886

782
Non-service
pension and postretirement benefit


30

36

60

72
Financing
(d) (note 7)


17

23

36

51
Total expenses


4,403

8,532

11,348

16,116
Income (loss) before income taxes


(693
)
729

(948
)
1,127
Income taxes


(167
)
(483 )

(234
)
(378 )
Net income (loss)


(526
)
1,212

(714
)
1,505
Per share information (Canadian dollars)

Net income (loss) per common share - basic
(note 11)


(0.72
)
1.58

(0.97
)
1.95
Net income (loss) per common share - diluted
(note 11)


(0.72
)
1.57

(0.97
)
1.94
(a) Amounts from related parties included in revenues.


747

2,234

2,483

3,956
(b) Amounts to related parties included in purchases of crude oil and products.


396

908

1,135

1,636
(c) Amounts to related parties included in production and manufacturing, and selling and general expenses.


138

161

321

322
(d) Amounts to related parties included in financing, (note 7).


14

24

38

52


	Second Quarter					Six Months to June 30
millions of Canadian dollars	2021		2020			2021		2020
Revenues and other income
Revenues (a)		8,007		3,666			14,999		10,330
Investment and other income (note 3)		40		44			46		70
Total revenues and other income		8,047		3,710			15,045		10,400

Expenses
Exploration		2		3			4		4
Purchases of crude oil and products (b) (note 11)		4,867		2,115			8,754		6,341
Production and manufacturing (c)		1,569		1,273			3,054		2,852
Selling and general (c)		200		183			389		349
Federal excise tax and fuel charge		465		369			869		820
Depreciation and depletion (note 11)		450		413			944		886
Non-service pension and postretirement benefit		10		30			21		60
Financing (d) (note 5)		13		17			27		36
Total expenses		7,576		4,403			14,062		11,348

Income (loss) before income taxes		471		(693	)		983		(948	)

Income taxes		105		(167	)		225		(234	)

Net income (loss)		366		(526	)		758		(714	)

Per share information (Canadian dollars)

Net income (loss) per common share - basic (note 9)		0.51		(0.72	)		1.04		(0.97	)
Net income (loss) per common share - diluted (note 9)		0.50		(0.72	)		1.04		(0.97	)
(a) Amounts from related parties included in revenues.		1,405		747			2,913		2,483

(b) Amounts to related parties included in purchases of crude oil and products.		666		396			1,181		1,135

(c) Amounts to related parties included in production and manufacturing, and selling and general expenses.		106		138			222		321

(d) Amounts to related parties included in financing, (note 5).		10		14			21		38

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

Table of Contents

IMPERIAL OIL LIMITED

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

          Six Months
       Second Quarter        to June 30
millions of Canadian dollars
2020
2019
2020
2019
Net income (loss)


(526
)
1,212

(714
)
1,505
Other comprehensive income (loss), net of income taxes

Postretirement benefits liability adjustment (excluding amortization)


-

-

(114
)
18
Amortization of postretirement benefits liability adjustment included in net periodic benefit costs


34

28

68

55
Total other comprehensive income (loss)


34

28

(46
)
73

Comprehensive income (loss)


(492
)
1,240

(760
)
1,578


	Second Quarter					Six Months to June 30
millions of Canadian dollars	2021		2020			2021		2020
Net income (loss)		366		(526	)		758		(714	)

Other comprehensive income (loss), net of income taxes
Postretirement benefits liability adjustment (excluding amortization)		0-		0-			54		(114	)
Amortization of postretirement benefits liability adjustment included in net periodic benefit costs		33		34			66		68
Total other comprehensive income (loss)		33		34			120		(46	)

Comprehensive income (loss)		399		(492	)		878		(760	)

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

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IMPERIAL OIL LIMITED

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

As at
June 30

As at
Dec 31

millions of Canadian dollars
2020
2019
Assets

Current assets

Cash


233

1,718
Accounts receivable, less estimated doubtful accounts
(a) (note 5)


1,866

2,699
Inventories of crude oil and products
(note 13)


1,253

1,296
Materials, supplies and prepaid expenses


741

616
Total current assets


4,093

6,329
Investments and long-term receivables
(b) (note 5)


882

891
Property, plant and equipment,


55,358

54,868
less accumulated depreciation and depletion


(21,497
)
(20,665 )
Property, plant and equipment, net


33,861

34,203
Goodwill
(note 13)


166

186
Other assets, including intangibles, net


498

578
Total assets


39,500

42,187
Liabilities

Current liabilities

Notes and loans payable
(c)


228

229
Accounts payable and accrued liabilities
(a) (note 9)


3,176

4,260
Income taxes payable


-

106
Total current liabilities


3,404

4,595
Long-term debt
(d) (note 8)


4,965

4,961
Other long-term obligations
(note 9)


3,753

3,637
Deferred income tax liabilities


4,462

4,718
Total liabilities


16,584

17,911
Shareholders’ equity

Common shares at stated value
(e) (note 11)


1,357

1,375
Earnings reinvested


23,516

24,812
Accumulated other comprehensive income
(loss) (note 12)


(1,957
)
(1,911 )
Total shareholders’ equity


22,916

24,276
Total liabilities and shareholders’ equity


39,500

42,187


	As at June 30			As at Dec 31
millions of Canadian dollars	2021			2020
Assets
Current assets
Cash		776			771
Accounts receivable - net (a)		3,163			1,919
Inventories of crude oil and products		1,213			1,161
Materials, supplies and prepaid expenses		722			673
Total current assets		5,874			4,524
Investments and long-term receivables (b)		748			781
Property, plant and equipment,		56,257			55,771
less accumulated depreciation and depletion		(24,664	)		(23,737	)
Property, plant and equipment, net		31,593			32,034
Goodwill (note 11)		166			166
Other assets, including intangibles - net		558			526
Total assets		38,939			38,031

Liabilities
Current liabilities
Notes and loans payable (c)		197			227
Accounts payable and accrued liabilities (a) (note 7)		4,411			3,153
Income taxes payable		42			0-
Total current liabilities		4,650			3,380
Long-term debt (d) (note 6)		5,065			4,957
Other long-term obligations (note 7)		4,061			4,100
Deferred income tax liabilities		4,394			4,176
Total liabilities		18,170			16,613

Shareholders’ equity
Common shares at stated value (e) (note 9)		1,302			1,357
Earnings reinvested		21,336			22,050
Accumulated other comprehensive income (loss) (note 10)		(1,869	)		(1,989	)
Total shareholders’ equity		20,769			21,418

Total liabilities and shareholders’ equity		38,939			38,031

(a)	Accounts receivable ~~less estimated doubtful accounts~~- net included net amounts receivable from related parties of ~~$317~~$582 million ~~(2019~~(2020 - ~~$1,007~~$384 million).

(b)	Investments and long-term receivables included amounts from related parties of ~~$311~~$301 million ~~(2019~~(2020 - ~~$296~~$313 million).

(c)	Notes and loans payable included amounts to related parties of ~~$111~~$75 million ~~(2019~~(2020 - $111 million).

(d)	Long-term debt included amounts to related parties of $4,447 million ~~(2019~~(2020 - $4,447 million).

(e)	Number of common shares authorized and outstanding were 1,100 million and ~~734~~705 million, respectively ~~(2019~~(2020 - 1,100 million and ~~744~~734 million, respectively).

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

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IMPERIAL OIL LIMITED

Consolidated statement of shareholders’ equity (U.S. GAAP, unaudited)

       Second Quarter     Six Months
    to June 30
millions of Canadian dollars
2020
2019
2020
2019
Common shares at stated value
(note 11)

At beginning of period


1,357

1,427

1,375

1,446
Share purchases at stated value


-

(17 )

(18
)
(36 )
At end of period


1,357

1,410

1,357

1,410
Earnings reinvested

At beginning of period


24,204

24,364

24,812

24,560
Net income (loss) for the period


(526
)
1,212

(714
)
1,505
Share purchases in excess of stated value


-

(351 )

(256
)
(693 )
Dividends declared


(162
)
(169 )

(324
)
(316 )
Cumulative effect of accounting change
(note 5)


-

-

(2
)
-
At end of period


23,516

25,056

23,516

25,056
Accumulated other comprehensive income (loss)
(note 12)

At beginning of period


(1,991
)
(1,472 )

(1,911
)
(1,517 )
Other comprehensive income
(loss)


34

28

(46
)
73
At end of period


(1,957
)
(1,444 )

(1,957
)
(1,444 )
Shareholders’ equity at end of period


22,916

25,022

22,916

25,022


	Second Quarter						Six Months to June 30
millions of Canadian dollars	2021			2020			2021			2020
Common shares at stated value (note 9)
At beginning of period		1,357			1,357			1,357			1,375
Share purchases at stated value		(55	)		0-			(55	)		(18	)
At end of period		1,302			1,357			1,302			1,357

Earnings reinvested
At beginning of period		22,281			24,204			22,050			24,812
Net income (loss) for the period		366			(526	)		758			(714	)
Share purchases in excess of stated value		(1,116	)		0-			(1,116	)		(256	)
Dividends declared		(195	)		(162	)		(356	)		(324	)
Cumulative effect of accounting change		0-			-			0-			(2	)
At end of period		21,336			23,516			21,336			23,516

Accumulated other comprehensive income (loss) (note 10)
At beginning of period		(1,902	)		(1,991	)		(1,989	)		(1,911	)
Other comprehensive income (loss)		33			34			120			(46	)
At end of period		(1,869	)		(1,957	)		(1,869	)		(1,957	)

Shareholders’ equity at end of period		20,769			22,916			20,769			22,916

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

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IMPERIAL OIL LIMITED

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


Inflow (outflow)	Second Quarter						Six Months to June 30
Inflow ( o utflow)													Second Quarter						Six Months to June 30
millions of Canadian dollars	2020			2019			2020			2019			2021			2020			2021			2020
Operating activities
Net income (loss)		(526	)		1,212			(714	)		1,505			366			(526	)		758			(714	)
Adjustments for non-cash items:
Depreciation and depletion		413			392			866			782			450			413			944			866
Impairment of intangible assets (note 13)		-			-			20			-
(Gain) loss on asset sales (note 4)		(10	)		(11	)		(17	)		(6	)
Inventory write-down to current market value (note 13)		(281	)		-			-			-
Impairment of intangible assets (note 11)														0-			0-			-			20
(Gain) loss on asset sales (note 3)														(24	)		(10	)		(27	)		(17	)
Inventory write-down to current market value (note 11)														0-			(281	)		0-			0-
Deferred income taxes and other		(242	)		(471	)		(199	)		(475	)		76			(242	)		136			(199	)
Changes in operating assets and liabilities:
Accounts receivable		(310	)		99			833			(605	)		(775	)		(310	)		(1,244	)		833
Inventories, materials, supplies and prepaid expenses		117			(40	)		(82	)		(21	)		58			117			(101	)		(82	)
Income taxes payable		(2	)		(9	)		(106	)		(37	)		21			(2	)		42			(106	)
Accounts payable and accrued liabilities		(46	)		(175	)		(1,074	)		728			655			(46	)		1,239			(1,074	)
All other items - net (b)		71			29			80			158			25			71			150			80
Cash flows from (used in) operating activities		(816	)		1,026			(393	)		2,029			852			(816	)		1,897			(393	)

Investing activities
Additions to property, plant and equipment		(205	)		(394	)		(515	)		(825	)		(241	)		(205	)		(408	)		(515	)
Proceeds from asset sales (note 4)		40			14			49			36
Proceeds from asset sales (note 3)														35			40			42			49
Loans to equity companies - net		(7	)		(49	)		(14	)		(103	)		(1	)		(7	)		12			(14	)
Cash flows from (used in) investing activities		(172	)		(429	)		(480	)		(892	)		(207	)		(172	)		(354	)		(480	)

Financing activities
Reduction in finance lease obligations (note 8)		(5	)		(6	)		(12	)		(13	)
Short-term debt - net														0			0			(36	)		0
Reduction in finance lease obligations (note 6)														(4	)		(5	)		(8	)		(12	)
Dividends paid		(162	)		(147	)		(326	)		(296	)		(161	)		(162	)		(323	)		(326	)
Common shares purchased (note 11)		-			(368	)		(274	)		(729	)
Common shares purchased (note 9)														(1,171	)		0			(1,171	)		(274	)
Cash flows from (used in) financing activities		(167	)		(521	)		(612	)		(1,038	)		(1,336	)		(167	)		(1,538	)		(612	)

Increase (decrease) in cash		(1,155	)		76			(1,485	)		99			(691	)		(1,155	)		5			(1,485	)
Cash at beginning of period		1,388			1,011			1,718			988			1,467			1,388			771			1,718
Cash at end of period (a)		233			1,087			233			1,087			776			233			776			233

(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 contributions to registered pension plans.		(41	)		(57	)		(100	)		(98	)

Income taxes (paid) refunded.		1			23			(152	)		46
Interest (paid), net of capitalization.		(17	)		(23	)		(36	)		(51	)

(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 contributions to registered pension plans.			(42	)			(41	)			(70	)			(100	)



Income taxes (paid) refunded.	27		1		28		(152	)
Interest (paid), net of capitalization.	(14	)	(17	)	(27	)	(36	)

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

These unaudited consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (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 ~~2019~~2020 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.

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

The results for the six months ended June 30, ~~2020,~~2021, are not necessarily indicative of the operations to be expected for the full year.

All amounts are in Canadian dollars unless otherwise indicated.

~~2. Accounting changes~~

~~Effective January 1, 2020, Imperial adopted the Financial Accounting Standards Board’s update,~~

~~Financial Instruments—Credit Losses (Topic 326)~~

, as amended. The standard requires a valuation allowance for credit losses be recognized 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. The standard did not have a material impact on the company’s financial statements.

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IMPERIAL OIL LIMITED

3.2. Business segments

Second Quarter    Upstream              Downstream           Chemical
millions of Canadian dollars
2020
   2019
2020
   2019
2020
   2019
Revenues and other income

Revenues
(a)

908
   2,587
2,587
   6,375
171
   266
Intersegment sales

262
   1,116
124
   487
27
   48
Investment and other income
(note 4)

10
   4
27
   19
1
   -

1,180
   3,707
2,738
   6,881
199
   314
Expenses

Exploration

3
   5
-
   -
-
   -
Purchases of crude oil and products
(note 13)

512
   1,802
1,896
   5,338
119
   171
Production and manufacturing

884
   1,171
343
   474
46
   70
Selling and general

-
   -
135
   201
21
   23
Federal excise tax and fuel charge

-
   -
369
   463
-
   -
Depreciation and depletion
(note 13)

363
   338
40
   46
4
   3
Non-service
pension and postretirement benefit

-
   -
-
   -
-
   -
Financing
(note 7)

-
   -
-
   -
-
   -
Total expenses

1,762
   3,316
2,783
         6,522
190
   267
Income (loss) before income taxes

(582)
   391
(45)
   359
9
   47
Income taxes

(138)
   (594)
(13)
   101
2
   9
Net income (loss)

(444)
   985
(32)
   258
7
   38
Cash flows from (used in) operating activities

(968)
   585
88
   423
46
   52
Capital and exploration expenditures
(b)

145
   301
51
   111
2
   6
Second Quarter        Corporate and other    Eliminations         Consolidated
millions of Canadian dollars
2020
   2019
2020
   2019
2020
   2019
Revenues and other income

Revenues
(a)

-
   -    -    -    3,666          9,228
Intersegment sales

-
   -
(413)
   (1,651)
-
   -
Investment and other income
(note 4)

6
   10
-
   -
44
   33

6
   10
(413)
   (1,651)
3,710
   9,261
Expenses

Exploration

-
   -
-
   -
3
   5
Purchases of crude oil and products
(note 13)

-
   -
(412)
   (1,649)
2,115
   5,662
Production and manufacturing

-
   -
-
   -
1,273
   1,715
Selling and general

28
   14
(1)
   (2)
183
   236
Federal excise tax and fuel charge

-
   -
-
   -
369
   463
Depreciation and depletion
(note 13)

6
   5
-
   -
413
   392
Non-service
pension and postretirement

benefit

30
   36
-
   -
30
   36
Financing
(note 7)

17
   23
-
   -
17
   23
Total expenses

81
   78
(413)
   (1,651)
4,403
   8,532
Income (loss) before income taxes

(75)
   (68)
-
   -
(693)
   729
Income taxes

(18)
   1
-
   -
(167)
   (483)
Net income (loss)

(57)
   (69)
-
   -
(526)
   1,212
Cash flows from (used in) operating activities

1
   (34)
17
   -
(816)
   1,026
Capital and exploration expenditures
(b)

9
   11
-
   -
207
   429


Second Quarter	Upstream		Downstream		Chemical
millions of Canadian dollars	2021	2020	2021	2020	2021	2020
Revenues and other income
Revenues (a)	2,616	908	5,015	2,587	376	171
Intersegment sales	1,312	262	788	124	79	27
Investment and other income (note 3)	6	10	28	27	1	1
	3,934	1,180	5,831	2,738	456	199
Expenses
Exploration	2	3	0-	0-	0-	0-
Purchases of crude oil and products (note 11)	2,044	512	4,760	1,896	240	119
Production and manufacturing	1,166	884	357	343	46	46
Selling and general	0-	0-	142	135	22	21
Federal excise tax and fuel charge	0-	0-	465	369	0-	0-
Depreciation and depletion (note 11)	399	363	39	40	5	4
Non-service pension and postretirement benefit	0-	0-	0-	0-	0-	0-
Financing (note 5)	0-	0-	0-	0-	0-	0-
Total expenses	3,611	1,762	5,763	2,783	313	190
Income (loss) before income taxes	323	(582)	68	(45)	143	9
Income taxes	76	(138)	8	(13)	34	2
Net income (loss)	247	(444)	60	(32)	109	7
Cash flows from (used in) operating activities	595	(968)	136	88	111	46
Capital and exploration expenditures (b)	130	145	120	51	2	2

Second Quarter	Corporate and other		Eliminations		Consolidated
millions of Canadian dollars	2021	2020	2021	2020	2021	2020
Revenues and other income
Revenues (a)	0-	0-	0-	0-	8,007	3,666
Intersegment sales	0-	0-	(2,179)	(413)	0-	0-
Investment and other income (note 3)	5	6	0-	0-	40	44
	5	6	(2,179)	(413)	8,047	3,710
Expenses
Exploration	0-	0-	0-	0-	2	3
Purchases of crude oil and products (note 11)	0-	0-	(2,177)	(412)	4,867	2,115
Production and manufacturing	0-	0-	0-	0-	1,569	1,273
Selling and general	38	28	(2)	(1)	200	183
Federal excise tax and fuel charge	0-	0-	0-	0-	465	369
Depreciation and depletion (note 11)	7	6	0-	0-	450	413
Non-service pension and postretirement benefit	10	30	0-	0-	10	30
Financing (note 5)	13	17	0-	0-	13	17
Total expenses	68	81	(2,179)	(413)	7,576	4,403
Income (loss) before income taxes	(63)	(75)	0-	0-	471	(693)
Income taxes	(13)	(18)	0-	0-	105	(167)
Net income (loss)	(50)	(57)	0-	0-	366	(526)
Cash flows from (used in) operating activities	10	1	0-	17	852	(816)
Capital and exploration expenditures (b)	7	9	0-	0-	259	207

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IMPERIAL OIL LIMITED

(a)	Included export sales to the United States of ~~$739~~$1,544 million ~~(2019~~(2020 - ~~$2,152~~$739 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.

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

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IMPERIAL OIL LIMITED

Six Months to June 30    Upstream             Downstream           Chemical
millions of Canadian dollars
2020
   2019
2020
   2019
2020
   2019
Revenues and other income

Revenues
(a)

2,560
   4,827
7,383
   11,849
387
   517
Intersegment sales

984
   2,064
692
   935
71
   120
Investment and other income
(note 4)

10
   4
42
   29
1
   -

3,554
   6,895
8,117
   12,813
459
   637
Expenses



Exploration

4
   38
-
   -
-
   -
Purchases of crude oil and products
(note 13)

2,162
   3,388
5,665
   9,920
259
   364
Production and manufacturing

1,992
   2,327
751
   855
109
   128
Selling and general

-
   -
316
   380
46
   44
Federal excise tax and fuel charge

-
   -
820
   857
-
   -
Depreciation and depletion
(note 13)

780
   672
86
   92
8
   7
Non-service
pension and postretirement

benefit

-
   -
-
   -
-
   -
Financing
(note 7)

-
   -
-
   -
-
   -
Total expenses

4,938
   6,425
7,638
   12,104
422
   543
Income (loss) before income taxes

(1,384)
   470
479
   709
37
   94
Income tax expense (benefit)

(332)
   (573)
109
   194
9
   22
Net income (loss)

(1,052)
   1,043
370
   515
28
   72
Cash flows from (used in) operating activities

(504)
   865
110
   1,155
43
   100
Capital and exploration expenditures
(b)

376
   673
127
   240
11
   23
Total assets as at June 30 (note 13)

33,591
   35,059
4,683
   5,041
404
   451
Six Months to June 30        Corporate and other    Eliminations           Consolidated
millions of Canadian dollars
2020
   2019
2020
   2019
2020
   2019
Revenues and other income

Revenues
(a)

-
   -
-
   -
10,330
   17,193
Intersegment sales

-
   -
(1,747)
   (3,119)
-
   -
Investment and other income
(note 4)

17
   17
-
   -
70
   50

17
   17
(1,747)
   (3,119)
10,400
   17,243
Expenses

Exploration

-
   -
-
   -
4
   38
Purchases of crude oil and products
(note 13)

-
   -
(1,745)
   (3,115)
6,341
   10,557
Production and manufacturing

-
   -
-
   -
2,852
   3,310
Selling and general

(11)
   29
(2)
   (4)
349
   449
Federal excise tax and fuel charge

-
   -
-
   -
820
   857
Depreciation and depletion
(note 13)

12
   11
-
   -
886
   782
Non-service
pension and postretirement benefit

60
   72
-
   -
60
   72
Financing
(note 7)

36
   51
-
   -
36
   51
Total expenses

97
   163
(1,747)
   (3,119)
11,348
   16,116
Income (loss) before income taxes

(80)
   (146)
-
   -
(948)
   1,127
Income tax expense (benefit)

(20)
   (21)
-
   -
(234)
   (378)
Net income (loss)

(60)
   (125)
-
   -
(714)
   1,505
Cash flows from (used in) operating activities

(42)
   (91)
-
   -
(393)
   2,029
Capital and exploration expenditures
(b
)

24
   22
-
   -
538
   958
Total assets as at June 30
(note 13)

1,088
   1,822
(266)
   (444)
39,500
   41,929


Six Months to June 30	Upstream		Downstream		Chemical
millions of Canadian dollars	2021	2020	2021	2020	2021	2020
Revenues and other income
Revenues (a)	4,758	2,560	9,542	7,383	699	387
Intersegment sales	2,663	984	1,561	692	132	71
Investment and other income (note 3)	6	10	33	42	1	1
	7,427	3,554	11,136	8,117	832	459
Expenses
Exploration	4	4	0-	0-	0-	0-
Purchases of crude oil and products (note 11)	3,878	2,162	8,780	5,665	449	259
Production and manufacturing	2,275	1,992	683	751	96	109
Selling and general	0-	0-	275	316	47	46
Federal excise tax and fuel charge	0-	0-	869	820	0-	0-
Depreciation and depletion (note 11)	844	780	78	86	9	8
Non-service pension and postretirement benefit	0-	0-	0-	0-	0-	0-
Financing (note 5)	1	0-	0-	0-	0-	0-
Total expenses	7,002	4,938	10,685	7,638	601	422
Income (loss) before income taxes	425	(1,384)	451	479	231	37
Income tax expense (benefit)	99	(332)	99	109	55	9
Net income (loss)	326	(1,052)	352	370	176	28
Cash flows from (used in) operating activities	1,126	(504)	598	110	173	43
Capital and exploration expenditures (b)	215	376	188	127	4	11
Total assets as at June 30 (note 11)	31,931	33,591	5,352	4,683	481	404

Six Months to June 30	Corporate and other		Eliminations		Consolidated
millions of Canadian dollars	2021	2020	2021	2020	2021	2020
Revenues and other income
Revenues (a)	0-	0-	0-	0-	14,999	10,330
Intersegment sales	0-	0-	(4,356)	(1,747)	0-	0-
Investment and other income (note 3)	6	17	0-	0-	46	70
	6	17	(4,356)	(1,747)	15,045	10,400
Expenses
Exploration	0-	0-	0-	0-	4	4
Purchases of crude oil and products (note 11)	0-	0-	(4,353)	(1,745)	8,754	6,341
Production and manufacturing	0-	0-	0-	0-	3,054	2,852
Selling and general	70	(11)	(3)	(2)	389	349
Federal excise tax and fuel charge	0-	0-	0-	0-	869	820
Depreciation and depletion (note 11)	13	12	0-	0-	944	886
Non-service pension and postretirement benefit	21	60	0-	0-	21	60
Financing (note 5)	26	36	0-	0-	27	36
Total expenses	130	97	(4,356)	(1,747)	14,062	11,348
Income (loss) before income taxes	(124)	(80)	0-	0-	983	(948)
Income tax expense (benefit)	(28)	(20)	0	0	225	(234)
Net income (loss)	(96)	(60)	0-	0-	758	(714)
Cash flows from (used in) operating activities	0-	(42)	0-	0-	1,897	(393)
Capital and exploration expenditures (b)	15	24	0-	0-	422	538
Total assets as at June 30 (note 11)	1,606	1,088	(431)	(266)	38,939	39,500

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IMPERIAL OIL LIMITED

(a)	Included export sales to the United States of ~~$2,112~~$3,113 million ~~(2019—$3,816~~(2020 - $2,112 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.

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

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IMPERIAL OIL LIMITED

4.3. Investment and other income

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

    Second Quarter
    Six Months
    to June 30

millions of Canadian dollars
2020
2019
2020
   2019
Proceeds from asset sales

40

14

49

   36
Book value of asset sales

30

3

32

   30
Gain (loss) on asset sales, before tax

10

11

17

   6
Gain (loss) on asset sales, after tax

9

10

15

   6


	Second Quarter				Six Months to June 30
millions of Canadian dollars	2021		2020		2021		2020
Proceeds from asset sales		35		40		42		49
Book value of asset sales		11		30		15		32
Gain (loss) on asset sales, before tax		24		10		27		17
Gain (loss) on asset sales, after tax		22		9		24		15

~~5. Allowance for current expected credit loss (CECL)~~4. Employee retirement benefits

~~Effective January 1, 2020, the company adopted the Financial Accounting Standards Board’s update,~~

~~Financial Instruments – Credit Losses (Topic 326),~~

as amended. The standard requires a valuation allowance for credit losses be recognized 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 reasonable and supportable forecasts. The standard requires this expected loss methodology for trade receivables, certain other financial assets and

~~off-balance-sheet~~

~~credit exposures. The cumulative effect adjustment related to the adoption of this standard reduced “Earnings reinvested” in Shareholders’ equity by $2 million.~~

The company is exposed to credit losses primarily through sales of petroleum products, crude oil, natural gas liquids and natural gas, as well as loans to equity companies and joint venture receivables. A counterparty’s ability to pay is assessed through a credit review process that considers payment terms, the counterparty’s established credit rating or the company’s assessment of the counterparty’s credit worthiness, contract terms, and other risks. The company can require prepayment or collateral to mitigate certain credit risks.

The ~~company groups financial assets into portfolios that share similar risk characteristics for purposes~~components of ~~determining the allowance for credit losses. Each reporting period,~~net benefit cost were as follows:


	Second Quarter						Six Months to June 30
millions of Canadian dollars	2021			2020			2021			2020
Pension benefits:
Current service cost		81			77			162			153
Interest cost		68			77			136			154
Expected return on plan assets		(107	)		(98	)		(214	)		(196	)
Amortization of prior service cost		4			3			8			7
Amortization of actuarial loss (gain)		36			39			72			77
Net periodic benefit cost		82			98			164			195

Other postretirement benefits:
Current service cost		7			6			14			12
Interest cost		5			6			11			12
Amortization of actuarial loss (gain)		4			3			8			6
Net periodic benefit cost		16			15			33			30

5. Financing costs


	Second Quarter						Six Months to June 30
millions of Canadian dollars	2021			2020			2021			2020
Debt-related interest		20			26			41			60
Capitalized interest		(7	)		(9	)		(15	)		(24	)
Net interest expense		13			17			26			36
Other interest		0			0			1			0
Total financing		13			17			27			36

In May 2021, the company ~~assesses whether a significant change in~~extended the maturity date of two of its existing committed short-term lines of credit ~~loss or risk has occurred. Among~~to May 2023, totalling $750 million. In June 2021, the ~~quantitative and qualitative factors considered are historical financial data, current conditions, industry and country risk, current~~ company extended the maturity date of one of its existing $300 million committed short-term lines of credit ratings and the quality of third-party guarantees secured from the counterparty. Financial assets are written off in whole, or in part, when practical recovery efforts have been exhausted and no reasonable expectation of recovery exists. Subsequent recoveries of amounts previously written off are recognized in earnings. The company manages receivable portfolios using past due balances as a key credit quality indicator.

~~The company recognizes a credit allowance for~~

~~off-balance-sheet~~

~~credit exposures as a liability on the balance sheet, separate from the allowance for credit losses related~~ to ~~recognized financial assets. These exposures could include unfunded loans to equity companies and financial guarantees that cannot be cancelled unilaterally by the company.~~

During the first half of 2020, the COVID-19 pandemic spread rapidly through most areas of the world resulting in economic uncertainty, global financial market volatility, and negative effects in the credit markets.June 2022. The company has ~~considered these effects, along with the significantly lower balances~~not drawn on any of ~~trade receivables at the end of the quarter, in~~ its ~~estimate of credit losses and concluded no material adjustment to credit allowances in the quarter was required. At June 30, 2020, the company’s evaluation of financial assets under~~

~~Financial Instruments – Credit Losses (Topic 326)~~

~~, as amended included $1,420~~$1,300 million of ~~accounts receivable, net of allowances of $4 million, and investments and long-term receivables of $326 million. The company has determined that, at this time, 0~~available credit ~~allowance is required for investments and long-term receivables. There is currently 0~~

~~off-balance-sheet~~facilities.

~~credit exposure.~~

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IMPERIAL OIL LIMITED

6. ~~Employee retirement benefits~~

~~The components of net benefit cost were as follows:~~

    Second Quarter
    Six Months
    to June 30

millions of Canadian dollars
2020
2019
    2020
    2019
Pension benefits:

Current service cost

77

57

153

114
Interest cost

77

81

154

162
Expected return on plan assets

(98
)
(88 )

(196
)
(175 )
Amortization of prior service cost

3

-

7

-
Amortization of actuarial loss
(gain)

39

38

77

75
Net periodic benefit cost

98

88

195

176
Other postretirement benefits:

Current service cost

6

4

12

8
Interest cost

6

6

12

11
Amortization of actuarial loss
(gain)

3

(1 )

6

(1 )
Net periodic benefit cost

15

9

30

18

~~7. Financing costs~~

    Second Quarter

    Six Months
    to June 30

millions of Canadian dollars

2020

2019

2020

2019

Debt-related interest

26

34

60

73

Capitalized interest

(9
)

(11
)

(24
)

(22
)
Net interest expense

17

23

36

51

Other interest

-

-

-

-

Total financing

17

23

36

51

~~During the~~

~~second~~

quarter of 2020, in addition to existing credit facilities of $500 million, the company entered into a $500 million committed short-term line of credit to May 2021, and a $300 million committed short-term line of credit to June 2021. The company has not drawn on any of its credit facilities.

8. Long-term debt


	As at June 30		As at Dec 31
millions of Canadian dollars	2020		2019		As at June 30 2021		As at Dec 31 2020
Long-term debt		4,447		4,447	4,447		4,447
Finance leases		518		514		618		510
Total long-term debt		4,965		4,961		5,065		4,957

7. Other long-term obligations


millions of Canadian dollars	As at June 30 2021		As at Dec 31 2020
Employee retirement benefits (a)		2,023		2,105
Asset retirement obligations and other environmental liabilities (b)		1,699		1,676
Share-based incentive compensation liabilities		84		45
Operating lease liability (c)		96		95
Other obligations		159		179
Total other long-term obligations		4,061		4,100

(a)	Total recorded employee retirement benefits obligations also included $58 million in current liabilities (2020 - $58 million).

(b)	Total asset retirement obligations and other environmental liabilities also included $100 million in current liabilities (2020 - $100 million).

(c)	Total operating lease liability also included $82 million in current liabilities (2020 - $97 million). In addition to the total operating lease liability, additional undiscounted commitments for leases not yet commenced totalled $4 million (2020 - $27 million).

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IMPERIAL OIL LIMITED

~~9. Other long-term obligations~~

         As at
June 30    As at
Dec 31
millions of Canadian dollars
2020
   2019
Employee retirement benefits
(a)


1,977

   1,822
Asset retirement obligations and other environmental liabilities
(b)


1,384

   1,388
Share-based incentive compensation liabilities


54

   65
Operating lease liability
(c)


107

   143
Other obligations


231

   219
Total other long-term obligations


3,753

   3,637

~~(a)~~

~~Total recorded employee retirement benefits obligations also included $58 million in current liabilities (2019 - $58 million).~~

~~(b)~~

~~Total asset retirement obligations and other environmental liabilities also included $124 million in current liabilities (2019 - $124 million).~~

~~(c)~~

Total operating lease liability also included $106 million in current liabilities (2019 - $115 million). In addition to the total operating lease liability, additional undiscounted commitments for leases not yet commenced totalled $27 million (2019 - $6 million).

~~10.~~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, ~~2020~~2021 and December 31, ~~2019~~2020, 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. 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.

At June 30, 2020, the carrying values of derivative instruments on the Consolidated balance sheet were gross assets of $27 million, gross liabilities of $74 million and collateral receivable of $70 million, with the net effects reflected in “Accounts receivable, less estimated doubtful accounts” on the Consolidated balance sheet. At December 31, 2019 the carrying values of derivative instruments on the Consolidated balance sheet were gross assets of $0 million, gross liabilities of $2 million and collateral receivable of $6 million.

~~At June 30, 2020, the~~The net notional ~~forward long /~~ long/(short) position of derivative instruments was (1,920,000) barrels for crude and (240,000) barrels for products. At December 31, 2019, the net notional forward long / (short) position of derivative instruments was (590,000) barrels for crude and 0 barrels for products.was:


(thousands of barrels)	As at June 30 2021			As at Dec 31 2020
Crude		(710	)		(800	)
Products		(160	)		(390	)

Realized and unrealized gain or (loss) on derivative instruments recognized onin 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
2020
2019
2020
2019
Revenues


(9
)
-

(8
)
(2 )
Purchases of crude oil and products


(52
)
-

(18
)
(6 )
Total


(61
)
-

(26
)
(8 )


	Second Quarter						Six Months to June 30
millions of Canadian dollars	2021			2020			2021			2020
Revenues		(9	)		(9	)		(9	)		(8	)
Purchases of crude oil and products		(19	)		(52	)		(33	)		(18	)
Total		(28	)		(61	)		(42	)		(26	)

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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:

~~11.~~


millions of Canadian dollars
At June 30, 2021
	Fair value								Effect of counterparty netting			Effect of collateral netting			Net carrying value
	Level 1		Level 2		Level 3		Total		Effect of counterparty netting			Effect of collateral netting			Net carrying value
Assets
Derivative assets (a)		6		0-		0-		6		(6	)		0-			-

Liabilities
Derivative liabilities (b)		8		0-		0-		8		(6	)		(2	)		-

(a)	Included in the Consolidated balance sheet line: “Materials, supplies and prepaid expenses”.

(b)	Included in the Consolidated balance sheet line: “Accounts payable and accrued liabilities”.


millions of Canadian dollars
At December 31, 2020
	Fair value								Effect of counterparty netting			Effect of collateral netting			Net carrying value
	Level 1		Level 2		Level 3		Total		Effect of counterparty netting			Effect of collateral netting			Net carrying value
Assets
Derivative assets (a)		2		0-		0-		2		(2	)		0-			-

Liabilities
Derivative liabilities (b)		12		0-		0-		12		(2	)		(10	)		-

(a)	Included in the Consolidated balance sheet line: “Materials, supplies and prepaid expenses”.

(b)	Included in the Consolidated balance sheet line: “Accounts payable and accrued liabilities”.

At June 30, 2021 and December 31, 2020, respectively, the company had $8 million and $5 million of collateral under a master 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
June 30
As of
Dec 31

thousands of shares
2020
   2019
Authorized


1,100,000

   1,100,000
Common shares outstanding


734,077

   743,902


thousands of shares	As of June 30 2021		As of Dec 31 2020
Authorized		1,100,000		1,100,000
Common shares outstanding		704,578		734,077

The

12-month

limited normal course issuer bid program that was in place ~~during~~throughout the second quarter of ~~2020,~~2021 came into effect on June ~~27, 2019.~~29, 2020 and was amended on April 30, 2021. The program enabled the company to purchase up to a maximum of ~~38,211,086~~29,363,070 common shares (5(4 percent of the total shares on June ~~13, 2019)~~15, 2020), 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 at approximately 69.6 percent. ~~The program ended on June 26, 2020, and purchases under this program were suspended on April 1, 2020. Upon expiration, the company had purchased 28,697,514 shares under the program.~~

The current

12-month

~~limited~~ normal course issuer bid program came into effect on June 29, ~~2020 and is used primarily to eliminate dilution from shares issued in conjunction with Imperial’s restricted stock unit plan.~~2021, under which Imperial will continue its existing share purchase program. The program enables the company to purchase up to a maximum of ~~50,000~~35,583,671 common shares (5 percent of the total shares on June 15, 2021) which includes shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid. As in the past, Exxon Mobil Corporation has advised the company that it intends to participate to maintain its ownership percentage at approximately 69.6 percent.

The 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, 2018
   782,565        1,446
Issued under employee share-based awards
   1 -
Purchases at stated value
   (38,664 ) (71 )
Balance as at December 31, 2019
   743,902 1,375
Issued under employee share-based awards
   - -
Purchases at stated value
   (9,825 ) (18 )
Balance as at June 30, 2020
      734,077 1,357


	Thousands of shares			Millions of dollars
Balance as at December 31, 2019		743,902			1,375
Issued under employee share-based awards		7			0-
Purchases at stated value		(9,832	)		(18	)
Balance as at December 31, 2020		734,077			1,357
Issued under employee share-based awards		0-			0-
Purchases at stated value		(29,499	)		(55	)
Balance as at June 30, 2021		704,578			1,302

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


						Six Months
	Second Quarter					to June 30					Second Quarter					Six Months to June 30
	2020			2019		2020			2019		2021		2020			2021		2020
Net income (loss) per common share - basic
Net income (loss) (millions of Canadian dollars)		(526	)		1,212		(714	)		1,505		366		(526	)		758		(714	)
Weighted average number of common shares outstanding (millions of shares)		734.1			767.4		736.5			772.5		724.1		734.1			729.1		736.5
Net income (loss) per common share (dollars)		(0.72	)		1.58		(0.97	)		1.95		0.51		(0.72	)		1.04		(0.97	)

Net income (loss) per common share - diluted
Net income (loss) (millions of Canadian dollars)		(526	)		1,212		(714	)		1,505		366		(526	)		758		(714	)
Weighted average number of common shares outstanding (millions of shares)		734.1			767.4		736.5			772.5		724.1		734.1			729.1		736.5
Effect of employee share-based awards (millions of shares) (a)		-			2.5		-			2.4		1.7		0-			1.7		0-
Weighted average number of common shares outstanding, assuming dilution (millions of shares)		734.1			769.9		736.5			774.9		725.8		734.1			730.8		736.5
Net income (loss) per common share (dollars)		(0.72	)		1.57		(0.97	)		1.94		0.50		(0.72	)		1.04		(0.97	)

Dividends per common share - declared (dollars)		0.22			0.22		0.44			0.41		0.27		0.22			0.49		0.44

(a)	For Second Quarter 2020 and Six Months to June 30, 2020, the Net income (loss) per common share – diluted excludes the effect of 2.0 million employee share-based awards. Share-based awards have the potential to dilute basic earnings per share in the future.

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IMPERIAL OIL LIMITED

~~12.~~10. Other comprehensive income (loss) information

Changes in accumulated other comprehensive income (loss):

millions of Canadian dollars
2020
2019
Balance at January 1


(1,911
)
(1,517 )
Postretirement benefits liability adjustment:

Current period change excluding amounts reclassified from accumulated other comprehensive income


(114
)
18
Amounts reclassified from accumulated other comprehensive income


       68

           55
Balance at June 30


(1,957
)
(1,444 )


millions of Canadian dollars	2021			2020
Balance at January 1		(1,989	)		(1,911	)
Postretirement benefits liability adjustment:
Current period change excluding amounts reclassified from accumulated other comprehensive income		54			(114	)
Amounts reclassified from accumulated other comprehensive income		66			68
Balance at June 30		(1,869	)		(1,957	)

Amounts reclassified out of accumulated other comprehensive income (loss) -

before-tax

income (expense):


	Second Quarter						Six Months to June 30						Second Quarter						Six Months to June 30
millions of Canadian dollars	2020			2019			2020			2019			2021			2020			2021			2020
Amortization of postretirement benefits liability adjustment included in net periodic benefit cost (a)		(45	)		(37	)		(90	)		(74	)		(44	)		(45	)		(88	)		(90	)

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

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

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

       Second Quarter        Six Months
    to June 30
millions of Canadian dollars
2020
   2019
2020
2019
Postretirement benefits liability adjustments:

Postretirement benefits liability adjustment (excluding amortization)


-

   -

(37
)
7
Amortization of postretirement benefits liability adjustment included in net periodic benefit cost


11

   9

22

19
Total


11

   9

(15
)
26


	Second Quarter				Six Months to June 30
millions of Canadian dollars	2021		2020		2021		2020
Postretirement benefits liability adjustments:
Postretirement benefits liability adjustment (excluding amortization)		0-		0-		17		(37	)
Amortization of postretirement benefits liability adjustment included in net periodic benefit cost		11		11		22		22
Total		11		11		39		(15	)

~~13.~~11. Miscellaneous financial information

~~Crude oil~~At March 31, 2021, due to the termination of transportation services agreements related to a third-party pipeline project, the company recognized a liability of $62 million, previously reported as a contingent liability in Note 10 of Imperial’s Form

10-K.

In connection with the same project, commitments under “Other long-term purchase agreements” as reported in Imperial’s Form

10-K

decreased by approximately $2.9 billion. The majority of these commitments related to years 2026 and ~~product inventories are carried at the lower of current market value or cost, determined under the~~

~~last-in,~~beyond.

~~first-out~~

~~method (LIFO).~~ In the first quarter of 2020, a

non-cash

charge of $281 million

~~after-tax~~

after tax (Upstream - $229 million; Downstream - $52 million) was recorded associated with the carrying value of crude oil inventory exceeding the current market value. In the second quarter of 2020, the first quarter’s temporary

non-cash

inventory charge was reversed. ~~The inventory balance will continue to be~~

~~re-evaluated~~

~~at the end of each quarter. At~~

~~year-end,~~

~~any adjustment to the carrying value is considered a permanent adjustment.~~

~~As disclosed in Imperial’s 2019 Form~~

~~10-K,~~

~~goodwill is tested for impairment annually or more frequently if events or circumstances indicate it might be impaired.~~ In the first quarter of 2020, with the change in economic conditions and the reduction in the company’s market capitalization, the company assessed its goodwill balances for impairment and recognized a

non-cash

goodwill impairment charge of $20 million in the company’s Upstream segment. The goodwill impairment is reflected in “Depreciation and depletion” on the Consolidated statement of income and “Goodwill” on the Consolidated balance sheet. The remaining balance of goodwill is associated with the Downstream segment.

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IMPERIAL OIL LIMITED

Item 2.

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

~~Current economic conditions~~Operating results

In early 2020, the balance of supply and demand for petroleum and petrochemical products experienced two significant disruptive effects. On the demand side, the

COVID-19

pandemic spread rapidly ~~across Canada and~~through most areas of the world resulting in substantial reductions in consumer and business activity and significantly reduced ~~local and global~~ demand for crude oil, natural gas, and petroleum products. This reduction in demand coincided with announcements of increased production in certain key

oil-producing

countries which led to increases in inventory levels and sharp declines in prices for crude oil, natural gas, and petroleum products. ~~During the second quarter, the~~

Through 2021, demand for petroleum and petrochemical products has continued to improve leading to stronger prices and margins across all segments. Some lingering effects of ~~COVID-19~~the weak 2020 business environment continued to affect the world’s major economies, and market conditions reflected considerable uncertainty. In Canada, consumer and business activity exhibited some signs of recovery, but relative to prior periods continues to be negatively affected by the pandemic. Key

~~oil-producing~~

~~countries~~ have ~~taken steps to reduce oversupply of crude oil and petroleum products, and credit markets appear to have stabilized, providing sufficient liquidity to credit-worthy companies.~~

In late March, the company announced significant reductions in 2020 capital and operating expense spending plans. Capital and exploration expenditures in 2020 are expected to be $1.1 billion to $1.2 billion, compared to the previously announced $1.6 billion to $1.7 billion. In addition, Imperial has identified and progressed opportunities to reduce 2020 operating expenses by $500 million compared to 2019 levels.

During the second quarter of 2020, the company entered into two additional committed short-term lines of credit totalling $800 million to supplement its existing lines of credit of $500 million. Both credit facilities will expire within one year and may be renewed or replaced according to the company’s financing needs and business environment. At the end of June 30, 2020, the company’s cash balance was $233 million, and

~~has not drawn~~a negative impact on ~~any of its lines of credit.~~

~~The company’s total debt did not increase during the second quarter.~~

~~The effect of COVID-19 and the current business environment on supply and demand patterns has negatively impacted Imperial’s~~ financial ~~and operating~~ results in the first ~~six months of 2020. Unless industry conditions seen thus far in 2020 improve significantly in the latter~~ half of 2021 when compared to periods prior to the ~~year,~~pandemic. The company continues to closely monitor industry and global economic conditions, including recovery from the

COVID-19

pandemic.

Second quarter 2021 vs. second quarter 2020

The company expects lower realized prices for its products to result in substantially lower earnings and cash generated from operations than in 2019. In response to these conditions, the company operated certain assets at reduced ratesrecorded net income of $366 million or $0.50 per share on a diluted basis in the second quarter of ~~2020, and extended plans~~2021, compared to ~~operate certain assets at reduced rates~~a net loss of $526 million or $0.72 per share in the ~~third quarter.~~same period of 2020. Second quarter 2020 results included a reversal of the

non-cash

inventory revaluation charge of $281 million recorded in the first quarter of 2020.

Upstream recorded net income of $247 million in the second quarter of 2021, compared to a net loss of $444 million in the same period of 2020. Improved results reflect higher realizations of about $1,100 million and higher volumes of about $280 million. These items were partially offset by the absence of the prior year reversal of the

non-cash

charge of $229 million related to the revaluation of the company’s inventory, higher operating expenses of about $230 million, higher royalties of about $200 million and unfavourable foreign exchange impacts of about $50 million.

West Texas Intermediate (WTI) averaged US$66.17 per barrel in the second quarter of 2021, up from US$27.83 per barrel in the same quarter of 2020. Western Canada Select (WCS) averaged US$54.64 per barrel and US$16.73 per barrel for the same periods. The ~~company advanced~~WTI / WCS differential averaged approximately US$12 per barrel for the ~~start~~second quarter of 2021, up from around US$11 in the same period of 2020.

The Canadian dollar averaged US$0.81 in the second quarter of 2021, an increase of US$0.09 from the second quarter of 2020.

Imperial’s average Canadian dollar realizations for bitumen increased in the quarter, primarily due to an increase in WCS. Bitumen realizations averaged $57.26 per barrel in the second quarter of 2021, up from $12.82 per barrel in the second quarter of 2020. The company’s average Canadian dollar realizations for synthetic crude increased generally in line with WTI, adjusted for changes in exchange rates and ~~extended~~transportation costs. Synthetic crude realizations averaged $80.80 per barrel in the ~~duration~~second quarter of ~~a planned turnaround at one~~2021, up from $32.20 per barrel in the same period of ~~Kearl’s two plants in an effort to reduce~~2020.

~~on-site~~

~~staffing levels and to better balance near-term production with demand. The turnaround began early May and was completed late June. While Kearl’s total~~

Total gross production ~~was reduced to an average~~ of Kearl bitumen averaged 255,000 barrels per day in the second quarter (181,000 barrels Imperial’s share), up from 190,000 barrels per day (135,000 barrels Imperial’s share) ~~for~~in the second quarter of ~~2020, total gross~~2020. Higher production was ~~up from~~mainly due to the ~~previously announced estimate~~absence of ~~approximately 150,000~~prior year production balancing with market demands, partially offset by impacts associated with planned turnaround activities.

Gross production of Cold Lake bitumen averaged 142,000 barrels per day ~~for the quarter, primarily driven by a partial recovery~~ in ~~market demand and strong plant performance. A planned turnaround at~~ the second ~~of Kearl’s two plants was also advanced and began~~

~~mid-July,~~

~~with anticipated completion late August. With the extended duration of these turnarounds, Imperial now expects total gross production at Kearl to average approximately 220,000~~quarter, up from 123,000 barrels per day for the full-year 2020, compared to the previous annual estimate of 240,000 barrels per day for 2020. At Cold Lake, Imperial expects full-year gross production to average approximately 135,000 barrels per day, compared to the previous annual estimate of 140,000 barrels per day for 2020. Regarding Syncrude, coker turnaround activities, which had previously been deferred to the third quarter, began early May and are expected to extend until late September. Additionally, the company continues to evaluate and adjust the timing and scope of other maintenance activities across its operations. These activities will be managed to ensure the health and safety of site personnel. Refinery utilization rates and petroleum product sales were reduced through the second quarter of 2020, driven by the significant decline in demand for petroleum products in Canada, but are expected to improve in the ~~third quarter. However, the length and severity~~same period of ~~decreased demand~~2020. Higher production was primarily due to ~~COVID-19~~improved reliability and ~~the current business environment are highly uncertain, with the future supply and demand patterns inherently difficult to predict.~~

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~~IMPERIAL OIL LIMITED~~

The company has reviewed its near-term spending reductions, near-term production impacts and expected near-term price levels to determine whether they put its long-lived assets at risk for impairment. Despite the challenging environment, the company’s view of long-term supply and demand fundamentals has not changed significantly. However, the company continues to assess its strategic plans and longer-term price views, taking into account current and developing industry and economic conditions, as part of its annual planning process. Depending on the outcome of that process, including in particular any significant future changes in the company’s strategic plans or longer-term price views, a portion of the company’s long-lived assets could be at risk for impairment. Due to interdependencies among the many elements critical to that planning process that are still unresolved or uncertain, it is not practicable to reasonably estimate the existence or range of any potential future impairment charges.

~~As disclosed in Imperial’s 2019 Form~~

~~10-K,~~

~~low crude oil and natural gas prices can impact the company’s estimates of proved reserves as reported under U.S. Securities and Exchange Commission (SEC) rules. Imperial’s average~~

~~year-to-date~~

~~realizations for crude oil have been significantly affected by low prices since the end of the first quarter. Similar to downward revisions of proved bitumen reserves at~~

~~year-end~~

2016 that resulted from low prices, if average prices seen thus far in 2020 persist for the remainder of the year, under the SEC definition of proved reserves, certain quantities that qualified as proved reserves at

~~year-end~~

2019, primarily proved bitumen reserves at Kearl (totalling approximately 60 percent of the company’s 3.5 billion oil-equivalent barrels of net proved reserves), will not qualify as proved reserves at

~~year-end~~

2020. Proved reserves estimates can be impacted by a number of factors including completion of development projects, reservoir performance, regulatory approvals, government policies, consumer preferences, changes in the amount and timing of capital investments, royalty framework, and significant changes in long-term oil and gas price levels. The company does not expect the operation of the underlying projects or its outlook for future production volumes to be affected by a possible downward revision of reported proved reserves under the SEC definition.

During the second quarter of 2020, Canadian federal and provincial governments introduced plans and programs to support business and economic activities in response to the disruptive impacts from the COVID-19 pandemic. The Government of Canada implemented the Canada Emergency Wage Subsidy as part of its COVID-19 Economic Response Plan. The company received wage subsidies under this program and, if eligible, intends to continue to apply for these wage subsidies. Additionally, the Government of Alberta announced its Recovery Plan, including a proposed acceleration of the Alberta corporate income tax rate decrease originally legislated in 2019. If enacted, the Alberta corporate income tax rate is reduced to eight percent beginning July 1, 2020, compared with a previously legislated reduction to eight percent beginning January 1, 2022. The cumulative effect of this proposed change on the company’s financial statements is not expected to be significant.

The company has taken steps, in line with federal and provincial guidelines and restrictions, to limit the spread of COVID-19 among employees, contractors and the broader community, while also maintaining operations to ensure reliable supply of products to customers as a provider of essential services. Further measures have been implemented across the organization, including voluntary COVID-19 testing and modified work schedules at remote camp facilities. The company maintains robust business continuity plans, which have been activated to minimize the impact of COVID-19 on workforce productivity. These measures have been effective in managing the COVID-19 outbreak at Kearl and reducing the number of infections. In June, Alberta Health Services declared the outbreak at Kearl to be over.lower scheduled downtime.

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IMPERIAL OIL LIMITED

~~Operating results~~

~~Second quarter 2020 vs. second quarter 2019~~

The company recorded a net loss of $526 million or $0.72 per share on a diluted basis in the second quarter of 2020, compared to net income of $1,212 million or $1.57 per share in the same period of 2019. Second quarter 2020 results include a reversal of the

~~non-cash~~

~~inventory revaluation charge of $281 million recorded in the first quarter of 2020. Second quarter 2019 results included a favourable impact, largely~~

~~non-cash,~~

~~of $662 million associated with the Alberta corporate income tax rate decrease.~~

Upstream recorded a net loss of $444 million in the second quarter of 2020, compared to net income of $985 million in the same period of 2019. Results were negatively impacted by lower realizations of about $1,210 million, the absence of a favourable impact of $689 million associated with the Alberta corporate income tax rate decrease in 2019, and lower volumes of about $200 million. These items were partially offset by a reversal of the

~~non-cash~~

inventory revaluation charge of $229 million recorded in the first quarter of 2020, lower royalties of about $200 million, lower operating expenses of about $170 million, and favourable foreign exchange effects of about $60 million.

West Texas Intermediate (WTI) averaged US$27.83 per barrel in the second quarter of 2020, down from US$59.91 per barrel in the same quarter of 2019. Western Canada Select (WCS) averaged US$16.73 per barrel and US$49.31 per barrel for the same periods. The WTI / WCS differential averaged approximately US$11 per barrel for the second quarter of 2020, essentially unchanged from the same period of 2019.

~~The Canadian dollar averaged US$0.72 in the second quarter of 2020, a decrease of US$0.03 from the second quarter of 2019.~~

Imperial’s average Canadian dollar realizations for bitumen decreased in the quarter, primarily due to a decrease in WCS. Bitumen realizations averaged $12.82 per barrel in the second quarter of 2020, compared to $57.19 per barrel in the second quarter of 2019. The company’s average Canadian dollar realizations for synthetic crude decreased generally in line with WTI, adjusted for changes in exchange rates and transportation costs. Synthetic crude realizations averaged $32.20 per barrel in the second quarter of 2020, compared to $79.96 per barrel in the same period of 2019.

Total gross production of Kearl bitumen averaged 190,000 barrels per day in the second quarter (135,000 barrels Imperial’s share), compared to 207,000 barrels per day (147,000 barrels Imperial’s share) in the second quarter of 2019. Lower production was mainly due to the balancing of near-term production with demand through the advancement and extension of planned turnaround activities, at one of Kearl’s two plants, partially offset by the addition of supplemental crushing facilities in 2020.

Gross production of Cold Lake bitumen averaged 123,000 barrels per day in the second quarter, compared to 135,000 barrels per day in the same period of 2019. Lower production was mainly due to production timing associated with steam management and maintenance.

The company’s share of gross production from Syncrude averaged ~~50,000~~47,000 barrels per day, compared to ~~80,000~~50,000 barrels per day in the second quarter of ~~2019.~~2020. Lower production was primarily associated with planned turnaround activities, partially offset by the absence of prior year production balancing with market demands.

Downstream recorded net income of $60 million in the second quarter of 2021, compared to a net loss of $32 million in the same period of 2020. Improved results reflect higher margins of about $200 million, partially offset by unfavourable foreign exchange impacts of about $70 million and the absence of the prior year reversal of the

non-cash

charge of $52 million related to the revaluation of the company’s inventory.

Refinery throughput averaged 332,000 barrels per day, up from 278,000 barrels per day in the second quarter of 2020. Capacity utilization was 78 percent, up from 66 percent in the second quarter of 2020. Higher throughput was driven by reduced impacts associated with the

COVID-19

pandemic, partially offset by a planned turnaround at Strathcona.

Petroleum product sales were 429,000 barrels per day, up from 357,000 barrels per day in the second quarter of 2020. Improved petroleum product sales were mainly due to reduced impacts associated with the

COVID-19

pandemic.

Chemical net income was $109 million in the ~~balancing~~second quarter, up from net income of ~~near-term production with demand~~$7 million in the same quarter of 2020, primarily due to higher polyethylene margins.

Corporate and ~~a revised turnaround schedule.~~

other expenses were $50 million in the second quarter, compared to $57 million in the same period of 2020.

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IMPERIAL OIL LIMITED

Downstream recorded a net loss of $32 million in the second quarter of 2020, compared to net income of $258 million in the same period of 2019. Results were negatively impacted by lower margins of about $400 million including the effects of reduced demand from the COVID-19 pandemic, and lower sales volumes of about $120 million. These items were partially offset by improved reliability of about $100 million, primarily due to the absence of the Sarnia fractionation tower incident which occurred in April 2019, lower operating expenses of about $90 million, and a reversal of the

~~non-cash~~

~~inventory revaluation charge of $52 million recorded in the first quarter of 2020.~~

Refinery throughput averaged 278,000 barrels per day, compared to 344,000 barrels per day in the second quarter of 2019. Capacity utilization was 66 percent, compared to 81 percent in the second quarter of 2019. Lower throughput was primarily due to reduced demand from the COVID-19 pandemic, partially offset by improved reliability mainly driven by the absence of the Sarnia fractionation tower incident.

Petroleum product sales were 357,000 barrels per day, compared to 477,000 barrels per day in the second quarter of 2019. Lower petroleum product sales were mainly due to reduced demand from the COVID-19 pandemic.

~~Chemical net income was $7 million in the second quarter, compared to $38 million from the same quarter of 2019.~~

~~Corporate and other expenses were $57 million in the second quarter, compared to $69 million in the same period of 2019.~~

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~~IMPERIAL OIL LIMITED~~

Six months ~~2020~~2021 vs. six months ~~2019~~2020

Net ~~loss~~income in the first six months of ~~2020~~2021 was ~~$714~~$758 million, or ~~$0.97~~$1.04 per share on a diluted basis, compared to a net ~~income~~loss of ~~$1,505~~$714 million or ~~$1.94~~$0.97 per share in the first six months of ~~2019. 2019 results included a favourable impact, largely~~

~~non-cash,~~2020.

~~of $662 million associated with the Alberta corporate income tax rate decrease.~~

Upstream recorded a net ~~loss~~income of ~~$1,052~~$326 million for the first six months of the year, compared to a net ~~income~~loss of ~~$1,043~~$1,052 million in ~~the same period of 2019. Results were negatively impacted by lower~~2020. Improved results reflect higher realizations of about ~~$1,800~~$1,810 million ~~the absence of a favourable impact of $689 million associated with the Alberta corporate income tax rate decrease in 2019,~~ and ~~lower~~higher volumes of about ~~$210~~$280 million. These items were partially offset by ~~lower~~higher royalties of about ~~$310~~$300 million, ~~lower~~higher operating expenses of about ~~$190~~$290 million, and ~~favourable~~unfavourable foreign exchange ~~effects~~impacts of about ~~$110~~$120 million.

West Texas Intermediate averaged US$~~36.66~~62.22 per barrel in the first six months of ~~2020, down~~2021, up from US$~~57.45~~36.66 per barrel in ~~the same period of 2019.~~2020. Western Canada Select averaged US$~~21.20~~50.14 per barrel and US$~~45.88~~21.20 per barrel for the same periods. The WTI / WCS differential ~~widened~~narrowed to ~~average~~ approximately US$1512 per barrel in the first six months of ~~2020,~~2021, from around US$1215 per barrel in the same period of ~~2019.~~2020.

The Canadian dollar averaged US$~~0.73~~0.80 in the first six months of ~~2020, a decrease~~2021, an increase of US$~~0.02~~0.07 from ~~the same period in 2019.~~2020.

Imperial’s average Canadian dollar realizations for bitumen ~~decreased~~increased in the first six months of ~~2020,~~2021 primarily due to ~~a decrease~~an increase in WCS. Bitumen realizations averaged $52.45 per barrel, up from $15.54 per barrel ~~compared to $53.20 per barrel from~~in the same period ~~in 2019.~~of 2020. The company’s average Canadian dollar realizations for synthetic crude ~~decreased~~increased generally in line with WTI, ~~in the first six months of 2020,~~ adjusted for changes in exchange rates and transportation costs. Synthetic crude realizations averaged $72.42 per barrel, up from $48.10 per barrel ~~compared to $74.77 per barrel from~~in the same period ~~in 2019.~~of 2020.

Total gross production of Kearl bitumen averaged ~~208,000~~253,000 barrels per day in the first six months of ~~2020 (147,000~~2021 (180,000 barrels Imperial’s share), up from ~~193,000~~208,000 barrels per day ~~(137,000~~(147,000 barrels Imperial’s share) in the same period of ~~2019.~~2020. Higher production was mainly due to the ~~addition~~absence of ~~supplemental crushing facilities in 2020,~~prior year production balancing with market demands, partially offset by ~~the balancing of near-term production~~impacts associated with ~~demand through the advancement and extension of~~ planned turnaround activities.

Gross production of Cold Lake bitumen averaged ~~131,000~~141,000 barrels per day in the first six months of ~~2020, compared to 140,000~~2021, up from 131,000 barrels per day in the same period of ~~2019.~~2020. Higher production was primarily due to improved reliability.

During the first six months of ~~2020,~~2021, the company’s share of gross production from Syncrude averaged ~~61,000~~63,000 barrels per day, ~~compared to 79,000~~up from 61,000 barrels per day in the same period of ~~2019. Lower~~2020. Higher production was ~~mainly due to~~primarily associated with the absence of prior year production balancing ~~of near-term production~~ with ~~demand.~~market demands and unplanned downtime, partially offset by planned turnaround activities.

Downstream net income was ~~$370~~$352 million for the first six months of the year, compared to ~~$515~~$370 million in the same period of ~~2019.~~2020. Results were negatively impacted by ~~lower~~unfavourable foreign exchange impacts of about $120 million, partially offset by higher margins of about ~~$250~~$50 million including the effects of reduced demand from the COVID-19 pandemic, and lower sales volumes of about $150 million. These items were partially offset by improved reliability of about $160 million, including the absence of the Sarnia fractionation tower incident which occurred in April 2019, and lower operating expenses of about ~~$80~~$50 million.

Refinery throughput averaged ~~330,000~~348,000 barrels per day in the first six months of ~~2020, compared to 364,000~~2021, up from 330,000 barrels per day in the same period of ~~2019.~~2020. Capacity utilization was 7881 percent, ~~compared to 86~~up from 78 percent in the same period of ~~2019. Lower~~2020. Higher throughput was ~~primarily due to~~driven by reduced ~~demand from~~impacts associated with the

COVID-19

pandemic, partially offset by ~~improved reliability including the absence of the Sarnia fractionation tower incident.~~a planned turnaround at Strathcona.

Petroleum product sales were ~~409,000~~421,000 barrels per day in the first six months of ~~2020, compared to 477,000~~2021, up from 409,000 barrels per day in the same period of ~~2019. Lower~~2020. Improved petroleum product sales were mainly due to reduced ~~demand from~~impacts associated with the

COVID-19

pandemic.

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~~IMPERIAL OIL LIMITED~~

Chemical net income was ~~$28~~$176 million in the first six months of ~~2020, compared to $72~~2021, up from $28 million in the same period of ~~2019.~~2020, primarily due to higher polyethylene margins.

Corporate and other expenses were ~~$60~~$96 million in the first six months of ~~2020, compared to $125~~2021, up from $60 million in the same period of ~~2019,~~2020, mainly due to ~~lower~~higher share-based compensation ~~charges.~~costs.

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Liquidity and capital resources

Cash flow ~~used in~~generated from operating activities was ~~$816~~$852 million in the second quarter, compared with cash flow ~~generated from~~used in operating activities of ~~$1,026~~$816 million in the corresponding period in ~~2019,~~2020, primarily reflecting ~~lower~~higher Upstream realizations ~~in the Upstream~~ and ~~lower margins in the Downstream.~~favourable working capital impacts.

Investing activities used net cash of ~~$172~~$207 million in the second quarter, compared with ~~$429~~$172 million used in the same period of ~~2019,~~2020.

Cash used in financing activities was $1,336 million in the second quarter, compared with $167 million used in the second quarter of 2020. Dividends paid in the second quarter of 2021 were $161 million. The per share dividend paid in the second quarter was $0.22, consistent with the same period of 2020. During the second quarter, the company, under its share purchase program, purchased about 29.5 million shares for $1,171 million, including shares purchased from ExxonMobil Corporation. In the second quarter of 2020, the company did not purchase any shares under its share purchase program.

The company’s cash balance was $776 million at June 30, 2021, versus $233 million at the end of second quarter 2020.

In May 2021, the company extended the maturity date of two of its existing committed short-term lines of credit to May 2023, totalling $750 million. In June 2021, the company extended the maturity date of one of its existing $300 million committed short-term lines of credit to June 2022. The company has not drawn on any of its $1,300 million of available credit facilities.

Cash flow generated from operating activities was $1,897 million in the first six months of 2021, compared to cash flow used in operating activities of $393 million in the same period of 2020, primarily reflecting higher Upstream realizations and favourable working capital impacts.

Investing activities used net cash of $354 million in the first six months of 2021, compared to $480 million used in the same period of 2020, primarily reflecting lower additions to property, plant and equipment.

Cash used in financing activities was $167 million in the second quarter, compared with $521 million used in the second quarter of 2019. Dividends paid in the second quarter of 2020 were $162 million. The per share dividend paid in the second quarter was $0.22, up from $0.19 in the same period of 2019. During the second quarter, the company did not purchase shares consistent with the suspension of its share purchase program effective April 1, 2020. In the second quarter of 2019, the company purchased about 9.8 million shares for $368 million, including shares purchased from Exxon Mobil Corporation.

~~The company’s cash balance was $233 million at June 30, 2020, versus $1,087 million at the end of second quarter 2019.~~

During the second quarter of 2020, in addition to existing credit facilities of $500 million, the company entered into a $500 million committed short-term line of credit to May 2021, and a $300 million committed short-term line of credit to June 2021. The company has not drawn on any of its credit facilities.

~~Cash flow used in operating activities was $393~~$1,538 million in the first six months of ~~2020, compared with cash flow generated~~2021, up from ~~operating activities of $2,029 million in the same period of 2019, primarily reflecting lower realizations in the Upstream and unfavourable working capital impacts.~~

~~Investing activities used net cash of $480 million in the first six months of 2020, compared with $892~~$612 million used in the same period of ~~2019, primarily reflecting lower additions to property, plant and equipment.~~

~~Cash used in financing activities was $612 million in the first six months of 2020, compared with $1,038 million used in the same period of 2019.~~2020. Dividends paid in the first six months of ~~2020~~2021 were ~~$326~~$323 million. The per share dividend paid in the first six months of ~~2020~~2021 was $0.44, ~~up from $0.38~~consistent with in the same period of ~~2019.~~2020. During the first six months of ~~2020,~~2021, the company, under its share purchase program, purchased about ~~9.8~~29.5 million shares for ~~$274 million, including shares purchased from Exxon Mobil Corporation.~~

~~As previously announced, purchases under this program were suspended on April 1, 2020.~~

$1,171 million. In the first six months of ~~2019,~~2020, the company purchased about ~~19.8~~9.8 million shares for ~~$729~~$274 million.

At March 31, 2021, due to the termination of transportation services agreements related to a third-party pipeline project, the company recognized a liability of $62 million, previously reported as a contingent liability in Note 10 of Imperial’s Form

10-K.

In connection with the same project, commitments under “Other long-term purchase agreements” as reported in Imperial’s Form

10-K

decreased by approximately $2.9 billion. The majority of these commitments related to years 2026 and beyond.

On June 23, ~~2020,~~2021, the company announced by news release that it had received final approval from the Toronto Stock Exchange for a ~~limited~~new normal course issuer ~~bid.~~bid and will continue its existing share purchase program. The program ~~is used primarily to eliminate dilution from shares issued in conjunction with Imperial’s restricted stock unit plan, and~~ enables the company to purchase up to a maximum of ~~50,000~~35,583,671 common shares during the period June 29, ~~2020~~2021 to June 28, ~~2021.~~2022. 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 28, ~~2021.~~2022.

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Forward-looking statements

Statements of future events or conditions in this report, including projections, targets, expectations, estimates, and business plans are forward-looking statements. Forward-looking statements can be identified by words such as believe, anticipate, intend, propose, plan, goal, seek, project, predict, target, estimate, expect, strategy, outlook, schedule, future, continue, likely, may, should, will and similar references to future periods. Forward-looking statements in this release include, but are not limited to, references to the use of derivative instruments and effectiveness of risk mitigation; ~~credit market stability~~earnings sensitivities; and ~~liquidity;~~plans for purchases under the capital outlook of $1.1 billion to $1.2 billion for 2020, and reduction of operating expenses by $500 million compared to 2019 levels; impacts from COVID-19 and an extended period of current industry conditions, including lower earnings, cash from operations and operating assets at reduced rates; changes to the timing and duration of Kearl and Syncrude turnaround activities; anticipated Kearl and Cold Lake production for the full-year 2020; timing and scope of other planned turnaround activities across operations; expected improvement in refinery utilization rates and petroleum products sales in the third quarter; the company’s view of long-term supply and demand fundamentals; the impacts of future reductions in long-term price outlooks, including impairment of long-lived assets; the impact of extended low oil and natural gas prices on proved reserves under SEC rules, including the possible downward revision of proved bitumen reserves; the intention to continue applying for the Canada Emergency Wage Subsidy; the cumulative effect of the Government of Alberta acceleration of corporate income tax rate decrease; the impact of measures implemented in response to COVID-19; and earnings sensitivities.

amended share purchase program.

Forward-looking statements are based on the company’s current expectations, estimates, projections and assumptions at the time the statements are made. Actual future financial and operating results, including expectations and assumptions concerning demand growth and energy source, supply and mix; commodity prices, foreign exchange rates and general market conditions; production rates, growth and mix; project plans, timing, costs, technical evaluations and capacities and the company’s ability to effectively execute on these plans and operate its assets; progression ~~or recurrence~~ of

COVID-19

and its impacts on Imperial’s ability to operate its assets, including the possible shutdown of facilities due to

COVID-19

outbreaks; the company’s ability to effectively execute on its business continuity plans and pandemic response activities; the ability to achieve cost savings and adjust maintenance work; refinery utilization and product sales; applicable laws and government policies, including production curtailment and restrictions in response to COVID-19; financing sources and capital structure, including the ability to issue long-term debt; and capital and environmental expenditures could differ materially depending on a number of factors. These factors include global, regional or local changes in supply and demand for oil, natural gas, and petroleum and petrochemical products and resulting price, differential and margin impacts, including foreign government action with respect to supply levels and prices and the ~~ongoing~~ impact of

COVID-19

on demand; ~~general economic conditions; availability and allocation of capital; currency exchange rates; transportation for accessing markets;~~ political or regulatory events, including changes in law or government policy such as tax laws, production curtailment and actions in response to ~~the progression or recurrence of~~

COVID-19; ~~availability and performance of third party service providers, including in light of restrictions related to COVID-19;~~

management effectiveness and disaster response preparedness, including business continuity plans in response to

COVID-19; ~~environmental risks inherent in oil and gas exploration and production activities; environmental regulation, including climate change and greenhouse gas regulation and changes to such regulation;~~

unanticipated technical or operational difficulties; project management and schedules and timely completion of projects; operational hazards and risks; ~~cybersecurity incidents;~~availability and allocation of capital; currency exchange rates; general economic conditions; and other factors discussed in Item 1A risk factors and Item 7 management’s discussion and analysis of financial condition and results of operations of Imperial Oil Limited’s most recent annual report on Form

~~10-K~~

~~and subsequent interim reports on Form~~

~~10-Q.~~10-K.

Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, some that are similar to other oil and gas companies and some that are unique to Imperial. Imperial’s actual results may differ materially from those expressed or implied by its forward-looking statements and readers are cautioned not to place undue reliance on them. Imperial undertakes no obligation to update any forward-looking statements contained herein, except as required by applicable law.

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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Item 3.

Quantitative and qualitative disclosures about market risk

Information about market risks for the six months ended June 30, ~~2020,~~2021, does not differ materially from that discussed on page 5532 of the company’s annual report on Form

10-K

for the year ended December 31, ~~2019.~~2020. The following table details those earnings sensitivities that have been updated from the fiscal

year-end

to reflect current market conditions.

Earnings Sensitivities

(a)

millions of Canadian dollars after tax

One dollar (U.S.) per barrel increase (decrease) in crude oil prices

(-)

~~120~~100

One cent decrease (increase) in the value of the Canadian dollar versus the U.S. dollar

+ (-)

100

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

Item 4.

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 June 30, ~~2020.~~2021. 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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PART II. OTHER INFORMATION

Item ~~1A.~~1.

~~Risk factors~~Legal proceedings

~~The risk factors that are discussed in Item 1A of the company’s annual report on Form~~

~~10-K~~

Imperial has elected to use a $1 million threshold for the year ended December 31, 2019 reference risk factors related to commodity supply and demand, and public health. These risk factors encompass, among other things, production oversupply, as a result of increased production in key producing countries as well as demand reduction due to the COVID-19 pandemic that was characterized as a global pandemic in March, 2020, and have led to volatility in commodity prices.

~~As a result of COVID-19, governments in many countries have mandated quarantines, closures,~~

~~stay-at-home~~

~~orders and travel restrictions that have had a significant impact on demand for the company’s products. While these effects are expected to be temporary and there has been some movement toward~~

~~pre-pandemic~~

activity levels, the duration of the business disruptions internationally and related financial impact cannot be reasonably estimated at this time and continued or new restrictions could continue to impact the demand for products.

Imperial’s future business results, including cash flows and financing needs, will be affected by the extent and duration of these conditions and the effectiveness of responsive actions that the company and others take, including our actions to reduce capital and operating expenses and government actions to address the COVID-19 pandemic. The impact of COVID-19 could also have an effect on the financial markets and result in an increase to the cost of capital. The company’s results will also be affected by any resulting negative impacts on national and global economies and markets from a prolonged decrease of economic activity.

The company has had positive COVID-19 cases at its operating sites that have not had a material impact on its operations or business. However, if the company’s mitigation and response efforts prove insufficient, large outbreaks of epidemics, pandemics or other health crises such as COVID-19 at operating sites, particularly in remote locations and where work camps are utilized, could impact the company’s personnel and its operations. The company could also be impacted by disruption to supply chains, methods of distribution and key third party service providers, which could impact the ability to produce or sell its products, as well as increasing the costs associated with its operations and decreasing revenues and margins.

The company has initiated numerous emergency response and business continuity plans, and a substantial portion of the company’s workforce has implemented remote working arrangements. If the company is not able to effectively operate and manage through these plans and alternative arrangements, the negative impacts could include reduced productivity and increased costs.

The COVID-19 pandemic continues to evolve and it is difficult to predict the ultimate impact of it or the timing of any resolution of the current supply imbalances. We continue to monitor market developments and evaluate the impacts of decreased demand on our production levels, as well as impacts on project development and future production.

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~~IMPERIAL OIL LIMITED~~

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

~~(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)~~

~~April 2020~~

~~(April 1 - April 30)~~

~~9,513,572~~

~~May 2020~~

~~(May 1 - May 31)~~

~~9,513,572~~

~~June 2020~~

~~(June 1 - June 26) (a)~~

~~(June 29 - June 30) (b)~~

~~50,000~~


	Total number of shares purchased		Average price paid per share (Canadian dollars)		Total number of shares purchased as part of publicly announced plans or programs		Maximum number of shares that may yet be purchased under the plans or programs (a) (b)

April 2021
(April 1 - April 30)		-		-		-		29,356,095
May 2021
(May 1 - May 31)		13,905,500		38.75		13,905,500		15,450,595
June 2021
(June 1 - June 28)		15,450,595		40.58		15,450,595		-
(June 29 - June 30)		142,332		37.77		142,332		35,441,339

(a)

~~The~~

~~12-month~~

On June 23, 2020, the company announced by news release that it had received final approval from the Toronto Stock Exchange for a limited normal course issuer ~~bid~~bid. The program ~~that~~ was initially used primarily to eliminate dilution from shares issued in ~~place during the second quarter of 2020, came into effect on June 27, 2019. The program~~conjunction with Imperial’s restricted stock unit plan, and enabled the company to purchase up to a maximum of ~~38,211,086~~50,000 common shares ~~(5 percent of~~during the ~~total shares on~~period June ~~13, 2019), which~~29, 2020 to June 28, 2021. 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.

On April 30, 2021, the company announced an amendment to its normal course issuer bid to increase the number of common shares that were available to be purchased. Under the amendment, the number of common shares available to be purchased increased to a maximum of 29,363,070 common shares during the period June 29, 2020 to June 28, 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. No other provisions of the normal course issuer bid have changed.

~~The program ended on June 26, 2020, and as previously announced, purchases under this program were suspended on April 1, 2020. Upon expiration, the company had purchased 28,697,514~~

The program ended on June 28, 2021. Upon expiration, the company had purchased the maximum 29,363,070 shares allowed under the program.

(b)

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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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)

Date: August ~~5, 2020~~4, 2021				/s/ Daniel E. Lyons ---------------------------------------------------
				(Signature)
				Daniel E. Lyons
				Senior vice-president, finance and administration, and controller (Principal accounting officer)



Date: August ~~5, 2020~~4, 2021				/s/ Cathryn Walker ---------------------------------------------------
				(Signature)
				Cathryn Walker
				Assistant corporate secretary

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	As of June 30		As of Dec 31
thousands of shares	2020		2019
Authorized		1,100,000		1,100,000
Common shares outstanding		734,077		743,902


	Thousands of shares			Millions of dollars
Balance as at December 31, 2018		782,565			1,446
Issued under employee share-based awards		1			-
Purchases at stated value		(38,664	)		(71	)
Balance as at December 31, 2019		743,902			1,375
Issued under employee share-based awards		-			-
Purchases at stated value		(9,825	)		(18	)
Balance as at June 30, 2020		734,077			1,357

(State or other jurisdiction
of incorporation or organization)

(I.R.S. Employer
Identification No.)

505 Quarry Park Boulevard S.E. Calgary, Alberta, Canada

(Address of principal executive offices)

(Postal Code)