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Imperial Oil (IMO) Stock Down 7.2% Since Q3 Earnings Miss

Imperial Oil's (IMO) net natural gas production of 111 million cubic feet per day (Mcf/d) in Q3 falls short of 145 Mcf/d reported in the comparable quarter of last year.

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This story originally appeared on Zacks

Imperial Oil’s IMO stock has declined 7.2% since the third-quarter 2021 earnings announcement on Oct 29.

- Zacks

The company’s lower-than-anticipated earnings due to increased total expenses, and an escalated capital and exploration spending displeased investors. This might be the cause for the firm’s stock price depreciation.

Delving Deeper

Imperial Oil reported third-quarter 2021 adjusted earnings per share of $1.02, missing the Zacks Consensus Estimate of $1.05 due to increased total costs, and an escalated capital and exploration expenditure in the quarter. However, the bottom line improved from the year-ago quarter’s break-even earnings, attributable to an impressive revenue contribution from the upstream unit on account of higher realizations of around $730 million.

The Canadian integrated oil and gas player’s quarterly revenues of $8.13 billion missed the Zacks Consensus Estimate of $8.89 billion. However, the top line rose from the year-ago quarter’s sales of $4.47 billion.

Segmental Information     

Upstream: Revenues of C$4,152 million increased from the prior-year level of C$2,303 million. The segment reported a net income of C$524 million against a net loss of C$74 million in the year-ago quarter. This upside was attributable to higher price realizations of around $730 million along with expanded volumes of around $350 million.

Net production volumes during the quarter under review averaged 389,000 barrels of oil equivalent per day (Boe/d), up from 352,000 Boe/d in the year-ago quarter. Total oil and NGL output amounted to 370,000 barrels per day (BPD) compared with 328,000 BPD in third-quarter 2020. Net oil and NGL output from Kearl and Cold Lake totalled 185,000 bpd and 111,000 bpd, respectively. Syncrude output averaged 66,000 BPD, marginally down from the year-earlier quarter’s level. Net natural gas production came in at 111 million cubic feet per day (Mcf/d), lower than 145 Mcf/d in the comparable quarter of last year.

Bitumen price realizations totaled C$60.44 a barrel, up from C$35.95 in the year-ago quarter. The company received an average realized price of C$85.94 per barrel of synthetic oil compared with the year-ago quarter’s C$50.79. For conventional crude oil, it received C$59.94 per barrel compared with the year-ago quarter’s C$29.45. Prices of NGL increased to C$57.16 a barrel while the same of gas rose to C$3.88 per thousand cubic feet year over year.

Downstream: Revenues of C$9,197 million were up from C$4,406 million in third-quarter 2020. Moreover, the segment earned a net income of C$293 million compared with C$77 million reported in the year-ago quarter, attributable to strong margins of about $330 million.

Refinery throughput in the third quarter averaged 404,000 BPD, higher than the prior-year quarter’s level of 341,000 BPD. Capacity utilization of 94% compared favorably with the year-earlier level of 81%. This outperformance was on account of increased demand.

Chemical: Revenues of C$477 million rose from C$268 million in third-quarter 2020. Net income was recorded at C$121 million compared with the year-ago quarter’s tally of C$27 million.

Imperial Oil Limited Price, Consensus and EPS Surprise

Imperial Oil Limited Price, Consensus and EPS Surprise

Imperial Oil Limited price-consensus-eps-surprise-chart | Imperial Oil Limited Quote

Total Costs & Capex

Total expenses of C$9,044 million increased from the year-ago quarter’s C$5,952 million.

In the quarter under consideration, the company’s capital and exploration expenditures summed C$277 million, up from the year-ago quarter’s C$141 million. Of the total expenditure, 54.5% was allotted to the upstream segment.

Financial Performance

Imperial Oil’s cash flow from operating activities was C$1.95 billion in the reported quarter. However, in the year-ago period, cash flow from operating activities came in at C$875 million.

The company returned C$195 million to its shareholders through dividends in the reported quarter. It paid out 27 Canadian cents per share of dividend, reflecting an increase of 5 cents from the year-ago figure.

As of Sep 30, the company held C$1.88 billion of cash and cash equivalents. Its total debt amounted to C$5,060 million, representing a total debt-to-total capital of 19.3%.

Outlook

Kearl's annual output is now projected to be 265,000 total gross BPD.

Full-year gross output at Cold Lake is projected to exceed its prior guidance of 135,000 BPD, owing largely to production optimization and reliability improvements.

For the ongoing year, Imperial Oil anticipates its capital expenditures to be $1.1 billion.

Zacks Rank & Other Key Picks

Imperial Oil currently sports a Zacks Rank #1 (Strong Buy). Other top-ranked players in the energy  space include Cheniere Energy LNG, Diamondback Energy, Inc. FANG and APA Corporation APA, each presently flaunting a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.



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