Item 1.
Financial statements
Consolidated statement of income (U.S. GAAP, unaudited)
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Third Quarter
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Nine Months
to September 30
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millions of Canadian dollars
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2017
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|
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2016
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2017
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2016
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Revenues and other income
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Operating revenues
(a)
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7,134
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6,568
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21,077
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17,967
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Investment and other income
(note 3)
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24
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874
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270
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945
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Total revenues and other income
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7,158
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7,442
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21,347
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18,912
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Expenses
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Exploration
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7
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16
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29
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75
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Purchases of crude oil and products
(b)
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4,251
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3,857
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13,226
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10,884
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Production and manufacturing
(c)
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1,338
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|
1,261
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4,238
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|
3,842
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Selling and general
(c)
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|
219
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|
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|
275
|
|
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|
626
|
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|
812
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Federal excise tax
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438
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|
434
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1,253
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1,237
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Depreciation and depletion
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391
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398
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1,135
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1,229
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Financing costs
(note 5)
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18
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|
19
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|
|
49
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|
|
|
52
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|
|
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Total expenses
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6,662
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6,260
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20,556
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18,131
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Income (loss) before income taxes
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496
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1,182
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791
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|
781
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|
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Income taxes
|
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125
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|
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|
179
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|
164
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60
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Net income (loss)
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371
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1,003
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627
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721
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Per-share
information
(Canadian
dollars)
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Net income (loss) per common share - basic
(note 8)
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0.44
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1.18
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0.74
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0.85
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Net income (loss) per common share - diluted
(note 8)
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0.44
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1.18
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0.74
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0.85
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Dividends per common share
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0.16
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0.15
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0.47
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0.44
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(a)
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Amounts from related parties included in operating revenues.
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756
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448
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2,801
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1,457
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(b)
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Amounts to related parties included in purchases of crude oil and products.
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604
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623
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1,919
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1,540
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(c)
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Amounts to related parties included in production and manufacturing, and selling and general expenses.
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127
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|
133
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415
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|
394
|
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The information in the notes to consolidated financial statements is an integral part of these statements.
3
IMPERIAL OIL LIMITED
Consolidated statement of comprehensive income (U.S. GAAP, unaudited)
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Third Quarter
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Nine Months
to September 30
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millions of Canadian dollars
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2017
|
|
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2016
|
|
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2017
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2016
|
|
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Net income (loss)
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|
371
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1,003
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|
627
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721
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|
Other comprehensive income (loss), net of income taxes
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Post-retirement benefits liability adjustment (excluding amortization)
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-
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-
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41
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100
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Amortization of post-retirement benefits liability adjustment included in net periodic benefit costs
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34
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34
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106
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108
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Total other comprehensive income (loss)
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34
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34
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147
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208
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Comprehensive income (loss)
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405
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1,037
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|
774
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929
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The information in the notes to consolidated financial statements is an integral part of these statements.
4
IMPERIAL OIL LIMITED
Consolidated balance sheet (U.S. GAAP, unaudited)
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millions of Canadian dollars
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As at
Sept
30
2017
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As at
Dec
31
2016
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Assets
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Current assets
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|
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Cash
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833
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391
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Accounts receivable, less estimated doubtful accounts
(a)
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1,896
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2,023
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Inventories of crude oil and products
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|
989
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|
949
|
|
Materials, supplies and prepaid expenses
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441
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|
468
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Total current assets
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4,159
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3,831
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Investments and long-term receivables
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|
931
|
|
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1,030
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Property, plant and equipment,
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53,844
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53,515
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less accumulated depreciation and depletion
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(18,248
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)
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|
(17,182
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)
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Property, plant and equipment, net
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35,596
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36,333
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Goodwill
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|
186
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186
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Other assets, including intangibles, net
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498
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274
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Total assets
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41,370
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41,654
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Liabilities
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Current liabilities
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Notes and loans payable
(b)
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202
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202
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Accounts payable and accrued liabilities
(a) (note 7)
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3,041
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3,193
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|
Income taxes payable
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59
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488
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Total current liabilities
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3,302
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3,883
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Long-term debt
(c) (note 6)
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5,013
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|
5,032
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Other long-term obligations
(d) (note 7)
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3,698
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|
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|
3,656
|
|
Deferred income tax liabilities
|
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4,336
|
|
|
|
4,062
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|
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Total liabilities
|
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16,349
|
|
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16,633
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|
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Shareholders equity
|
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Common shares at stated value
(e) (note 8)
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1,547
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|
1,566
|
|
Earnings reinvested
(note 9)
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25,224
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|
25,352
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|
Accumulated other comprehensive income (loss)
(note 10)
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|
(1,750
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)
|
|
|
(1,897
|
)
|
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|
Total shareholders equity
|
|
|
25,021
|
|
|
|
25,021
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|
|
|
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Total liabilities and shareholders equity
|
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|
41,370
|
|
|
|
41,654
|
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(a)
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Accounts receivable, less estimated doubtful accounts included net amounts receivable from related parties of $87 million (2016 - $172 million).
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(b)
|
Notes and loans payable included amounts to related parties of $75 million (2016 - $75 million).
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(c)
|
Long-term debt included amounts to related parties of $4,447 million (2016 - $4,447 million).
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(d)
|
Other long-term obligations included amounts to related parties of $71 million (2016 - $104 million).
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(e)
|
Number of common shares authorized and outstanding were 1,100 million and 838 million, respectively (2016 - 1,100 million and 848 million, respectively).
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The information in the notes to consolidated financial statements is an integral part of these statements.
5
IMPERIAL OIL LIMITED
Consolidated statement of cash flows (U.S. GAAP, unaudited)
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|
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Inflow (outflow)
|
|
Third Quarter
|
|
|
Nine Months
to September 30
|
|
millions of Canadian dollars
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
371
|
|
|
|
1,003
|
|
|
|
627
|
|
|
|
721
|
|
Adjustments for
non-cash
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and depletion
|
|
|
391
|
|
|
|
398
|
|
|
|
1,135
|
|
|
|
1,229
|
|
(Gain) loss on asset sales
(note 3)
|
|
|
(6
|
)
|
|
|
(909
|
)
|
|
|
(219
|
)
|
|
|
(952
|
)
|
Deferred income taxes and other
|
|
|
131
|
|
|
|
215
|
|
|
|
294
|
|
|
|
35
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(297
|
)
|
|
|
275
|
|
|
|
127
|
|
|
|
(121
|
)
|
Inventories, materials, supplies and prepaid expenses
|
|
|
104
|
|
|
|
(7
|
)
|
|
|
(13
|
)
|
|
|
112
|
|
Income taxes payable
|
|
|
19
|
|
|
|
(13
|
)
|
|
|
(429
|
)
|
|
|
-
|
|
Accounts payable and accrued liabilities
|
|
|
81
|
|
|
|
(241
|
)
|
|
|
(159
|
)
|
|
|
(59
|
)
|
All other items - net
(a)
|
|
|
43
|
|
|
|
51
|
|
|
|
320
|
|
|
|
299
|
|
|
|
Cash flows from (used in) operating activities
|
|
|
837
|
|
|
|
772
|
|
|
|
1,683
|
|
|
|
1,264
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment
|
|
|
(241
|
)
|
|
|
(189
|
)
|
|
|
(683
|
)
|
|
|
(893
|
)
|
Proceeds from asset sales
(note 3)
|
|
|
8
|
|
|
|
1,194
|
|
|
|
230
|
|
|
|
1,244
|
|
Additional investments
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
Cash flows from (used in) investing activities
|
|
|
(234
|
)
|
|
|
1,005
|
|
|
|
(454
|
)
|
|
|
350
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt - net
|
|
|
-
|
|
|
|
(1,591
|
)
|
|
|
-
|
|
|
|
(1,679
|
)
|
Long-term debt - additions
(note 6)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
495
|
|
Reduction in capitalized lease obligations
(note 6)
|
|
|
(7
|
)
|
|
|
(6
|
)
|
|
|
(20
|
)
|
|
|
(21
|
)
|
Dividends paid
|
|
|
(136
|
)
|
|
|
(127
|
)
|
|
|
(390
|
)
|
|
|
(364
|
)
|
Common shares purchased
(note 8)
|
|
|
(250
|
)
|
|
|
-
|
|
|
|
(377
|
)
|
|
|
-
|
|
|
|
Cash flows from (used in) financing activities
|
|
|
(393
|
)
|
|
|
(1,724
|
)
|
|
|
(787
|
)
|
|
|
(1,569
|
)
|
|
|
|
|
|
|
|
Increase (decrease) in cash
|
|
|
210
|
|
|
|
53
|
|
|
|
442
|
|
|
|
45
|
|
Cash at beginning of period
|
|
|
623
|
|
|
|
195
|
|
|
|
391
|
|
|
|
203
|
|
|
|
Cash at end of period
(b)
|
|
|
833
|
|
|
|
248
|
|
|
|
833
|
|
|
|
248
|
|
|
|
(a) Included contribution to registered pension plans.
|
|
|
(78
|
)
|
|
|
(44
|
)
|
|
|
(176
|
)
|
|
|
(120
|
)
|
(b)
|
Cash is composed of cash in bank and cash equivalents at cost. Cash equivalents are all highly liquid securities with maturity of three months or less when purchased.
|
The information in the notes to consolidated financial statements is an integral part of these statements.
6
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 Generally Accepted Accounting Principles of the United States of America (GAAP) and follow the same accounting policies and methods of computation as, and should be read in conjunction with,
the most recent annual consolidated financial statements filed with the U.S. Securities and Exchange Commission (SEC) in the companys 2016 annual report on Form
10-K.
In the opinion of the company, the
information furnished herein reflects all known accruals and adjustments necessary for a fair statement of the results for the periods reported herein. All such adjustments are of a normal recurring nature. Prior data has been reclassified in
certain cases to conform to the current presentation basis.
The companys exploration and production activities are accounted for under the successful
efforts method.
The results for the nine months ended September 30, 2017, are not necessarily indicative of the operations to be expected for the full
year.
All amounts are in Canadian dollars unless otherwise indicated.
7
IMPERIAL OIL LIMITED
2. Business segments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
Upstream
|
|
|
Downstream
|
|
|
Chemical
|
|
millions of Canadian dollars
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
Revenues and other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
(a)
|
|
|
1,668
|
|
|
|
1,316
|
|
|
|
5,204
|
|
|
|
4,971
|
|
|
|
262
|
|
|
|
281
|
|
Intersegment sales
|
|
|
587
|
|
|
|
709
|
|
|
|
241
|
|
|
|
253
|
|
|
|
62
|
|
|
|
58
|
|
Investment and other income
(note 3)
|
|
|
7
|
|
|
|
1
|
|
|
|
15
|
|
|
|
870
|
|
|
|
-
|
|
|
|
1
|
|
|
|
|
|
|
2,262
|
|
|
|
2,026
|
|
|
|
5,460
|
|
|
|
6,094
|
|
|
|
324
|
|
|
|
340
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
|
|
|
7
|
|
|
|
16
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Purchases of crude oil and products
|
|
|
947
|
|
|
|
861
|
|
|
|
4,014
|
|
|
|
3,827
|
|
|
|
179
|
|
|
|
188
|
|
Production and manufacturing
|
|
|
893
|
|
|
|
887
|
|
|
|
394
|
|
|
|
323
|
|
|
|
51
|
|
|
|
51
|
|
Selling and general
|
|
|
5
|
|
|
|
(1
|
)
|
|
|
167
|
|
|
|
238
|
|
|
|
19
|
|
|
|
22
|
|
Federal excise tax
|
|
|
-
|
|
|
|
-
|
|
|
|
438
|
|
|
|
434
|
|
|
|
-
|
|
|
|
-
|
|
Depreciation and depletion
|
|
|
330
|
|
|
|
346
|
|
|
|
53
|
|
|
|
46
|
|
|
|
3
|
|
|
|
2
|
|
Financing costs
(note 5)
|
|
|
1
|
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
Total expenses
|
|
|
2,183
|
|
|
|
2,107
|
|
|
|
5,066
|
|
|
|
4,868
|
|
|
|
252
|
|
|
|
263
|
|
|
|
Income (loss) before income taxes
|
|
|
79
|
|
|
|
(81
|
)
|
|
|
394
|
|
|
|
1,226
|
|
|
|
72
|
|
|
|
77
|
|
Income taxes
|
|
|
17
|
|
|
|
(55
|
)
|
|
|
102
|
|
|
|
224
|
|
|
|
20
|
|
|
|
21
|
|
|
|
Net income (loss)
|
|
|
62
|
|
|
|
(26
|
)
|
|
|
292
|
|
|
|
1,002
|
|
|
|
52
|
|
|
|
56
|
|
|
|
Cash flows from (used in) operating activities
|
|
|
479
|
|
|
|
432
|
|
|
|
268
|
|
|
|
264
|
|
|
|
99
|
|
|
|
73
|
|
Capital and exploration expenditures
(b
)
|
|
|
92
|
|
|
|
149
|
|
|
|
55
|
|
|
|
38
|
|
|
|
5
|
|
|
|
7
|
|
|
|
|
|
|
|
Third Quarter
|
|
Corporate and Other
|
|
|
Eliminations
|
|
|
Consolidated
|
|
millions of Canadian dollars
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
Revenues and other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
(a)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,134
|
|
|
|
6,568
|
|
Intersegment sales
|
|
|
-
|
|
|
|
-
|
|
|
|
(890
|
)
|
|
|
(1,020
|
)
|
|
|
-
|
|
|
|
-
|
|
Investment and other income
(note 3)
|
|
|
2
|
|
|
|
2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
24
|
|
|
|
874
|
|
|
|
|
|
|
2
|
|
|
|
2
|
|
|
|
(890
|
)
|
|
|
(1,020
|
)
|
|
|
7,158
|
|
|
|
7,442
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7
|
|
|
|
16
|
|
Purchases of crude oil and products
|
|
|
-
|
|
|
|
-
|
|
|
|
(889
|
)
|
|
|
(1,019
|
)
|
|
|
4,251
|
|
|
|
3,857
|
|
Production and manufacturing
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,338
|
|
|
|
1,261
|
|
Selling and general
|
|
|
29
|
|
|
|
17
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
219
|
|
|
|
275
|
|
Federal excise tax
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
438
|
|
|
|
434
|
|
Depreciation and depletion
|
|
|
5
|
|
|
|
4
|
|
|
|
-
|
|
|
|
-
|
|
|
|
391
|
|
|
|
398
|
|
Financing costs
(note 5)
|
|
|
17
|
|
|
|
21
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18
|
|
|
|
19
|
|
|
|
Total expenses
|
|
|
51
|
|
|
|
42
|
|
|
|
(890
|
)
|
|
|
(1,020
|
)
|
|
|
6,662
|
|
|
|
6,260
|
|
|
|
Income (loss) before income taxes
|
|
|
(49
|
)
|
|
|
(40
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
496
|
|
|
|
1,182
|
|
Income taxes
|
|
|
(14
|
)
|
|
|
(11
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
125
|
|
|
|
179
|
|
|
|
Net income (loss)
|
|
|
(35
|
)
|
|
|
(29
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
371
|
|
|
|
1,003
|
|
|
|
Cash flows from (used in) operating activities
|
|
|
(9
|
)
|
|
|
3
|
|
|
|
-
|
|
|
|
-
|
|
|
|
837
|
|
|
|
772
|
|
Capital and exploration expenditures
(b)
|
|
|
7
|
|
|
|
11
|
|
|
|
-
|
|
|
|
-
|
|
|
|
159
|
|
|
|
205
|
|
|
|
(a)
|
Included export sales to the United States of $1,080 million (2016 - $941 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 capital leases, additional investments and acquisitions.
|
8
IMPERIAL OIL LIMITED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months to September 30
|
|
Upstream
|
|
|
Downstream
|
|
|
Chemical
|
|
millions of Canadian dollars
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
Revenues and other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
(a)
|
|
|
5,166
|
|
|
|
3,699
|
|
|
|
15,087
|
|
|
|
13,470
|
|
|
|
824
|
|
|
|
798
|
|
Intersegment sales
|
|
|
1,494
|
|
|
|
1,516
|
|
|
|
792
|
|
|
|
689
|
|
|
|
191
|
|
|
|
156
|
|
Investment and other income
(note 3)
|
|
|
17
|
|
|
|
22
|
|
|
|
248
|
|
|
|
919
|
|
|
|
(1
|
)
|
|
|
1
|
|
|
|
|
|
|
6,677
|
|
|
|
5,237
|
|
|
|
16,127
|
|
|
|
15,078
|
|
|
|
1,014
|
|
|
|
955
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
|
|
|
29
|
|
|
|
75
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Purchases of crude oil and products
|
|
|
3,089
|
|
|
|
2,584
|
|
|
|
12,037
|
|
|
|
10,139
|
|
|
|
573
|
|
|
|
518
|
|
Production and manufacturing
|
|
|
2,917
|
|
|
|
2,634
|
|
|
|
1,169
|
|
|
|
1,059
|
|
|
|
152
|
|
|
|
149
|
|
Selling and general
|
|
|
1
|
|
|
|
(3
|
)
|
|
|
540
|
|
|
|
729
|
|
|
|
60
|
|
|
|
63
|
|
Federal excise tax
|
|
|
-
|
|
|
|
-
|
|
|
|
1,253
|
|
|
|
1,237
|
|
|
|
-
|
|
|
|
-
|
|
Depreciation and depletion
|
|
|
964
|
|
|
|
1,053
|
|
|
|
148
|
|
|
|
158
|
|
|
|
9
|
|
|
|
6
|
|
Financing costs
(note 5)
|
|
|
5
|
|
|
|
(6
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
Total expenses
|
|
|
7,005
|
|
|
|
6,337
|
|
|
|
15,147
|
|
|
|
13,322
|
|
|
|
794
|
|
|
|
736
|
|
|
|
Income (loss) before income taxes
|
|
|
(328
|
)
|
|
|
(1,100
|
)
|
|
|
980
|
|
|
|
1,756
|
|
|
|
220
|
|
|
|
219
|
|
Income taxes
|
|
|
(103
|
)
|
|
|
(336
|
)
|
|
|
230
|
|
|
|
363
|
|
|
|
59
|
|
|
|
59
|
|
|
|
Net income (loss)
|
|
|
(225
|
)
|
|
|
(764
|
)
|
|
|
750
|
|
|
|
1,393
|
|
|
|
161
|
|
|
|
160
|
|
|
|
Cash flows from (used in) operating activities
|
|
|
904
|
|
|
|
32
|
|
|
|
626
|
|
|
|
1,028
|
|
|
|
176
|
|
|
|
205
|
|
Capital and exploration expenditures
(b)
|
|
|
286
|
|
|
|
745
|
|
|
|
128
|
|
|
|
145
|
|
|
|
12
|
|
|
|
21
|
|
Total assets as at September 30
|
|
|
35,387
|
|
|
|
36,975
|
|
|
|
4,671
|
|
|
|
4,403
|
|
|
|
365
|
|
|
|
379
|
|
|
|
|
|
|
|
Nine Months to September 30
|
|
Corporate and Other
|
|
|
Eliminations
|
|
|
Consolidated
|
|
millions of Canadian dollars
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
Revenues and other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
(a)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
21,077
|
|
|
|
17,967
|
|
Intersegment sales
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,477
|
)
|
|
|
(2,361
|
)
|
|
|
-
|
|
|
|
-
|
|
Investment and other income
(note 3)
|
|
|
6
|
|
|
|
3
|
|
|
|
-
|
|
|
|
-
|
|
|
|
270
|
|
|
|
945
|
|
|
|
|
|
|
6
|
|
|
|
3
|
|
|
|
(2,477
|
)
|
|
|
(2,361
|
)
|
|
|
21,347
|
|
|
|
18,912
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
29
|
|
|
|
75
|
|
Purchases of crude oil and products
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,473
|
)
|
|
|
(2,357
|
)
|
|
|
13,226
|
|
|
|
10,884
|
|
Production and manufacturing
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,238
|
|
|
|
3,842
|
|
Selling and general
|
|
|
29
|
|
|
|
27
|
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
626
|
|
|
|
812
|
|
Federal excise tax
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,253
|
|
|
|
1,237
|
|
Depreciation and depletion
|
|
|
14
|
|
|
|
12
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,135
|
|
|
|
1,229
|
|
Financing costs
(note 5)
|
|
|
44
|
|
|
|
58
|
|
|
|
-
|
|
|
|
-
|
|
|
|
49
|
|
|
|
52
|
|
|
|
Total expenses
|
|
|
87
|
|
|
|
97
|
|
|
|
(2,477
|
)
|
|
|
(2,361
|
)
|
|
|
20,556
|
|
|
|
18,131
|
|
|
|
Income (loss) before income taxes
|
|
|
(81
|
)
|
|
|
(94
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
791
|
|
|
|
781
|
|
Income taxes
|
|
|
(22
|
)
|
|
|
(26
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
164
|
|
|
|
60
|
|
|
|
Net income (loss)
|
|
|
(59
|
)
|
|
|
(68
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
627
|
|
|
|
721
|
|
|
|
Cash flows from (used in) operating activities
|
|
|
(23
|
)
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
1,683
|
|
|
|
1,264
|
|
Capital and exploration expenditures
(b)
|
|
|
29
|
|
|
|
37
|
|
|
|
-
|
|
|
|
-
|
|
|
|
455
|
|
|
|
948
|
|
Total assets as at September 30
|
|
|
1,283
|
|
|
|
674
|
|
|
|
(336
|
)
|
|
|
(337
|
)
|
|
|
41,370
|
|
|
|
42,094
|
|
|
|
(a)
|
Included export sales to the United States of $3,024 million (2016 - $2,704 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 capital leases, additional investments and acquisitions.
|
9
IMPERIAL OIL LIMITED
3.
|
Investment and other income
|
Investment and other income included gains and losses on asset sales as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
Nine Months
to September 30
|
|
millions of Canadian dollars
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
Proceeds from asset sales
|
|
|
8
|
|
|
|
1,194
|
|
|
|
230
|
|
|
|
1,244
|
|
Book value of asset sales
|
|
|
2
|
|
|
|
285
|
|
|
|
12
|
|
|
|
292
|
|
|
|
Gain (loss) on asset sales, before tax
(a) (b)
|
|
|
6
|
|
|
|
909
|
|
|
|
219
|
|
|
|
952
|
|
|
|
Gain (loss) on asset sales, after tax
(a) (b)
|
|
|
5
|
|
|
|
774
|
|
|
|
191
|
|
|
|
808
|
|
|
|
(a)
|
The nine months ended September 30, 2017 included a gain of $174 million ($151 million after tax) for the sale of a surplus property in Ontario.
|
(b)
|
Third quarter and nine months ended September 30, 2016, included gains of $0.8 billion ($0.7 billion, after tax) from the sale of company-owned Esso retail sites in British Columbia, Alberta,
Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia and Newfoundland.
|
4.
|
Employee retirement benefits
|
The components of net benefit cost were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
Nine Months
to September 30
|
|
millions of Canadian dollars
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
Pension benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current service cost
|
|
|
54
|
|
|
|
50
|
|
|
|
163
|
|
|
|
152
|
|
Interest cost
|
|
|
77
|
|
|
|
82
|
|
|
|
235
|
|
|
|
240
|
|
Expected return on plan assets
|
|
|
(104
|
)
|
|
|
(101
|
)
|
|
|
(306
|
)
|
|
|
(300
|
)
|
Amortization of prior service cost
|
|
|
2
|
|
|
|
2
|
|
|
|
7
|
|
|
|
7
|
|
Amortization of actuarial loss (gain)
|
|
|
43
|
|
|
|
39
|
|
|
|
132
|
|
|
|
121
|
|
|
|
Net periodic benefit cost
|
|
|
72
|
|
|
|
72
|
|
|
|
231
|
|
|
|
220
|
|
|
|
|
|
|
|
|
Other post-retirement benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current service cost
|
|
|
4
|
|
|
|
4
|
|
|
|
12
|
|
|
|
12
|
|
Interest cost
|
|
|
6
|
|
|
|
7
|
|
|
|
18
|
|
|
|
20
|
|
Amortization of actuarial loss (gain)
|
|
|
2
|
|
|
|
3
|
|
|
|
6
|
|
|
|
10
|
|
|
|
Net periodic benefit cost
|
|
|
12
|
|
|
|
14
|
|
|
|
36
|
|
|
|
42
|
|
|
|
5.
|
Financing costs and additional notes and loans payable information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
Nine Months
to September 30
|
|
millions of Canadian dollars
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
Debt-related interest
|
|
|
24
|
|
|
|
32
|
|
|
|
73
|
|
|
|
95
|
|
Capitalized interest
|
|
|
(7)
|
|
|
|
(11)
|
|
|
|
(29)
|
|
|
|
(37)
|
|
|
|
Net interest expense
|
|
|
17
|
|
|
|
21
|
|
|
|
44
|
|
|
|
58
|
|
Other interest
|
|
|
1
|
|
|
|
(2)
|
|
|
|
5
|
|
|
|
(6)
|
|
|
|
Total financing costs
|
|
|
18
|
|
|
|
19
|
|
|
|
49
|
|
|
|
52
|
|
|
|
10
IMPERIAL OIL LIMITED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at
Sept 30
|
|
|
As at
Dec 31
|
|
millions of Canadian dollars
|
|
2017
|
|
|
2016
|
|
|
|
Long-term debt
|
|
|
4,447
|
|
|
|
4,447
|
|
Capital leases
|
|
|
566
|
|
|
|
585
|
|
|
|
Total long-term debt
|
|
|
5,013
|
|
|
|
5,032
|
|
|
|
7.
|
Other long-term obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at
Sept 30
|
|
|
As at
Dec 31
|
|
millions of Canadian dollars
|
|
2017
|
|
|
2016
|
|
|
|
Employee retirement benefits
(a)
|
|
|
1,410
|
|
|
|
1,645
|
|
Asset retirement obligations and other environmental liabilities
(b)
|
|
|
1,577
|
|
|
|
1,544
|
|
Share-based incentive compensation liabilities
|
|
|
138
|
|
|
|
139
|
|
Other obligations
|
|
|
573
|
|
|
|
328
|
|
|
|
Total other long-term obligations
|
|
|
3,698
|
|
|
|
3,656
|
|
|
|
(a)
|
Total recorded employee retirement benefits obligations also included $58 million in current liabilities (2016 - $58 million).
|
(b)
|
Total asset retirement obligations and other environmental liabilities also included $108 million in current liabilities (2016 - $108 million).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
Sept 30
|
|
|
As of
Dec 31
|
|
thousands of shares
|
|
2017
|
|
|
2016
|
|
|
|
Authorized
|
|
|
1,100,000
|
|
|
|
1,100,000
|
|
Common shares outstanding
|
|
|
837,581
|
|
|
|
847,599
|
|
|
|
From 1995 through September 2017, the company had a series of
12-month
normal course issuer bid
share purchase programs. Cumulatively, 916,563 thousand shares were purchased under these programs. Exxon Mobil Corporations participation in these programs, including concurrent programs outside the normal course issuer bids, maintained
its ownership interest in Imperial at approximately 69.6 percent.
The current
12-month
normal course issuer bid
program was announced on June 22, 2017, under which Imperial plans to continue its share purchase program. The program enables the company to purchase up to a maximum of 25,395,927 common shares (3 percent of the total shares on
June 13, 2017), which includes shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid. As in the past, Exxon Mobil Corporation has advised the company
that it intends to participate to maintain its ownership percentage at approximately 69.6 percent. The results of these activities are as shown below:
|
|
|
|
|
|
|
|
|
year
|
|
Purchased shares
thousands
|
|
|
Millions of
dollars
|
|
|
|
1995 - 2015
|
|
|
906,544
|
|
|
|
15,708
|
|
2016 - Third quarter
|
|
|
-
|
|
|
|
-
|
|
- Full year
|
|
|
1
|
|
|
|
-
|
|
2017 - Third quarter
|
|
|
6,732
|
|
|
|
250
|
|
-
Year-to-date
|
|
|
10,018
|
|
|
|
377
|
|
|
|
Cumulative purchase to date
|
|
|
916,563
|
|
|
|
16,085
|
|
|
|
11
IMPERIAL OIL LIMITED
The excess of the purchase cost over the stated value of shares purchased has been recorded as a distribution of
earnings reinvested.
The following table provides the calculation of net income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
|
|
|
|
Third Quarter
|
|
|
to September 30
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
Net income (loss) per common share - basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
(millions of Canadian dollars)
|
|
|
371
|
|
|
|
1,003
|
|
|
|
627
|
|
|
|
721
|
|
Weighted average number of common shares outstanding
(millions of
shares)
|
|
|
841.8
|
|
|
|
847.6
|
|
|
|
845.5
|
|
|
|
847.6
|
|
Net income (loss) per common share
(dollars)
|
|
|
0.44
|
|
|
|
1.18
|
|
|
|
0.74
|
|
|
|
0.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share - diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
(millions of Canadian dollars)
|
|
|
371
|
|
|
|
1,003
|
|
|
|
627
|
|
|
|
721
|
|
Weighted average number of common shares outstanding
(millions of
shares)
|
|
|
841.8
|
|
|
|
847.6
|
|
|
|
845.5
|
|
|
|
847.6
|
|
Effect of employee share-based awards
(millions of shares)
|
|
|
3.1
|
|
|
|
3.2
|
|
|
|
2.9
|
|
|
|
3.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding, assuming dilution
(millions
of shares)
|
|
|
844.9
|
|
|
|
850.8
|
|
|
|
848.4
|
|
|
|
850.6
|
|
|
|
|
|
|
Net income (loss) per common share
(dollars)
|
|
|
0.44
|
|
|
|
1.18
|
|
|
|
0.74
|
|
|
|
0.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
|
|
|
|
Third Quarter
|
|
|
to September 30
|
|
millions of Canadian dollars
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings reinvested at beginning of period
|
|
|
25,224
|
|
|
|
23,160
|
|
|
|
25,352
|
|
|
|
23,687
|
|
Net income (loss) for the period
|
|
|
371
|
|
|
|
1,003
|
|
|
|
627
|
|
|
|
721
|
|
Share purchases in excess of stated value
|
|
|
(237
|
)
|
|
|
-
|
|
|
|
(358
|
)
|
|
|
-
|
|
Dividends declared
|
|
|
(134
|
)
|
|
|
(127
|
)
|
|
|
(397
|
)
|
|
|
(373
|
)
|
Earnings reinvested at end of period
|
|
|
25,224
|
|
|
|
24,036
|
|
|
|
25,224
|
|
|
|
24,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
IMPERIAL OIL LIMITED
10.
|
Other comprehensive income (loss) information
|
Changes in accumulated other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
millions of Canadian dollars
|
|
2017
|
|
|
2016
|
|
|
|
Balance at January 1
|
|
|
(1,897
|
)
|
|
|
(1,828
|
)
|
Post-retirement benefits liability adjustment:
|
|
|
|
|
|
|
|
|
Current period change excluding amounts reclassified from accumulated other comprehensive
income
|
|
|
41
|
|
|
|
100
|
|
Amounts reclassified from accumulated other comprehensive income
|
|
|
106
|
|
|
|
108
|
|
|
|
Balance at September 30
|
|
|
(1,750
|
)
|
|
|
(1,620
|
)
|
|
|
Amounts reclassified out of accumulated other comprehensive income (loss) -
before-tax
income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
Nine Months
to September 30
|
|
millions of Canadian dollars
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
Amortization of post-retirement benefits liability adjustment
included in net periodic benefit cost
(a)
|
|
|
(47
|
)
|
|
|
(44
|
)
|
|
|
(145
|
)
|
|
|
(138
|
)
|
|
|
(a) This accumulated other comprehensive income component is included in
the computation of net periodic benefit cost (note 4).
|
|
Income tax expense (credit) for components of other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
Nine Months
to September 30
|
|
millions of Canadian dollars
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
Post-retirement benefits liability adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-retirement benefits liability adjustment (excluding amortization)
|
|
|
-
|
|
|
|
-
|
|
|
|
16
|
|
|
|
37
|
|
Amortization of post-retirement benefits liability adjustment included in
net periodic benefit
cost
|
|
|
13
|
|
|
|
10
|
|
|
|
39
|
|
|
|
30
|
|
|
|
Total
|
|
|
13
|
|
|
|
10
|
|
|
|
55
|
|
|
|
67
|
|
|
|
11.
|
Recently issued accounting standards
|
In May 2014, the Financial Accounting Standards Board (FASB) issued a new
standard,
Revenue from Contracts with Customers
. The standard establishes a single revenue recognition model for all contracts with customers, eliminates industry specific requirements and expands disclosure requirements. The standard is
required to be adopted beginning January 1, 2018. The company expects to adopt the standard using the modified retrospective method, under which prior years results are not restated, but supplemental information on the impact of the new
standard will be included in the 2018 results. The impact from the standard is not expected to have a material effect on the companys financial statements.
In February 2016, the FASB issued a new standard
, Leases
. The standard requires all leases with an initial term greater than one year be recorded on the balance
sheet as a lease asset and lease liability. The standard is required to be adopted beginning January 1, 2019. Imperial is evaluating the standard and its effect on the companys financial statements and plans to adopt it in 2019.
13
IMPERIAL OIL LIMITED
In March 2017, the FASB issued an Accounting Standards Update
2017-07,
Compensation Retirement Benefits (Topic 715):
Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
. The update requires that the service cost component of net benefit costs be reported in
the same line in the income statement as other compensation costs and that the other components of net benefit costs be presented separately from the service cost component. Additionally, only the service cost component of net benefit costs will be
eligible for capitalization. Imperial will adopt the update beginning January 1, 2018. As a result of Imperials adoption of the update, the company expects to add a new line
Non-service
pension and
other postretirement benefit expense to its consolidated statement of income. This line would reflect the other components of net benefit costs as described in the Accounting Standards Update and would include amounts that were previously
included in Production and manufacturing expenses, and Selling and general expenses. As of January 1, 2018, these costs will no longer be considered for capitalization. The impact from this change on the companys net income is not
expected to be material. Furthermore, as part of the adoption of the update, the company expects it will include all of these costs in its Corporate and Other expenses.
14
IMPERIAL OIL LIMITED
Item 2.
|
Managements discussion and analysis of financial condition and results of operations
|
Operating results
Third quarter 2017 vs. third quarter 2016
The companys net
income for the third quarter of 2017 was $371 million or $0.44
per-share
on a diluted basis, compared to the net income of $1,003 million or $1.18
per-share
for the same period last year. Third quarter 2016 results included a $716 million gain from the sale of retail sites.
Upstream recorded net income in the
third quarter of $62 million, compared to a net loss of $26 million in the same period of 2016. Results in the third quarter of 2017 reflected the impact of higher Canadian crude oil realizations of about $190 million and higher Kearl
volumes of about $50 million. These impacts were partially offset by lower Syncrude and conventional volumes of about $80 million, including the absence of production at Norman Wells, and higher royalties of about $50 million.
West Texas Intermediate (WTI) averaged US$48.23 per barrel in the third quarter of 2017, up from US$44.94 per barrel in the same quarter of 2016. Western Canada Select
(WCS) averaged US$38.29 per barrel and US$31.43 per barrel respectively for the same periods. The WTI / WCS differential narrowed to 21 percent in the third quarter of 2017, from 30 percent in the same period of 2016.
The Canadian dollar averaged US$0.80 in the third quarter of 2017, an increase of US$0.03 from the third quarter of 2016.
Imperials average Canadian dollar realizations for bitumen and synthetic crudes increased generally in line with the North American benchmarks, adjusted for
changes in exchange rates and transportation costs. Bitumen realizations averaged $39.02 per barrel for the third quarter of 2017, an increase of $8.86 per barrel versus the third quarter of 2016. Synthetic crude realizations averaged $61.14 per
barrel, an increase of $2.17 per barrel for the same period of 2016.
Gross production of Cold Lake bitumen averaged 163,000 barrels per day in the third quarter, up
from 157,000 barrels per day in the same period last year. The higher production was mainly due to the timing of the steam cycles.
Gross production of Kearl
bitumen averaged 182,000 barrels per day in the third quarter (129,000 barrels Imperials share) up from 159,000 barrels per day (113,000 barrels Imperials share) during the third quarter of 2016. Higher production was mainly the result
of improved reliability.
The companys share of gross production from Syncrude averaged 74,000 barrels per day, compared to 85,000 barrels per day in the
third quarter of 2016. Repairs associated with the Syncrude Mildred Lake upgrader fire were completed in late July. Lower third quarter volumes reflect the impact of the fire on operations, when compared to the same quarter in 2016.
Downstream net income was $292 million in the third quarter, compared to $1,002 million in the same period of 2016. Earnings decreased mainly due to the
absence of a $716 million gain from the sale of company-owned retail sites and higher refining turnaround activity of about $100 million. These factors were partly offset by higher refining margins of about $140 million.
Refinery throughput averaged 385,000 barrels per day, compared to 407,000 barrels per day in the third quarter of 2016. Reduced throughput reflects increased turnaround
activity associated with the Nanticoke refinery in the third quarter 2017.
Petroleum product sales were 500,000 barrels per day, compared to 505,000 barrels per
day in the third quarter of 2016.
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IMPERIAL OIL LIMITED
Chemical net income was $52 million in the third quarter, compared to $56 million in the same quarter of
2016.
Net income effects from Corporate and Other were negative $35 million in the third quarter, compared to negative $29 million in the same period of
2016.
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IMPERIAL OIL LIMITED
Nine months 2017 vs. nine months 2016
Net income in the first nine months of 2017 was $627 million, or $0.74
per-share
on a diluted basis versus net income of
$721 million or $0.85 per-share in the first nine months of 2016.
Upstream recorded a net loss of $225 million in the first nine months of 2017, compared
to a net loss of $764 million from the same period of 2016. Results reflected the impact of higher Canadian crude oil realizations of about $940 million and higher Kearl volumes of about $50 million. These impacts were partially
offset by higher royalties of about $150 million, lower Syncrude and conventional volumes of about $130 million, including the absence of production at Norman Wells, higher energy costs of about $90 million, and higher operating
expenses at Syncrude of about $90 million.
West Texas Intermediate averaged US$49.40 per barrel in the first nine months of 2017, up from US$41.54 per barrel
in the same period of 2016. Western Canada Select averaged US$37.57 per barrel and US$27.74 per barrel respectively for the same periods. The WTI / WCS differential narrowed to 24 percent in the first nine months of 2017, from 33 percent
in the same period of 2016.
During the first nine months of 2017, the Canadian dollar strengthened relative to the US dollar versus the same period of 2016. The
Canadian dollar averaged US$0.77 in the first nine months of 2017, an increase of about US$0.01 from the same period of 2016.
Imperials average Canadian
dollar realizations for bitumen and synthetic crudes increased generally in line with the North American benchmarks, adjusted for changes in the exchange rate and transportation costs. Bitumen realizations averaged $37.82 per barrel for the first
nine months of 2017, an increase of $14.05 per barrel versus the same period of 2016. Synthetic crude realizations averaged $64.37 per barrel, an increase of $10.92 per barrel from the same period of 2016.
Gross production of Cold Lake bitumen averaged 161,000 barrels per day in the first nine months of 2017, compared to 162,000 barrels per day from the same period of
2016.
Gross production of Kearl bitumen averaged 179,000 barrels per day in the first nine months of 2017 (127,000 barrels Imperials share) up from 169,000
barrels per day (120,000 barrels Imperials share) from the same period of 2016. Increased 2017 production reflects improved reliability associated with the mining and ore preparation operations.
During the first nine months of 2017, the companys share of gross production from Syncrude averaged 56,000 barrels per day, compared to 61,000 barrels per day
from the same period of 2016. Syncrude year to date production was impacted by the March 2017 fire at the Syncrude Mildred Lake upgrader and planned maintenance. In 2016, production was impacted by the Alberta wildfires and planned maintenance.
Downstream net income was $750 million, compared to $1,393 million from the same period of 2016. Earnings decreased mainly due to the absence of a
$719 million gain from the sale of company-owned retail sites and lower marketing margins of approximately $170 million associated with the impact of the retail divestment. These factors were partially offset by a gain of $151 million
from the sale of a surplus property and higher industry refining margins of about $90 million.
Refinery throughput averaged 381,000 barrels per day in the
first nine months of 2017, up from 351,000 barrels per day from the same period of 2016. Capacity utilization increased to 90 percent from 83 percent in the same period of 2016, reflecting reduced turnaround maintenance activity.
Petroleum product sales were 492,000 barrels per day in the first nine months of 2017, up from 481,000 barrels per day from the same period of 2016. Sales growth
continues to be driven by strong collaboration across our downstream value chain and the expansion of Imperials wholesale, industrial and commercial networks.
Chemical net income was $161 million, up from $160 million from the same period of 2016.
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IMPERIAL OIL LIMITED
For the first nine months of 2017, net income effects from Corporate and Other were negative $59 million, versus
negative $68 million from the same period of 2016.
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IMPERIAL OIL LIMITED
Liquidity and capital resources
Cash flow generated from operating activities was $837 million in the third quarter, compared with $772 million in the corresponding period in 2016.
Investing activities used net cash of $234 million in the third quarter, compared with $1,005 million cash generated from investing activities in the same
period of 2016, reflecting lower proceeds from asset sales.
Cash used in financing activities was $393 million in the third quarter, compared with
$1,724 million in the third quarter of 2016, reflecting the absence of debt repayments. Dividends paid in the third quarter of 2017 were $136 million. The
per-share
dividend paid in the third quarter
was $0.16, up from $0.15 in the same period of 2016. In the second quarter of 2017, Imperial resumed share purchases under its share buyback program. During the third quarter, the company purchased about 6.7 million shares for approximately
$250 million.
The companys cash balance was $833 million at September 30, 2017, versus $248 million at the end of the third quarter of
2016.
Cash flow generated from operating activities was $1,683 million in the first nine months of 2017, compared with $1,264 million in 2016, reflecting
higher earnings, excluding the impact of asset sales, partially offset by unfavourable working capital effects.
Investing activities used net cash of
$454 million in the first nine months of 2017, compared with cash generated from investing activities of $350 million from the same period of 2016, reflecting lower proceeds from asset sales partially offset by lower additions to property,
plant and equipment.
Cash used in financing activities was $787 million in the first nine months of 2017, compared with $1,569 million from the same
period of 2016, reflecting the absence of debt repayments. Dividends paid in the first nine months of 2017 were $390 million. The
per-share
dividend paid in the first nine months of 2017 was $0.46, up
from $0.43 for the same period of 2016.
During the first nine months of 2017 the company purchased about 10 million shares for $377 million, including
shares purchased from Exxon Mobil Corporation.
Recently issued accounting standards
In May 2014, the Financial Accounting Standards Board (FASB) issued a new standard,
Revenue from Contracts with Customers
. The standard establishes a single
revenue recognition model for all contracts with customers, eliminates industry specific requirements and expands disclosure requirements. The standard is required to be adopted beginning January 1, 2018. The company expects to adopt the
standard using the modified retrospective method, under which prior years results are not restated, but supplemental information on the impact of the new standard will be included in the 2018 results. The impact from the standard is not
expected to have a material effect on the companys financial statements.
In February 2016, the FASB issued a new standard
, Leases
. The standard
requires all leases with an initial term greater than one year be recorded on the balance sheet as a lease asset and lease liability. The standard is required to be adopted beginning January 1, 2019. Imperial is evaluating the standard and its
effect on the companys financial statements and plans to adopt it in 2019.
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IMPERIAL OIL LIMITED
In March 2017, the FASB issued an Accounting Standards Update
2017-07,
Compensation Retirement Benefits (Topic 715):
Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
. The update requires that the service cost component of net benefit costs be reported in
the same line in the income statement as other compensation costs and that the other components of net benefit costs be presented separately from the service cost component. Additionally, only the service cost component of net benefit costs will be
eligible for capitalization. Imperial will adopt the update beginning January 1, 2018. As a result of Imperials adoption of the update, the company expects to add a new line
Non-service
pension and
other postretirement benefit expense to its consolidated statement of income. This line would reflect the other components of net benefit costs as described in the Accounting Standards Update and would include amounts that were previously
included in Production and manufacturing expenses, and Selling and general expenses. As of January 1, 2018, these costs will no longer be considered for capitalization. The impact from this change on the companys net income is not
expected to be material. Furthermore, as part of the adoption of the update, the company expects it will include all of these costs in its Corporate and Other expenses.
Forward-looking statements
Statements in this report regarding future
events or conditions are forward-looking statements. Actual future financial and operating results could differ materially due to the impact of market conditions, changes in law or governmental policy, changes in operating conditions and costs,
changes in project schedules, operating performance, demand for oil and gas, commercial negotiations or other technical and economic factors.
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IMPERIAL OIL LIMITED