Financial Data and Key Metrics Changes - The company generated CAD 1.9 billion in cash flow from operations in Q4 2025 and CAD 6.7 billion for the full year [5] - Cash on hand at year-end 2025 exceeded CAD 1.1 billion after funding capital programs and returning CAD 2.1 billion to shareholders in Q4 [5] - Net income for Q4 was CAD 492 million, down CAD 257 million from Q4 2024, primarily due to lower upstream realizations [13] - Fourth quarter cash flows from operating activities were CAD 1.918 billion, with normalized cash flow at approximately CAD 1.585 billion [16] Business Line Data and Key Metrics Changes - Upstream segment reported a loss of CAD 2 million in Q4, down CAD 730 million from Q3 2025, while downstream earnings increased to CAD 519 million, up CAD 75 million from Q3 [14] - Chemical business generated earnings of CAD 9 million, down CAD 12 million from Q4 2024, reflecting bottom-of-cycle margin conditions [14][27] - Kearl's production averaged 274,000 barrels per day in Q4, down 42,000 barrels from Q3, while Cold Lake's production averaged 153,000 barrels per day, up 3,000 barrels from Q3 [19][22] Market Data and Key Metrics Changes - Refinery throughput in Q4 averaged 408,000 barrels per day, with a utilization rate of 94%, down from Q3 due to maintenance [26] - The company noted strong distillate refining margins in Q4, particularly in November, contributing to robust refining earnings [51][82] Company Strategy and Development Direction - The company aims to maximize the value of existing assets, progress restructuring plans, and deliver industry-leading shareholder returns [10][28] - Focus on optimizing production across the asset base, lowering unit costs, and increasing cash flow generation remains a priority [28] - The restructuring announced in September is progressing as planned, with a goal of achieving CAD 150 million in annual savings starting in 2028 [86] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate operational challenges, including extreme weather conditions impacting production [34] - The outlook for Canadian heavy oil remains stable, with no significant changes observed despite external market fluctuations [60] - The company is well-positioned to capture market demand and enhance profitability through its integrated business model and strategic investments [49][82] Other Important Information - The company declared a dividend of CAD 0.87 per share, marking a 20% increase, the largest nominal dividend increase in company history [10] - A one-time charge of CAD 320 million was recorded due to the decision to cease production at the Norman Wells asset [8] - The company completed a comprehensive review of inventory practices, identifying opportunities for enhanced efficiency [9][57] Q&A Session Summary Question: Discussion on Kearl's production impacts due to wet conditions - Management acknowledged the significant impact of wet conditions on production and outlined plans to improve operational protocols to mitigate future risks [32][34] Question: Background on the Mahican SA-SAGD project - The Mahican project will utilize similar technology to the successful Grand Rapids operation, targeting a production of 30,000 barrels per day starting in 2029 [39][40] Question: Shareholder returns and potential NCIB - Management confirmed that the dividend increase reflects confidence in long-term strategies and that NCIB remains a complementary part of their capital allocation approach [44][46] Question: Refining earnings resilience and market outlook - Management highlighted strong refining margins and the ability to adapt production to market demands, ensuring profitability even in fluctuating conditions [48][51] Question: Optimization of materials and supplies inventory - The company is implementing a standardized approach to inventory management, leveraging technology and best practices to enhance efficiency [57][58] Question: Outlook for Western Canadian heavy oil - Management noted no significant changes in market fundamentals for Canadian heavies, maintaining a focus on their integrated business model [60][62]

Financial Data and Key Metrics Changes - The company generated CAD 1.9 billion in cash flow from operations in Q4 2025 and CAD 6.7 billion for the full year [4] - Net income for Q4 was CAD 492 million, down CAD 257 million from Q4 2024, primarily due to lower upstream realizations [12] - The company ended the year with over CAD 1.1 billion in cash on hand after returning CAD 4.6 billion to shareholders in 2025 [4][16] Business Line Data and Key Metrics Changes - Upstream production averaged 444,000 oil equivalent barrels per day in Q4, down 18,000 from Q3 2025 [17] - Downstream earnings were CAD 519 million, up CAD 75 million from Q3, mainly due to higher margins [13] - The chemical business generated earnings of CAD 9 million, down CAD 12 million from Q4 2024, reflecting challenging market conditions [24] Market Data and Key Metrics Changes - The refining sector saw strong margins, particularly in November, contributing to robust downstream earnings [48] - Distillate refining margins were notably strong, allowing the company to optimize production for higher returns [48][79] Company Strategy and Development Direction - The company aims to maximize the value of existing assets and continue delivering industry-leading shareholder returns [9][25] - A focus on optimizing inventory management practices is expected to enhance operational efficiency and reduce costs [7][53] - The company is progressing with its restructuring plan, which is anticipated to yield CAD 150 million in annual savings starting in 2028 [83] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving production targets despite challenges from weather conditions [32][33] - The company remains focused on maintaining a reliable and growing dividend, reflecting confidence in future cash flow generation [41][42] - The outlook for Canadian heavy oil remains stable, with no significant changes observed despite external market fluctuations [57][59] Other Important Information - The company declared a dividend of CAD 0.87 per share, marking a 21% increase, the largest nominal dividend increase in its history [9] - A one-time charge of CAD 320 million was recorded due to the accelerated cessation of production at the Norman Wells asset [6][11] Q&A Session Summary Question: Discussion on Kearl's production impacts due to wet conditions - Management acknowledged the significant impact of exceptionally wet conditions on production and outlined plans to improve operational protocols to mitigate future risks [30][32] Question: Details on the Mahican SA-SAGD project - The Mahican project will utilize similar technology to the successful Grand Rapids operation, with a planned startup in 2029 and a target production of 30,000 barrels per day [36][37] Question: Shareholder returns and potential NCIB - Management confirmed that the dividend increase reflects confidence in long-term strategies and that the NCIB remains a complementary part of their capital allocation approach [41][44] Question: Insights on refining margins and market conditions - Management highlighted strong refining margins and the ability to adjust production to capture high-value markets, ensuring resilience in the downstream business [45][48] Question: Optimization of materials and supplies inventory - The company is implementing a standardized approach to inventory management, leveraging technology and best practices to enhance efficiency and reduce complexity [53][55] Question: Outlook for Western Canadian heavy oil - Management noted no significant changes in the market fundamentals for Canadian heavy oil, maintaining a focus on their integrated business model and competitive positioning [57][59]

Financial Performance - Net income for Q4 2025 was $492 million, down from $1,225 million in Q4 2024, with net income excluding identified items at $968 million compared to $1,225 million in the previous year[2][9] - Full-year estimated net income for 2025 was $3,268 million, down from $4,790 million in 2024, with net income excluding identified items at $4,299 million[2][33] - Net income for 2025 was $3,268 million, a decline of 31.5% compared to $4,790 million in 2024[59] - Net income for Q4 2025 was CAD 492 million, a decrease of 60% from CAD 1,225 million in Q4 2024[63] - Total revenues for Q4 2025 were CAD 11,280 million, down 10.5% from CAD 12,607 million in Q4 2024[63] - Upstream revenues decreased to CAD 3,599 million in Q4 2025 from CAD 4,686 million in Q4 2024, a decline of 23.2%[63] - Total revenues for 2025 were $47,078 million, down from $51,532 million in 2024, reflecting a decrease of approximately 8.5%[59] Cash Flow and Expenditures - Cash flows from operating activities increased to $1,918 million in Q4 2025, up from $1,789 million in Q4 2024, while cash flows excluding working capital were $1,260 million[3][9] - Cash flows from operating activities increased to $6,708 million in 2025 from $5,981 million in 2024, representing a growth of 12.2%[42] - Capital and exploration expenditures rose to $651 million in Q4 2025, compared to $423 million in Q4 2024[3][9] - Capital and exploration expenditures increased to CAD 651 million in Q4 2025, compared to CAD 423 million in Q4 2024, a rise of 54%[63] Shareholder Returns - The company returned $2,072 million to shareholders in Q4 2025, including $361 million in dividends and $1,711 million in share repurchases[6][9] - Quarterly dividend increased by 20% from $0.72 to $0.87 per share[6][9] - Dividends paid increased to $1,401 million in 2025 from $1,238 million in 2024, reflecting a rise of 13.2%[44] - The company plans to continue its share repurchase program, having received approval to buy up to 25,452,248 common shares from June 29, 2025, to June 28, 2026[45] Production and Operational Metrics - Upstream production averaged 444,000 gross oil-equivalent barrels per day in Q4 2025, a decrease from 460,000 barrels per day in Q4 2024, with Kearl production impacted by wet weather[4][9] - Gross crude oil production averaged 439,000 barrels per day in Q4 2025, a decrease from 455,000 barrels per day in Q4 2024[65] - Total crude oil production for the year 2025 was 433,000 barrels per day, an increase from 428,000 barrels per day in 2024[65] - Refinery throughput averaged 408,000 barrels per day in Q4 2025, slightly down from 411,000 barrels per day in Q4 2024, with capacity utilization at 94%[5][9] - Refinery throughput increased to 402 thousand barrels per day in 2025, up from 399 thousand barrels per day in 2024, indicating improved operational efficiency[39] - Petroleum product sales increased to 479,000 barrels per day in Q4 2025, up from 458,000 barrels per day in Q4 2024, driven by higher volumes in supply and retail channels[5][9] Costs and Expenses - Cash operating costs for Q4 2025 were CAD 2,552 million, an increase of 28.7% compared to CAD 1,984 million in Q4 2024; for the twelve months, cash operating costs rose to CAD 8,662 million from CAD 7,547 million, a 14.8% increase[81] - Total expenses for Q4 2025 were CAD 10,651 million, down from CAD 11,032 million in Q4 2024, while total expenses for the twelve months decreased to CAD 42,816 million from CAD 45,293 million[81] - The production and manufacturing costs in Q4 2025 were CAD 2,294 million, up 32.8% from CAD 1,729 million in Q4 2024; for the twelve months, these costs increased to CAD 7,269 million from CAD 6,599 million[82] - Unit cash operating costs for the Upstream segment in Q4 2025 were CAD 39.61 per oil-equivalent barrel, significantly higher than CAD 28.43 in Q4 2024[85] - The cash operating costs for the Upstream segment in Q4 2025 were CAD 1,618 million, compared to CAD 1,203 million in Q4 2024, reflecting a 34.5% increase[83] Impairments and Charges - Identified items for the year included a $320 million after-tax charge related to the Norman Wells end of field life acceleration and a $306 million after-tax non-cash impairment charge[33] - The company reported a non-cash impairment charge of $306 million after-tax related to the Calgary Imperial Campus in 2025[41] - The company reported an unfavorable one-time charge of CAD 109 million before-tax for Kearl and CAD 21 million before-tax for Cold Lake related to inventory optimization[87] Realizations and Exchange Rates - Average bitumen realizations decreased by $7.52 per barrel, while synthetic crude oil realizations decreased by $12.92 per barrel due to lower WTI prices[34] - The average foreign exchange rate was 0.72 in 2025, slightly down from 0.73 in 2024[36] - Average realizations for bitumen decreased to CAD 59.00 per barrel in Q4 2025 from CAD 71.58 per barrel in Q4 2024[65] Earnings Per Share - Net income per common share for Q4 2025 was CAD 1.00, down 57.8% from CAD 2.37 in Q4 2024, while the twelve-month net income per share decreased to CAD 6.48 from CAD 9.03[79] - The net income excluding identified items per common share for Q4 2025 was CAD 1.97, compared to CAD 2.37 in Q4 2024, indicating a decline of 16.9%[79]

Core Insights - Canadian oil producer Imperial Oil reported a decline in fourth-quarter profit due to a decrease in crude prices [1] Company Summary - Imperial Oil's fourth-quarter profit fell as a result of lower crude oil prices impacting revenue [1]

Core Viewpoint - Imperial Oil Limited is a significant entity in the Canadian oil and gas sector, preparing to release quarterly earnings with an estimated EPS of $1.40 and projected revenue of $8.83 billion, while facing challenges in profitability despite a history of exceeding earnings estimates [1][6]. Financial Performance - Analysts project higher revenues of $10.5 billion, reflecting a 16% increase in sales estimates, although the EPS indicates a 17.2% year-over-year decline [2]. - The company reported earnings of $1.57 per share in the most recent quarter, surpassing the Zacks Consensus Estimate of $1.44 per share, showcasing a strong track record of exceeding earnings expectations [3]. Financial Metrics - Imperial Oil has a price-to-earnings (P/E) ratio of approximately 13.04, indicating moderate market valuation of its earnings [4]. - The price-to-sales ratio is about 1.14, and the enterprise value to sales ratio is 1.17, reflecting investor valuation of the company's sales [4]. - The enterprise value to operating cash flow ratio stands at 8.26, indicating how cash flow is valued relative to the company's total valuation [4]. Capital Structure and Liquidity - The company maintains a conservative capital structure with a low debt-to-equity ratio of 0.18, suggesting limited reliance on debt [5]. - A current ratio of 1.47 indicates a strong liquidity position, allowing the company to effectively cover its short-term liabilities [5].

Core Insights - The fourth-quarter 2025 earnings season is underway, with a focus on the oil and energy sector facing macroeconomic uncertainty and commodity price volatility [1] - A few energy companies are positioned to exceed earnings expectations, potentially leading to stock price boosts and investment opportunities [1] Oil and Gas Price Movements - West Texas Intermediate crude oil prices averaged $59.64 per barrel in Q4 2025, down from $70.69 the previous year, due to global oversupply and sluggish demand growth [3] - OPEC+ nations began unwinding production cuts in September, increasing output alongside steady non-OPEC supply, resulting in inventory builds of up to 2 million barrels per day [3] - Natural gas prices at Henry Hub averaged $3.75 per million British thermal units, up from $2.44 the previous year, driven by colder winter weather, high LNG exports, and increased consumption from data centers [5] Identifying Potential Market Beaters - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 1, 2, or 3 have a 70% chance of beating earnings expectations [7] - Earnings ESP is a proprietary tool that measures the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate [7] Company Highlights - **Imperial Oil Limited (IMO)**: Expected to report earnings of $1.40 per share, a 17.16% decrease from the prior year, but has a 1.79% Earnings ESP and a strong track record of exceeding estimates [10] - **ExxonMobil Corporation (XOM)**: Anticipated to post earnings of $1.64 per share, down 1.8% year over year, with a 2.29% Earnings ESP and a history of 5.71% average earnings surprises [12] - **Patterson-UTI Energy, Inc. (PTEN)**: Set to report earnings of 12 cents per share, flat year over year, with a notable 19.15% Earnings ESP and an average surprise of 17.5% [13] - **Helmerich & Payne, Inc. (HP)**: Expected to report earnings of 51 cents per share, a 15% drop from the prior year, but with a 14.85% Earnings ESP and a history of positive earnings surprises [14]

Core Viewpoint - Imperial Oil Limited (IMO) is expected to report its fourth-quarter 2025 results on January 30, 2026, with earnings estimated at $1.40 per share and revenues of $10.5 billion [1][8]. Group 1: Recent Performance - In the last reported quarter, Imperial Oil's adjusted earnings per share were $1.57, surpassing the Zacks Consensus Estimate of $1.44, but down from $1.71 per share in the same quarter last year due to lower upstream price realizations [2]. - Total revenues for the last quarter were $8.8 billion, which fell short of the Zacks Consensus Estimate of $11.1 billion [2]. - The company has consistently beaten earnings estimates in the past four quarters, achieving an average surprise of 13.3% [2]. Group 2: Estimate Revisions - The Zacks Consensus Estimate for fourth-quarter 2025 earnings has decreased by 1.4% over the past week, indicating a 17.2% year-over-year decline [3]. - Revenue estimates for the same quarter suggest a 16% increase compared to the previous year [3]. Group 3: Strategic Developments - Imperial Oil is one of Canada's largest integrated oil companies, involved in oil and gas production, refining, and marketing [4]. - The company announced a restructuring strategy aimed at enhancing long-term cash flow and efficiency by centralizing functions and leveraging ExxonMobil's capabilities, targeting annual expense savings of $150 million by 2028 [5]. - This restructuring is expected to improve productivity, lower unit costs, and support higher production while maintaining 2025 guidance [5]. Group 4: Earnings Prediction - The Zacks model indicates a likelihood of an earnings beat for Imperial Oil, supported by a positive Earnings ESP of +1.79% and a Zacks Rank of 3 (Hold) [6][7].

Company Overview - Imperial Oil Limited (NYSEAMERICAN:IMO) produces high-quality fuels, lubricants, and chemical products marketed under the Esso and Mobil brands [1] Analyst Ratings and Price Targets - TD Securities lowered its price target on Imperial Oil from C$107 to C$106 while maintaining a 'Sell' rating [2] - BMO Capital downgraded the stock from 'Outperform' to 'Market Perform', reducing its price target from C$132 to C$129 [2] - Analysts suggest that despite Imperial's strong financial position, it offers limited short-term upside potential compared to industry peers [2] Capital Expenditure Plans - Imperial Oil announced plans to increase its FY 2026 capital spending to C$2 billion-C$2.2 billion, up from the C$1.9 billion-C$2.1 billion range for the current year [3] Production and Refinery Forecasts - The company expects upstream production to be between 441,000 to 460,000 barrels of oil equivalent per day (boepd) for 2026, compared to 433,000 to 456,000 boepd projected for 2025 [4] - Refinery throughput is forecasted at 395,000 to 405,000 barrels per day in 2026, down from 405,000 to 415,000 barrels per day expected this year due to planned turnaround activities at the Sarnia and Strathcona refineries [4]

Core Insights - Imperial Oil Limited (IMO) is a strategically significant entity in Canada's energy sector, involved in oil and gas exploration, production, oil sands, refining, and downstream marketing, contributing to national energy security and the economy [1] Financial Performance - Despite a robust business model, IMO's stock performance has been lackluster, with shares rising only 5.6% compared to a 16.7% increase in the broader Canadian Oil & Gas Exploration and Production sub-industry [2][6] - The Zacks Consensus Estimate for IMO's earnings per share has been revised down by 3.57% for 2025 and 2.71% for 2026, indicating lower near-term expectations [5] - In Q3 2025, IMO generated C$1.8 billion in operating cash flow, with Kearl unit costs decreasing to $15.13 per barrel, down nearly $4 from the previous quarter [6][10] Competitive Advantages - The strategic relationship with ExxonMobil provides IMO with access to advanced technologies and global expertise, enhancing operational efficiency and long-term value creation [8] - Financial resilience is evident as IMO ended Q3 2025 with C$1.9 billion in cash, supporting ongoing capital investments and shareholder returns [9] - The company is successfully reducing unit cash costs through efficiency gains, which strengthens its cash flow generation [10] Strategic Initiatives - A restructuring plan aims to centralize corporate and technical activities, targeting annual savings of C$150 million by 2028, which is expected to improve productivity and lower operating costs [11] Challenges - High capital intensity is a concern, with 2026 capital expenditures projected between C$2 billion and C$2.2 billion, necessitating strong cash flow generation [13] - The transition to alternative energy sources poses competitive pressure, as the company’s growth strategy relies on the success of emerging technologies [14] - Downstream throughput guidance for 2026 suggests a potential decline in refining performance, with a utilization rate of 91-93% compared to 98% in Q3 2025 [15] - Financial performance is sensitive to volatile commodity prices, which can significantly impact upstream earnings [16]

Core Insights - Imperial Oil Limited (IMO) has outlined its strategic vision for 2026, focusing on sustainable growth and maximizing value from existing operations [1] - The company aims to enhance profitability and operational resilience through a blend of operational excellence and growth initiatives [2] Upstream Strategy - Imperial's strategy emphasizes progressing high-value growth opportunities while maintaining world-class operations at flagship projects Kearl and Cold Lake [3] - The company plans to invest between C$2 billion and C$2.2 billion in capital and exploration expenditures in 2026, targeting long-term profitability [4] - Production capacity targets include 300,000 barrels per day (bbl/d) at Kearl and 165,000 bbl/d at Cold Lake, with a total production forecast of 441,000-460,000 barrels of oil equivalent per day (boe/d) [5][6] Operational Flexibility - Imperial will maintain operational flexibility through strategically planned turnarounds at key upstream assets, ensuring optimal working conditions while minimizing production impact [7] Downstream Investments - In the downstream segment, throughput is estimated at 395,000-405,000 bbl/d, with refinery capacity utilization expected between 91% and 93% [10] - Major turnarounds are planned at the Strathcona and Sarnia refineries to maintain efficiency and prepare for upcoming emissions regulations [11][12] Sustainability Initiatives - The company prioritizes projects that improve its environmental footprint, focusing on renewable diesel production to meet growing demand for sustainable energy solutions [13][14] Long-Term Growth and Shareholder Returns - Imperial's strategy for 2026 aims to deliver exceptional returns to shareholders through strategic capital investments and operational efficiency [15] - The company’s disciplined capital allocation approach will focus on high-priority projects that drive future cash flow growth [17][18] Conclusion - Imperial's 2026 strategy is designed to maximize shareholder returns, enhance profitability, and drive long-term growth through a combination of strategic investments and operational excellence [19][20]