Imperial Oil (IMO) Q2 Earnings In Line, Revenues Fall Y/Y
Imperial Oil IMO reported second-quarter 2023 adjusted earnings per share of 86 cents, which was in line with the Zacks Consensus Estimate. However, the bottom line declined from the year-ago quarter’s figure of $2.84 due to lower price realization.
Revenues of $8.8 billion missed the Zacks Consensus Estimate of $11.4 billion. The top line also declined from the year-ago quarter’s level of $13.6 billion. This was primarily due to weaker performance of the Upstream and Downstream segments.
Imperial Oil declared a quarterly dividend of 50 Canadian cents per share, payable on Oct 1, 2023, to shareholders of record at the close of business on Sep 1, 2023.
Imperial Oil Limited Price, Consensus and EPS Surprise
Imperial Oil Limited price-consensus-eps-surprise-chart | Imperial Oil Limited Quote
Segmental Information
Upstream: Revenues of C3,590 million decreased from the prior-year level of C$5,949 million. The figure also missed our projection of C$4703.3 billion.
The segment reported a net income of C$384 million compared with C$1,346 million in the year-ago quarter. The figure missed our estimate of C$613.3 million. Lower price realization and lower volumes in the reported quarter were the main contributors to this downside.
Net production volume came in at 320,000 barrels of oil equivalent per day (Boe/d) compared with 336,000 Boe/d in the year-ago quarter. Total oil and NGL output was 357,000 barrels per day (bpd) compared with 397,000 bpd in the second quarter of 2022.
Oil and NGL output from Kearl and Cold Lake totaled 144,000 bpd and 105,000 bpd, respectively. Syncrude output averaged 61,000 bpd, down from the year-ago quarter’s level of 63,000 bpd. Net natural gas production came in at 32 million cubic feet per day (Mcf/d), lower than 95 Mcf/d in the comparable quarter of 2022.
Bitumen price realizations totaled C$68.64 a barrel compared with C$112.27 in the year-ago period. IMO received an average realized price of C$100.92 per barrel for synthetic oil compared with the prior-year quarter’s C$144.67.
For conventional crude oil, it received C$64.33 per barrel compared with C$115.80 in the corresponding period of 2022. The price of NGL decreased from C$6.81 per thousand cubic feet to C$2.36 year over year.
Downstream: Revenues of C$12,735 million were down from C$18,785 million in the second quarter of 2022. The figure also missed our projection of C$16,587.9 million.
Net income was C$250 million compared with C$1,033 million in the year-ago period, attributable to lower realization in the Downstream segment. The figure, however, beat our estimate of C$84.4 million.
The refinery throughput in the second quarter averaged 388,000 bpd, lower than the prior-year quarter’s level of 412,000 bpd. The capacity utilization was 90% compared with the year-ago quarter’s level of 96%.
Chemical: Revenues of C$437 million declined from C$563 million in the second quarter of 2022. The figure also missed our projection of C$501 billion.
Net income for this segment was recorded at C$71 million, up from the year-ago quarter’s level of C$53 million. The amount exceeded our prediction of C$55.9 million.
Total Costs & Capex
Total expenses of C$10,935 million decreased from the prior-year quarter’s C$14,141 million. The figure also missed our projection of C$13,924.8 billion. Capital and exploration expenditures increased to C$493 million from C$314 million in the corresponding period of 2022.
Financial Performance
Cash flow from operating activities totaled C$885 million compared with C$2.68 billion in the year-ago quarter. Free cash flow totaled C$396 million.
As of Jun 30, Imperial Oil had cash and cash equivalents of C$2.38 billion. Total debt amounted to C$4.02 billion, with a debt-to-capitalization of 14.4%.
The company returned C$257 million to its shareholders through dividends in the reported quarter.
Outlook
Capital expenditure for full-year 2023 is anticipated to be around C$1.7 billion.
Imperial Oil updated its 2023 year-to-date production performance at Kearl in the range of 265,000-275,000 barrels per day.
Zacks Rank and Key Picks
Currently, IMO carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the energy sector are Murphy USA MUSA, sporting a Zacks Rank #1 (Strong Buy), and Evolution Petroleum EPM and Archrock AROC, both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA is valued at around $6.55 billion. In the past year, its shares have risen 5.6%.
MUSA currently pays a dividend of $1.52 per share, or 0.51% on an annual basis. Its payout ratio currently sits at 6% of earnings.
Evolution Petroleum is worth approximately $319.05 million. EPM currently pays a dividend of 48 cents per share, or 5.20% on an annual basis.
The company currently has a forward P/E ratio of 8.88. In comparison, its industry has an average forward P/E of 13.60, which means EPM is trading at a discount to the group.
Archrock is valued at around $2.01 billion. It delivered an average earnings surprise of 15.08% for the last four quarters and its current dividend yield is 4.67%.
AROC is a provider of natural gas contract compression services and aftermarket services of compression equipment.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Imperial Oil Limited (IMO) : Free Stock Analysis Report
Murphy USA Inc. (MUSA) : Free Stock Analysis Report
Evolution Petroleum Corporation, Inc. (EPM) : Free Stock Analysis Report
Archrock, Inc. (AROC) : Free Stock Analysis Report
