Imperial's (IMO) Q3 Earnings Fall Y/Y, Sales Miss Estimates
Imperial Oil Limited IMO reported third-quarter 2023 adjusted earnings per share of $2.06, which missed the year-ago quarter’s $2.11. This underperformance was primarily due to lower price realization.
Revenues of $10.4 billion missed the Zacks Consensus Estimate of $13.4 billion. The top line also declined from the year-ago quarter’s $11.7 billion. This was mainly caused by weaker performance of all segments.
Imperial declared a quarterly dividend of 50 Canadian cents per share, payable on Jan 1, 2024, to shareholders of record at the close of business on Dec 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 C$4,807 million decreased from C$4,949 million in the prior year. The figure also missed our projection of C$5390.7 billion.
The segment reported net income of C$1,028 million compared with C$986 million in the year-ago quarter. The figure beat our estimate of C$783.2 million.
Net production volume came in at 355,000 barrels of oil equivalent per day (Boe/d) compared with 361,000 Boe/d in the year-ago quarter. Total oil and NGL output was 350,000 barrels per day (bpd) compared with 346,000 bpd in the third quarter of 2022.
Oil and NGL output from Kearl and Cold Lake totaled 195,000 bpd and 175,000 bpd, respectively. Syncrude output totaled 59,000 bpd, increasing from 51,000 bpd a year ago. Net natural gas production came in at 30 million cubic feet per day (Mcf/d), lower than 87 Mcf/d in the comparable quarter of 2022.
Bitumen price realizations totaled C$86.05 per barrel compared with C$81.58 in the year-ago period. IMO received an average realized price of C$112.98 per barrel for synthetic oil compared with the prior-year quarter’s C$124.80. It received C$76.53 per barrel for conventional crude oil compared with the year-ago quarter’s C$94.87.
In the reported quarter, IMO's average WTI prices fell to C$82.32 per barrel from C$91.43 in the year-ago period.
Downstream: Revenues of C$15,112 million were down from C$16,236 million in the third quarter of 2022. The figure also missed our anticipation of C$18,742.9 million.
Net income was C$586 million compared with C$1,012 million in the year-ago period. This can be attributed to lower realization in the Downstream segment. The figure, however, beat our estimate of C$320.1 million.
The refinery throughput in the third quarter averaged 416,000 bpd, lower than the prior-year level of 426,000 bpd. The capacity utilization was 96% compared with the year-ago level of 100%.
Chemical: Revenues of C$382 million declined from C$520 million in the third quarter of 2022. The figure also missed our projection of C$592.4 billion.
Segmental net income was C$23 million, decreasing from the year-ago quarter’s level of C$54 million. The amount missed our prediction of C$76.4 million.
Total Costs & Capex
Total expenses of C$11,820 million declined from the year-ago quarter’s C$12,719 million. The figure also fell short of our projection of C$16,153.2 billion.
In the quarter under consideration, IMO’s capital and exploration expenditures totaled C$387 million, lower than the year-ago quarter’s C$392 million.
Financial Performance
Imperial’s cash flow from operating activities was C$2.36 billion in the reported quarter compared with C$3.09 billion a year ago.Free cash flow totaled C$1.98 billion.
As of Sep 30, 2023, Imperial had cash and cash equivalents of C$2.72 billion. Total debt amounted to C$4.14 billion, with a debt to capitalization of 14.8%.
The company returned C$292 million to its shareholders through dividends in the reported quarter.
Outlook
Capital expenditure for full-year 2023 is anticipated to be C$1.7 billion.
Imperial expects its full-year 2023 production performance in the range of 265,000-275,000 barrels per day.
Zacks Rank
Currently, IMO carries a Zacks Rank #3 (Hold).
Key Picks
Investors interested in the energy sector might look at some better-ranked stocks like CVR Energy CVI, USA Compression Partners USAC and Delek US Holdings, Inc. DK. While CVI sports a Zacks Rank #1 (Strong Buy), USAC and DK carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
CVR Energy is valued at $3.29 billion. In the past year, its shares have declined 10.2%.
CVI currently pays a dividend of $2 per share or 6.11% on an annual basis. Its payout ratio is 30% of earnings.
USA Compression Partners is valued at around $2.47 billion. USAC currently pays a dividend of $2.10 per unit or 8.37% on an annual basis.
USAC provides natural gas compression services, and offers compression services to oil companies and independent producers, processors, gatherers and transporters of natural gas and crude oil. It also operates stations.
Delek US Holdings is worth approximately $1.17 billion. DK currently pays a dividend of 94 cents per share, or 3.57% on an annual basis.
DK operates in the integrated downstream energy business in the United States. The company operates in three segments: refining, logistics and retail.
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