Oil and Gas

TOURMALINE DECLARES $2.00/SHARE SPECIAL DIVIDEND, PROVIDES OPERATIONAL AND 2023 GUIDANCE UPDATE

 Tourmaline Oil Corp. (TSX: TOU) ("Tourmaline" or the "Company") is pleased to announce a special dividend and provide an operational and 2023 guidance update.

Tourmaline Oil Corp. (CNW Group/Tourmaline Oil Corp.)

SPECIAL DIVIDEND

Tourmaline is pleased to announce the declaration of a special dividend of $2.00 /share, given the continued strong financial performance and outlook for the Company. The special dividend is part of Tourmaline's comprehensive shareholder return plan and will be paid on February 1, 2023 to shareholders of record on January 24, 2023 . This special dividend is designated as an "eligible dividend" for Canadian income tax purposes.

The Company anticipates paying further special dividends each quarter in 2023 and tactical utilization of its normal course issuer bid during the course of the year. Net debt (1) for year-end 2023 is forecast below the long-term net debt target of $1.0 - $1.2 billion .

PRODUCTION UPDATE
  • Tourmaline achieved a 2022 exit volume production of 528,000 boepd (peak production was achieved December 12-18, 2022 , with average production of 532,000 boepd during that period).
  • Fourth quarter 2022 average production was approximately 512,000 boepd and was challenged by considerable unplanned operated and third-party downtime. The most significant outages were inlet compressor failures at the Tourmaline Aitken and Resthaven plants in November, unplanned disruptions on the Enbridge 26" mainline for five weeks in October and early November, NGL losses in BC in December due to railcar interruptions caused by extreme cold conditions, and higher than planned frac downtime in NEBC.
  • The Company has elected to increase the downtime provision from 4% to 6% for 2023. The primary driver for the increased provision in 2023 is the absence of a finalized permitting framework in NEBC. The Company has sufficient permits in place to conduct its EP program for several years, but the distribution of these permits has led to increased frac related downtime. When the permitting framework is finalized, much of this higher provision will no longer be required. The Company now expects 2023 average production of 520,000-540,000 boepd, the broader range reflecting the higher downtime provision.
Q4 2022 AND 2023 CASH FLOW OUTLOOK
  • Given below normal temperatures in western North America in November and December and Tourmaline's significant exposure to those natural gas markets, the Company expects significantly higher cash flow in the fourth quarter of 2022 than originally forecasted. December average natural gas prices were US $28.51 /mmbtu at Hunt, US $28.82 /mmbtu at Malin, and US $30.53 /mmbtu at PG&E. Tourmaline sells approximately 390 mmcfpd into these markets.
  • Tourmaline is now expecting cash flow (2) ("CF") of $4.5 billion in 2023, based on updated strip pricing at January 3, 2023 , yielding free cash flow (3) ("FCF") of $2.6 billion on capital expenditures (4) of $1.86 billion .
  • Tourmaline commenced deliveries of 140,000 mmcfpd for its Gulf Coast LNG contract on January 1, 2023 , realizing full exposure to JKM pricing.
  • As previously disclosed, the Company intends to return 50-90% of FCF to shareholders in 2023.
  • Given significantly enhanced cash flow in Q4 2022 and anticipated strong Q1 2023 cash flow, the Company has elected to pay a special dividend of $2.00 /share. The special dividend will be paid on February 1, 2023 to shareholders of record on January 24, 2023 .
CAPITAL PROGRAMS
  • The Company estimates capital expenditures, excluding A&D, of approximately $1.7 billion in 2022 as inflation was on average 7% higher in the second half of 2022 than the 18% inflation contingency previously assumed in the mid-2022 outlook.
  • Tourmaline now plans EP capital spending of $1.675 billion in 2023 reflecting an inflation contingency of 25% for 2023 compared to 2021 levels.
  • The 2023 total capital expenditures budget also includes approximately $100 million for exploration directed spending including drilling approximately 15 wells, seismic expenditures and follow up land sale activity. The Company will carry the exploration program as a separate, incremental capital item on a go forward basis outside of the base EP plan given the slightly higher risk nature of those expenditures. The Company views this successful exploration program as a good use of excess FCF beyond what is being returned to shareholders. Excess FCF may also be allocated to margin-improving midstream investments, acquisitions, and environmental performance improvement initiatives.
  • The Company is maintaining the long-term net debt target in the $1.0 -1.2 billion range (approximately 0.2 times anticipated 2023 cash flow).
EP UPDATE
  • The Company is currently operating the full drilling rig fleet (13-14 rigs) across all three operated complexes, with one rig in 2023 focused primarily on new pool/new zone exploration activities.
  • The Gundy complex achieved a record average production of 402 mmcfpd of natural gas in December with 27,000 bpd of condensate and NGLs.
  • The most recent seven well Lower Charlie Lake pad in the Peace River High complex, brought on-stream in December, is producing at 5,150 boepd (2,844 bpd oil and 14 mmcfd natural gas).
  • The Company is pleased with the expanding exploration effort across all three operated complexes, with an additional nine new pool/new zone discoveries in 2022. The Company drilled 11 new pool/new zone and discovery delineation follow up wells in 2022 and is planning 15 exploration wells in 2023. The Company estimates the exploration activities have added 481 gross locations to the existing drilling inventory thus far. Production from this organic growth program will access the Company's existing extensive infrastructure network.
  • As disclosed previously, the Company believes it has generated two material new play discoveries over the past three years. Reserves of 845.1 bcfe have been booked in the 2021 year-end independent reserve report. Tourmaline will test several additional new pool/new play opportunities over the next two years which could lead to further material reserve, production, and inventory additions.
  • Tourmaline currently has 301 valid drilling permits in NEBC and expects to drill approximately 140 net wells in BC in 2023. While the Company is well positioned to maintain or modestly grow BC production over the next two-three years, the remaining permits don't allow for the most efficient EP program execution. Many of the permits are on existing large pads which leads to unusually high frac related impairments during completion operations (for example, frac downtime at Gundy increased from 5.5% to 10% in 2022). Some of the remaining permits are for Tier 2 locations which, given the size of Tourmaline's Tier 1 inventory, would not otherwise be drilled at this time. These Tier 2 locations are, however, economic at gas prices of $1.50 /mcf. The greater frac-related impairment and the subset of Tier 2 locations being drilled has been factored into current 2023 production guidance. The Company remains confident that an agreement between the BRFN and BC First Nations with the Province of British Columbia will be reached in 2023.
2021 SUSTAINABILITY REPORT
  • Tourmaline released its 2021 Sustainability Report on December 22, 2022 , and it can be found on the Company's website. This report contains 2021 performance data and includes our new methane emission intensity reduction target of 55% by 2027, using 2020 as a benchmark. We reiterate our target to reduce scope 1 core emission intensity by 25% by 2027, from 2018 levels.
  • Tourmaline lowered scope 1 and 2 emission intensity by 12% in 2021, relative to 2020 levels.



(1)

"Net debt" is defined as bank debt and senior unsecured notes plus working capital deficit (adjusted for the fair value of financial instruments, short-term lease liabilities, short-term decommissioning obligations and unrealized foreign exchange in working capital deficit). See "Non-GAAP Financial Measures" in this news release and in the Company's Q3 2022 Management's Discussion and Analysis.

(2)

Cash flow" is a non-GAAP financial measure defined as cash flow from operating activities adjusted for the change in non-cash working capital (deficit) and income tax expense. See "Non-GAAP Financial Measures" in this news release and in the Company's Q3 2022 Management's Discussion and Analysis.

(3)

"Free cash flow" is a non-GAAP financial measure defined as cash flow less capital expenditures, excluding acquisitions and dispositions. Free cash flow is prior to dividend payments. See "Non-GAAP Financial Measures" in this news release and in the Company's Q3 2022 Management's Discussion and Analysis.

(4)

"Capital Expenditures" is a non-GAAP financial measure defined as cash flow from investing activities adjusted for the change in non-cash working capital (deficit), and corporate acquisitions. See "Non-GAAP Financial Measures" in this news release and in the Company's Q3 2022 Management's Discussion and Analysis.

Reader Advisories

CURRENCY

All amounts in this news release are stated in Canadian dollars unless otherwise specified.

FORWARD-LOOKING INFORMATION

This news release contains forward-looking information and statements (collectively, " forward-looking information ") within the meaning of applicable securities laws. The use of any of the words "forecast", "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "on track", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information. More particularly and without limitation, this news release contains forward-looking information concerning Tourmaline's plans and other aspects of its anticipated future operations, management focus, objectives, strategies, financial, operating and production results, business opportunities and shareholder return plan, including the following: the use of the normal course issuer bid; the future declaration and payment of dividends and the timing and amount thereof which assumes, among other things, the availability of free cash flow to fund such dividends; anticipated petroleum and natural gas production and production growth for various periods including estimated production levels for the fourth quarter of 2022 and full-year 2023; expected full-year 2022 total capital spending and 2023 EP capital spending levels; the number of expected wells to be drilled, completed, and brought on production in Q1 2023; the anticipated receipt of drilling permits and that BRFN and BC First Nations will reach an agreement with the Province of British Columbia ; anticipated winter natural gas prices; anticipated inflationary contingencies; emission reduction targets and anticipated 2022 and 2023 cash flow and free cash flow and 2023 net debt. The forward-looking information is based on certain key expectations and assumptions made by Tourmaline, including expectations and assumptions concerning the following: prevailing and future commodity prices and currency exchange rates; the degree to which Tourmaline's operations and production may be disrupted or by circumstances attributable to supply chain disruptions and the COVID-19 pandemic and the responses of governments and the public to the pandemic; applicable royalty rates and tax laws; interest rates; inflation; future well production rates and reserve volumes; operating costs, the timing of receipt of regulatory approvals; the performance of existing wells; the success obtained in drilling new wells; anticipated timing and results of capital expenditures; the sufficiency of budgeted capital expenditures in carrying out planned activities; the timing, location and extent of future drilling operations; the benefits to be derived from acquisitions; the state of the economy and the exploration and production business including the impacts of the COVID-19 pandemic and the responses of governments and the public to the pandemic thereon; the availability and cost of financing, labour and services; and ability to market crude oil, natural gas and natural gas liquids successfully. Without limitation of the foregoing, future dividend payments, if any, and the level thereof is uncertain, as the Company's dividend policy and the funds available for the payment of dividends from time to time is dependent upon, among other things, free cash flow, financial requirements for the Company's operations and the execution of its growth strategy, fluctuations in working capital and the timing and amount of capital expenditures, debt service requirements and other factors beyond the Company's control. Further, the ability of Tourmaline to pay dividends will be subject to applicable laws (including the satisfaction of the solvency test contained in applicable corporate legislation) and contractual restrictions contained in the instruments governing its indebtedness, including its credit facility.

Although Tourmaline believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Tourmaline can give no assurances that it will prove to be correct. Since forward-looking information addresses future events and conditions, by its very nature it involves inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: the risks associated with the oil and gas industry in general such as operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; supply chain disruptions; the uncertain impacts of COVID-19 on Tourmaline's business, and the societal, economic and governmental response to COVID-19; the uncertainty of estimates and projections relating to reserves, production, revenues, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; interest rate fluctuations; changes in rates of inflation; marketing and transportation; loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to complete or realize the anticipated benefits of acquisitions or dispositions; ability to access sufficient capital from internal and external sources; uncertainties associated with counterparty credit risk; failure to obtain required regulatory and other approvals including drilling permits and the impact of not receiving such approvals on the Company's long-term planning; and changes in legislation, including but not limited to tax laws, royalties and environmental regulations. Readers are cautioned that the foregoing list of factors is not exhaustive.

Additional information on these and other factors that could affect Tourmaline, or its operations or financial results, are included in the Company's most recently filed Management's Discussion and Analysis (See "Forward-Looking Statements" therein), Annual Information Form (See "Risk Factors" and "Forward-Looking Statements" therein) and other reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website ( www.sedar.com ) or Tourmaline's website ( www.tourmalineoil.com ).

The forward-looking information contained in this news release is made as of the date hereof and Tourmaline undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless expressly required by applicable securities laws.

UNAUDITED FINANCIAL INFORMATION

Certain anticipated financial and operating results for 2022 included in this news release such as cash flow, free cash flow, capital expenditures and production information are based on unaudited estimated results. These estimated results are subject to change upon completion of the audited financial statements for the year ended December 31, 2022 , and changes could be material.

BOE EQUIVALENCY

In this news release, production information may be presented on a "barrel of oil equivalent" or "BOE" basis. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, as the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

FINANCIAL OUTLOOKS

Also included in this news release are estimates of Tourmaline's 2023 CF and net debt level, which are based on, among other things, the various assumptions as to production levels, capital expenditures, annual cash flows and other assumptions disclosed in this news release and including Tourmaline's estimated 2023 average daily production of 530,000 boepd, 2023 commodity price assumptions for natural gas ( $3.96 /mcf NYMEX US, $3.55 /mcf AECO, $24.34 /mcf JKM US), crude oil ( $76.25 /bbl WTI US) and an exchange rate assumption of $0.73 (US/CAD). To the extent such estimates constitutes a financial outlook, it was approved by management and the Board of Directors of Tourmaline on January 12, 2023 and is included to provide readers with an understanding of Tourmaline's anticipated cash flow and net debt level based on the capital expenditure, production and other assumptions described herein and readers are cautioned that the information may not be appropriate for other purposes.

NON-GAAP AND OTHER FINANCIAL MEASURES

This news release contains the terms cash flow, capital expenditures and free cash flow which are considered "non-GAAP financial measures". These terms do not have a standardized meaning prescribed by GAAP. In addition, this news release contains the term net debt, which is considered a "capital management measure" and does not have a standardized meaning prescribed by GAAP. Accordingly, the Company's use of these terms may not be comparable to similarly defined measures presented by other companies. Investors are cautioned that these measures should not be construed as an alternative to net income determined in accordance with GAAP and these measures should not be considered to be more meaningful than GAAP measures in evaluating the Company's performance. See "Non-GAAP and Other Financial Measures" in the most recent Management's Discussion and Analysis for more information on the definition and description of these terms.

OIL AND GAS METRICS

This news release contains certain oil and gas metrics which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included in this document to provide readers with additional measures to evaluate the Company's performance; however, such measures are not reliable indicators of the Company's future performance and future performance may not compare to the Company's performance in previous periods and therefore such metrics should not be unduly relied upon.

SUPPLEMENTAL INFORMATION REGARDING PRODUCT TYPES

This news release includes references to 2022 exit production, Q4 2022 production, and full-year 2023 expected average daily production. The following table is intended to provide supplemental information about the product type composition for each of the production figures that are provided in this news release:


Light and Medium
Crude Oil (1)

Conventional
Natural Gas

Shale Natural Gas

Natural Gas
Liquids (1)

Oil Equivalent
Total


Company Gross
(Bbls)

Company Gross
(Mcf)

Company Gross
(Mcf)

Company Gross
(Bbls)

Company Gross
(Boe)

2022 Exit Production ..

44,900

1,352,600

1,098,400

74,600

528,000

Q4 2022
Production………………

43,500

1,311,500

1,065,000

72,415

512,000

2023 Expected Average
Daily Production
........

48,300

1,336,100

1,118,500

72,600

530,000







( 1 ) For the purposes of this disclosure, condensate has been combined with Light and Medium Crude Oil as the associated revenues and certain costs of condensate are similar to Light and Medium Crude Oil. Accordingly, NGLs in this disclosure exclude condensate.

Certain Definitions:

1H

first half

2H

second half

bbl

barrel

bbls/day

barrels per day

bbl/mmcf

barrels per million cubic feet

bcf

billion cubic feet

bcfe

billion cubic feet equivalent

bpd or bbl/d

barrels per day

boe

barrel of oil equivalent

boepd or boe/d

barrel of oil equivalent per day

bopd or bbl/d

barrel of oil, condensate or liquids per day

DUC

drilled but uncompleted wells

EP

exploration and production

gj

gigajoule

gjs/d

gigajoules per day

JKM

Japan Korea Marker

mbbls

thousand barrels

mmbbls

million barrels

mboe

thousand barrels of oil equivalent

mboepd

thousand barrels of oil equivalent per day

mcf

thousand cubic feet

mcfpd or mcf/d

thousand cubic feet per day

mcfe

thousand cubic feet equivalent

mmboe

million barrels of oil equivalent

mmbtu

million British thermal units

mmbtu/d

million British thermal units per day

mmcf

million cubic feet

mmcfpd or mmcf/d

million cubic feet per day

MPa

megapascal

mstb

thousand stock tank barrels

natural gas

conventional natural gas and shale gas

NCIB

normal course issuer bid

NGL or NGLs

natural gas liquids

tcf

trillion cubic feet

ABOUT TOURMALINE OIL CORP.

Tourmaline is Canada's largest and most active natural gas producer dedicated to producing the lowest-emission and lowest-cost natural gas in North America . We are an investment grade exploration and production company providing strong and predictable operating and financial performance through the development of our three core areas in the Western Canadian Sedimentary Basin. With our existing large reserve base, decades-long drilling inventory, relentless focus on execution and cost management, and industry-leading environmental performance, we are excited to provide shareholders an excellent return on capital, and an attractive source of income through our base dividend and surplus free cash flow distribution strategies

SOURCE Tourmaline Oil Corp.

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Imperial announces fourth quarter 2022 financial and operating results

  • Quarterly net income of $1,727 million and cash flow from operating activities of $2,797 million
  • Upstream production of 441,000 gross oil-equivalent barrels per day during fourth quarter, driven by continued strength at Kearl and Cold Lake, and higher production at Syncrude
  • Maintained strong refining capacity utilization, achieving best ever quarterly utilization of 101 percent
  • Returned more than $2.1 billion to shareholders in the fourth quarter, including successful completion of substantial issuer bid
  • Declared first quarter dividend of 44 cents per share
  • Approved $720 million project to construct largest renewable diesel facility in Canada
  • Announcing company-wide goal to achieve net zero (Scope 1 and 2) by 2050 in operated assets

Imperial (TSE: IMO) (NYSE American: IMO) :

Imperial reported estimated net income in the fourth quarter of $1,727 million and cash flow from operating activities of $2,797 million, compared to net income of $2,031 million and cash flow from operating activities of $3,089 million in the third quarter of 2022. Fourth quarter results reflected strong operating performance across all business segments and robust diesel crack spreads, which were offset by lower upstream realizations. Full-year estimated net income was $7,340 million with cash flow from operating activities of $10,482 million.

"Our financial results this past year are the strongest in company history, driven by record operating performance across our assets," said Brad Corson, chairman, president and chief executive officer. "Throughout 2022 our operations remained focused on ensuring a stable supply of energy products to Canadian and global markets, supporting continued economic growth and capturing significant value for our shareholders."

Upstream production in the fourth quarter averaged 441,000 gross oil-equivalent barrels per day, bringing full-year production to 416,000 gross oil-equivalent barrels per day. At Kearl, quarterly total gross production averaged 284,000 barrels per day, in-line with the asset's previous record quarterly production set in the fourth quarter of 2020. Kearl's second half production was the highest in the asset's history, fully recovering from early 2022 cold weather impacts, bringing full-year production to 242,000 total gross barrels per day. At Cold Lake, quarterly gross production averaged 141,000 barrels per day with annual production of 144,000 barrels per day, the highest full-year production since 2018. At Syncrude, quarterly production increased to 87,000 gross barrels per day following the completion of its planned turnaround in the third quarter of 2022, with full-year production of 77,000 barrels per day representing the highest annual production in Syncrude history.

In the Downstream, throughput in the fourth quarter averaged 433,000 barrels per day with capacity utilization of 101 percent, the highest quarterly utilization in company history, as Imperial continues to maximize production to meet Canadian demand. Full-year throughput averaged 418,000 barrels per day with capacity utilization of 98 percent, the highest full-year utilization in company history. Fourth quarter petroleum product sales averaged 487,000 barrels per day, with annual petroleum product sales averaging 475,000 barrels per day.

During the quarter, Imperial returned $2,145 million to shareholders, through dividend payments, accelerated completion of the company's annual normal course issuer bid program and successful completion of the company's $1.5 billion substantial issuer bid program in December. Throughout 2022, the company returned over $7 billion to its shareholders. "Imperial continued delivering on its long-standing commitment by returning record cash to shareholders in 2022 through our reliable and growing dividend and industry-leading share repurchase programs," said Corson.

In January, Imperial announced it will further help Canada achieve its net zero goals by approving a $720 million renewable diesel project located at the company's Strathcona Refinery near Edmonton. The project will be the largest of its kind in Canada, designed to produce more than one billion litres of renewable diesel annually primarily from locally sourced feedstocks and could help reduce greenhouse gas emissions by about 3 million metric tons per year, as determined in accordance with Canada's Clean Fuel Regulations. Site preparation and initial construction work is underway with renewable diesel production expected to start in early 2025, subject to regulatory approvals.

As part of the company's efforts to provide solutions that lower the greenhouse gas emissions intensity of our operations and provide lower life-cycle emissions products to our customers, Imperial is implementing a company-wide goal to achieve net zero emissions (Scope 1 and 2) by 2050 in its operated assets through collaboration with government and industry partners. Successful technology development and supportive fiscal and regulatory frameworks will be needed to achieve this goal. This work builds on Imperial's previously announced net-zero goal for operated oil sands as part of the Pathways Alliance initiative, as well as the company's 2030 emission intensity reduction goal for operated oil sands. The company plans to achieve its net zero goal by applying oil sands recovery technologies that use less steam, implementing carbon capture and storage and implementing efficiency projects including the use of lower carbon fuels at its operations.

"We continue to make progress on advancing lower-carbon solutions that support our journey to net zero, including our strategic growth investment in the Strathcona Renewable Diesel project," said Corson. "This project will create jobs for the local economy, help our customers reduce their emissions and further enhance Imperial's low-carbon product offering."

Fourth quarter highlights

  • Net income of $1,727 million or $2.86 per share on a diluted basis, up from $813 million or $1.18 per share in the fourth quarter of 2021.
  • Cash flows from operating activities of $2,797 million, up from $1,632 million in the same period of 2021. Cash flows from operating activities excluding working capital 1 of $2,452 million, up from $1,648 million in the same period of 2021.
  • Capital and exploration expenditures totaled $488 million, up from $441 million in the fourth quarter of 2021.
  • The company returned $2,145 million to shareholders in the fourth quarter of 2022, including $211 million in dividends paid and $1,934 million in share repurchases, through its normal course issuer bid and completion of the $1,500 million substantial issuer bid program in December.
  • Production averaged 441,000 gross oil-equivalent barrels per day, compared to 445,000 gross oil-equivalent barrels per day in the same period of 2021. Adjusting for the sale of XTO Energy Canada, which closed in the third quarter of 2022, production increased by 11,000 gross oil-equivalent barrels per day compared to the same period in 2021.
  • Total gross bitumen production at Kearl averaged 284,000 barrels per day (201,000 barrels Imperial's share), in-line with the asset's previous record quarterly production set in the fourth quarter of 2020 and up from 270,000 barrels per day (191,000 barrels Imperial's share) in the fourth quarter of 2021.
  • Gross bitumen production at Cold Lake averaged 141,000 barrels per day, compared to 142,000 barrels per day in the fourth quarter of 2021.
  • The company's share of gross production from Syncrude averaged 87,000 barrels per day, up from 79,000 barrels per day in the fourth quarter of 2021.
  • Refinery throughput averaged 433,000 barrels per day, up from 416,000 barrels per day in the fourth quarter of 2021. Capacity utilization reached 101 percent, the highest quarterly utilization in company history, up from 97 percent in the fourth quarter of 2021, as the company continues to maximize production to meet Canadian demand.
  • Petroleum product sales were 487,000 barrels per day, compared to 496,000 barrels per day in the fourth quarter of 2021.
  • Chemical net income of $41 million in the quarter, compared to $64 million in the fourth quarter of 2021. Lower income was primarily driven by lower polyethylene margins.
  • Approved $720 million project to construct largest renewable diesel facility in Canada. The project, located at Imperial's Strathcona Refinery near Edmonton, is designed to produce more than one billion litres of renewable diesel annually, primarily from locally sourced feedstocks and could help reduce greenhouse gas emissions by about 3 million metric tonnes per year, as determined in accordance with Canada's Clean Fuel Regulations. Site preparation and initial construction work is underway with renewable diesel production expected to start in early 2025, subject to regulatory approvals.
  • Announcing company-wide goal to achieve net zero (Scope 1 and 2) by 2050 in operated assets, through collaboration with government and industry partners. This builds on Imperial's previously announced net zero goal for operated oil sands as part of the Pathways Alliance initiative, as well as the company's 2030 emission intensity reduction goal for its operated oil sands.
  • The Pathways Alliance entered into a Carbon Sequestration Evaluation Agreement with the Government of Alberta, enabling the Alliance to immediately start a detailed evaluation of its proposed geological storage hub, which would be one of the world's largest carbon capture and storage projects.

____________________
1
non-GAAP financial measure - see attachment VI for definition and reconciliation

Recent business environment

During the COVID-19 pandemic, industry investment to maintain and increase production capacity was restrained to preserve capital, resulting in underinvestment and supply tightness as demand for petroleum and petrochemical products recovered. Across late 2021 and the first half of 2022, this dynamic, along with supply chain constraints, and a continuation of demand recovery, led to a steady increase in oil and natural gas prices and refining margins.

Demand for petroleum and petrochemical products has grown in 2022, with the company's financial results benefiting from stronger prices and margins. Commodity and product prices are expected to remain volatile given the current global economic uncertainty and geopolitical events affecting supply and demand.

The general rate of inflation in Canada and many other countries experienced a brief decline in the initial stage of the COVID-19 pandemic, before starting to increase steadily in 2021 due to imbalanced recoveries between supply and demand in the global economy. The underlying factors include, but are not limited to, supply chain disruptions, shipping bottlenecks, labour constraints, and side effects from monetary and fiscal expansions. Prices for services and materials continue to respond to the fast changing dynamics involving economic growth, overall inflation, commodity markets, and industry activities. The company closely monitors market trends and works to mitigate both operating and capital cost impacts in all price environments through efficient project management practices, and general productivity improvements.

Operating results
Fourth quarter 2022 vs. fourth quarter 2021

Fourth Quarter

millions of Canadian dollars, unless noted

2022

2021

Net income (loss) (U.S. GAAP)

1,727

813

Net income (loss) per common share, assuming dilution (dollars)

2.86

1.18

Upstream
Net income (loss) factor analysis
millions of Canadian dollars

2021

Price

Volumes

Royalty

Other

2022

545

(160)

40

(50)

156

531

Price – Lower bitumen realizations were primarily driven by the widening WTI/WCS spread. Average bitumen realizations decreased by $5.68 per barrel generally in line with WCS, and synthetic crude oil realizations increased by $22.68 per barrel.

Volumes – Higher volumes were the result of improved plant performance at Kearl and lower unplanned downtime at Syncrude, partially offset by the absence of XTO Energy Canada production following the divestment in the third quarter of 2022.

Royalty – Higher royalties primarily driven by improved commodity prices.

Other – Favourable foreign exchange impacts of about $160 million, partially offset by higher operating expenses of about $70 million, resulting primarily from higher energy prices.

Marker prices and average realizations

Fourth Quarter

Canadian dollars, unless noted

2022

2021

West Texas Intermediate (US$ per barrel)

82.58

77.04

Western Canada Select (US$ per barrel)

57.00

62.49

WTI/WCS Spread (US$ per barrel)

25.58

14.55

Bitumen (per barrel)

59.85

65.53

Synthetic crude oil (per barrel)

115.22

92.54

Average foreign exchange rate (US$)

0.74

0.79

Production

Fourth Quarter

thousands of barrels per day

2022

2021

Kearl (Imperial's share)

201

191

Cold Lake

141

142

Syncrude (a)

87

79

Kearl total gross production (thousands of barrels per day)

284

270

(a) In the fourth quarter of 2022, Syncrude gross production included about 2 thousand barrels per day of bitumen and other products (2021 - 3 thousand barrels per day) that were exported to the operator's facilities using an existing interconnect pipeline.

Higher production at Kearl was primarily driven by improved plant performance and the absence of extreme cold weather in December 2021.

Downstream
Net income (loss) factor analysis
millions of Canadian dollars

2021

Margins

Other

2022

250

720

218

1,188

Margins – Higher margins primarily reflect improved market conditions.

Other – Improved volumes of about $60 million, favourable foreign exchange impacts of about $60 million, absence of the prior year unfavourable out-of-period inventory adjustment of $60 million, partially offset by higher operating expenses of about $50 million.

Refinery utilization and petroleum product sales

Fourth Quarter

thousands of barrels per day, unless noted

2022

2021

Refinery throughput

433

416

Refinery capacity utilization (percent)

101

97

Petroleum product sales

487

496

Improved refinery throughput in the fourth quarter of 2022 was primarily driven by economic optimization across the downstream supply chain.

Chemicals
Net income (loss) factor analysis
millions of Canadian dollars

2021

Margins

Other

2022

64

(20)

(3)

41

Corporate and other

Fourth Quarter

millions of Canadian dollars

2022

2021

Net income (loss) (U.S. GAAP)

(33

)

(46

)

Liquidity and capital resources

Fourth Quarter

millions of Canadian dollars

2022

2021

Cash flow generated from (used in):

Operating activities

2,797

1,632

Investing activities

(473

)

(399

)

Financing activities

(2,151

)

(955

)

Increase (decrease) in cash and cash equivalents

173

278

Cash and cash equivalents at period end

3,749

2,153

Cash flow generated from operating activities primarily reflects higher Upstream realizations, improved Downstream margins, and favourable working capital impacts.

Cash flow used in investing activities primarily reflects higher additions to property, plant and equipment.

Cash flow used in financing activities primarily reflects:

Fourth Quarter

millions of Canadian dollars, unless noted

2022

2021

Dividends paid

211

188

Per share dividend paid (dollars)

0.34

0.27

Share repurchases (a)

1,934

761

Number of shares purchased (millions) (a)

27.3

17.5

(a) Share repurchases were made under the company's normal course issuer bid program, and substantial issuer bid that commenced on November 4, 2022 and expired on December 9, 2022. Includes shares purchased from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid, and by way of a proportionate tender under the company's substantial issuer bid.

The company completed share repurchases under its normal course issuer bid on October 21, 2022.

On November 4, 2022, the company commenced a substantial issuer bid pursuant to which it offered to purchase for cancellation up to $1.5 billion of its common shares through a modified Dutch auction and proportionate tender offer. The substantial issuer bid was completed on December 14, 2022, with the company taking up and paying for 20,689,655 common shares at a price of $72.50 per share, for an aggregate purchase of $1.5 billion and 3.4 percent of Imperial's issued and outstanding shares at the close of business on

October 31, 2022. This included 14,399,985 shares purchased from Exxon Mobil Corporation by way of a proportionate tender to maintain its ownership percentage at approximately 69.6 percent.

Full-year 2022 vs. full-year 2021

Twelve Months

millions of Canadian dollars, unless noted

2022

2021

Net income (loss) (U.S. GAAP)

7,340

2,479

Net income (loss) per common share, assuming dilution (dollars)

11.44

3.48

Net income (loss) excluding identified items 1

7,132

2,479

Current year results include favourable identified items 1 of $208 million related to the company's gain on the sale of interests in XTO Energy Canada.

Upstream
Net income (loss) factor analysis
millions of Canadian dollars

2021

Price

Volumes

Royalty

Identified

Items¹

Other

2022

1,395

3,140

(80)

(970)

208

(48)

3,645

Price – Higher realizations were generally in line with increases in marker prices, driven primarily by increased demand. Average bitumen realizations increased by $26.76 per barrel generally in line with WCS, and synthetic crude oil realizations increased by $43.85 per barrel.

Volumes – Lower volumes were primarily the result of downtime at Kearl in the first half of the year, partly offset by higher production at Syncrude and Cold Lake.

Royalty – Higher royalties primarily driven by improved commodity prices.

Identified Items 1 – Current year results include favourable identified items 1 related to the company's gain on the sale of interests in XTO Energy Canada.

Other – Higher operating expenses of about $500 million, primarily from higher energy prices, partially offset by favourable foreign exchange impacts of about $270 million, and higher electricity sales at Cold Lake of about $60 million due to increased prices.

Marker prices and average realizations

Twelve Months

Canadian dollars, unless noted

2022

2021

West Texas Intermediate (US$ per barrel)

94.36

68.05

Western Canada Select (US$ per barrel)

76.28

54.96

WTI/WCS Spread (US$ per barrel)

18.08

13.09

Bitumen (per barrel)

84.67

57.91

Synthetic crude oil (per barrel)

125.46

81.61

Average foreign exchange rate (US$)

0.77

0.80

____________________
1
non-GAAP financial measure - see Attachment VI for definition and reconciliation

Production

Twelve Months

thousands of barrels per day

2022

2021

Kearl (Imperial's share)

172

186

Cold Lake

144

140

Syncrude (a)

77

71

Kearl total gross production (thousands of barrels per day)

242

263

(a) In 2022, Syncrude gross production included about 3 thousand barrels per day of bitumen and other products (2021 - 1 thousand barrels per day) that were exported to the operator's facilities using an existing interconnect pipeline.

Lower production at Kearl was primarily a result of downtime in the first half of the year.

Downstream
Net income (loss) factor analysis
millions of Canadian dollars

2021

Margins

Other

2022

895

2,350

377

3,622

Margins – Higher margins primarily reflect improved market conditions.

Other – Lower turnaround impacts of about $140 million, reflecting the absence of turnaround activities at Strathcona refinery, improved volumes of about $130 million, favourable foreign exchange impacts of about $120 million, absence of the prior year unfavourable out-of-period inventory adjustment of $74 million, partially offset by higher operating expenses of about $190 million.

Refinery utilization and petroleum product sales

Twelve Months

thousands of barrels per day, unless noted

2022

2021

Refinery throughput

418

379

Refinery capacity utilization (percent)

98

89

Petroleum product sales

475

456

Improved refinery throughput in 2022 was primarily driven by increased demand and reduced turnaround activity.

Improved petroleum product sales in 2022 primarily reflects increased demand.

Chemicals
Net income (loss) factor analysis
millions of Canadian dollars

2021

Margins

Other

2022

361

(110)

(47)

204

Margins – Lower margins primarily reflect weaker industry polyethylene margins.

Corporate and other

Twelve Months

millions of Canadian dollars

2022

2021

Net income (loss) (U.S. GAAP)

(131

)

(172

)

Liquidity and capital resources

Twelve Months

millions of Canadian dollars

2022

2021

Cash flow generated from (used in):

Operating activities

10,482

5,476

Investing activities

(618

)

(1,012

)

Financing activities

(8,268

)

(3,082

)

Increase (decrease) in cash and cash equivalents

1,596

1,382

Cash flow generated from operating activities primarily reflects higher Upstream realizations, improved Downstream margins, and favourable working capital impacts.

Cash flow used in investing activities primarily reflects higher additions to property, plant and equipment, which were partially offset by proceeds from the sale of interests in XTO Energy Canada.

Cash flow used in financing activities primarily reflects:

Twelve Months

millions of Canadian dollars, unless noted

2022

2021

Dividends paid

851

706

Per share dividend paid (dollars)

1.29

0.98

Share repurchases (a)

6,395

2,245

Number of shares purchased (millions) (a)

93.9

56.0

(a) Share repurchases were made under the company's normal course issuer bid program, and substantial issuer bids that commenced on May 6, 2022 and November 4, 2022, and expired on June 10, 2022 and December 9, 2022, respectively. Includes shares purchased from Exxon Mobil Corporation concurrent with, but outside of, the normal course issuer bid, and by way of a proportionate tender under the company's substantial issuer bids.

On June 27, 2022, the company announced that it had received final approval from the Toronto Stock Exchange for a new normal course issuer bid to continue its then existing share repurchase program. The program enabled the company to purchase up to a maximum of 31,833,809 common shares during the period

June 29, 2022 to June 28, 2023. The program completed on October 21, 2022 as a result of the company purchasing the maximum allowable number of shares under the program.

On May 6, 2022, the company commenced a substantial issuer bid pursuant to which it offered to purchase for cancellation up to $2.5 billion of its common shares through a modified Dutch auction and proportionate tender offer. The substantial issuer bid was completed on June 15, 2022, with the company taking up and paying for 32,467,532 common shares at a price of $77.00 per share, for an aggregate purchase of $2.5 billion and 4.9 percent of Imperial's issued and outstanding shares at the close of business on May 2, 2022. This included 22,597,379 shares purchased from Exxon Mobil Corporation by way of a proportionate tender to maintain its ownership percentage at approximately 69.6 percent.

On November 4, 2022, the company commenced a substantial issuer bid pursuant to which it offered to purchase for cancellation up to $1.5 billion of its common shares through a modified Dutch auction and proportionate tender offer. The substantial issuer bid was completed on December 14, 2022, with the company taking up and paying for 20,689,655 common shares at a price of $72.50 per share, for an aggregate purchase of $1.5 billion and 3.4 percent of Imperial's issued and outstanding shares at the close of business on

October 31, 2022. This included 14,399,985 shares purchased from Exxon Mobil Corporation by way of a proportionate tender to maintain its ownership percentage at approximately 69.6 percent.

During the third quarter of 2022, the company decreased its long-term debt by $1 billion by partially repaying an existing facility with an affiliated company of ExxonMobil.

Key financial and operating data follow.

Forward-looking statements

Statements of future events or conditions in this report, including projections, targets, expectations, estimates, and business plans are forward-looking statements. Forward-looking statements can be identified by words such as believe, anticipate, intend, propose, plan, goal, seek, project, predict, target, estimate, expect, strategy, outlook, schedule, future, continue, likely, may, should, will and similar references to future periods. Forward-looking statements in this report include, but are not limited to, references to continuing to maximize production to meet Canadian fuel demand; the company's planned renewable diesel complex at Strathcona, including project cost, production estimates, expected sources of feedstock, projections regarding expected reductions in greenhouse gas emissions in comparison to conventional fuels, expected start up in early 2025, and timing of regulatory approvals; the ability for the renewable diesel project to create jobs, help customers reduce emissions and enhance the company's low carbon product offering; continuing to advance lower-carbon solutions supporting the company's journey to net zero; the company's ongoing efforts to provide solutions that lower the greenhouse gas emissions intensity of operations and provide lower life-cycle emissions products to customers; the company-wide goal to achieve net zero emissions (Scope 1 and 2) by 2050 in its operated assets through collaboration with government and industry partners; the company's 2030 emission intensity reduction goal for operated oil sands assets; the impact and ability to apply recovery technologies, carbon capture and storage, and efficiency projects including the use of lower carbon fuels at its operations to achieve lower emissions goals; evaluation of the Pathways Alliance proposed geological storage hub, including the carbon sequestration evaluation agreement with the Government of Alberta; the expectation of commodity and product price volatility; and the continued evolution of inflation and prices for services and materials, its impact on operating and capital cost, and the company's ability to mitigate these costs.

Forward-looking statements are based on the company's current expectations, estimates, projections and assumptions at the time the statements are made. Actual future financial and operating results, including expectations and assumptions concerning demand growth and energy source, supply and mix; production rates, growth and mix across various assets; project plans, timing, costs, technical evaluations and capacities and the company's ability to effectively execute on these plans and operate its assets, including its investment in the renewable diesel complex at Strathcona; the adoption and impact of new facilities or technologies on reductions to GHG emissions intensity, including but not limited to Strathcona renewable diesel, carbon capture and storage including in connection with hydrogen for the renewable diesel project, recovery technologies and efficiency projects and any changes in the scope, terms, or costs of such projects; for renewable diesel, the availability and cost of locally-sourced and grown feedstock and the supply of renewable diesel to British Columbia in connection with its low-carbon fuel legislation; the amount and timing of emissions reductions, including the impact of lower carbon fuels; that any required support from policymakers and other stakeholders for various new technologies such as carbon capture and storage will be provided; performance of third party service providers; receipt of regulatory approvals in a timely manner; refinery utilization; applicable laws and government policies, including with respect to climate change, GHG emissions reductions and low carbon fuels; the ability to offset any ongoing inflationary pressures; capital allocation including shareholder returns, and capital and environmental expenditures; progression of COVID-19 and its impacts on Imperial's ability to operate its assets; and commodity prices, foreign exchange rates and general market conditions could differ materially depending on a number of factors.

These factors include global, regional or local changes in supply and demand for oil, natural gas, and petroleum and petrochemical products and resulting price, differential and margin impacts, including foreign government action with respect to supply levels and prices, the impact of COVID-19 on demand and the occurrence of wars; availability and allocation of capital; the receipt, in a timely manner, of regulatory and third-party approvals, including for new technologies that will help the company meet its lower emissions goals; the results of research programs and new technologies, the ability to bring new technologies to commercial scale on a cost-competitive basis, and the competitiveness of alternative energy and other emission reduction technologies; failure or delay of supportive policy and market development for the adoption of emerging lower emission energy technologies and other technologies that support emissions reductions; political or regulatory events, including changes in law or government policy, environmental regulation including climate change and greenhouse gas regulation, and actions in response to COVID-19; unanticipated technical or operational difficulties; project management and schedules and timely completion of projects; availability and performance of third-party service providers, including in light of restrictions related to COVID-19; environmental risks inherent in oil and gas exploration and production activities; management effectiveness and disaster response preparedness, including business continuity plans in response to COVID-19; operational hazards and risks; cybersecurity incidents, including increased reliance on remote working arrangements; currency exchange rates; general economic conditions; and other factors discussed in Item 1A risk factors and Item 7 management's discussion and analysis of financial condition and results of operations of Imperial Oil Limited's most recent annual report on Form 10-K and subsequent interim reports.

Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, some that are similar to other oil and gas companies and some that are unique to Imperial Oil Limited. Imperial's actual results may differ materially from those expressed or implied by its forward-looking statements and readers are cautioned not to place undue reliance on them. Imperial undertakes no obligation to update any forward-looking statements contained herein, except as required by applicable law.

In this release all dollar amounts are expressed in Canadian dollars unless otherwise stated. This release should be read in conjunction with Imperial's most recent Form 10-K. Note that numbers may not add due to rounding.

The term "project" as used in this release can refer to a variety of different activities and does not necessarily have the same meaning as in any government payment transparency reports.

Imperial's company-wide net-zero goal (Scope 1 and 2) by 2050 is backed by a comprehensive approach centered on detailed emission-reduction roadmaps for its major operated assets. Roadmaps may be updated as needed to reflect technology, policy and other developments, including the development and acquisition of major operated assets. Actions needed to advance the company's 2030 greenhouse gas emissions intensity reductions plans are incorporated into its medium-term business plans, which are updated annually. The reference case for planning beyond 2030 is based on the ExxonMobil's Energy Outlook research and publication, which contains demand and supply projections based on assessment of current trends in technology, government policies, consumer preferences, geopolitics, and economic development. Reflective of the existing global policy environment, the Energy Outlook does not project the degree of required future policy and technology advancement and deployment for the world, or Imperial, to meet net-zero goals by 2050. As future policies and technology advancements emerge, they will be incorporated into the Outlook, and the company's business plans will be updated accordingly.

Individual projects or opportunities may advance based on a number of factors, including availability of supportive policy, technology for cost-effective abatement, company planning process, and alignment with our partners and other stakeholders. The company's plans to reduce emissions are good-faith efforts based on current relevant data and methodology, which could be changed or refined.

Attachment I

Fourth Quarter

Twelve Months

millions of Canadian dollars, unless noted

2022

2021

2022

2021

Net Income (loss) (U.S. GAAP)

Total revenues and other income

14,453

12,312

59,670

37,590

Total expenses

12,174

11,201

50,186

34,307

Income (loss) before income taxes

2,279

1,111

9,484

3,283

Income taxes

552

298

2,144

804

Net income (loss)

1,727

813

7,340

2,479

Net income (loss) per common share (dollars)

2.87

1.18

11.47

3.48

Net income (loss) per common share - assuming dilution (dollars)

2.86

1.18

11.44

3.48

Other Financial Data

Gain (loss) on asset sales, after tax

9

241

43

Total assets at December 31

43,524

40,782

Total debt at December 31

4,155

5,176

Shareholders' equity at December 31

22,413

21,735

Capital employed at December 31

26,593

26,931

Dividends declared on common stock

Total

266

185

932

729

Per common share (dollars)

0.44

0.27

1.46

1.03

Millions of common shares outstanding

At December 31

584.2

678.1

Average - assuming dilution

603.0

689.5

641.5

713.2

Attachment II

Fourth Quarter

Twelve Months

millions of Canadian dollars

2022

2021

2022

2021

Total cash and cash equivalents at period end

3,749

2,153

3,749

2,153

Operating Activities

Net income (loss)

1,727

813

7,340

2,479

Adjustments for non-cash items:

Depreciation and depletion

465

545

1,897

1,977

(Gain) loss on asset sales

(3

)

(10

)

(158

)

(49

)

Deferred income taxes and other

281

75

(77

)

91

Changes in operating assets and liabilities

345

(16

)

1,485

363

All other items - net

(18

)

225

(5

)

615

Cash flows from (used in) operating activities

2,797

1,632

10,482

5,476

Investing Activities

Additions to property, plant and equipment

(492

)

(424

)

(1,526

)

(1,108

)

Proceeds from asset sales

18

24

904

81

Additional investments

(6

)

Loans to equity companies - net

1

1

10

15

Cash flows from (used in) investing activities

(473

)

(399

)

(618

)

(1,012

)

Cash flows from (used in) financing activities

(2,151

)

(955

)

(8,268

)

(3,082

)

Attachment III

Fourth Quarter

Twelve Months

millions of Canadian dollars

2022

2021

2022

2021

Net income (loss) (U.S. GAAP)

Upstream

531

545

3,645

1,395

Downstream

1,188

250

3,622

895

Chemical

41

64

204

361

Corporate and other

(33

)

(46

)

(131

)

(172

)

Net income (loss)

1,727

813

7,340

2,479

Revenues and other income

Upstream

4,332

4,252

19,764

15,831

Downstream

15,919

14,453

64,985

34,786

Chemical

422

449

1,976

1,758

Eliminations / Corporate and other

(6,220

)

(6,842

)

(27,055

)

(14,785

)

Revenues and other income

14,453

12,312

59,670

37,590

Purchases of crude oil and products

Upstream

1,787

1,712

7,971

7,492

Downstream

13,110

12,980

55,569

29,505

Chemical

260

273

1,330

966

Eliminations

(6,264

)

(6,843

)

(27,128

)

(14,789

)

Purchases of crude oil and products

8,893

8,122

37,742

23,174

Production and manufacturing

Upstream

1,438

1,266

5,491

4,661

Downstream

447

406

1,640

1,445

Chemical

80

65

273

210

Eliminations

Production and manufacturing

1,965

1,737

7,404

6,316

Selling and general

Upstream

Downstream

179

156

653

572

Chemical

23

22

85

90

Eliminations / Corporate and other

55

37

144

122

Selling and general

257

215

882

784

Capital and exploration expenditures

Upstream

364

266

1,128

632

Downstream

94

168

295

476

Chemical

5

2

10

8

Corporate and other

25

5

57

24

Capital and exploration expenditures

488

441

1,490

1,140

Exploration expenses charged to Upstream income included above

1

26

5

32

Attachment IV

Operating statistics

Fourth Quarter

Twelve Months

2022

2021

2022

2021

Gross crude oil and natural gas liquids (NGL) production

(thousands of barrels per day)

Kearl

201

191

172

186

Cold Lake

141

142

144

140

Syncrude (a)

87

79

77

71

Conventional

6

11

8

10

Total crude oil production

435

423

401

407

NGLs available for sale

2

1

1

Total crude oil and NGL production

435

425

402

408

Gross natural gas production (millions of cubic feet per day)

37

121

85

120

Gross oil-equivalent production (b)

441

445

416

428

(thousands of oil-equivalent barrels per day)

Net crude oil and NGL production (thousands of barrels per day)

Kearl

184

179

157

178

Cold Lake

105

119

106

114

Syncrude (a)

77

68

63

62

Conventional

6

11

8

9

Total crude oil production

372

377

334

363

NGLs available for sale

1

1

1

Total crude oil and NGL production

372

378

335

364

Net natural gas production (millions of cubic feet per day)

37

112

83

115

Net oil-equivalent production (b)

378

397

349

383

(thousands of oil-equivalent barrels per day)

Kearl blend sales (thousands of barrels per day)

277

272

236

264

Cold Lake blend sales (thousands of barrels per day)

186

189

188

187

NGL sales (thousands of barrels per day) (c)

1

Average realizations (Canadian dollars)

Bitumen (per barrel)

59.85

65.53

84.67

57.91

Synthetic crude oil (per barrel)

115.22

92.54

125.46

81.61

Conventional crude oil (per barrel)

67.91

70.09

97.45

59.84

NGL (per barrel)

62.07

64.92

35.87

Natural gas (per thousand cubic feet)

5.54

4.92

5.69

3.83

Refinery throughput (thousands of barrels per day)

433

416

418

379

Refinery capacity utilization (percent)

101

97

98

89

Petroleum product sales (thousands of barrels per day)

Gasolines

242

240

229

224

Heating, diesel and jet fuels

180

180

176

160

Lube oils and other products

41

44

47

45

Heavy fuel oils

24

32

23

27

Net petroleum products sales

487

496

475

456

Petrochemical sales (thousands of tonnes)

193

194

842

831

(a) Syncrude gross and net production included bitumen and other products that were exported to the operator's facilities using an existing interconnect pipeline.

Gross bitumen and other products production (thousands of barrels per day)

2

3

3

1

Net bitumen and other products production (thousands of barrels per day)

2

2

3

1

(b) Gas converted to oil-equivalent at six million cubic feet per one thousand barrels.

(c) NGL sales round to 0 in 2021.

Attachment V

Net income (loss) per

Net income (loss) (U.S. GAAP)

common share - diluted (a)

millions of Canadian dollars

Canadian dollars

2018

First Quarter

516

0.62

Second Quarter

196

0.24

Third Quarter

749

0.94

Fourth Quarter

853

1.08

Year

2,314

2.86

2019

First Quarter

293

0.38

Second Quarter

1,212

1.57

Third Quarter

424

0.56

Fourth Quarter

271

0.36

Year

2,200

2.88

2020

First Quarter

(188

)

(0.25

)

Second Quarter

(526

)

(0.72

)

Third Quarter

3

Fourth Quarter

(1,146

)

(1.56

)

Year

(1,857

)

(2.53

)

2021

First Quarter

392

0.53

Second Quarter

366

0.50

Third Quarter

908

1.29

Fourth Quarter

813

1.18

Year

2,479

3.48

2022

First Quarter

1,173

1.75

Second Quarter

2,409

3.63

Third Quarter

2,031

3.24

Fourth Quarter

1,727

2.86

Year

7,340

11.44

(a) Computed using the average number of shares outstanding during each period. The sum of the quarters presented may not add to the year total.

Attachment VI

Non-GAAP financial measures and other specified financial measures
Certain measures included in this document are not prescribed by U.S. Generally Accepted Accounting Principles (GAAP). These measures constitute "non-GAAP financial measures" under Securities and Exchange Commission Regulation G, and "specified financial measures" under National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure of the Canadian Securities Administrators.

Reconciliation of these non-GAAP financial measures to the most comparable GAAP measure, and other information required by these regulations, have been provided. Non-GAAP financial measures and specified financial measures are not standardized financial measures under GAAP and do not have a standardized definition. As such, these measures may not be directly comparable to measures presented by other companies, and should not be considered a substitute for GAAP financial measures.

Cash flows from (used in) operating activities excluding working capital
Cash flows from (used in) operating activities excluding working capital is a non-GAAP financial measure that is the total cash flows from operating activities less the changes in operating assets and liabilities in the period. The most directly comparable financial measure that is disclosed in the financial statements is cash flows from (used in) operating activities within the company's Consolidated statement of cash flows. Management believes it is useful for investors to consider these numbers in comparing the underlying performance of the company's business across periods when there are significant period-to-period differences in the amount of changes in working capital. Changes in working capital is equal to "Changes in operating assets and liabilities" as disclosed in the company's Consolidated statement of cash flows and in Attachment II of this document. This measure assesses the cash flows at an operating level, and as such, does not include proceeds from asset sales as defined in Cash flows from operating activities and asset sales in the Frequently Used Terms section of the company's annual Form 10-K.

Reconciliation of cash flows from (used in) operating activities excluding working capital

Fourth Quarter

Twelve Months

millions of Canadian dollars

2022

2021

2022

2021

From Imperial's Consolidated statement of cash flows

Cash flows from (used in) operating activities

2,797

1,632

10,482

5,476

Less changes in working capital

Changes in operating assets and liabilities

345

(16

)

1,485

363

Cash flows from (used in) operating activities excl. working capital

2,452

1,648

8,997

5,113

Free cash flow
Free cash flow is a non-GAAP financial measure that is cash flows from operating activities less additions to property, plant and equipment and equity company investments plus proceeds from asset sales. The most directly comparable financial measure that is disclosed in the financial statements is cash flows from (used in) operating activities within the company's Consolidated statement of cash flows. This measure is used to evaluate cash available for financing activities (including but not limited to dividends and share purchases) after investment in the business.

Reconciliation of free cash flow

Fourth Quarter

Twelve Months

millions of Canadian dollars

2022

2021

2022

2021

From Imperial's Consolidated statement of cash flows

Cash flows from (used in) operating activities

2,797

1,632

10,482

5,476

Cash flows from (used in) investing activities

Additions to property, plant and equipment

(492

)

(424

)

(1,526

)

(1,108

)

Proceeds from asset sales

18

24

904

81

Additional investments

(6

)

Loans to equity companies - net

1

1

10

15

Free cash flow

2,324

1,233

9,864

4,464

Net income (loss) excluding identified items
Net income (loss) excluding identified items is a non-GAAP financial measure that is total net income (loss) excluding individually significant non-operational events with an absolute corporate total earnings impact of at least $100 million in a given quarter. The net income (loss) impact of an identified item for an individual segment in a given quarter may be less than $100 million when the item impacts several segments or several periods. The most directly comparable financial measure that is disclosed in the financial statements is net income (loss) within the company's Consolidated statement of income. Management uses these figures to improve comparability of the underlying business across multiple periods by isolating and removing significant non-operational events from business results. The company believes this view provides investors increased transparency into business results and trends, and provides investors with a view of the business as seen through the eyes of management. Net income (loss) excluding identified items is not meant to be viewed in isolation or as a substitute for net income (loss) as prepared in accordance with U.S. GAAP. All identified items are presented on an after-tax basis.

Reconciliation of net income (loss) excluding identified items

Fourth Quarter

Twelve Months

millions of Canadian dollars

2022

2021

2022

2021

From Imperial's Consolidated statement of income

Net income (loss) (U.S. GAAP)

1,727

813

7,340

2,479

Less identified items included in Net income (loss)

Gain/(loss) on sale of assets

208

Subtotal of identified items

208

Net income (loss) excluding identified items

1,727

813

7,132

2,479

Cash operating costs (cash costs)
Cash operating costs is a non-GAAP financial measure that consists of total expenses, less costs that are non-cash in nature, including, Purchases of crude oil and products, Federal excise taxes and fuel charge, Depreciation and depletion, Non-service pension and postretirement benefit, and Financing. The components of cash operating costs include (1) Production and manufacturing, (2) Selling and general and (3) Exploration, from the company's Consolidated statement of income, and as disclosed in Attachment III of this document. The sum of these income statement lines serve as an indication of cash operating costs and does not reflect the total cash expenditures of the company. The most directly comparable financial measure that is disclosed in the financial statements is total expenses within the company's Consolidated statement of income. This measure is useful for investors to understand the company's efforts to optimize cash through disciplined expense management.

Reconciliation of cash operating costs

Fourth Quarter

Twelve Months

millions of Canadian dollars

2022

2021

2022

2021

From Imperial's Consolidated statement of Income

Total expenses

12,174

11,201

50,186

34,307

Less:

Purchases of crude oil and products

8,893

8,122

37,742

23,174

Federal excise taxes and fuel charge

563

524

2,179

1,928

Depreciation and depletion

465

545

1,897

1,977

Non-service pension and postretirement benefit

4

10

17

42

Financing

26

22

60

54

Total cash operating costs

2,223

1,978

8,291

7,132

Components of cash operating costs

Fourth Quarter

Twelve Months

millions of Canadian dollars

2022

2021

2022

2021

From Imperial's Consolidated statement of Income

Production and manufacturing

1,965

1,737

7,404

6,316

Selling and general

257

215

882

784

Exploration

1

26

5

32

Cash operating costs

2,223

1,978

8,291

7,132

Segment contributions to total cash operating costs

Fourth Quarter

Twelve Months

millions of Canadian dollars

2022

2021

2022

2021

Upstream

1,439

1,292

5,496

4,693

Downstream

626

562

2,293

2,017

Chemicals

103

87

358

300

Corporate / Eliminations

55

37

144

122

Cash operating costs

2,223

1,978

8,291

7,132

Unit cash operating cost (unit cash costs)
Unit cash operating costs is a non-GAAP ratio. Unit cash operating costs (unit cash costs) is calculated by dividing cash operating costs by total gross oil-equivalent production, and is calculated for the Upstream segment, as well as the major Upstream assets. Cash operating costs is a non-GAAP financial measure and is disclosed and reconciled above. This measure is useful for investors to understand the expense management efforts of the company's major assets as a component of the overall Upstream segment. Unit cash operating cost, as used by management, does not directly align with the definition of "Average unit production costs" as set out by the U.S. Securities and Exchange Commission (SEC), and disclosed in the company's SEC Form 10-K.

Components of unit cash operating cost

Fourth Quarter

2022

2021

millions of Canadian dollars

Upstream (a)

Kearl

Cold Lake

Syncrude

Upstream (a)

Kearl

Cold Lake

Syncrude

Production and manufacturing

1,438

673

327

393

1,266

561

315

333

Selling and general

Exploration

1

26

Cash operating costs

1,439

673

327

393

1,292

561

315

333

Gross oil-equivalent production

441

201

141

87

445

191

142

79

(thousands of barrels per day)

Unit cash operating cost ($/oeb)

35.47

36.39

25.21

49.10

31.56

31.93

24.11

45.82

USD converted at the quarterly average forex

26.25

26.93

18.66

36.33

24.93

25.22

19.05

36.20

2022 US$0.74; 2021 US$0.79

Twelve Months

2022

2021

millions of Canadian dollars

Upstream (a)

Kearl

Cold Lake

Syncrude

Upstream (a)

Kearl

Cold Lake

Syncrude

Production and manufacturing

5,491

2,353

1,344

1,563

4,661

1,902

1,117

1,388

Selling and general

Exploration

5

32

Cash operating costs

5,496

2,353

1,344

1,563

4,693

1,902

1,117

1,388

Gross oil-equivalent production

416

172

144

77

428

186

140

71

(thousands of barrels per day)

Unit cash operating cost ($/oeb)

36.20

37.48

25.57

55.61

30.04

28.02

21.86

53.56

USD converted at the YTD average forex

27.87

28.86

19.69

42.82

24.03

22.42

17.49

42.85

2022 US$0.77; 2021 US$0.80

(a) Upstream includes Imperial's share of Kearl, Cold Lake, Syncrude and other.

After more than a century, Imperial continues to be an industry leader in applying technology and innovation to responsibly develop Canada's energy resources. As Canada's largest petroleum refiner, a major producer of crude oil, a key petrochemical producer and a leading fuels marketer from coast to coast, our company remains committed to high standards across all areas of our business.

Source: Imperial

Investor relations
(587) 476-4743

Media relations
(587) 476-7010

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