How Does Imperial Oil Company Work?

The upstream segment focuses on exploring and producing various hydrocarbons, including crude oil, natural gas, synthetic crude oil, and bitumen. Key production sites are located in Alberta, Ontario, and the Northwest Territories, with significant offshore activities as well.

Downstream operations involve the transportation, refining, and marketing of petroleum products, primarily under the Esso brand. The chemical segment manufactures and distributes petrochemicals, supporting a diverse range of industrial applications.

Major assets include the Kearl Oil Sands mining operation and the Cold Lake in-situ operations. The company also holds a 25% stake in Syncrude Canada. In Q1 2025, the upstream segment saw a 31% increase in net income to $731 million, boosted by efficiency gains at Cold Lake and the Grand Rapids project.

Imperial Oil operates three refineries with a combined capacity of nearly 400,000 barrels per day. In Q1 2025, refinery throughput averaged 397,000 barrels per day at 91% utilization, contributing $584 million to net income and underscoring the strength of its downstream operations.

In 2024, Imperial Oil achieved its highest annual upstream production in over three decades. This surge was significantly boosted by advancements at Cold Lake, including the pioneering solvent-assisted steam-assisted gravity drainage (SA-SAGD) project at Grand Rapids, which improves bitumen recovery and lowers emissions intensity.

The company executed refinery turnarounds across its facilities in 2024, completing them ahead of schedule and under budget. Its downstream segment maintained strong margins, with refinery throughput averaging 397,000 barrels per day and achieving 91% capacity utilization in Q1 2025.

While facing production volatility due to weather and unplanned downtime at Kearl in Q1 2025, Imperial Oil implemented enhanced winter operating procedures. The chemical segment experienced a notable decrease in net income during the same quarter due to reduced margins.

Imperial Oil's integrated business model and industry-leading assets provide a robust competitive edge. Strategic investments in technologies like the EBRT pilot, which cuts emissions by 60% and costs by 50%, enhance oil sands viability. The company is also expanding into lower-carbon energy, with its Strathcona renewable diesel facility set to begin operations in mid-2025.

Imperial Oil is a dominant force in Canada's energy market, operating as the country's largest petroleum refiner and a major player in fuels marketing. Its extensive retail presence, with the Esso brand leading in market share, highlights its strong consumer connection.

The company faces challenges from the global energy transition, which could impact upstream margins, and potential regulatory changes like carbon pricing. Operational disruptions, such as those experienced at Kearl in Q1 2025, and transportation issues also pose risks to efficiency and price realization.

Looking ahead to 2025, Imperial Oil is focused on maximizing asset value and pursuing growth opportunities while reducing emissions. Strategic investments are planned to support production growth and the completion of key projects, aiming to enhance free cash flow and shareholder returns.

Capital and exploration expenditures are projected between $1.9 billion and $2.1 billion for 2025. Major investments include the Strathcona renewable diesel project, expected by mid-2025, and the ongoing development of Enhanced Bitumen Recovery Technology pilots.