Yahoo Finance Imperial's (IMO) Q4 Earnings Beat Estimates, Revenues Miss
Imperial Oil Limited IMO reported fourth-quarter 2022 adjusted earnings per share (EPS) of $2.11, which beat the Zacks Consensus Estimate of $1.84. This was due to higher contributions from the company's downstream segment, driven by higher volumes and improved margins.
Moreover, the bottom line improved significantly from the year-ago quarter’s profit of 94 cents per share.
However, the Canadian integrated oil and gas player’s quarterly revenues of $10.7 billion underperformed the Zacks Consensus Estimate of $13.2 billion. However, the top line rose from the year-ago quarter’s sales of $9.8 billion. The disappointment versus the consensus mark could be blamed on lower production during the period.
Imperial Oil announced a first-quarter dividend of 44 Canadian cents per share, payable on Apr 1, 2023, to shareholders of record at the close of the business on Mar 3, 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$4,332 million increased from the prior-year level of C$4,252 million. However, the segment reported a net income of C$531 million, less than the year-ago quarter’s figure of C$545 million. This decrease was due to lower gross volumes and lower conventional crude oil realizations in the reported quarter.
During the quarter under review, gross production volumes averaged 441,000 barrels of oil equivalent per day (Boe/d), down from 445,000 Boe/d in the year-ago quarter. The total oil and NGL output amounted to 435,000 barrels per day (bpd) compared with 425,000 bpd in the fourth quarter of 2021.
Net oil and NGL output from Kearl and Cold Lake totaled 184,000 bpd and 105,000 bpd respectively. Syncrude output averaged 77,000 bpd, up from the year-ago level of 68,000 bpd. Net natural gas production came in at 37 million cubic feet per day (Mcf/d), lower than 112 Mcf/d in the last year’s comparable quarter.
Bitumen price realizations totaled C$59.85 per barrel, down from C$65.53 in the year-ago quarter. IMO received an average realized price of C$115.22 per barrel of synthetic oil compared with the year-ago quarter’s C$92.54.
Imperial Oil received C$67.91 per barrel for conventional crude oil, compared with the year-ago quarter’s C$70.09. The price of gas rose to C$5.54 per thousand cubic feet.
Downstream:
Revenues of C$14,453 million increased from C$12,312 million, recorded in the fourth quarter of 2021. Moreover, the segment earned a net income of C$1,188 million compared with C$250 million in the year-ago quarter, due to higher refinery throughput and improved margins. The improved margins were a result of higher demand for refined products.
The refinery throughput in the fourth quarter averaged 433,000 bpd, higher than the prior-year level of 416,000 bpd due to a reduction in planned maintenance activity and improved reliability at the company's refineries. Additionally, the refineries operated at high utilization rates during the quarter, which also contributed to the increased throughput.
Chemical:
Revenues of C$422 million decreased from C$449 million, recorded in the fourth quarter of 2021. The net income for this segment was recorded at C$41 million, down from C$64 million in the year-ago quarter.
Total Costs & Capex
Total expenses of C$12,174 million increased from the year-ago quarter’s C$11,201 million.
In the quarter under consideration, Imperial Oil’s capital and exploration expenditures totaled C$488 million, higher than the year-ago quarter’s C$441 million.
Financial Performance
Imperial Oil’s cash flow from operating activities was C$2,797 billion in the reported quarter. In the year-ago period, cash flow from operating activities had come in at C$1,632 billion. Meanwhile, IMO’s free cash flow in the fourth quarter of 2022 totaled C$2,324 billion.
In the reported quarter, the company returned C$2,145 million to its shareholders. This amount included C$211 million in dividends paid and C$1,934 million in share repurchases. The share repurchases were made through its normal course issuer bid and the completion of a C$1,500 million substantial issuer bid program in December.
As of Dec 31, 2022, Imperial Oil held C$3,749 billion in cash and cash equivalents.
Outlook
Imperial Oil is expected to prioritize the implementation of a significant transition plan in 2023, with a continued focus on the integration of systems, processes, and people. It also expects the realization of synergy benefits to grow with further integration in 2023.
In order to stay consistent with this sustained production performance, Imperial Oil updated its 2023 year-to-date production performance at Kearl to around 265,000 barrels per day.
The company announced that it plans to complete the Grand Rapids project, an oil sands mining operation in northern Alberta, Canada, on an accelerated basis by the end of 2023, which is about one year ahead of schedule. This project increased its CapEx by about $100 million.
Zacks Rank and Key Picks
Currently, Imperial Oil Limited carries a Zacks Rank #3 (Hold). Meanwhile, investors interested in the energy sector might look at some better-performing stocks like ProPetro Holding PUMP and Energy Transfer ET both sporting a Zacks Rank #1 (Strong Buy) and Helmerich & Payne (HP) holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ProPetro Holding: PUMP currently has a forward P/E ratio of 4.43. In comparison, its industry has an average forward P/E of 25.40, which means PUMP is trading at a discount to the group.
ProPetro Holding is worth approximately $1.13 billion. Its shares have decreased 20.8% in the past year.
Energy Transfer LP: Energy Transfer LP is valued at around $39.66 billion. ET delivered an average earnings surprise of 16.34% for the last four quarters, and its current dividend yield is 9.50%.
Energy Transfer LP currently has a forward P/E ratio of 8.95. In comparison, its industry has an average forward P/E of 14.20, which means Energy Transfer LP is trading at a discount to the group.
Helmerich & Payne: Helmerich & Payne is valued at around $4.78 billion. Helmerich & Payne, headquartered in Tulsa, OK, has a trailing four-quarter earnings surprise of roughly 130.98% on average.
Over the past 60 days, the Zacks Consensus Estimate for HP's fiscal 2023 earnings has been revised by 18.8%. In the past year, HP stock has increased by 36.3%.
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