Oil price weakness drives Imperial Oil to bigger-than-expected loss

The Imperial Oil Kearl mining project in northern Alberta averaged 194,000 bpd in the first quarter, up from 95,000 bpd during the first quarter of 2015, as the project continues to ramp up to full capacity. Imperial Oil photo.

By Nia Williams

CALGARY, Alberta, April 29 (Reuters) – Canadian integrated oil producer and refiner Imperial Oil Ltd reported a slightly bigger-than-expected quarterly loss on Friday, hurt by continued weakness in global crude prices.

Imperial’s net loss was C$101 million ($81 million), or 12 Canadian cents per share, in the first quarter ended March 31, compared with net income of C$421 million, or 50 Canadian cents per share, a year earlier.

The slump in global crude prices, which fell to 13-year lows of around $26 a barrel in the first quarter and are still 60 percent below mid-2014 levels, outweighed benefits from a weak Canadian dollar.

Imperial and other Canadian oil producers record expenses in Canadian dollars, while the price of oil is tied to the U.S. dollar, making the weak loonie a positive factor at a time when oil prices remain persistently low.

The company’s adjusted loss was 15 Canadian cents per share, bigger than the average analyst estimate of 14 Canadian cents, according to Thomson Reuters I/B/E/S.

Imperial shares were last down 0.2 percent on the Toronto Stock Exchange at C$41.97 following the slight miss on market expectations.

“The key differences relative to our estimates were lower-than-expected realized pricing, higher product purchase expenses in the upstream segment, partially offset by higher earnings in the downstream segment,” BMO Capital Markets analyst Randy Ollenberger wrote in a note.

Imperial said gross production rose 26 percent and averaged a record 421,000 barrels of oil equivalent per day. Its Kearl mining project in northern Alberta averaged 194,000 bpd in the first quarter, up from 95,000 bpd during the first quarter of 2015, as the project continues to ramp up to full capacity.

The company is also seeking approval from regulators for its 50,000 bpd Cold Lake expansion project, which will use solvent-assisted steam technology to extract bitumen. Imperial has not made a final investment decision on the project but said construction could start in 2019 and production in 2022.

Income from the company’s refining business dropped by 43 percent as margins fell.

Exxon Mobil Corp, which owns a majority stake in Imperial, reported a 63 percent drop in quarterly profit on Friday, citing weak prices and lower refining margins.

($1 = 1.2524 Canadian dollars)

(Additional reporting by Vishaka George in Bengaluru; Editing by Shounak Dasgupta, Maju Samuel and Frances Kerry)