Q1 Profit for Imperial Oil Declines due to Cheaper Crude Prices
Imperial Oil Ltd., the Number 2 oil refiner and producer of Canada, reported a profit decline of 21 percent in quarter one because of the cheaper crude price per barrel and higher refinery maintenance.
According to the company, the beginning of the initial phase of its Kearl oil sands program in Northern Alberta is coming and the sales of the oil blend produced from the project are anticipated to start in quarter three.
Imperial, which is partly owned by Exxon Mobil Corp, has been having challenges in overcoming the start-up issues of its 110,000-barrel a day project in Kearl.
The project was initially expected to start production by the end of last year, yet it has not produced anything until this time.
The Kearl project will utilize production technology that permits the tar-like bitumen of the oil sands to flow to market without needing any upgrade.
The project has been surrounded by cost overruns that led the budget higher by almost two-thirds from the first 2009 forecast that was estimated at C$7.9 billion.
The net income of the company during the quarter dropped from C$1.02 billion or C$1.19 a share last year, to C$798 million or 94 Canadian cents a share.
Total profit and other revenue grew 6 percent to C$8.01 billion.
The gross production of Imperial declined 2 percent to an average oil equivalent of 284,000 barrels per day.
Cash flow from operations, a primary indicator of the firm’s ability to afford new programs and oil drilling, declined from C$1.05 billion of last year to C$597 million.
Costs for the majority of the liquid output of the company are based on the price of WTI.
According to the company, the average price of WTI was $8.67 a barrel lower, or around 8 percent, during quarter one versus the past year.