Imperial Oil Limited

Ladies and gentlemen, thank you for standing by and welcome to the Imperial Oil First Quarter 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during this time, you will need to press star 1 on your telephone keypad. Also, if you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Mr. Dave Hughes, VP of Investor Relations. Thank you. Please go ahead.

Thank you, Jeff, and good morning, everybody. Thanks for joining us on our first quarter earnings call. With me today is our senior management, and that includes Brad Corson, Chairman, President, and CEO, Dan Lyons, Senior Vice President of Finance and Administration, Simon Younger, Senior Vice President of the Upstream, John Wetmore, Vice President of the Downstream, and Sherry Evers, Vice President of Commercial and Corporate Development. First thing I'm going to do is read the cautionary statement. Today's comments include reference to non-GAAP financial measures. The definitions and reconciliations of these measures can be found in Attachment 6 of our most recent press release and available on our website with the link to this conference call. Today's comments may also contain forward-looking information. Any forward-looking information is not a guarantee of future performance and actual future financial and operating results can differ materially depending on a number of factors and assumptions. Forward-looking information and the risk factors and assumptions are described in further detail in our first quarter earnings press release that we issued this morning, as well as our most recent Form 10-K. All of those documents are available on CDAR, EDGAR, and on our website, so please refer to those. Usual format, we'll start out with Brad offering some opening remarks, then Dan will provide a financial update, and then Brad again with an operational update. And after the opening remarks, we will move to the Q&A. So with that, I'll turn it over to Brad.

Well, good morning, everybody, and welcome to our first quarter 2021 earnings call. I hope each of you and your families are doing well and continuing to stay healthy. Now, last time I spoke to you back in early February, we discussed what was a very challenging year for our industry, but one in which Imperial delivered very solid business results in the face of both the global pandemic and the associated economic challenges. I also noted Imperial's foundational improvements, including increased production capacity and a reduced cost structure. Over the past year, we have emphasized the priority that we were placing on making sure that we remained well positioned for the eventual recovery as we were taking steps to respond to the business environment. I'm pleased to tell you that the very positive note we ended 2020 on has continued through the first quarter of 2021, despite the continued challenges brought on by the pandemic. Over the next few minutes, Dan and I will detail the results of what was a very strong first quarter. So now let's talk about those first quarter results. Since we entered 2021, we have been facing lower than normal product demand, but have seen commodity prices and product margins strengthen. The improved market environment coupled with our continued strong operational and cost performance resulted in us delivering our highest quarterly earnings since the third quarter of 2019 and the highest first quarter since 2018. Earnings for the quarter were $392 million, an improvement of over $1.5 billion versus the fourth quarter. But recall that the fourth quarter results reflected an impairment of close to $1.2 billion related to our unconventional assets. Without this impairment, our earnings excluding identified items have still improved by over $360 million versus the fourth quarter. I'd also highlight that all of our business lines, all of the business lines, delivered positive earnings this quarter, which is great to see. The first quarter also delivered significant cash flow from operating activities of over $1 billion, reflecting strong operational performance, including the highest first quarter upstream production in 30 years, and an ongoing focus on cost reductions and efficiencies. These efforts drove significant benefits in 2020, such as production and manufacturing expense reductions of around $1 billion, And while not all of this was structural, we are committed to finding more efficiencies to offset those savings that weren't structural. And we're seeing this good progress on cost reductions continue into 2021. And to put that in perspective, our cash operating costs in the first quarter were almost $70 million lower than in the first quarter of 2020. We've talked a lot over the past year about our financial resilience, our operational strength, flexibility, and integration. And I hope you will agree that our first quarter results are indicative of those strengths and provide a reason for confidence in the company's performance moving forward. Our continued strong operational performance and cash generation not only supported our ability to once again declare a dividend for the quarter, but to significantly increase that dividend. We have paid a dividend reliably for over 100 consecutive years now, and grown it each of the last 26 years. This morning, we announced a dividend of 27 cents per share, which represents a 5-cent-per-share increase, or close to 23 percent increase. Additionally, we announced an amendment to our current NCIB program to allow us to repurchase up to 4% of the outstanding shares of Imperial by the end of June 2021, so over the next two months. Last year, we were very proud of the fact that we were able to keep paying a stable, reliable dividend in a very tough time. Today's announcements just continue to underscore not just our strong financial position and our confidence in the future, but also clearly demonstrates our ongoing commitment to returning cash to our shareholders. I will now turn it over to Dan to go through our financial performance for the quarter in more detail.