Imperial Oil Limited

Good day, and welcome to the Imperial Oil 4Q earnings call. At this time, I would like to turn the conference over to Dave Hughes, VP, Investor Relations. Please go ahead.

Thank you very much, and good morning, everybody. Welcome to our fourth quarter earnings call. Here today are Brad Corson, Chairman, President, CEO, Dan Lyons, Senior Vice President, Finance and Administration, Simon Younger, Senior Vice President of the Upstream Corporation, John Wetmore, Vice President of the Downstream and Cherry Universe, Vice President of Commercial and Corporate Development. I'm just going to start with a cautionary statement. Today's comments include reference to non-GAAP financial measures. Definitions and reconciliations of these measures can be found in attachment six of our most recent press release and are available on our website with a link to this conference call. These comments may also contain forward-looking information. Any forward-looking information is not a guarantee of future performance and actual future performance, and operating results can vary materially depending on a number of factors and assumptions. Forward-looking information and the risk factors and assumptions described in further detail in our fourth quarter earnings release that we issued this morning, as well as our most recent form 10-K. All of these documents are available on CDAR, EDGAR, and on our website, so please refer to those. After Brad's opening remarks, as usual, Dan will give a financial update, and then we'll go back to Brad for an operational update, and we'll follow with all of the Q&A session.

So with that, I'm happy to turn it over to Brad for his opening remarks. All right. Thanks, Dave. Good morning, everybody, and Happy New Year. Welcome to our fourth quarter earnings call. I hope you're all doing well and your new year is off to a good start. As we close out 2022 reporting, I'm pleased to share another very strong quarter for Imperial in what has been a standout year for us, both financially and operationally. Our downstream continued to deliver exceptional operating and financial performance in the fourth quarter, while Curl tied a quarterly production record, and Cold Lake and Syncrude continued to deliver strong production results as well. It's especially satisfying to see this level of operating performance in a year where commodity prices were so supportive, which in turn allowed us to maximize value for our shareholders. Looking back on the full year, we are closing the books on what was the best year in the company's history, a stark contrast to the challenges we faced just two years ago at the depths of COVID. In 2022, we set numerous records, both operating and financial. We delivered record earnings and cash flow, as well as record shareholder returns underpinned by a 63% increase to our dividend and over $6 billion in share buybacks. Operationally, we continue to see Curl deliver new daily and quarterly best-evers. further supporting our confidence in achieving 280,000 barrels per day gross by 2024. Cold Lake delivered production at the high end of the upwardly revised guidance range, and Syncrude had a best-ever production year supported by the interconnecting bidirectional pipelines. And in the downstream, our refining assets achieved best-ever utilization, allowing us to maximize products available to the market. And in addition to these performance achievements, we continue to reinvest in the business, and we successfully advanced multiple accretive capital projects, such as completion of the Sarnia Products Pipeline, which improves our ability to supply refined products to markets in Ontario. We also made significant progress on our commitments to sustainability and decarbonization, including a decision to invest in Canada's largest renewable diesel manufacturing facility at Strathcona, material progress on the Pathways Initiative, and establishing a corporate-wide net zero goal. We'll talk more about many of these achievements over the next several minutes. And the overall macro environment remained positive through the year. And while commodity prices did soften somewhat in the fourth quarter, they remained quite strong due to global economic effects of ongoing supply challenges, growing demand, and ongoing geopolitical events. Our unrelenting focus on safety and reliability enables our strong operating performance in this environment and continues to underpin our strong financial results. Over the next few minutes, Dan and I will detail the results of what was a very strong quarter. So now let's review the fourth quarter results. Earnings for the quarter were just over $1.7 billion, and our cash from operating activities was almost $2.8 billion. Another strong operating quarter, including Curl matching its best-ever production quarter and the downstream setting utilization record, coupled with continued strong commodity fundamentals, most notably robust diesel crack spreads, supported these strong results. Full year 2022, saw record operating performance across our assets, which played a large part in generating full-year earnings of over $7.3 billion and operating cash flow of almost $10.5 billion, the strongest financial results in Imperial's history. These strong financial results come with increased loyalty and tax contributions to the provincial and federal governments, providing economic benefits for all Canadians. We achieved total upstream production of 441,000 barrels of oil equivalent per day in the quarter, reflecting continued strong and, in some cases, record-setting performance across our upstream assets, which I'll talk more about in just a few minutes. I would also note that northern Alberta experienced another significant cold weather event in December, and I'm pleased to say we managed through that just fine. And a huge thank you to the efforts of our operating teams who continue to work safely and diligently to provide reliable energy supply to the market. In the downstream, we saw another outstanding quarter. Our refinery utilization in the quarter was 101%, marking the second quarter in a row with utilization at or above 100%, and also the highest quarterly utilization we have seen in the company's history. surpassing the previous record set just last quarter. This also contributed to the highest annual utilization in the company's history. Given the current commodity price environment driven by external supply challenges we've talked about previously, this level of performance is delivering tremendous value. The fourth quarter also saw us continue to maximize shareholder returns. We completed the accelerated NCIB in October and successfully executed our second substantial issuer bid in 2022, returning $1.5 billion of cash to our shareholders in December on top of the $2.5 billion SIB completed back in June. And this was in addition to $211 million in dividends paid in the quarter for a total of $851 million for the year. Altogether, this represents over $7 billion of cash returned to shareholders in 2022, the highest level of returns in Imperials history. And finally, this morning, we declared a dividend of 44 cents per share, payable April 1st of 2023. And I can assure you that in 2023, we are maintaining our core strategy of optimizing our existing asset base to drive maximum shareholder value. a strategy that will allow us to continue to focus on returning cash to our shareholders. And with that, I'll pass things over to Dan.