IMPERIAL OIL LTD. $46 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $39.0 billion; Price-to-sales ratio: 1.6; Dividend yield: 1.0%; TSINetwork Rating: Average; www.imperialoil.ca) is a major integrated-oil company. U.S.-based ExxonMobil Corp. (New York symbol XOM) owns 69.6% of Imperial’s shares.
Most of the Imperial’s production comes from its oil-sands projects in Alberta. It also has conventional oil and natural-gas operations in western Canada, and holds interests in offshore projects in Atlantic Canada. The company’s other operations include four refineries and roughly 1,900 Esso gas stations.
In the three months ended March 31, 2011, Imperial earned $781 million, or $0.91 a share. That’s up 64.1% from $476 million, or $0.56 a share. Cash flow per share rose 4.7%, to $1.12 to $1.07. Revenue rose 11.4%, to $6.9 billion from $6.2 billion.
Imperial produced an average of 256,000 barrels of oil equivalent a day (including natural gas). That’s up 6.7% from 240,000 barrels a year earlier. Oil accounted for 84% of Imperial’s production. The remaining 16% was natural gas.
The company sold its synthetic oil for an average of $93.24 a barrel in the latest quarter, up 13.4% from $82.24 a year earlier. However, gas prices fell 26.0%, to $3.85 per thousand cubic feet from $5.20.
Imperial continues to make progress on its Kearl oil-sands project in northern Alberta. Imperial owns 71% of Kearl; ExxonMobil owns the remaining 29%. It will cost a total of $8 billion to bring Kearl into operation. Imperial’s share is $5.6 billion.
Kearl is nearly 60% complete, and should add 78,100 barrels of oil to Imperial’s daily production when it begins operating in 2012. Kearl’s reserves should last 40 to 50 years.
Imperial trades at 13.2 times the $3.48 a share it should earn in 2011, and 9.4 times its likely cash flow of $4.90.
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