IMPERIAL OIL $50.82 - Toronto symbol IMO

IMPERIAL OIL $50.82 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $42.7 billion; TSINetwork Rating: Average; Dividend yield: 1.0%; www.imperialoil.ca) is a major integrated oil company with oil sands projects in Alberta and conventional oil and gas operations across Western Canada. It also operates four refineries and 1,850 Esso gas stations.

In the three months ended December 31, 2013, Imperial produced an average of 329,000 barrels of oil equivalent a day, up 15.4% from 285,000 barrels a year earlier. The gain was mainly due to the start-up of its Kearl oil sands project in April 2013.

The higher production increased Imperial’s revenue by 7.2%, to $8.4 billion from $7.8 billion. However, insufficient pipeline capacity has made it difficult for the company to sell its oil in higher-priced markets. That cut its earnings per share by 1.5%, to $1.24 from $1.26. Cash flow per share fell 11.7%, to $1.67 from $1.89.

The company is now building a terminal in Edmonton that will let it ship more oil by train. It expects to complete this project in 2015.

The stock trades at a reasonable 12.0 times Imperial’s projected 2014 earnings of $4.25 a share and 9.5 times its forecast cash flow of $5.36 a share.

Imperial Oil is still a safety-conscious buy.

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