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Imperial Oil reports $188M loss as COVID-19 hits workers, slows work schedule

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CEO Brad Corson

Imperial Oil Ltd. is slowing or deferring maintenance work throughout its operations as it tries to ensure employee safety in the wake of a COVID-19 outbreak that has infected 83 workers at its Kearl oilsands mine in northern Alberta.

The Calgary-based company said Friday it will start a planned one-month maintenance shutdown of one of its two production trains at Kearl in a few days and extend it by an extra month to late June or early July to allow more distancing between workers.

The extension means production at Kearl will fall from the record average of 226,000 barrels per day in the first quarter – and 238,000 bpd in March – to about 150,000 bpd in the second quarter, CEO Brad Corson told a conference call on Friday.

“This allows us to progress at a more measured pace and greatly reduce the number of people we have working at site at any given time and without affecting the overall scope,” he said.

“It also allows us to complete the work at a time of likely low prices so we can have the asset fully up and running as and when prices recover.”

He said the company has also reduced the scope of maintenance at its Sarnia, Ont., refinery, will defer planned work at its Sarnia chemical plant and is postponing planned maintenance at its Nanicoke, Ont., and Strathcona (Edmonton) refineries until after this year.

Twenty-two of the Kearl workers stricken with the coronavirus have recovered and the others are being monitored or treated as necessary, Corson said.

Work at the project is continuing with enhanced physical distancing, cleaning and health screening, along with supplying face masks and moving fewer workers on transport airplanes and buses.

Kearl is owned by Imperial at 71% and its parent company, ExxonMobil, with 29%.

The record output at Kearl thanks to the introduction of supplemental ore crushers drove overall Imperial production to about 419,000 barrels of oil equivalent per day in the first three months of 2020, up from 388,000 boe/d in the same period last year.

Record throughput at its Strathcona refinery helped take its overall processing total to 383,000 barrels per day, the same as a year ago.

Corson said demand for jet fuel and gasoline fell significantly in March, while diesel demand dropped by a more moderate amount, due to measures taken to limit the pandemic. However, there are signs demand may be slowly recovering, he added.

Imperial reported a net loss of $188 million in the first quarter due to lower commodity prices and non-cash charges of $301 million, with $281 million of that due to a reduction in the value of its inventory as crude oil prices plunged in March and $20 million from a goodwill impairment.

It had a net profit of $293 million in the same quarter last year.

Fellow oilsands producers Husky Energy Inc. and Cenovus Energy Inc. both reported writedowns and losses earlier this week.

Imperial’s revenue and other income totalled $6.69 billion in the quarter, down from $7.98 billion in the first quarter of 2019.

Imperial’s average realized bitumen price averaged $18.08 per barrel in the first quarter of 2020, compared to $48.85 per barrel in the first quarter of 2019.

Crude-by-rail shipments averaged 97,000 bpd from its co-owned Edmonton rail terminal in the first quarter of 2020, up from 53,000 bpd in the fourth quarter of 2019.

Shipments by rail fell to about 10,000 bpd in April and are being phased out as pipeline space is freed up amid industry-wide production cutbacks due to current low oil prices, said Corson.

Analysts said Imperial beat their expectations on production and on cash flow, the latter thanks to higher profits from its refining and marketing sector.

Imperial cut its 2020 capital spending plan at the end of March by $500 million to between $1.1 billion and $1.2 billion and targeted a reduction in expenses by $500 million compared with 2019 levels in an effort to deal with impact of the pandemic.

 


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Petroleum sector pledges support during COVID-19

Screen Shot 2020-05-05 at 11.40.37 AMImperial Oil is the latest major petroleum company to roll up its sleeves in the fight against COVID-19. Already, Shell is offering free sandwiches and beverages to essential workers during the pandemic. Now, Imperial is coming forward with initiatives to help support those on the front line and aid in the fight against the spread of the virus. 

The Calgary-based company reports that they will provide up to $2 million in free fuel vouchers to frontline nurses, paramedics and doctors as part of its Heroes Campaign launched in response to the COVID-19 pandemic. Through this promotion, Imperial is offering 80,000 digital vouchers, each worth $25, to healthcare workers currently providing critical care across Canada. Vouchers can be secured online on a first-come, first-served basis at www.healthcarehero.ca and are redeemable at more than 2,000 Esso and Mobil stations across Canada through the company’s free Speedpass+ mobile payment app.

Imperial is also donating 60 tonnes of isopropyl alcohol (IPA) to be used in disinfectant products. IPA is an ingredient used in medical, health and pharmaceutical applications, such as hand sanitizer, medical wipes and rubbing alcohol. This donation will assist the production of more than 600,000, 350 ml bottles of hand sanitizer.

“We recognize the need is great and while many of us are isolating in the physical sense, I am proud of how our employees and neighbours have come together to donate critical supplies and funding where it is needed the most,” says Imperial CEO Brad Corson.

In addition to helping to meet Canada’s demand for IPA, Imperial has also supported the country’s pandemic response efforts by donating hundreds of laptops to students and matching employee cash donations 2:1.

Imperial reports that their laptop initiative will support on-line learning with a donation of 500 laptops to help meet the demand for technology devices while classrooms remain closed. The program has Imperial working with the Electronic

Recycling Association’s Lending Laptops Program in support of the Calgary Board of Education’s EducationMatters campaign.

With community charities in greater need than ever, Imperial has teamed with its employees to help. Imperial increased its match dollars to $2 for every $1 given by an employee. This is for donations to community charities and not-for-profit organizations.   

“We owe so much gratitude to those on the front lines who are working long hours helping those in need,” says Imperial’s CEO. According to Corson, the company will continue to look for ways to support Canadians as we all manage through this challenging period.


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Imperial Oil names new president, as Kruger announces retirement

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Corson is Imperial’s new president

The board of directors of Imperial Oil Limited is appointing B.W. (Brad) Corson as president.

Corson took on the role September 17, 2019. In turn, chairman and CEO R.M. (Rich) Kruger is retiring at the end of December 2019. Corson will assume the role of chairman, president and CEO of Imperial Oil Limited on January 1, 2020.

“On behalf of the Imperial board of directors, I would like to thank Rich Kruger for his outstanding leadership and dedication over the last almost seven years. During his tenure, Rich has led the organization through a period of record upstream growth, exceptional downstream financial and operational performance, and unprecedented returns to shareholders in the form of share repurchases and dividend growth,” Imperial Oil Limited board member Krystyna Hoeg said in a statement. “That said, perhaps Rich’s greatest legacy to the company and its employees is his work to successfully ignite and foster cultural change within Imperial to enhance competitiveness and position it well for the future.”

Rich Kruger is retiring at the end of December.

Rich Kruger is retiring at the end of December.

Kruger, born in Minneapolis, Minnesota, holds a mechanical engineering degree from the University of Minnesota and an MBA from the University of Houston. He began his career with Exxon in 1981 in Houston, Texas and held various technical and management positions throughout the United States. Kruger’s career then took an international turn and for the next 20 years, he led development and production activities in the former Soviet Union, Africa, Asia Pacific and the Middle East. In 2008, he was appointed president of ExxonMobil Production Company and a vice president of ExxonMobil Corporation. Then, in 2013, he began his tenure as chairman, president and CEO of Imperial Oil .

Corson, a native of Woodstock, Illinois, is a graduate of Auburn University’s chemical engineering program. He joined Exxon in 1983 in New Orleans, as a project engineer. During his 36 year career with the company, he held a variety of technical, operations, commercial and managerial assignments around the world. In addition to multiple assignments across the United States, he has also held key leadership positions in Hong Kong and London. In 2009, Corson was appointed vice president, ExxonMobil Production Company, with responsibilities for oil and gas production activities in Europe and the Caspian regions.

In 2015, Corson was appointed president, ExxonMobil Upstream Ventures and vice president of ExxonMobil Corporation where he was responsible for overseeing ExxonMobil’s global upstream acquisition and divestment programs. Under his leadership, ExxonMobil made key strategic acquisitions in the Permian Basin, Papua New Guinea, Mozambique and Brazil.