Imperial OilIMO

Morningstar Rating

Stock Research and Analysis

by Kish Patel

Imperial Oil's focus on execution and cost management stems from its affiliation with parent ExxonMobil XOM, and we think this relationship gives Imperial a leg up on its Canadian peers. Like many other North American energy companies, Imperial is staking a major part of its fortunes on developing the oil sands in northern Alberta. Read more

Bulls Say

Imperial has a history of generating strong returns on capital, increasing dividends, and buying back shares.

The company's relationship with parent ExxonMobil gives it access to expertise, research, and a host of other benefits.

Imperial has an immaculate balance sheet that provides considerable flexibility, especially if the company has to weather a downcycle.

The company's Cold Lake project has been a model of operational excellence, 20 years after commercial production began.

The integration of Imperial's upstream and downstream businesses helps smooth out the inherent cyclicality of commodity prices. Read more

Bears Say

Imperial's Mackenzie Delta gas project has doubled in cost and has been delayed until 2014, raising serious questions about its economic viability.

The company's oil sands projects face a large amount of uncertainty with regard to costs and timing.

If the company can't bring on new resources from its unconventional projects, it may have a tough time replacing conventional declines.

Imperial might have trouble finding a downstream solution for its oil sands development; converting its refineries to take on blended bitumen would be an expensive process.

Changes to Alberta's royalty regime will have a negative impact on the economics of Imperial Oil's projects in the province, including Kearl. Read more

Strategy

Across the company, Imperial strives for reliability of operations and cost management. The company invests in large, long-life projects where it can leverage its technical expertise and operational focus to drive down costs and extend the life of reserves. Read more

Management

ExxonMobil owns about 70% of the outstanding shares of Imperial Oil, and though the relationship certainly offers Imperial access to a wealth of expertise and insight, we can't help but think that Imperial has the voice of ExxonMobil in the back of its mind when it's time to make the big decisions. Read more

Profile

Imperial Oil is Canada's largest integrated oil company and is 70% owned by ExxonMobil. It is involved in upstream oil and gas exploration and production, as well as downstream refining, distribution, and chemicals production. Read more

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