Earnings call transcript: Imperial Oil Q3 2025 beats EPS expectations but misses on revenue

Imperial Oil Ltd. reported its third-quarter 2025 earnings, revealing a notable earnings per share (EPS) beat but a shortfall in revenue. The company’s EPS reached $2.17, surpassing the forecast of $1.94, marking an 11.86% surprise. However, revenue fell short of expectations, coming in at $12.05 billion against the anticipated $13.92 billion, a 13.43% miss. This mixed performance resulted in a pre-market stock dip of 3.56%, with shares trading at $88.

Key Takeaways

• EPS exceeded expectations by 11.86%.
• Revenue missed forecasts by 13.43%.
• Stock price fell 3.56% in pre-market trading.
• Strong cash flow and shareholder returns were highlighted.
• New projects and technological advancements are underway.

Company Performance

Imperial Oil demonstrated robust operational performance despite the revenue miss. The company reported a net income of $539 million for the quarter, with cash flow from operations reaching $1.8 billion. Shareholder returns were significant, with $1.8 billion distributed through dividends and buybacks. The company continues to leverage its integrated business model to navigate a challenging market environment.

Financial Highlights

• Revenue: $12.05 billion, down from forecasted $13.92 billion.
• EPS: $2.17, exceeding the forecast of $1.94.
• Net income: $539 million; $1,094 million excluding identified items.
• Cash on hand: $1.9 billion at quarter’s end.

Earnings vs. Forecast

Imperial Oil’s EPS of $2.17 significantly surpassed the forecasted $1.94, reflecting strong operational efficiency and cost management. However, the revenue miss of 13.43% indicates challenges in market conditions and sales performance, marking a notable deviation from expectations.

Market Reaction

The market reacted negatively to the revenue miss, with Imperial Oil’s stock falling 3.56% in pre-market trading to $88. This decline contrasts with the company’s recent highs and indicates investor concern over revenue generation despite strong earnings.

Outlook & Guidance

Looking forward, Imperial Oil is targeting enhanced production levels at its Kearl and Cold Lake facilities. The company aims to reduce annual expenses by $150 million by 2028 and plans to release its 2026 guidance in December. These initiatives underscore a commitment to operational efficiency and technological advancements.

Executive Commentary

CEO John Whelan emphasized the company’s strategic stability and growth plans, stating, "Our strategy is not changing, and our growth plans are not changing." He also highlighted the company’s focus on shareholder returns: "We continue to return surplus cash to our shareholders in a timely manner."

Risks and Challenges

• Revenue shortfalls highlight potential market demand issues.
• Global supply disruptions affecting diesel markets.
• Economic uncertainties could impact future performance.
• Technological advancements may face implementation challenges.
• Restructuring efforts could lead to transitional inefficiencies.

Q&A

During the earnings call, analysts probed into Kearl’s production capabilities and the company’s restructuring plans. Questions also focused on Imperial Oil’s strategies for in-situ projects and potential adjustments to its share buyback programs, reflecting a keen interest in the company’s operational and financial strategies.

Full transcript - Imperial Oil Ltd (IMO) Q3 2025:

Conference Moderator: Good day and welcome to the Imperial Oil third-quarter 2025 earnings call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Peter Shaw, Vice President of Investor Relations.

Peter Shaw, Vice President of Investor Relations, Imperial Oil: Good morning, everyone, and welcome to our third-quarter earnings conference call. I am joined this morning by Imperial Oil’s senior management team, including John Whelan, Chairman, President, and CEO; Dan Lyons, Senior Vice President, Finance and Administration; Cheryl Gomez-Smith, Senior Vice President, Upstream; and Scott Maloney, Vice President, Downstream. Today’s comments include reference to non-GAAP financial measures. The 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. Today’s comments may 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 are described in further detail in our third-quarter earnings release that we issued this morning, as well as our most recent Form 10-K. All these documents are available on CDAR Plus, EDGAR, and our website. I’d ask you to refer to those. John is going to start this morning with some opening remarks and then hand it over to Dan, who is going to provide the financial update. John will provide an operations update, and once we’re done that, we’ll allow time for Q&A. With that, I will turn it over to John for his opening remarks.

John Whelan, Chairman, President, and CEO, Imperial Oil: Thank you, Peter. Good morning, everybody, and welcome to our third-quarter earnings call. I hope everyone is doing well, and as always, we appreciate you taking the time to join us this morning. I’m really pleased to report another strong quarter. We generated cash flow from operations of nearly $1.8 billion and ended the quarter with approximately $1.9 billion of cash on hand. To our shareholders, we delivered over $1.8 billion through dividends and buybacks. Our strong financial performance and ability to return significant cash to shareholders was underpinned by higher volumes, including record crude production and high refinery utilization. With planned turnaround activity now complete, we’re positioned for a strong finish to the year across all of our assets. While crude has softened of late, our integrated business model is very resilient, and we generate substantial free cash flow over a range of oil price environments.

As such, we will continue executing on our strategy and the plans we provided at our investor day earlier this year. During the quarter, we also announced a restructuring effort that is aligned with our well-established strategy and will further strengthen our leading position and our foundation for future growth. I’ll come back to this in more detail shortly. Now, let me share some highlights from the quarter. At Kearl, the bar has been raised again, with the team delivering 316,000 barrels per day gross, the highest quarterly production in the asset’s history. A great step on our path towards reaching annual production of 300,000 barrels per day. At Cold Lake, Grand Rapids continued to perform well, and the new Lemming SAGD development finished steaming, and we expect first production shortly.

These projects support transformation at Cold Lake, where we continue to expect more than 40% of production by 2030 to come from advantaged technologies. Downstream utilization of 98% was significantly higher quarter over quarter, even with planned turnaround activity at Sarnia beginning in September. That turnaround is now complete and was executed below cost and ahead of schedule. Now, I’d like to share more on our restructuring plans. On September 29, we announced restructuring plans to further advance our well-established strategy of increasing cash flow and delivering unmatched, industry-leading shareholder returns. We plan to further improve our industry-leading performance by centralizing additional corporate and technical activities in global business and technology centers, realizing substantial efficiency and effectiveness benefits from scale, integration, and technology. This restructuring is consistent with our longstanding strategy to maximize the value of our existing assets using technology and leveraging our relationship with ExxonMobil.

With data availability and processing capabilities growing at an accelerating pace, the changes are designed to fully leverage global available expertise to maximize the benefits of current technology and accelerate the cost-effective deployment of new technologies to drive value and enhance financial resilience. Our world is evolving quickly. Technology is advancing in leaps and bounds. We see it all around us. There has been huge growth in global capability centers, and we have to move with it. As a company, our legacy is defined by change and adaptation to ever-evolving business environments, technology, and customer needs. That ability to evolve is one of our greatest strengths. We have done it time and time again, and it is key to our success and leading position. These restructuring actions will further enhance our foundation for future growth and position us to continue delivering unmatched industry-leading returns and long-term value for our shareholders.

At the same time, we remain fully committed to meet or beat the medium-term growth and expense reduction plans communicated at our investor day in April. Additionally, as a result of the restructuring, we have recorded a one-time restructuring charge and expect to achieve a reduction in annual expenses of $150 million by 2028. Larger benefits are expected over the long term, as more fully leveraging the global scale and expertise of ExxonMobil will enable us to further enhance cash flow growth by driving productivity improvements across our operations, including higher production, reduced downtime, lower unit operating costs, as well as project planning and execution excellence. Our relationship with ExxonMobil is an advantage that others don’t have and can’t replicate. Now, we will manage this transition through a rigorous process.

We will be restructuring our corporate workforce, what we call above field, which will result in a reduction in the number of employee roles by the end of 2027. In the second half of 2028, we will further consolidate activities at our operating sites, primarily the Strathcona refinery in Edmonton, to enhance collaboration, operational focus, and execution excellence. Through this transition, our focus remains on supporting our employees, operating with integrity, putting safety first, and executing our business strategy. Additionally, in view of the restructuring and our reduced office space requirements, we have signed an agreement to sell our Calgary campus, resulting in a non-cash impairment charge. On that note, I’ll turn it over to Dan to discuss our financial results in more detail.

Dan Lyons, Senior Vice President, Finance and Administration, Imperial Oil: Thanks, John. We had two identified items in the third quarter in our corporate segment. First, the restructuring plans that John mentioned resulted in a charge of $330 million before tax in the quarter, with an unfavorable earnings impact of $249 million after tax. This charge largely consists of employee severance costs, which will be paid out over the next two years as we migrate activities to business and technology centers and achieve efficiencies. Second, following an extensive marketing effort and after careful consideration of the current status and the anticipated outlook for large properties in the Calgary real estate market, we signed a sales and purchase agreement to sell our Calgary campus, which is expected to close in the coming months. Consistent with this, we recorded a non-cash impairment charge of $406 million before tax, with an unfavorable earnings impact of $306 million after tax in the quarter.

The sales and purchase agreement includes a lease-back arrangement to support Imperial Oil’s needs over the next several years. Turning to our underlying third-quarter results, we recorded net income of $539 million. However, excluding identified items, the ones I just described, net income for the quarter is $1,094 million, down $143 million from the third quarter of 2024, driven by lower upstream realizations, partially offset by higher refining margins. When comparing sequentially, third-quarter net income is down $410 million from the second quarter of 2025, but again, excluding identified items, net income is up $145 million, primarily due to strong operational performance. Now, shifting our attention to each business line and looking sequentially, upstream earnings of $728 million are up $64 million from the second quarter, primarily due to higher volumes and realizations.

Downstream earnings of $444 million are up $122 million from the second quarter, mainly reflecting higher margins and volumes. Our chemical business generated earnings of $21 million, consistent with the second quarter. Moving on to cash flow, in the third quarter, we generated $1,798 million in cash flows from operating activities, excluding working capital effects. Cash flows from operating activities for the third quarter were $1,600 million, which includes a $149 million unfavorable impact from the previously mentioned restructuring charge. Taking this into account, normalized cash flow was about $1,750 million in the quarter. As John mentioned, we ended the quarter in a strong position with about $1.9 billion of cash on hand. Now, shifting to CapEx, capital expenditures in the third quarter totaled $505 million, $19 million higher than the third quarter of 2023.

In the upstream, third-quarter spending of $353 million focused on sustaining capital at Kearl, Cold Lake, and Syncrude. In the downstream, third-quarter CapEx was primarily spent on sustaining capital projects across our refining network. Our full-year outlook remains consistent with our previously issued guidance. Shifting to shareholder distributions, in the third quarter, we continue to demonstrate our longstanding commitment to return surplus cash to our shareholders, paying $366 million in dividends and returning almost $1.5 billion through our accelerated share repurchase program under our normal course issuer bid. We anticipate completing our NCIB program before year-end. Finally, this morning, we announced the fourth-quarter dividend of $0.72 per share, in line with our third-quarter dividend. Imperial Oil remains committed to a reliable and growing dividend, as demonstrated by 31 consecutive years of annual dividend growth. Now, I’ll turn it back to John to discuss our operational performance.

John Whelan, Chairman, President, and CEO, Imperial Oil: Thanks, Dan. I want to take the next few minutes to share the key highlights from our operating results. Upstream production for the quarter averaged 462,000 oil-equivalent barrels per day, up 35,000 barrels per day versus the second quarter, and up 15,000 barrels per day versus the third quarter of 2024. This quarter marks a new crude production record for the company. Now, I’ll cover highlights for each of the assets, starting with Kearl. Kearl set a quarterly production record averaging 316,000 barrels per day, up 41,000 barrels per day versus the second quarter, and up 21,000 barrels per day versus the third quarter of 2024. This marks the highest quarterly production ever for Kearl, surpassing our previous best set in the fourth quarter of 2023. The strong volumes were driven by a combination of high ore quality and our optimization efforts associated with ore selectivity.

We’re also realizing reliability gains from upsizing and design improvements of the hydrotransport lines. Kearl continued to progress on unit cash costs, and that is quickly becoming one of my favorite parts of our story. Unit cash costs at Kearl were $15.13 US per barrel this quarter, a decrease of nearly $4 US per barrel compared to the second quarter, helped by the absence of our planned turnaround, but also improved reliability, recovery, and ore selectivity. When compared to the third quarter of last year, we achieved a decrease of over $2 US per barrel. The third quarter’s strong performance contributed to our year-to-date unit cash cost of $17.89 US per barrel. With year-to-date unit cash costs down over $2 US per barrel, we are realizing the benefit of our strategy that is focused on growing volumes with lower unit cash costs. Moving next to Cold Lake.

Cold Lake’s production averaged 150,000 barrels per day, up 5,000 barrels per day versus the second quarter of 2025, and up 3,000 barrels per day versus the third quarter of 2024. I would like to take a moment to draw your attention to unit cash costs at Cold Lake. The current cost in the third quarter was $13.38 US per barrel, and that is supporting year-to-date costs of $14 US, which is down $1 US per barrel versus the same period last year. While we have certainly benefited from low gas prices, we continue to make progress on structural cost reduction initiatives and our strategy to transform Cold Lake to a high proportion of technology-advantaged production. Consistent with that, our Lemming SAGD project remains on track. Having recently completed steam circulation, we expect to see first oil in the coming weeks, with production ramping up over the next year.

Looking to the future, we have an abundance of high-quality in-situ opportunities in our portfolio. At Aspen, we continue to progress the EBRT pilot, with startup remaining on track for early 2027. In addition, our Clark Creek and Corner assets provide us with further long-term growth opportunities. These three assets have the potential to support up to 150,000 barrels per day each of advantaged production during their estimated 25 to 50-year operating life. To round out the upstream, I’ll cover Syncrude. Imperial Oil’s share of Syncrude production for the quarter averaged 78,000 barrels per day, which was up 1,000 barrels per day versus the second quarter and down 3,000 barrels per day versus the third quarter of 2024. In early September, Syncrude began its planned 50-day COCR turnaround and was able to complete it ahead of schedule and under budget, with work wrapping up at the beginning of last week.

Syncrude also continued to utilize the Interconnect pipeline to import bitumen and gas oil to ensure high upgrader utilization. This enabled an additional 6,000 barrels per day, our share of Syncrude Suite Premium production. Now, moving to the downstream. We delivered strong operational results while progressing our planned turnaround at Sarnia. Refinery throughput averaged 425,000 barrels per day, equating to a refinery utilization of 98%. This exceeded last year’s third quarter throughput by 36,000 barrels per day, and it exceeded the second quarter 2025 throughput by 49,000 barrels per day, primarily driven by lower turnaround impacts and strong reliability at all sites. As we mentioned in the second quarter earnings call, we started up the Strathcona Renewable Diesel facility and are already realizing benefits of backing out more expensive imported products and replacing them with our own low cost of supply. We continue to optimize production based on hydrogen availability.

Earlier this week, we successfully completed our turnaround at Sarnia, ahead of schedule and below budget. With our turnaround activity complete for the year, we are expecting a strong fourth quarter. Petroleum product sales in the quarter were 464,000 barrels per day, which is down 16,000 barrels per day versus the second quarter of 2025, driven by lower export volumes, partially offset by higher jet and asphalt sales. Overall, we continue to see robust demand in Canada, with gas and diesel comparable to the third quarter of 2024 levels and jet showing stronger demand. Turning now to chemicals, earnings in the third quarter were $21 million, consistent with the second quarter. Compared to the third quarter of 2024, earnings were down $7 million, driven by weaker polyethylene margins. While challenging market conditions persist, our integration with the Sarnia refinery continues to add value and provides resilience in low-price environments.

To wrap up, I’m very pleased with the strong operational and financial performance in the quarter, highlighted by the record quarterly liquids production in our upstream, best-ever quarterly production at Kearl, and strong refinery utilization of 98% in our downstream. With our planned turnaround activity complete, we’re focused on a strong finish and remain confident in our guidance. We continue to return surplus cash to our shareholders in a timely manner and still expect to complete the accelerated normal course issuer bid by the end of the year. As mentioned earlier, our restructuring plan advances our longstanding strategy of maximizing the value of our existing assets. The plan positions Imperial Oil to continue delivering industry-leading shareholder returns over a range of market conditions. We are transforming from a position of strength, leveraging the rapidly advancing technology environment, the growth in global capability centers, and our relationship with ExxonMobil.

I’ve described what is changing as part of our restructuring. It is equally important to highlight what is not. Our governance and leadership structure is not changing. What we are doing is fully aligned with our strategy. Our strategy is not changing, and our growth plans are not changing. We remain a proud Canadian company, an industry-leading, technology-focused energy company contributing significantly to the country and our shareholders. Throughout this transition, we remain committed to supporting our employees, the communities where we operate, and responsibly producing the energy and products Canadians rely on. In closing, let me say the combination of our financial position, strong operating results, and our strategic initiatives to further strengthen our efficiency and effectiveness give me confidence in the future of Imperial Oil and our ability to further enhance our industry-leading position.

I am very pleased with the strong results our team has delivered, and I want to thank them. I would like to thank you once again for your continued interest and support. Looking ahead, we are planning to issue our annual guidance for 2026 in mid-December. With that, I will now move to our Q&A session and pass the floor back to Peter.

Peter Shaw, Vice President of Investor Relations, Imperial Oil: Thank you, John. As always, we’d appreciate it if you could limit yourself to one question plus a follow-up, so that we can get to all the questions. With that, Operator, could you please open up the line for questions?

Conference Moderator: Thank you. If you would like to signal with questions, please press Star 1 on your touch-tone telephone. If you’re joining us today using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is Star 1 if you would like to signal with questions. The first question will come from Manav Gupta with UBS.

Good morning, guys. Kearl keeps setting new milestones. I mean, production volume was significantly better than our expectations, and I don’t think I’ve seen a $15 op cost out there. Help us understand what’s driving these improvements and how is this asset positioning Imperial extremely well for times to come ahead.

John Whelan, Chairman, President, and CEO, Imperial Oil: Thank you, Manav. I may make a few comments, and Cheryl can chime in as well. Thank you for that comment. As I said, Kearl’s unit cost performance there, the reliability, the performance of the asset has certainly become one of my favorite parts of the story. It is very key to our success and our future for sure. As we look at where we are right now, I think we’re really well positioned to meet the midpoint of our annual guidance. The team continues to set new records. We had a best-ever second quarter. Now we’ve had the best-ever quarter in the third quarter. It is important to note there’s variability quarter to quarter, and we need to keep that in mind as we go forward as well. This quarter, we had very strong volumes with our high OR quality, our optimization efforts, as well as reliability gains.

Honestly, I couldn’t be prouder of this team and be more optimistic about this asset and the importance of it to our business. We’re on track to deliver on our commitments and around a future of 300,000 barrels a day for this asset and a unit cost target of $18 a barrel in 2027. Cheryl can comment a bit more, but thank you for the comments. This is a very important part of our business for sure, and we’re very pleased with the performance of this asset.

Cheryl Gomez-Smith, Senior Vice President, Upstream, Imperial Oil: Thanks, John. A little bit more in terms of what’s made the difference, and I’m going to go back to some of the messages that I shared when we had Investor Day. Kearl continues to have a relentless focus on optimizing scope and collaborating lessons learned, and this is including implementing creative ideas. We continue to integrate lessons learned and technology, drive better decisions via data and analytics, as well as leverage our global learnings and benchmarking. In short, we’re maintaining this continuous improvement mindset. The work and the success that we’ve had to date gives me confidence to continue to outperform while maintaining our facility integrity as well as our strong risk management.

Thank you. My quick follow-up is on the refining macro. It looks like the diesel markets are very tight, and whatever channel checks we are doing is indicating that the Russian refineries have taken a significant hit, and it’ll take a long time for those markets to normalize. I wanted to understand in the next three to six months, how do you see the refining market out there? Do you think the strength in diesel cracks can continue? If that’s the case, your fourth quarter numbers in the refining side have definite upside from where we are. If you could comment on that.

Sure. I’ll jump in and take that. Yeah, we have certainly seen the same things right out the door right now with the global supply-demand balances and the sanctions out there propping up diesel margins. As long as those sanctions continue and the disruptions occur in the global market, we think that that’s a possible outcome for us. The way we manage our business is making the products that we see margins out the door on. With all of our maintenance work behind us this year, we see high utilization numbers for the balance of the fourth quarter. Combined with the margins that we’re seeing, especially in the diesel channel, we’re looking forward to a positive fourth quarter.

Conference Moderator: Thank you. We’ll take a question from Greg Pardy with RBC Capital Markets.

Yeah, thanks. Good morning. Thanks for the rundown, John and Dan. I wanted to come back to the restructuring just to better understand how the transition is going to work. You’ve done a sale lease-back on the building, which means that the staff that will be retained presumably is going to be at Quarry Park. It sounds like you’ll be at Quarry Park. I’m just trying to understand if the transition is going to occur over essentially 2026 and 2027. Have the folks that no longer have a role, are they still in the building, or has that transition kind of moved? I’m just trying to better understand how the dynamics are going to shake out.

John Whelan, Chairman, President, and CEO, Imperial Oil: Thanks, Greg. Let me cover that. If we step back from this, what we’re doing, I would say, and I’ll get to the specifics of your question, we’ve been assessing this opportunity over a couple of years, and it really builds on the transformation journey that we’ve been on for more than a decade, frankly. Gradually outsourcing work, global capability centers, and leveraging technology to improve efficiency. In the past, you’ve seen that over the last decade in terms of our organization size. We’re doing just as much or more in terms of what we’re operating, what we’re executing, but with less people, doing it in a more efficient manner. In the past, we did this opportunity-by-opportunity based on an opportunity-by-opportunity basis or organization-by-organization.

Now we’ve looked at this from a company-wide perspective, and as we’ve kind of crawled and walked, we see the opportunity to run as we move forward. I share that just to highlight there’s been a tremendous amount of planning put into this, and we have a detailed plan for how we will execute this over the next two years. In terms of, you’re right, this transition will occur over a two-year period in terms of the workforce transformation piece of it. The consolidation of operating sites will happen after that in 2028, so an overall three-year period. We have detailed plans in place for the outsourcing of this work to global capability centers. Another important part to consider is part of this efficiency gain is outsourcing work, but there’s also about 40% of the reduction is pure efficiency gain.

There will be less people required to do the work as we capture the scale that we can get in these global capability centers. We have a two-year transition for how we’ll capture those efficiencies and outsource the work to these global capability centers. Our organization, we are right, the office, while we have entered into a sale and purchase agreement on the office, that includes a lease-back for us where we will stay in Quarry Park through 2026 and 2027 and the first part of 2028 until we move most of the staff to consolidate them at operating sites at that time. Nobody will have to move, and you will see a transitioning, a reduction in our workforce over that two-year period, 2026 and 2027. The end of 2027, we will get to the desired outcome that we have communicated.

In 2028, we will move people after we’ve achieved that reduction. John, I hope that answers your question.

Oh my goodness. Yeah. No, I mean, John, you’re always well prepared. No, no. That’s incredibly thorough. Maybe just to come back to what Cheryl was talking about with respect to Kearl. In C$ dollars, a little over $20 is looking very, very good. I’m wondering if you could just maybe break it down between kind of volume versus input costs versus just perhaps the elimination of absolute costs or structural costs that have now been taken out of Kearl as a consequence of fewer people, digitalization, and so forth. Obviously, we had very weak natural gas prices in the third quarter, but not sure that that’s really a factor at all in terms of the performance you put up.

I mean, I’ll start, and then I will hand over to Cheryl, Greg. Thanks for the question. I mean, it is a really good point you make. It is a combination of both. We are working both the denominator and the numerator in that. We have been reducing our absolute costs, what we call capturing structural efficiencies. Not just reducing in the short term, not pushing things out, but actually structurally reducing our costs, costs that we can reduce and will remain reduced. We do that with a very laser-like focus on maintaining integrity, safety, and all of those things that are most important to us. You’ve heard me talk about in the past being the most responsible operator. That involves safety performance, your integrity, your reliability, but also your cost structure.

We do those things in concert, ensuring that we maintain integrity, reliability, and safety, but also reducing our structural costs. There have been millions and millions of dollars in structural savings identified. Obviously, you have seen the barrels go up as well. It is the combination of both. The team continues to work on both parts of that equation, which is really important given the magnitude of the improvements we’ve seen and what we want to continue to do as we go forward. I’ll pass it over to Cheryl to elaborate a little more.

Cheryl Gomez-Smith, Senior Vice President, Upstream, Imperial Oil: Sure. Thanks, John. Greg, what I would say is this is a very good example of the and equation. As John mentioned, in this space where we’re looking at unit cash costs, we’re leveraging scale, looking at structural cost savings as well as incremental production. When I think about incremental production, it leverages the relatively high fixed cost structure at Kearl. This is a powerful lever in terms of lowering our unit cash costs. As John mentioned, we continue to focus on reliability, maintenance optimization, deployment of digital solutions to improve our productivity and lower absolute costs. Several of the things we highlighted at our investment day in terms of automation, robotics, remote activities. It’s a yes and in terms of how we get there.

Understood. Thanks very much.

John Whelan, Chairman, President, and CEO, Imperial Oil: Thank you, Greg.

Conference Moderator: We’ll take a question from Dennis Fong with CIBC.

Hi, good morning, and thanks for taking my question. My first one is just related to your in-situ pipeline, Aspen, Clark Creek, and Corner. Thank you for the rundown. Obviously, EBRT is a focal point in terms of the go-forward strategy. Is just kind of solidifying and understanding the development potential and the results of the pilot the primary driver for moving on to the next steps? What else would you like to see beyond further prove out of the technology for you to feel comfortable moving forward with Aspen, I guess, first, or any of these three in-situ projects?

John Whelan, Chairman, President, and CEO, Imperial Oil: Thank you. Thank you, Dennis, for the question. I’ll start again, and I may ask Cheryl to chime in as well. I think if we look at this future in-situ portfolio, we remain very bullish about it. The resource base is significant and of high quality, and we believe we have the technology and EBRT to unlock that resource base at lower unit cost, lower emissions than even the technology we’re using today. We have decided to do the pilot. We feel quite confident in the technology. We’ve done a lot of lab testing on it, but given the scale at which we want to deploy it, we felt it was valuable to do the pilot. The main things we’re going to be looking for in the pilot are the solvent recovery and the production uplift that come from those.

That’s the main thing, and we’ll start up the pilot in 2027. From a technology perspective, we’re going in pretty positive about it, but it’s important to prove that up, I think, through a real-life pilot in the field. We feel very good about the resource. We will continue to do some delineation work around that, but we’ve done a lot already, and we feel very comfortable in that space. I think the other part is just the overall investment environment. You’ve heard us in industry talk about that, the importance, and we’ve been on record with that at the government, and we’re working closely with the government around that, simplifying regulations, shortening project approval timelines, and those types of things. That’s important as we consider future investment and growth in production. The other aspect is egress, and we feel very good about that, particularly for Aspen.

As we look out the next decade and we listen to what the pipeline companies are talking about in terms of debottlenecking projects with Trans Mountain, Enbridge’s announced projects that they’ve been talking about, we feel very good that there’s egress going to be available for the next decade or so. We’re doing some work on the technology. There’s an investment climate piece that we continue to involve work with the government on. We think there’s egress. Overall, we’re very bullish about the opportunities.

Cheryl Gomez-Smith, Senior Vice President, Upstream, Imperial Oil: I’ll just add a couple of other comments, Dennis. We’ve drilled the three wells, and as John mentioned, we’re on target for an early 2027 startup. We’re going to run the pilot to validate production uplift here. John mentioned solvent recovery as well as overall operability. The other thing I’d highlight is the pilot is intended to de-risk this technology, and it’s a very similar approach to what we took for SA-SAGD. I think we’re well on track there. I’d echo the comments that John made, which is we’re looking forward to EBRT technology. This is what we’re looking for in terms of being a game changer for our in-situ developments going forward.

Great. Really appreciate that context from both of you. I want to shift focus back maybe towards Cold Lake. Obviously, you have the Lemming SAGD project with the targeted startup here. I just wanted to think a little bit more, how should we be thinking about the Mohican SA-SAGD project, as well as if you wouldn’t mind highlighting any of the future SA-SAGD project opportunities that exist within that field and maybe what that potentially looks like, both from an OpEx perspective as well as a production perspective and level, and if there’s any further updates from what you guys highlighted at the investor day. Thanks.

John Whelan, Chairman, President, and CEO, Imperial Oil: I’ll make a few broader comments, Dennis, and then Cheryl can come in again as well. Our plan that we laid out for 165,000 barrels per day at Cold Lake in the next few years, we still feel very good about that plan. We’re committed to that plan, and there’s a number of things that contribute to that. There’s low-cost base optimization projects such as our laser technology. There’s infill drilling using the unique compact rig that we have there to do infill drilling. That’s a part of it. We’re applying warm flow in a number of areas. We’ve got the Lemming SAGD project that I just spoke about. Grand Rapids is going extremely well as well. It’s all of these building blocks and components that contribute to our confidence of getting to 165,000 barrels per day.

Now, the Mohican SA-SAGD, I’ll let Cheryl come back and talk more about that. That’s obviously very important. That’s a 2029 startup with a peak production of about 30,000 barrels a day. It’s all of these building blocks that contribute to it. Also, the transition, the transformation really that we’re making at Cold Lake, moving to these advantaged technologies and seeing ourselves continue to see in 2030 about 40% of our production coming from that advantaged technology. I’ll let Cheryl say a bit more specifically on Mohican and so on.

Cheryl Gomez-Smith, Senior Vice President, Upstream, Imperial Oil: Sure. Maybe I’ll cycle back with Grand Rapids. We’re very pleased, Dennis, with our results from Grand Rapids thus far. Specific to that effort, the next three pads are currently in development, and this will fully leverage our plant capacity and offer inventory to sustain production at low capital. Now, switching to Mohican, this will be our first commercial clear water SA-SAGD development. John mentioned a 2029 startup. One of the things that’s an enabler and projects take time in the development is we have to convert the Mohican plant, which is currently a cyclic steam facility, to a solvent-enabled SA-SAGD plant. All that in mind, we’re on track to deliver, I’d say, more than about 50,000 barrels per day from SA-SAGD advantage production by the 2030 timeframe.

The other thing maybe I’ll leave with is we do have a pipeline of future SA-SAGD projects as I look at 2040, 2050, and we’ll take those in due course.

Great. Thank you very much, Cheryl and John. Really appreciate that color on both of those items.

John Whelan, Chairman, President, and CEO, Imperial Oil: Thank you, Dennis.

Conference Moderator: We have a question from Doug Leggett with Wolf Research.

Peter Shaw, Vice President of Investor Relations, Imperial Oil: Thanks. Good morning, everyone. Thanks for having me on. John, I wonder if I could ask a really simple follow-up on Kearl. Given the sustained efficiency improvements you’ve seen, the consistent production performance, what would you say today is the production capacity trajectory for Kearl in terms of where it is now and where you think you can get to? That’s my first one. My follow-up’s a quick one. It’s probably for Dan. It’s always for Dan. Same question every quarter. You leaned on your balance sheet a little bit this quarter, and you’ve accelerated the timeline for your buyback. Is there any intention in the current environment for an SIB before the middle of next year?

John Whelan, Chairman, President, and CEO, Imperial Oil: Thanks, Doug. Yeah, let me take the Kearl one. I couldn’t be more proud of this team and the improvements that have been made at Kearl over a number of years. I remain confident that we’ll continue to make improvements at Kearl in terms of unit cost reductions and volumes uplift. I think our story is very consistent. Right now the way we think about it is very consistent with our investor day. We believe we have a strong foundation that supports potential for 300-plus thousand barrels per day. We talked about at that time the number of days that we’re seeing of greater than 300,000 barrel a day days. You see the quarter that we just had and the quarter that also builds that confidence. Right now, our focus is really how do we move it to 300,000 barrels a day?

I would just say the confidence in that is growing all the time. We talked about that in the investor day. We have a pretty clear path to get the asset to 300,000 barrels a day with bitumen recovery projects, continued focus on individual equipment performance, extending our turnaround intervals, and the reduction duration. I feel very good about that. We’re not done at 300. We’re very much focused on what’s the potential beyond that. We believe there is potential beyond that. We’re continuing to work and develop those plans, and we’ll share them as those get matured.

Peter Shaw, Vice President of Investor Relations, Imperial Oil: Thanks, John.

John Whelan, Chairman, President, and CEO, Imperial Oil: Do you want me to take the second one?

Peter Shaw, Vice President of Investor Relations, Imperial Oil: Yeah.

John Whelan, Chairman, President, and CEO, Imperial Oil: Yeah. Hey, Doug. Just to address your question, as you said, as we’ve said here, we fully plan to complete our accelerated normal course issuer bid by year-end, consistent with what we’ve said a few times. Of course, looking into next year, the soonest we can renew that is late June of 2026. We plan to renew our normal course issuer bid. Your question’s really around the first half of 2026. As I said before, our ability to return cash in that period really just depends on commodity prices, right? It depends on the crude prices and cracks. What we’ve said for a long time is, as we generate surplus cash, we’ll return it in a timely way. That still remains our principle. It’s really just going to be dependent on what the commodity markets give us in the first half of next year.

Peter Shaw, Vice President of Investor Relations, Imperial Oil: Okay. From your mouth, it goes to yours. Thanks, guys.

John Whelan, Chairman, President, and CEO, Imperial Oil: Thank you, Doug.

Conference Moderator: That does conclude the question-and-answer session. I’ll now turn the conference back over to Peter Shaw for closing remarks.

John Whelan, Chairman, President, and CEO, Imperial Oil: Thank you. On behalf of the management team, I’d like to thank everyone for joining us this morning. If you have any further questions, please don’t hesitate to reach out to the IR team, and we’ll be happy to answer those. With that, we’ll say thank you very much and have a great day.

Conference Moderator: Thank you. That does conclude today’s conference. We do thank you for your participation. Have an excellent day.

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