The Rising Influence of Rising Affluence

[DewDiligence]

IMO hasn’t been mentioned on this board except in passing
(e.g. in #msg-59578616). Does anyone here own it? What I
do not fully understand is why IMO’s valuation is so much
higher than other large integrated oil companies. I would have
thought XOM’s 70% stake would put a lid on IMO’s valuation.

http://www.reuters.com/article/2011/04/28/imperialoil-idUSN2729535820110428

›Imperial Profit Climbs on Higher Output, Margins

Thu Apr 28, 2011 1:49pm EDT
By Jeffrey Jones

CALGARY, Alberta, April 28 (Reuters) - Imperial Oil Ltd's (IMO) first-quarter profit rose 64 percent on higher oil sands production and rich refining margins, Canada's second-largest oil producer and refiner said on Thursday.

Imperial, the Canadian affiliate of Exxon Mobil Corp (XOM), earned C$781 million ($822 million), or 91 Canadian cents a share, up from a year-earlier C$476 million, or 56 Canadian cents a share. That lagged an estimate of 96 Canadian cents a share, the average among analysts surveyed by Thomson Reuters I/B/E/S.

However, excluding C$60 million of stock-based compensation charges, earnings per share were about 98 Canadian cents, Chief Executive Bruce March said after his company's annual meeting.

Revenues rose 11 percent to C$6.9 billion.

Imperial, which is developing the C$8 billion Kearl oil sands project in northern Alberta and is lead partner in the C$16.2 billion Mackenzie gas pipeline proposal in Canada's Far North, said results were helped by higher output from its Cold Lake, Alberta, oil sands development and its 25 percent stake in the Syncrude Canada oil sands joint venture.

Imperial and its industry peers benefited from U.S. benchmark oil prices that averaged $94.60 a barrel in the quarter, up 20 percent from the year before.

However, a glut of heavy crude due to tight export pipeline capacity pressured Canadian prices. Imperial said prices for its tar sands-derived bitumen averaged C$55.76 a barrel, a 10 percent drop.

Meanwhile, the stronger Canadian dollar tempered results, it said.

Overall oil and gas production averaged 310,000 barrels of oil equivalent a day, up 7 percent.

The Kearl project, a 50-50 joint venture with Exxon Mobil, is 60 percent complete and due to start up late next year. The partners are reworking the design into a two-phase project rather than a three-phase. New cost estimates as a result of the reworking are expected over the next month, March said.

The development has hit some snags because of legal challenges to Imperial's plan to move 200 oversized modules for use at Kearl on a highway through Idaho and Montana before heading north through Alberta.

A hearing in Idaho is expected to wrap up some time next week and a Montana judge is expected to rule in mid-May on whether to grant a temporary restraining order.

Imperial is assessing the cost of the delays and potential moves such as breaking some of the modules up into smaller pieces, March told reporters.

"This has got a lot of moving arms and legs when you think about legal challenges and making them smaller to go through a different route on the U.S. Interstate system," he said. "We don't have that nailed down yet, but you wouldn't expect there would be lower costs."

Net income in refining and marketing surged by C$237 million to C$276 million as margins widened and the company reduced maintenance downtime at its refineries, Imperial said.

The company's shares were off 69 Canadian cents, or 1 percent, at C$49.62 on the Toronto Stock Exchange on Thursday. They have climbed 17 percent in the past year.

Exxon Mobil owns 69.6 percent of Imperial's shares. The U.S. oil major reported a 69 percent jump in quarterly profit to $10.65 billion on Thursday, its highest since the third quarter of 2008.‹