February 2, 2015 / 1:23 PM / 3 years ago

Imperial Oil profit slumps as oil prices plunge

Cars pull into an Esso gas station in Richmond Hill, Ontario, January 30, 2015. REUTERS/Mark Blinch

(Reuters) - Imperial Oil Ltd (IMO.TO), Canada’s second-largest integrated oil producer and refiner, posted a 36.5 percent fall in quarterly profit, hurt by lower crude prices as well as weaker refining and marketing margins.

The company, majority-owned by Exxon Mobil Corp (XOM.N), expects to spend about C$4 billion ($3.2 billion) in 2015, 29 percent less than 2014, and said it would closely monitor operating costs and capital investments.

Imperial Oil joins a list of Canadian and U.S. oil and gas producers who have scaled back capital spending plans for 2015, following a sharp decline in oil prices over the past six months.

Crude prices have tumbled by more than half since June, with the average price for benchmark Brent in the October-December quarter down 30 percent from a year earlier.

The low crude prices also took a toll on Exxon’s results. Exxon, which holds 69.6 percent of Imperial Oil, on Monday reported a 21 percent fall in quarterly profit.

Imperial Oil’s net income also fell to C$671 million, or 79 Canadian cents per share, in the fourth quarter ended Dec. 31 from C$1.06 billion, or C$1.24 per share, a year earlier.

Profit was, however, higher than the 76 Canadian cents per share analysts on average had estimated.

The Calgary-based company’s revenue fell 4 percent to C$8.03 billion.

The company said total production fell 4 percent to average 315,000 barrels of oil equivalent per day.

Synthetic crude selling prices fell 10.5 percent to an average of C$82.04 per barrel, while the average realized price for bitumen fell about 1.8 percent to C$52.37 per barrel.

Imperial Oil said it had almost completed the expansion project at its Kearl oil sands mine in northern Alberta, and that it now expects start-up in the third quarter, roughly three months ahead of its previous forecast.

Bitumen production from the project, which was recently opened, rose 27 percent to 66,000 barrels per day. About 47,000 bpd was Imperial’s share.

However, that is much less than the mine’s capacity to produce 110,000 bpd, a mark it has often struggled to meet.

The mine was shut for about three weeks in November after a “vibration issue” was detected in the facility’s ore-crushing unit.

Since then the company’s shares have fallen 12.7 percent to close at C$47.24 on Friday on the Toronto Stock Exchange. The stock was up 3.6 percent at C$48.89 in early trading on Monday.

Reporting by Anet Josline Pinto and by Nia Williams; Editing by Kirti Pandey and Savio D'Souza

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