* Quarterly profit down more than half on lower oil prices
* Average oil production up 12.5 pct to 234,000 bpd
* Not ready to formally approve Kearl project
* Shares up 14 Canadian cents at C$43.14 (Adds details and company comment, updates share price. Changes dateline, previous TORONTO.)
CALGARY, Alberta April 30 (Reuters) - Profit at Imperial Oil Ltd (IMO.TO), Canada’s top oil production and refining firm, tumbled along with energy prices in the first quarter, the company said on Thursday, as it again deferred making a final decision on its big Kearl oil sands project.
Bruce March, Imperial’s chief executive, told reporters after the company’s annual meeting that Kearl -- forecast to cost C$8 billion ($6.7 billion) -- is likely to proceed. The final green light for the northern Alberta project, originally expected in 2008, is now expected by the end of June.
However before formally committing to the largest project the company has ever attempted, Kearl will go through yet more reviews as the company looks to further wean costs.
“We’ve taken about eight months to try to push as much cost out of our project as we possible can,” March said. “And we’ve been very, very successful.”
Imperial expects to offer a revised cost estimate for Kearl when it gives a green light to the project. March signaled that the C$8 billion price tag, an estimate that’s more than five years old, is unlikely to stand as costs have risen sharply even though the recession is deflating costs for materials and labor.
“We have not seen costs come out of our business to go back to 2003 or 2004 levels,” March said. “But it’s a lot better than it was nine months ago at the peak of $147 oil.”
Imperial is one of just a handful of companies to remain committed to an oil sands project despite economic turmoil and falling oil prices.
Since oil prices tumbled late in 2008, more than C$90 billion worth of projects have been delayed, deferred or canceled outright.
Before the meltdown, Canadian oil sands projects were plagued by multibillion-dollar cost overruns due to a shortage of skilled labor and rising prices for materials such as steel.
Kearl, located north of the oil sands hub of Fort McMurray, Alberta, would produce 300,000 barrels a day of raw bitumen, starting with a 100,000 barrel a day phase. PROFIT TUMBLES
Imperial, 69.6 percent owned by Exxon Mobil Corp (XOM.N), said net income in the first quarter fell by more than half to C$289 million ($242.8 million), or 33 Canadian cents a share, from C$681 million, or 75 Canadian cents a share, in the year-before quarter.
Operating revenues dropped to C$4.65 billion from C$7.23 billion for the same period of 2008.
The average price of benchmark Brent crude oil was $44.44 a barrel in the first quarter, down about 54 percent from the same quarter last year, the company said.
Imperial said it increased its total year-end proved reserves by almost 50 percent from the previous year, largely on reserves additions from phase 1 of its Kearl oil sands project in northern Alberta.
The company said its oil production averaged 234,000 barrels per day, up 13 percent from 208,000 bpd in the year-earlier quarter.
Natural gas production rose 1.16 percent to 262 million cubic feet per day.
Earnings in the company’s refining division rose more than six-fold to C$202 million from C$30 million, on rising margins, increased throughput and the impact of the lower Canadian dollar.
Imperial Oil shares were up 15 Canadian cents at C$43.14 on Thursday afternoon on the Toronto Stock Exchange.
$1=$1.19 Canadian Reporting by Scott Haggett and Pav Jordan; editing by Peter Galloway