Imperial Oil Limited · TSX:IMO
Imperial Oil — Investor Day (March 2022)
76 slides from Imperial Oil's investor day presentation, Mar 10, 2022
Slide 1: Investor Day
Investor Day March 10, 2022 Imperial | 2022 | 1
Slide 2: Agenda
Agenda Topic Speaker Time Opening remarks Brad Corson 8:00 Chairman, President and CEO Environmental/Social/Governance Sherri Evers 8:20 VP, Commercial and Corporate Development Upstream outlook Simon Younger 8:50 SVP, Upstream Break 9:30 Downstream & Chemical outlook Jon Wetmore 9:40 VP, Downstream
Slide 3: Opening remarks
Opening remarks Brad Corson Chairman, President and Chief Executive Officer Imperial | 2022 | 3
Slide 4: Reflections on the past year
Reflections on the past year Strong results and substantial progress on strategic priorities Strong commodity prices, recovering demands Well-positioned to benefit from recovery coming out of pandemic Outstanding operational performance Highest Upstream production on record Strong Downstre
Slide 5: What you will hear today
What you will hear today Integrated business model drives shareholder value Focus on optimizing The power of integration Delivering existing assets Continued focus on Resiliency superior Relentless focus on costs lowering break-evens through shareholder and reliability Strength of balance
Slide 6: Macro view
Macro view Global supply challenges and demand recovery support continued commodity price strength Global oil supply Underinvestment during past cycle OPEC+ struggling to meet targets Public company growth constrained by capital allocation and energy transition priorities Geopolitics play
Slide 7: Fundamentals drive energy demand growth
Fundamentals drive energy demand growth Further investment required in any scenario Economies continue to develop and grow Increasing populations, desire for improved standard of living Energy supply evolves to meet demand projections Energy trends vary by sector, geography but demand growin
Slide 8: Sustainability focus
Sustainability focus Canada, and Imperial, should be supplier of choice Multiple views of future energy requirements highlight oil and gas as being key part of mix Canada is the most responsible producer in the world Top ESG ratings amongst world’s largest reserve holders Leadership in susta
Slide 9: ESG
ESG Sherri Evers Vice-president, Commercial and Corporate Development Imperial | 2022 | 9
Slide 10: Canada – Positioned to lead the energy transition
Canada – Positioned to lead the energy transition Collaborative and innovative policy landscape promotes accelerated energy solutions Progressing policy and incenting emissions reductions Advanced climate policies Net-zero ambition Expertise in carbon management Advanced regulatory systems
Slide 11: Imperial sustainability priorities
Imperial sustainability priorities Advancing responsible energy solutions for a better tomorrow Indigenous Climate reconciliation People Land and water Develop pathways in Strengthen collaboration and Cultivate a workplace where Further improve support of a net-zero future partnerships with Indigeno
Slide 12: Accelerating our progress on ESG
Accelerating our progress on ESG Significant strides made over the last year New goal to reduce emissions intensity at oil sands operations Co-processing Accelerated pilot at Sarnia silver-level and Nanticoke Highest PAR2 Working to annual Strathcona enhance certification Indigenous renewable Renewa
Slide 13: Robust governance and committed leadership
Robust governance and committed leadership Integration of ESG in pursuit of superior shareholder value Risk management oversight Management committee leads integrated ESG strategy Imperial Board of Directors Shareholders and stakeholders input at all levels Risk management assessment and mitigatio
Slide 14: Indigenous reconciliation journey
Indigenous reconciliation journey Striving to create lasting relationships and shared prosperity Committed to creating a safe space for our employees to learn, engage and better understand Executive-led Indigenous recruitment and retention working group Demonstrating commitment through busines
Slide 15: Our climate strategy
Our climate strategy Leveraging our expertise, integration and technologies Imperial | 2022 | 15
Slide 16: Advancing carbon solutions
Advancing carbon solutions Innovating for a lower-carbon future Boiler flue gas Advanced fuels and lubricants Oil Sands Pathways SA-SAGD Autonomous haul system Biofuel blending to Net Zero Short term Emission reduction solutions LASER Co-processing Supporting renewable power Re
Slide 17: GHGi reductions in operated oil sands
GHGi reductions in operated oil sands Driving emissions improvements through short, medium and long-term goals Our long term goal is to achieve net-zero emissions in operated Achieved reduction in operated oil oil sands by 2050 through collaboration with governments and sands GHGi by other partner
Slide 18: Carbon capture and storage
Carbon capture and storage Pathways alliance critical enabler for a lower-carbon future Fort McMurray Progressing Oil Sands Pathways to Net Zero alliance to support emission reduction Transportation One of few proven technologies to help decarbonize line energy-intensive industries Cold Lake E
Slide 19: New energy solutions
New energy solutions Keeping our communities and customers moving Helping our customers reduce their GHG Canadian market demand growth Indexed versus 2017, % emissions by working together on solutions Biofuels Demand for lower-emission fuels expected 200 to grow rapidly 150 Producing advanced
Slide 20: Energy solution delivers real value to shareholders
Energy solution delivers real value to shareholders Growing our business with renewable diesel Helping our customers Clean Fuel Regulation competitive reduce their GHG emissions compliance opportunity Potential to reduce emissions by 3MT annually Strategic project leverages existing facility for
Slide 21: Continuing our progress
Continuing our progress Solutions in support of a lower carbon future 2022 Expand deployment New product Anticipated first Potential initiation Evaluating potential of boiler flue gas offerings including deployment of of first phase of to leverage low- evaluation of SA-SAGD at carbon capture carbon
Slide 22: Upstream Outlook
Upstream Outlook Simon Younger Senior vice-president, Upstream Imperial | 2022 | 22
Slide 23: Upstream strategy
Upstream strategy Best-in-class producer, maximizing cash flow, positioning for a lower carbon future Maximize value from long-life, low-decline assets Targeting industry-leading unit cost and reliability Select, disciplined capital investments Lowering emissions through profitable investmen
Slide 24: 2021 Upstream performance
2021 Upstream performance Demonstrated strong operational performance and sustained improvements 2021 vs. 2019 Successfully managed COVID to avoid disruption Production (koebd) 428 +8% Maintained priority on safe operations Cash cost1 ($B) 4.7 +5% Preserved capital discipline and cost focus Un
Slide 25: Long-life, low-decline asset base
Long-life, low-decline asset base High-quality stable production base; focused on GHG-advantaged growth Production koebd 500 400 ~4.3 billion boe of proved and probable reserves Multi-decade production profile 300 Low sustaining capital 200 425 – 440 koebd production outlook for 2022 20% l
Slide 26: Upstream cash flow outlook
Upstream cash flow outlook Delivering value and strengthening cash flow from operating activities Average annual cash from operating activities at $US 60 WTI $B 4 Cash flow outlook strengthened vs prior outlook by 15% (ex. market factors) Progressing cost improvements – 9% reduction Increased
Slide 27: Upstream investment outlook
Upstream investment outlook Investing for value through select volume growth and GHG intensity reduction Average annual capital expenditures1 $B Capital plan reduced from prior outlook Sustaining capital moderates from 2022 5-year average of ~$5 per barrel Key sustaining projects include: 1
Slide 28: Industry-leading digital approach
Industry-leading digital approach Accelerating value with a rapidly growing digital portfolio >$1B/yr Digital investment principles • Capital-efficient • Fast payback • Agile development Near-term focus and wins Future potential >30 successful initiatives $750M/yr Optimizing production Improvi
Slide 29: Advanced analytics and work process optimization
Advanced analytics and work process optimization Converting data to dollars Enhanced mine planning Well downtime tracker Surveillance and failure analysis (10-15 kbd) (~1 kbd ) (>$40M/yr) Kearl Recovery Heat Map Integrating field work Fines % processes to Leveraging minimize analytics in Grade % wel
Slide 30: Kearl 2021 performance
Kearl 2021 performance Demonstrated strength of Kearl asset Production kbd Record production in 2021 250 Exceeded prior record by 40 kbd Realized full benefit of supplemental crushers (+24 kbd) Achieved turnaround interval extension (+7 kbd) 200 2020 Supplemental Turnaround Grade & 2021 Crus
Slide 31: Kearl journey
Kearl journey Stable, reliable operations enabling acceleration of optimization phase kbd $US/bbl 300 40 Targeting 280 kbd in 2024, earlier than prior outlook Accelerated turnaround strategy Debottlenecking, reliability, and maintenance improvements 200 Enhanced mine planning and improved re
Slide 32: Technology in support of Kearl volume growth
Technology in support of Kearl volume growth Reliability and secondary recovery initiatives Advanced wear materials Coarse tailings bitumen recovery Flotation tailings bitumen recovery Hydrotransport Primary Separation Cell (PSC) Ore Screen Flotation Tailings Column Cells To Fines Treatment Coarse S
Slide 33: Autonomous haul update
Autonomous haul update Fleet conversion improving profitability and safety On track to convert 55 trucks (~70%) by end of Q3 Record AHS movement in 2021 Tripled vs. 2020, >30% total material Unit cash cost1 savings ~$US 1/bbl Autonomous platform enabling optimization across broader mine mo
Slide 34: Kearl boiler flue gas emissions reduction technology
Kearl boiler flue gas emissions reduction technology Successful first deployment, expanding to five additional boilers Innovative technology recovers waste heat from the boiler’s exhaust to pre-heat process water Cold Warm Process Process Water Water Successful startup of first unit May 2021 wit
Slide 35: Cold Lake 2021 performance
Cold Lake 2021 performance Performance exceeding expectations and sustainable into the future Production performance kbd 150 Increased production 8 kbd vs. 2020 Water balance strategy and equipment reliability (~5 kbd) Infill drilling and optimization (~3 kbd) Strongest reliability in past 5
Slide 36: Cold Lake strategy
Cold Lake strategy Maximize asset value and cash flow through transformational GHG strategy Transition to lower emission technology Strategy to sustain volumes through resilient kbd 200 Base Base infills Lower emissions production investments, delivering competitive returns and GHG transformation
Slide 37: Key Cold Lake volume sustainment investments
Key Cold Lake volume sustainment investments Progressing capital-efficient projects to sustain strong production performance Niche rig drilling program Leming field redevelopment Successful first deployment, >20 redrills and sidetracks to date SAGD technology to redevelop low-recovery, high-qual
Slide 38: Strategy underpinned by advanced in situ technologies
Strategy underpinned by advanced in situ technologies Research and development supporting long term profitable GHG reduction Enhanced Late-Life Process, ELP Non-Condensable Gas, NCG Cyclic Solvent Process, CSP Non-thermal late life process Reduce water use and GHGi by ~25% Non–thermal cyclic p
Slide 39: Cold Lake carbon capture and storage (CCS) opportunity
Cold Lake carbon capture and storage (CCS) opportunity Efficient emissions reduction, supporting Cold Lake strategy transformation Mahihkan Plant at Cold LakeLake Pursuing CCS emissions reduction opportunity that captures efficiencies with Cold Lake operations Evaluating capture of CO2 from comb
Slide 40: Syncrude strategy
Syncrude strategy Capturing value of transition to owner-operator model Production kbd Successful partner engagement and collaboration delivered transformational step in asset strategy 90 Transitioned from Syncrude to Suncor as operator 2021 Synergies of $300M gross through regional efficienci
Slide 41: Future resource optionality
Future resource optionality Portfolio of growth opportunities with net-zero potential Aspen – rendering of central plant In situ GHG intensity t CO2e/m3 0.5 Large inventory of in situ opportunities Aspen, Corner, Clarke Creek, Clyden Strategic approach to future development Maintain optional
Slide 42: Upstream summary
Upstream summary Best-in-class producer, maximizing value, positioning for a lower carbon future Maximizing value from existing assets Sustaining efficiencies; targeting industry leading unit cost and reliability Investing for value through select volume growth and GHG intensity reduction In
Slide 43: Break
Break Imperial | 2022 | 43
Slide 44: Downstream and Chemical Outlook
Downstream and Chemical Outlook Jon Wetmore Vice-president, Downstream Imperial | 2022 | 44
Slide 45: Downstream and Chemical strategy
Downstream and Chemical strategy Increasing profitability across the value chain Deliver industry leading performance in safety, reliability, and operations integrity Strategically invest in logistics to expand market reach, reduce costs and improve supply reliability Enhance world-class Esso
Slide 46: Canadian margin environment
Canadian margin environment Structurally advantaged margins, resilient through the pandemic Average monthly gasoline crack Average monthly diesel crack $US/bbl $US/bbl 80 80 Avg. Canadian gasoline crack Avg. Canadian diesel crack Avg. US gasoline crack Avg. US diesel crack 40 40 0 0 2010 2011 2012 2
Slide 47: Canadian fuel demand update
Canadian fuel demand update Demand continuing to recover Canadian industry demand (~% of normal*) Canadian economic activity increasing Omicron impacting near-term, potential for continued volatility Gasoline, diesel demand expected to recover to 90 - 95% 90 - 95% 70 - 75% Q4 2021 Q4 2021 Q4 2
Slide 48: Canadian refining
Canadian refining Canada’s largest refiner with access to global technology and expertise Refinery throughput and utilization kbd Structurally advantaged refining business 400 100% Largest domestic refiner, strategically located assets Fully integrated Chemical plant for optimized molecule upl
Slide 49: Fuel, lubricant and asphalt marketing
Fuel, lubricant and asphalt marketing Industry leading brands and product offering creates customer pull Retail branded wholesale model provides structural advantages Industry leading site count with ~2,400 sites across Canada Capital efficient growth Strategic partnerships with best-in-clas
Slide 50: Developing a lower-carbon product offering
Developing a lower-carbon product offering Broad portfolio of products helping customers meet their sustainability goals 75% of existing gasoline and diesel sales contain renewable content Continuing to grow blending and distribution capability Growing portfolio of advanced fuels that improve
Slide 51: Innovation delivers shareholder value
Innovation delivers shareholder value Further enhancing Imperial’s Downstream offer with innovative solutions and technologies Advanced recycling Vegetable oil co-processing Collaborative product trials Battery energy storage Transforming plastic waste into Vegetable oil co-processed with Iden
Slide 52: Downstream investments
Downstream investments Strategic investments in low-capital, high-return business Annual capital expenditure1 forecast $M 600 Selective investing in refinery slate, 300 production efficiency and resiliency Support and enhance strategic logistics 0 Market opportunities, access, reliability 2021
Slide 53: Sarnia products pipeline (SPPL) update
Sarnia products pipeline (SPPL) update Proactive investment in efficient and reliable logistics Project details: ~$470M final investment, ~$400M spent through year-end 2021 63 km pipeline, restores capacity into key Toronto market On track to be in service 2Q22 SPPL creates structural valu
Slide 54: Strathcona renewable diesel project update
Strathcona renewable diesel project update Building Canada’s largest renewable diesel (RD) facility Grassroots facility ~$500M capital investment, globally competitive scale Total investment, including 3P capital investments, exceeds $1B 20 kbd of premium RD from locally grown feedstocks and
Slide 55: Strathcona renewable diesel value proposition
Strathcona renewable diesel value proposition Capturing competitive value for shareholders Canadian Clean Fuel Regulations supporting low-carbon investments RD is an efficient pathway for hard to decarbonize sectors Canadian RD currently supplied by costly long-haul imports Grassroots assets
Slide 56: Downstream profitability
Downstream profitability Resilient business model, focused on increasing profitability Cash operating costs1 and refinery throughput $B kbd 3 400 Resilient, reliable performance across the cycle 2 300 Fully integrated, flexible business model 1 Further structural cost reductions achieved in 20
Slide 57: Chemical site integration advantage
Chemical site integration advantage Advantaged location and integration, positioned to compete in a high-growth market Feedstock Annual net income HDPE injection molding price history % $M US ¢/lb 100 Other 450 Other 120 Marcellus Mid-west Marcellus ethane Ethane ethane 300 90 50 150 60 Refinery Ref
Slide 58: Imperial Chemical produces high-value products
Imperial Chemical produces high-value products Meeting customer demands with consistent, high-quality, differentiated products Product trials Customer-focused $M NPV product development 50 High-density polyethylene (HDPE) for rotational and injection molding applications 25 End product uses are
Slide 59: Imperial's Downstream and Chemical advantage
Imperial’s Downstream and Chemical advantage Sustainably advantaged assets, brands and products Canadian domestic fuel markets benefit from advantaged margins Strategically located, highly-integrated assets with low sustaining capital requirements Portfolio of superior brands and products fost
Slide 60: Financial Outlook
Financial Outlook Dan Lyons Chief Financial Officer Imperial | 2022 | 60
Slide 61: Advantaged financial profile
Advantaged financial profile Resilient business model with upside leverage 10-year cash flow from operating activities Integrated, balanced business model Growing production, long-life low decline assets Advantaged downstream, leading fuels marketer Downstream, Chemical & Upstream Integrated
Slide 62: Record-setting performance in 2021
Record-setting performance in 2021 Delivered continued cash flow growth Annual cash flow from operating activities Strong integrated performance across all business lines $B 6 Record cash flow from operating activities Record Upstream production Record Chemical earnings Continued Downstrea
Slide 63: Cash operating costs
Cash operating costs Significant cost efficiencies achieved and maintained Annual cash operating costs1 $B Sustainable cost reductions across all business lines 8 Over $1B in cost efficiencies Progressing additional cost reduction opportunities Continued focus on energy efficiency 6 Cost-e
Slide 64: Capital expenditure forecast
Capital expenditure forecast Low sustaining capital requirement with select growth opportunities Annual capital expenditure1 forecast $B 2022 target of $1.4B, down $0.2B from previous plan 2 Sustaining capital2 averages ~$1B over period Predominantly Upstream Kearl in-pit tailings drives hig
Slide 65: Re-affirming capital allocation priorities
Re-affirming capital allocation priorities Remain committed to returning surplus cash to shareholders Dividend per share (paid basis) $ Reliable and growing dividend 1.50 Dividend increased by 55% since beginning of 2021 0.75 Low sustaining capital requirements Select, high-return capital-ef
Slide 66: Record cash returned to shareholders in 2021
Record cash returned to shareholders in 2021 Robust free cash flow outlook Annual cash distributions Free cash flow profile1,2 $B $B 6 6 4 4 2 2 0 0 $50 $60 $70 $80 2016-20 Avg 2021 $US WTI Dividend Buyback Prior outlook 1 Non-GAAP financial measure – see supplemental information for definition and
Slide 67: Corporate guidance summary
Corporate guidance summary 2022 Annual Guidance1 2022 Turnaround Schedule Total Capex $B 1.4 Upstream (full-year opex and production impacts, before royalties) 1Q/2Q: Syncrude Hydrotreater, 3 kbd, $14M opex Upstream Production kboed 425 - 440 2Q: Kearl K1 plant, 10 kbd, $70M opex (IOL share) Kearl k
Slide 68: Closing remarks
Closing remarks Brad Corson Chairman, President and Chief Executive Officer Imperial | 2022 | 68
Slide 69: The Imperial advantage
The Imperial advantage Growing shareholder value Integration and synergies High-quality, Resilience long-life through assets cycle Maximizing shareholder value Industry leading Shareholder balance returns sheet Technology leadership Imperial | 2022 | 69
Slide 70: Our winning strategy
Our winning strategy Disciplined focus on existing assets Discipline and focus Efficiency, reliability, capital efficient investment Industry leading cost structure Driving value in mature, competitive downstream business Share price performance Progress towards ESG targets in evolving env
Slide 71: Q&A
Q&A Imperial | 2022 | 71
Slide 72: For more information
For more information: Dave Hughes Vice President, Investor Relations +1 587.476.4743 [email protected] imperialoil.ca twitter.com/ImperialOil linkedin.com/company/Imperial-Oil youtube.com/ImperialOil facebook.com/ImperialOilLimited Imperial | 2022 | 72
Slide 73: Cautionary statement
Cautionary statement Statements of future events or conditions in this report, including projections, targets, expectations, estimates, and business plans are forward-looking statements. Forward-looking statements can be identified by words such as believe, anticipate, intend, propose, plan, goal, s
Slide 74: Cautionary statement
Cautionary statement In these materials, certain natural gas volumes have been converted to barrels of oil equivalent (BOE) on the basis of six thousand cubic feet (Mcf) to one barrel (bbl). BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf to one bbl is based
Slide 75: Supplemental Information
Supplemental Information Debt-to-capital ratio Debt, defined as the sum of “Notes and loans payable” and “Long-term debt”, divided by capital, defined as the sum of debt and “Total shareholders’ equity”. Capital and exploration expenditures Capital and exploration expenditures (or capital expenditur
Slide 76: Supplemental Information
Supplemental Information Cash operating costs (Cash costs) Cash operating costs is a non-GAAP financial measure that consists of total expenses, less costs that are non-cash in nature, including, Purchases of crude oil and products, Federal excise taxes and fuel charge, Depreciation and depletion, N