Imperial Oil Posts Strong Q3 Results; Shares Dip

Imperial Oil (IMO), the Canadian subsidiary of ExxonMobil (XOM), posted a strong increase in profit in the third quarter, boosted by rising oil prices, higher production, and increased demand for motor fuels.

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Profit came in at C$908 million (C$1.29 per share) in Q3 2021, compared to a profit of C$3 million (C$0.00 per share) in the same period last year.

Production averaged 435,000 gross oil-equivalent barrels per day. It’s the company’s highest third-quarter production in 30 years and up from 365,000 barrels per day in Q3 2020. Downstream capacity utilization was 94% in the quarter, the highest since the fourth quarter of 2018.

Imperial chairman, president and CEO Brad Corson said, “Imperial’s strong operational performance enabled the company to capture significant value from the current commodity price environment. Combined with our disciplined approach to cost management and capital spending, Imperial generated robust free cash flow of $1,688 million in the quarter.”

Imperial Oil plans to build a world-class renewable diesel complex at its Strathcona refinery. Corson said this project not only demonstrates-Imperial’s commitment and support to Canada’s ambition to achieve net-zero by 2050 and the transition to low-emission fuels, but is also expected to generate significant value for the company and its shareholders. (See Insiders’ Hot Stocks on TipRanks)

On October 19, Goldman Sachs analyst Neil Mehta maintained a Hold rating on IMO with a price target of C$47. This implies 10% upside potential.

Overall, consensus on the Street is that IMO is a Hold based on t12 Holds. The average Imperial Oil price target of C$45.50 implies 6.4% upside potential to current levels.