Imperial Oil shares rise as company renews share buybacks

TC Energy Corp to split company into two separate companies Mike Shorr, director of trader education at Prosper Trading Academy, joins BNN Bloomberg to discuss TC Energy's plans to split into two separate companies, by spinning off its crude oil pipelines business.

Canada's Imperial Oil shares rose on Friday as investors focused on plans to renew share buybacks, despite quarterly earnings slumping 72% year-on-year as maintenance activity hit production amid a drop in energy prices.

Imperial, majority-owned by Exxon Mobil, joined global peers in reporting a decline in second-quarter profits after oil prices fell in the second quarter, pressured by a banking crisis in which several large lenders failed and fears of a looming recession crimped demand.

The Calgary-based company's earnings, however, met or exceeded analysts' expectations, and painted an optimistic picture for the second half of the year.

"While we still have major planned turnaround work ahead of us ... we expect to see stronger volumes in the second half, most notably in the upstream," CEO Brad Corson told analysts on a conference call.

Imperial shares were last up 4.7% on the Toronto Stock Exchange at $71.47.

The company said it will renew an annual normal course issuer bid (NCIB) to repurchase shares and planned to accelerate the program before the end of the year.

"With maintenance out of the way at several key assets, we see the company being well-positioned for H2/23 (the second half of 2023)," BMO Capital Markets analyst Randy Ollenberger said in a research note, that adding Imperial could launch additional buybacks late this year or early next year.

Imperial reported net income of $675 million (US$510.82 million), or $1.15 per share, for the quarter ended June 30, down from $2.4 billion or $3.63 per share, a year earlier.

Average realized prices for Western Canada Select, the benchmark Canadian crude, fell 39% to US$58.49 per barrel while second-quarter upstream production declined 12% to 363,000 barrels of oil equivalent per day (boepd), hurt by maintenance-related stoppages, the company said.

Imperial's crude utilization stood at 90% in the reported quarter, lower than last year's 96% due to the impact of a planned turnaround at its Strathcona refinery in Alberta, which pushed quarterly total downstream throughput lower by 6% to 388,000 barrels per day (bpd).

The company has completed construction work for expanding a seepage interception system at its Kearl oil sands mine in northern Alberta, intended to solve a months-long leak of toxic tailings water from the site that was first discovered in May 2022 and is the subject of a federal investigation.

Earlier this week Imperial reported a separate oil spill into a process water lagoon at its Mahihkan plant near Cold Lake in northern Alberta that contaminated 12 Canada geese.

(Reporting by Sourasis Bose in Bengaluru and Nia Williams in British Columbia; Editing by Vinay Dwivedi, Matthew Lewis and Marguerita Choy)