CALGARY -- Gains from higher oil prices and refinery margins were more than offset by asset impairment charges from abandoned natural gas projects as Imperial Oil Ltd. reported choppy fourth-quarter results on Friday.

The Calgary-based company took a charge of $289 million on its northern B.C. Horn River shale gas development, a 50-50 venture with its U.S. parent, Exxon Mobil Corp., citing an assessment of its "relative competitiveness."

The project was once expected to become a major supply source for B.C.'s liquefied natural gas export industry, but no LNG projects have been built.

Imperial spokeswoman Lisa Schmidt said Friday the company has decided not to proceed although it still has about 82,000 hectares of drilling rights in the area, down from 136,000 hectares after some Crown leases were allowed to expire in 2016.

The partners drilled a successful horizontal well there in 2012 that averaged 30 million cubic feet per day of gas production but suspended it in 2015 as average benchmark natural gas prices fell to 16-year lows.

Imperial also recorded a $277-million charge on the Mackenzie natural gas pipeline project in the Northwest Territories it cancelled late last year. That project had won regulatory approval in 2010, but its economic prospects were also hampered by low gas prices.

The charges left the company with a net loss of $137 million or 16 cents per share for the last three months of 2017. That compared with net income of $1.44 billion or $1.70 per share in the same period of 2016, boosted by a $988-million gain on the sale of its chain of Esso gas stations.

Net income would have been $85 million in the latest quarter, compared with net income of $103 million a year earlier, excluding the special items, Imperial said. Thomson Reuters pegged its adjusted earnings at 51 cents per share, excluding items, missing analyst expectations of 68 cents.

Production at the underperforming Kearl oilsands mine in northern Alberta averaged 176,000 barrels per day in the fourth quarter (125,000 bpd net to Imperial, 51,000 bpd to partner ExxonMobil), up from 169,000 bpd in the fourth quarter of 2016, the company said. It added operating expenses at the project also grew by about $50 million.

"Substantial progress was made towards addressing reliability issues at Kearl," said Imperial CEO Rich Kruger in a statement. "Following these improvements, Kearl is expected to produce an annual average of 200,000 barrels per day gross in 2018."

The company reiterated its plan to spend $400 million to increase Kearl's average gross production to 240,000 bpd by the end of 2019. It said its capital spending in 2018 is being set at between $1.5 billion and $1.7 billion, double the $671 million spent in 2017.

Imperial, Canada's largest petroleum refiner, said total revenue and other income amounted to $8.08 billion, down from $8.44 billion in the fourth quarter of 2016, as upstream production matched the year-earlier output of 399,000 barrels of oil equivalent per day.

For the full year, Imperial reported a profit of $490 million or 58 cents per share on $29.42 billion in revenue. That compared with a profit of $2.17 billion or $2.55 per share on $27.35 billion in revenue in 2016.

Companies in this story: (TSX:IMO)