- Strong Cash Flow Generated $1.9B in Q4 cash flow from operations and $6.7B annually, despite WTI averaging <$60/bbl.
- Free Cash Flow Resilience $1.4B in Q4 free cash flow, driven by integrated operations and lower downstream costs.
- Shareholder Returns Returned $4.6B in 2025 ($361M dividends, $1.7B buybacks) and raised dividend 20% to $0.87/share.
- Production Challenges Offset by New Projects Q4 upstream production fell 4% to 444K boe/d due to weather, but Cold Lake Leming SAGD reached 9,000 bpd.
- Future Growth Targets Maintains 285,000–295,000 bpd guidance for 2026, with 300,000 bpd long-term target and Mahihkan SAGD (30K bpd by 2029).
Operational Performance
Operationally, the company faced challenges, including extremely wet conditions at Kearl in October, which impacted equipment mobility and delayed accessing high-quality ore. Despite this, the company recovered strongly in December, achieving its second-highest monthly production. Upstream production averaged 444,000 oil equivalent barrels per day, down 18,000 oil equivalent barrels per day versus the third quarter. Kearl's quarterly production was 274,000 barrels per day gross, down 42,000 barrels per day versus the record quarterly production in the third quarter.
Shareholder Returns
The company returned $4.6 billion to shareholders in 2025, including $361 million in dividends and $1.7 billion in share repurchases. A dividend of $0.87 per share was declared, payable on April 1, 2026, representing a 20% increase. The 21% dividend hike reflects management's confidence in the company's strategy and plans to create value. With a dividend yield of 2.09%, Imperial Oil remains an attractive option for income-seeking investors.
Valuation
Imperial Oil's valuation metrics suggest a relatively attractive profile, with a P/E ratio of 21.2, P/B ratio of 4.08, and EV/EBITDA of 10.25. The company's return on invested capital (ROIC) stands at 15.21%, indicating a strong ability to generate returns on invested capital. With a free cash flow yield of 6.88%, Imperial Oil appears to be undervalued, offering a compelling investment opportunity.
Outlook
Looking ahead to 2026, Imperial Oil remains focused on delivering industry-leading operational performance, maximizing the value of existing assets, and continuing to return surplus cash to shareholders. The company prioritizes a reliable and growing dividend and will continue to return surplus cash in a timely manner. Analysts estimate next year's revenue growth at 1.6%, indicating a stable outlook for the company.
Downstream Business
The refining business performed strongly, with robust refining margins, particularly in November. The company's flexibility and operational capability allowed it to maximize distillate production and take advantage of high distillate margins. Imperial Oil's downstream business is well-positioned to capture margins due to its asset location and logistics network.