Download PDF

1. Company Snapshot

1.a. Company Description

Imperial Oil Limited engages in exploration, production, and sale of crude oil and natural gas in Canada.The company operates through three segments: Upstream, Downstream and Chemical segments.The Upstream segment explores for, and produces crude oil, natural gas, synthetic oil, and bitumen.


As of December 31, 2021, this segment had 386 million oil-equivalent barrels of proved undeveloped reserves.The Downstream segment is involved in the transportation and refining of crude oil, blending of refined products and the distribution, and marketing of refined products.It also transports crude oil to refineries by contracted pipelines, common carrier pipelines, and rail; maintains a distribution system to move petroleum products to market by pipeline, tanker, rail, and road transport; and owns and operates fuel terminals, natural gas liquids, and products pipelines in Alberta, Manitoba, and Ontario.


In addition, this segment markets and supplies petroleum products to motoring public through approximately 2,400 Esso and Mobil-branded sites.Further, it sells petroleum products, including fuel, asphalt, and lubricants for industrial and transportation customers, independent marketers, and resellers, as well as other refiners serving the agriculture, residential heating, and commercial markets through branded fuel and lubricant resellers.The Chemical segment manufactures and markets various petrochemicals, benzene, aromatic and aliphatic solvents, plasticizer intermediates, and polyethylene resin.


Imperial Oil Limited has a strategic agreement with E3 Metals Corp.to advance a lithium-extraction pilot in Alberta.The company was incorporated in 1880 and is headquartered in Calgary, Canada.


Imperial Oil Limited is a subsidiary of Exxon Mobil Corporation.

Show Full description

1.b. Last Insights on IMO

Imperial Oil's Q4 earnings beat estimates with 19.01% and 19.54% surprises in earnings and revenue, respectively. The company also reported a 20% dividend lift. According to Tudor, Pickering, Holt, the company's shares were maintained at a hold rating with a price target at C$115.00. Imperial Oil's strong production and dividend growth are promising, but risks from declining income and refining pressures exist.

1.c. Company Highlights

2. Imperial Oil's Strong Q4 2025 Earnings: A Resilient Integrated Business Model

Imperial Oil reported a robust fourth quarter 2025, with cash flow from operations reaching $1.9 billion and $6.7 billion for the full year. The company generated nearly $1.4 billion in free cash flow in the fourth quarter when WTI averaged less than $60 USD. Earnings per share (EPS) came in at $1.94, beating analyst estimates of $1.86. The company's integrated business model demonstrated resilience, with stronger downstream profitability. Excluding identified items, net income for the quarter was $968 million, down $257 million from the fourth quarter of 2024.

Publication Date: Feb -02

📋 Highlights
  • 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.

3. NewsRoom

Card image cap

Is Imperial Oil Still Attractive After 2025 Pullback and Five Year 467% Surge?

Dec -17

Source:

Card image cap

Imperial Oil Unveils Its Corporate Roadmap and Outlook for 2026

Dec -16

Source:

Card image cap

Imperial Oil Issues Corporate Outlook for 2026, With $2 Billion Capital Plan

Dec -15

Source:

Card image cap

Imperial provides 2026 corporate guidance outlook

Dec -15

Source:

Card image cap

Imperial Oil Downgraded to Market Perform at BMO on Valuation; Price Target Lowered to C$129.00

Dec -15

Source:

Card image cap

4 Canadian Oil Stocks That Are Filling the Heavy Crude Gap

Dec -12

Source:

Card image cap

What Recent Developments Are Shaping the Investment Story for Imperial Oil

Nov -26

Source:

Card image cap

RBC Lifts Imperial Oil (IMO) Price Target to C$118, Maintains Sector Perform

Nov -26

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.02%)

6. Segments

Downstream

Expected Growth: 2.5%

Increasing demand for refined petroleum products in Canada, driven by growth in transportation and industrial sectors, will fuel Imperial Oil Limited's refining and marketing segment growth.

Upstream

Expected Growth: 3.6%

Imperial Oil's upstream segment is expected to grow due to increasing global demand for crude oil and natural gas, driven by population growth and urbanization, as well as the company's strategic investments in exploration and production capabilities.

Chemical

Expected Growth: 4.5%

Imperial Oil's petrochemical segment growth is driven by increasing demand from packaging, construction, and automotive industries, as well as growing adoption of recycled plastics, leading to a forecast CAGR of 4.5%.

Corporate and Other

Expected Growth: 4.3%

Imperial Oil's corporate offices and other non-operational activities are expected to grow steadily, driven by increasing investments in digitalization and process optimization, as well as the company's efforts to reduce operating costs and improve efficiency.

Eliminations

Expected Growth: 4.4%

Imperial Oil’s elimination segment growth is driven by increased demand for petroleum products, refining capacity expansion, and a focus on operational efficiency, which will lead to higher profitability.

7. Detailed Products

Esso Gasoline

High-quality gasoline for vehicles, designed to improve fuel efficiency and engine performance

Mobil 1 Lubes

Premium lubricants for vehicles, providing superior engine protection and performance

Asphalt and Sulfur Products

High-quality asphalt and sulfur products for construction, road building, and industrial applications

Chemical Products

Specialty chemicals for various industries, including plastics, adhesives, and coatings

Heavy Oil and Bitumen

Heavy oil and bitumen products for industrial and commercial use

Jet Fuel and Aviation Products

High-quality jet fuel and aviation products for the aviation industry

8. Imperial Oil Limited's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Imperial Oil Limited is moderate due to the availability of alternative energy sources such as solar and wind power, as well as increasing adoption of electric vehicles.

Bargaining Power Of Customers

The bargaining power of customers is low due to the lack of negotiating power of individual consumers, and the company's ability to maintain prices despite fluctuations in demand.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate due to the presence of a few large suppliers of crude oil, but the company's ability to negotiate prices and maintain relationships with multiple suppliers.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the oil and gas industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several large players in the oil and gas industry, leading to intense competition for market share and pricing power.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 16.31%
Debt Cost 3.95%
Equity Weight 83.69%
Equity Cost 13.12%
WACC 11.63%
Leverage 19.49%

11. Quality Control: Imperial Oil Limited passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Suncor Energy

A-Score: 7.5/10

Value: 7.2

Growth: 6.8

Quality: 6.2

Yield: 8.0

Momentum: 8.0

Volatility: 9.0

1-Year Total Return ->

View Full Report
Stock-Card
Imperial Oil

A-Score: 7.3/10

Value: 6.4

Growth: 7.7

Quality: 6.7

Yield: 6.0

Momentum: 9.0

Volatility: 8.3

1-Year Total Return ->

View Full Report
Stock-Card
ExxonMobil

A-Score: 6.7/10

Value: 5.6

Growth: 5.0

Quality: 5.9

Yield: 8.0

Momentum: 6.0

Volatility: 9.7

1-Year Total Return ->

View Full Report
Stock-Card
Chevron

A-Score: 6.4/10

Value: 5.7

Growth: 4.9

Quality: 5.0

Yield: 8.0

Momentum: 5.0

Volatility: 9.7

1-Year Total Return ->

View Full Report
Stock-Card
Cenovus Energy

A-Score: 6.4/10

Value: 7.0

Growth: 5.7

Quality: 5.0

Yield: 6.0

Momentum: 8.0

Volatility: 6.7

1-Year Total Return ->

View Full Report
Stock-Card
Diamondback Energy

A-Score: 6.2/10

Value: 5.8

Growth: 7.8

Quality: 6.4

Yield: 7.0

Momentum: 3.5

Volatility: 6.7

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

140.27$

Current Price

140.27$

Potential

-0.00%

Expected Cash-Flows