Canadian producer Imperial Oil saw its net profit soar by 68% in the second quarter from year-ago levels as the highest second-quarter production in over 30 years and narrowing Canadian crude price discounts to the U.S. benchmark more than offset weaker refining results.
Imperial Oil, majority owned by U.S. supermajor ExxonMobil, reported on Friday a net income of US$818 million (C$1.133 billion) for the second quarter, up from US$488 million (C$675 million) for the second quarter of 2023.
Cash flow from operating activities also jumped as Imperial Oil's production averaged 404,000 gross oil-equivalent barrels per day, the highest second-quarter production in more than 30 years when adjusting for the divestment of XTO Energy Canada. This output level was up from 363,000 gross oil-equivalent barrels per day in the same period of 2023.
In the first half of 2024, the price of crude oil remained relatively flat compared to the fourth quarter of 2023, but the discount of the price of Western Canada Select (WCS), the benchmark for Canadian heavy crude sold at Hardisty in Alberta, relative to the U.S. crude oil benchmark, West Texas Intermediate (WTI), narrowed, "primarily due to additional pipeline capacity coming online," Imperial Oil said.
The expanded Trans Mountain pipeline, which entered into service in May, has tripled the capacity of the original pipeline to 890,000 barrels per day (bpd) from 300,000 bpd to carry crude from Alberta's oil sands to British Columbia on the Pacific Coast.
In the downstream, Imperial Oil flagged lower refining margins, as did all oil companies this earnings season.
"Refining margins fell as increasing supply more than met growing demand and geopolitical trade-flow disruptions lessened," Imperial Oil said.
Looking ahead, the company expects strong production in the second half of the year, too.
"With the majority of upstream turnaround activity behind us, we are well positioned for strong production in the second half of the year," Imperial Oil's chairman, president and CEO Brad Corson said.
By Charles Kennedy for Oilprice.com
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