Canada’s Imperial Oil Cuts Spending

Imperial Oil, a Canadian integrated oil and gas company owned 70% by US supermajor ExxonMobil, said March 31 it would cut spending this year by C$1bn (US$704mn) in response to the global Covid-19 pandemic and commodity price collapse.

“The current Covid-19 pandemic, as well as business and commodity price environment, poses many challenges for our industry,” CEO Brad Corson said. “Imperial’s integrated business model, high quality asset portfolio, and strong balance sheet offer valuable stability during this period, and we are taking steps to exercise flexibility in our plans to respond to market conditions by reducing our capital investment and operating costs.”

Capital spending for 2020 will be reduced by 30%, or C$500mn, to between C$1.1bn and C$1.6bn, and spending will be aimed at paced investments for key growth-related projects and on ensuring ongoing safe and reliable operations.

In addition to the reduced capital spending, Imperial Oil has identified opportunities to reduce operating expenses by C$500mn from 2019 levels that will drive efficiency and effectiveness while still ensuring safe and reliable ongoing operations. It did not say whether employee layoffs would be part of those cuts.

Scope reductions for the planned Q2 turnaround of the company’s Sarnia refinery have been identified, and a planned coker turnaround at its Syncrude oil sands operation has been deferred to Q3.

The current demand environment and the ongoing response to Covid-19 are expected to result in negative impacts on Imperial’s upstream production and downstream refinery and product sales in the near term, the company said, although the magnitude of those impacts is uncertain.