Imperial Oil posts 13 per cent drop in second quarter earnings

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CALGARY - Imperial Oil (TSX:IMO) is reporting a 13 per cent drop in second-quarter earnings, citing lower commodity prices and higher planned maintenance.

Net income was $635 million, or 75 cents per diluted share, for the quarter compared with $726 million or 85 cents per share in the same period last year.

Revenue came in at $7.5 billion for the quarter compared to $7.8 billion year over year.

The Calgary-based company says gross oil-equivalent barrels of production averaged 269,000 barrels a day versus 292,000 barrels in the same period last year.

It says lower production was due primarily to planned maintenance activities at Syncrude and Cold Lake along with the impact of divestment of natural gas assets completed in 2011.

Analysts polled by Thomson Reuters were expecting Imperial to post revenues of about $6.2 billion.

Imperial is in the early stages of weighing a liquefied natural gas export terminal on Canada's West Coast in order to get a better price for the gas it produces in province's northeast.

The acreage Imperial has in the Horn River Basin contains dry gas, which can fetch a price several times higher in Asia than it could in North America, which is awash in supplies.

Earlier this month, CEO Bruce March said the $10.9-billion Kearl oilsands mine was nearly complete and on track to start up later this year.

He also said all of the gargantuan pieces of equipment had finally made their way to the mine site in northern Alberta.

Calgary-based Imperial, which is majority-owned by U.S. energy giant ExxonMobil (NYSE:XOM), ran into legal trouble transporting giant modules manufactured in Korea to Alberta through the United States.

The enormous shipments moved across the Pacific and along rivers to Lewiston, Idaho, where they were to be transported by truck the rest of the way to northern Alberta.

The initial plan was to move the shipments along two-way highways through Idaho and Montana, but legal challenges arose because local residents and conservation groups didn't want the megaloads moving along those scenic routes.

Eventually, Imperial broke up the loads into smaller parts and applied to ship the equipment along Interstate highways instead.

In December, Imperial's board of directors approved an $8.9-billion expansion that will begin producing 110,000 barrels per day by late 2015.

When the Calgary-based firm announced in 2009 that it would build the Kearl mine, it expected three phases of roughly the same size. Later, it decided to instead build the mine in two phases, with smaller projects along the way to boost output in increments.

For the next phase of Kearl March said Imperial has set aside space at fabrication yards in Edmonton to construct the modules.

Imperial has vast steam-driven oilsands operations at Cold Lake, a 25 per cent stake in the Syncrude Canada oilsands mine, a handful of refineries across Canada and a chain of Esso-branded fuel stations.

Organizations: Imperial Oil, TSX, ExxonMobil Thomson Reuters NYSE Syncrude Canada

Geographic location: Cold Lake, CALGARY, Canada Northern Alberta United States Lewiston, Idaho West Coast Horn River Basin Asia North America Korea Alberta Pacific Montana Edmonton

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