FINANCIAL ANALYSIS

Financial Analysis of Imperial Oil Ltd.

Financial Analysis of Imperial Oil Ltd.

Introduction

Imperial Oil is Canada's second largest oil company. The company operates four refineries in Canada with total throughput capacity of 502,000 barrels per day. It has proved reserves of 63 million barrels of oil, 1,661 million barrels of bitumen, 691 million barrels of synthetic oil, and 590 billion cubic feet of natural gas (Moffett, 2011). The company is seventy percent owned by ExxonMobil. The financial statements of the company reflect an overall healthy and stable company. The research paper presents a brief overview of the company along with an analysis of its financial statement and performance of the company in the year 2010.

Financial Performance

The financial performance of any company is gauged by its financial statements. The financial performance of the company, according to the Income statement, leads to the following statistics and results. Imperial Oil reported a drop of nineteen percent in the net income of the fourth quarter as compared to the same period of the previous year. The reason is attributed to the poor refining results. Downstream fourth quarter earnings declined eighty percent against the same quarter of last year due to the weak refined product margins. However, upstream earnings for the quarter increased 46% as compared to last year's fourth quarter. The conflict in the upstream and downstream analysis is due to the fact that higher oil prices have offset the lower production volumes. Lower volumes from Cold Lake due to well maintenance resulted in a four percent drop in the gross production for the quarter. Moreover, earnings increased from $1.6 billion in 2009 to $2.2 billion in 2010. The company maintained its increasing trend in dividends payout as the annual per share dividends paid raised for the sixteenth consecutive year. The company was able to ...