Imperial Oil Limited IMO is set to release second-quarter results on Jul 29. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $2.14 per share on revenues of $16.7 billion.
Let’s delve into the factors that might have influenced the integrated energy company’s performance in the June quarter. But it’s worth taking a look at IMO’s previous-quarter performance first.
Highlights of Q1 Earnings & Surprise History
In the last-reported quarter, the Calgary, Canada-based petroleum operator beat the consensus mark on strengthening commodity price realizations. Imperial Oil had reported adjusted earnings per share of $1.38, ahead of the Zacks Consensus Estimate of $1.35. Revenues of $10 billion also outperformed the Zacks Consensus Estimate by 10.6%.
IMO beat the Zacks Consensus Estimate for earnings twice in the last four quarters and missed in the other two, resulting in a negative earnings surprise of 2.5%, on average. This is depicted in the graph below:
Imperial Oil Limited Price and EPS Surprise
Imperial Oil Limited price-eps-surprise | Imperial Oil Limited Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for the second-quarter bottom line has been revised 7% downward in the past seven days. The estimated figure indicates a 422% surge year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 155.2% increase from the year-ago period.
Factors to Consider
Imperial is expected to have benefited from the surge in hydrocarbon realizations. In the first quarter of 2022, the company’s bitumen price realizations averaged C$89.36 a barrel, up from C$47.19 in the year-ago quarter. Further, IMO received an average realized price of C$117.24 per barrel of synthetic oil compared with the year-ago quarter’s C$67.41. For conventional crude oil, it received C$98.38 per barrel, while a year ago, the company got C$49.54. Prices of NGL increased to C$59.27 a barrel, while the same of gas rose to C$5.08 per thousand cubic feet year over year. The uptick is most likely to have continued in the to-be-reported quarter, thanks to the sharp rise in commodity prices following geopolitical tensions, strained supply and robust demand. This price boost is likely to have buoyed the second-quarter revenues and cash flows of Imperial Oil.
IMO is also expected to have reaped the reward of a better macro environment in its downstream (or refining) unit. In the previous quarter, segment revenues of C$14,045 million were up significantly from C$5,305 million in the first quarter of 2021. Moreover, the segment earned a net income of C$389 million compared with C$292 million reported in the year-ago quarter. The positive movement is expected to have continued in the to-be-reported quarter, with post-pandemic demand recovery driving margins higher.