What happened with IMO today?
No read yet
Uses news and trading volume to explain the day’s move and how it relates to the market.
Stop guessing. Get the call, a three-month target price, the best and worst cases, and a source for every claim.
Imperial Oil supplies fuels for transportation, industry and heating, mainly in Canada. Most of its revenue comes from selling petroleum products. It processes predominantly Canadian crude in its refineries and supplements its own production with purchased crude and finished fuels. Independent businesses buy its fuel for sale through Esso- and Mobil-branded sites; industrial and transportation customers also buy directly from Imperial.
The company also produces oil in Canada, mainly from oil sands. Kearl and Cold Lake produce bitumen, a heavy form of crude that is blended with lighter hydrocarbons for transport. Its Syncrude joint venture processes bitumen into lighter synthetic crude. These operations supply Imperial’s and other companies’ refineries. A smaller chemicals business manufactures and sells products including polyethylene resin and solvents, with production alongside its Sarnia refinery.
The money Imperial earns depends on crude-oil selling prices and the gap between fuel selling prices and refinery feedstock costs. Moving heavy oil to market also depends on transport capacity and the cost of blending materials. Its operations require licensed access to water and must meet environmental rules governing emissions, waste and site reclamation.
The risk section is the longest, dullest part of the filing. This keeps only what can really hurt you: where it hits, how hard, when it plays out.
Every company claims an edge. Each one is checked against hard numbers like margins and returns: which hold, and which line gives way first.
Suncor and Imperial share exposure to Canadian oil-sands selling prices and refining margins: both sell bitumen and synthetic crude to refiners and also refine and market fuel. Watch Suncor’s bitumen and synthetic-crude sales for a comparison with Imperial’s oil-sands business.
ExxonMobil is both a supplier and an outlet for Imperial’s oil: it sells petroleum volumes to Imperial, processes Imperial’s oil-sands crude in its refineries and partners with it at Kearl. News about their shared Kearl operation bears directly on Imperial’s bitumen production.
Cenovus and Imperial both produce Canadian heavy oil and refine it into products for sale, so refining can partly cushion changes in heavy-oil price discounts. Watch Cenovus’s heavy-oil refining margins to gauge how much cheaper crude feedstock can offset weaker oil-production revenue.
Canadian Natural and Imperial both sell Alberta oil-sands bitumen and synthetic crude into petroleum markets, leaving their production businesses exposed to similar oil prices and costs. Canadian Natural’s synthetic-crude and bitumen results are the relevant comparison for Imperial, rather than its broader natural-gas business.
Shell competes with Imperial for Canadian refining and branded-fuel business; both also produce and market oil and gas.
ConocoPhillips and Imperial sell Canadian bitumen and crude oil to North American petroleum buyers, tying both to prices in those markets. Watch the prices ConocoPhillips receives for these products, whose contracts adjust market benchmarks for location, quality and transportation.
Valero competes with Imperial to supply gasoline, diesel and other transportation fuels to Canadian wholesale and bulk buyers. Its fuel sales to distributors and large users offer a comparison for demand in Imperial’s industrial and transportation markets.
Chevron and Imperial both earn money from producing oil and selling refined fuels and chemicals, sharing exposure to crude prices, refining margins and petrochemical demand. Chevron’s refined-product and petrochemical results provide comparisons for Imperial’s businesses beyond oil production.
BP and Imperial both produce oil and refine and market fuel, so crude selling prices and the gap between fuel prices and crude costs matter to both. Watch BP’s refining and fuel-marketing results for a comparison with Imperial’s downstream business.
Phillips 66 and Imperial both refine and sell transportation fuels and run chemicals businesses exposed to North American product markets. Phillips 66’s gasoline, diesel and aviation-fuel sales through branded outlets and wholesalers offer a comparison for Imperial’s fuel-marketing business.
Marathon Petroleum and Imperial both turn crude into gasoline and fuels such as diesel, then sell through wholesale and branded channels, sharing exposure to refining margins. Watch Marathon Petroleum’s gasoline and distillate sales volumes as a comparison for Imperial’s main fuel products.
PBF Energy competes with Imperial in Canadian markets for gasoline, diesel, jet fuel and other refinery products. Its sales to commercial accounts and major oil companies offer a comparison for the wholesale side of Imperial’s fuel business.
Sunoco competes with Imperial for Canadian wholesale fuel customers, supplying dealers and commercial businesses through brands including Pioneer, Fas Gas and Ultramar, while Imperial supplies Esso and Mobil channels. Watch Sunoco’s Canadian dealer and commercial fuel business for signs of demand in this shared customer market.
EIA Crude Oil Stocks Change (Oct/16)
US crude and gasoline stock levels show how tight supplies are, which can affect the crude prices Imperial receives for its oil and the refined-product prices that shape its Canadian refineries’ margins.
Read crude and gasoline stock changes separately: falling crude stocks may support Imperial’s Upstream oil realizations, while falling gasoline stocks may support Downstream product prices and refining margins; rising stocks can point the other way.
Valero Energy Corporation earningsVLO
Valero’s report will show how Canadian wholesale and bulk buyers are taking gasoline, diesel and other transport fuels in markets Imperial Oil also supplies.
Look at Valero’s fuel sales to distributors and large users. Steady or rising sales would indicate support from buyers in markets Imperial Oil also serves, giving its industrial and transport fuel business a firmer demand backdrop; weakening sales would point to cooling demand in those shared markets.
Imperial Oil Limited earningsThis company
Imperial Oil’s report will show whether oil-sands output and prices, alongside refining margins and fuel sales, are supporting its integrated business.
Read oil-sands production and realized prices alongside refinery throughput, product sales and refining margins. Steady upstream output or prices with support from downstream margins and sales would show refining and marketing cushioning pressure on crude production; weakness in both would show the integrated business is not offsetting it.
Cenovus Energy Inc. earningsCVE
Cenovus’s report will show whether heavy-oil refining margins are offsetting pressure on oil-production revenue, a shared issue for Imperial Oil’s oil-sands and refining businesses.
Read Cenovus’s heavy-oil refining margins alongside the change in oil-production revenue. Stronger refining margins while production revenue is under pressure would show refining cushioning oil-price weakness, a relevant comparison for Imperial Oil; weaker margins would indicate that the offset is limited.
ExxonMobil Holdings Corporation earningsXOM
ExxonMobil’s report may shed light on the jointly operated Kearl oil-sands project, whose operations directly affect Imperial Oil’s bitumen production.
Watch ExxonMobil’s disclosures on Kearl operations and output. Steady operations and production would support bitumen output from Imperial Oil’s share of the project; disruption or reduced output would signal a direct risk to Imperial’s oil-sands production.
