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An Imperial Oil refinery

Sean Kilpatrick

Third-quarter profit at Imperial Oil Ltd. fell 61 per cent on lower prices for oil and natural gas and weaker refining results, Canada's No. 2 oil producer and refiner said Thursday.

The company, 69.6 per cent owned by U.S. major Exxon Mobil Corp. said net income dropped to $547-million, or 64 cents a share, from $1.39-billion, or $1.57, in the third quarter of 2008.

Revenue fell 42 per cent to $5.56-billion.

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Like other oil producers, Imperial's profit fell as benchmark oil prices tumbled 42 per cent from the year before and natural gas prices sank 62 per cent.

Imperial was expected to post earnings per share, excluding one-time items, of 58 cents, according to Thomson Reuters I/B/E/S.

"Earnings in the third quarter were down ...primarily due to lower upstream crude oil and natural gas commodity prices as a result of the global economic downturn," Bruce March, Imperial's chief executive officer, said in a statement.

The company and Exxon are partners in the $8-billion Kearl oil sands project, where Imperial started major construction in the second quarter. They are also developing promising shale gas reserves in the Horn River region of British Columbia.

Exxon said Thursday its third-quarter profit fell 68 per cent to $4.73-billion (U.S.), or 98 cents a share, on lower commodity prices and weak demand for fuel.

Imperial's cash flow fell 57 per cent to $698-million from $1.64-billion.

In its earnings release, Imperial offered no update on the future of the Mackenzie Valley natural gas pipeline after a newspaper report earlier this week said the Canadian government had turned down a series of financial support measures for the $16.2-billion (U.S.) project. Imperial has said that it hasn't been informed of any changes to the federal government's backing for the proposed line, which is still awaiting regulatory approvals.

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The company's net oil and natural gas liquids production averaged 208,000 barrels per day in the quarter, down 1 per cent from a year earlier. Natural gas output rose 19 per cent to 295 million cubic feet per day.

More than half of the company's oil production comes from its Cold Lake thermal oil sands project, where output averaged 116,000 bpd in the quarter, down 1,000 bpd from the year-prior period.

In September Imperial filed amendments to the previously approved Nabiye expansion of Cold Lake, which will add 30,000 barrels a day of capacity and allow the company to access 250 million barrels of reserves.

Imperial's refining and marketing division, which operates four refineries and supplies 1,900 Esso-branded gas stations, made $62-million in the quarter, down 77 per cent from $270-million as the recession cut demand and squeezed margins.

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