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Imperial Oil beats forecasts despite slight dip in profit

The Imperial Oil refinery in Sarnia, Ont.

JACQUES BOISSINOT/THE CANADIAN PRESS

Imperial Oil Ltd. saw a slight dip in fourth-quarter profit as the Calgary-based energy company felt the impact of transportation constraints that have weighed on the price of Canadian crude.

Imperial, which is majority owned by Houston energy heavyweight ExxonMobil Corp., posted earnings of $1.056-billion, or $1.24 per share.

That was down from last year but beat the average analyst estimate of 92 cents of adjusted earnings and 89 cents per share under standard accounting, according to estimates compiled by Thomson Reuters.

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During the same period a year earlier, Imperial earned $1.076-billion, or $1.26 per share.

Although the price of West Texas Intermediate crude oil, a key U.S. benchmark, rose by 11 per cent during the quarter versus a year earlier, Imperial didn't see much of a benefit.

Delays in building new pipelines, such as the controversial proposal to send Alberta crude to the Texas coast through the Keystone XL pipeline system, have dampened the price of Canadian crude.

Average price realizations for bitumen – the tar-like crude produced in the oilsands – were $53.31 per barrel during the last three months of 2013, versus $55.90 per barrel during the same 2012 quarter as the price gap between heavy and light grades of crude widened.

In an effort to improve market access, Imperial and crude shipper Kinder Morgan are building a crude-by-rail oil terminal in Edmonton that would have an initial capacity of 100,000 barrels per day. Construction is underway and first shipments are expected in 2015.

Imperial's $12.9-billion Kearl oilsands mine started up last year and the ramp-up to full rates is continuing. During the quarter, output averaged 52,000 barrels per day – about half of the 110,000 barrels per day the mine was designed to churn out.

"Production was impacted during the quarter by harsh winter weather and equipment reliability issues that are being addressed. Although gross production rates of 100,000 barrels per day (71,000 Imperial's share) were reached in the quarter, ongoing activities to stabilize performance at these higher levels are progressing," Imperial said in a release.

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Imperial is working on an expansion at Kearl that would add another 110,000 barrels per day. At the end of December, construction was 72 per cent complete and the expansion is on track for a 2015 start-up.

"Lessons learned from the initial development continue to be applied to all aspects of the expansion project," Imperial said in its statement.

Imperial's total quarterly revenue and other income rose to $8.3-billion, up from $7.8-billion in the fourth quarter of 2012.

The company produced the equivalent of 320,000 barrels of oil per day during the fourth quarter, up from 285,000 barrels per day on average a year earlier.

Imperial says the increased production was mostly due to its Kearl oilsands project and the acquisition of a 50 per cent stake in natural gas producer Celtic Exploration Ltd.

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