Bloomberg News

Imperial Says Kearl Oil Sands Sales to Start in Third Quarter

April 25, 2013

Imperial Oil Ltd. (IMO), the second- largest Canadian oil producer, said sales from the C$12.9 billion ($12.6 billion) Kearl oil-sands project are expected to begin in the third quarter.

“Start-up of the initial phase of the Kearl oil-sands project is imminent,” Calgary-based Imperial said in a statement distributed by CNW today. The project, which will have initial output of about 110,000 barrels a day and expand to 345,000, was expected to start late last year. The company has been saying for weeks that production would commence soon.

Imperial has said Kearl will develop 3.2 billion barrels of crude in Alberta’s oil-sands region. The company, 70 percent owned by Exxon Mobil Corp. (XOM:US), on Feb. 1 raised its estimate for initial costs because of “harsh weather” and issues delivering heavy equipment to the site, 70 kilometers (45 miles) north of Fort McMurray. Some Montana residents protested the truck traffic through their state.

“First production was expected in early April,” Michael P. Dunn and Robert J. Fitzmartyn, analysts for FirstEnergy Capital Corp., said in an April 18 research note. “It may be mid-year before first sales occur, as Imperial must first fill storage tanks and the pipeline to the facility.”

The Kearl notice was part of Imperial’s quarterly earnings statement today. The company reported net income fell to C$798 million, or 94 cents a share, from C$1.02 billion, or C$1.19, a year earlier. Excluding one-time items, per-share profit was 1 cent less than the 95-cent average of 12 analysts’ estimates compiled by Bloomberg.

The price of Canadian heavy crude fell 12 percent from a year earlier to average $66.99 a barrel in the quarter, according to data compiled by Bloomberg.

Imperial gained 2.3 percent to C$40.09 at the close in Toronto yesterday. The stock has one sell, five buy and 11 hold recommendations from analysts, according to data compiled by Bloomberg.

Suncor Energy Inc. is the largest Canadian oil producer by market value.

To contact the reporter on this story: Rebecca Penty in Calgary at rpenty@bloomberg.net; Jeremy van Loon in Calgary at jvanloon@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net


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