02/02/2015 08:16 EST | Updated 04/04/2015 05:59 EDT

Imperial Oil forges ahead with oilsands projects, posts 36% drop in Q4 profits

CALGARY - Despite the steep drop in crude prices in recent months, Imperial Oil Ltd. (TSX:IMO) says it isn't changing its game plan.

The Calgary-based oil producer and refiner aims to start up two major oilsands projects this year: an expansion to its Kearl mine north of Fort McMurray, Alta., and its steam-driven Nabiye project to the south, around Cold Lake, Alta.

"The business environment of the past several months, with the dramatic decline in global crude prices, illustrates the cyclical nature of the oil and gas business. Imperial plans and operates its businesses with a long-term perspective that results in resiliency across a wide range of market conditions," CEO Rich Kruger said in a release Monday.

"Our resiliency is achieved in large part due to our long-life, high-quality assets, integrated business model and ongoing focus on business fundamentals."

For most of 2015 so far, crude has languished below US$50 a barrel, a steep slide from the US$107 a barrel it hit last June.

Kruger said Imperial Oil's will closely monitor and respond to market conditions but its near-term plans remain "largely unchanged."

However, its capital and exploration expenditures will be about 29 per cent lower than in 2014— $4 billion versus $5.65 billion.

The $8.9-billion Kearl expansion mirrors the first phase, with 110,000 barrels a day in capacity. It's slated to start up during the third quarter of this year, months earlier than expected.

Meanwhile, steaming has begun at the $2-billion, 40,000-barrel-per-day Nabiye project near Cold Lake, Alta., with bitumen production expected this quarter.

Imperial reported Monday that its fourth-quarter profit was down 36 per cent compared with a year before, reflecting operational issues as well as the dramatic decline in crude oil prices.

The existing Kearl mine continued to operate below capacity, with output averaging 66,000 barrels per day during the fourth quarter, during which excessive vibration in the ore-crusher unit prompted a precautionary shutdown. Without that outage, Kearl output averaged 87,000 barrels per day.

As well, production from its share of the Syncrude Canada Ltd. mine was down because of increased maintenance activity.

Imperial's net income for the three months ended Dec. 31 was $671 million, or 79 cents per share, down from $1.06 billion or $1.24 per share in the fourth quarter of 2013.

Cash flow from operating activities was $1.1 billion during the fourth quarter, down by about a third from a year earlier. Total revenues were $8 billion versus $8.4 billion.

However, there was not change to Imperial's quarterly dividend of 13 cents per share. The next payout to shareholders is April 1 to shareholders of record as of March 5.

Shares in Imperial, which is majority owned by U.S. energy giant ExxonMobil Corp, were up nearly six per cent at $50.

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