Imperial Oil Annual Report 2009

FY2009 Annual Report · Imperial Oil

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SUMMARY
ANNUAL
REPORT
2009

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The importance
of energy

ECONOMIC GROWTH AND ENERGY DEMAND ARE INTERTWINED
■ Despite the current economic downturn and even with signiﬁ cant strides in improving
energy efﬁ ciency, global energy demand is projected to be about 30 percent higher in
2030 compared to today’s level.

■ The vast majority of increased demand will occur in developing countries, where
populations, economic activity and improvements in quality of life are growing
most rapidly.

■ The dual challenge is how to meet the world’s growing energy needs while also

reducing the impact of energy use on the environment.

■ Environmentally responsible development and use of all energy resources are

essential to supplying the energy – and supporting the economic growth – that Canada
and the world need.

■ Due to their availability, affordability and versatility, oil and natural gas will continue to

supply about 60 percent of the world’s energy needs over the outlook period.

■ Supplying increasing amounts of oil and natural gas is a long-term proposition that will
require access to resources, large-scale investment, and the development of new
technology to tap frontier energy sources.

Oil and natural gas will continue to supply about 60 percent
of the world’s energy over the next two decades
World energy demand by fuel type – millions of oil-equivalent barrels a day

350

300

250

200

150

100

Other*

Coal

Natural gas

60%

Oil

1970

1980

1990

2000

2010

2020

2030

* Other energy sources include nuclear, hydro, biomass, wind and solar.

Forward-looking statements
This report contains forward-looking information on future production, project start-ups and future capital
spending. Actual results could differ materially as a result of market conditions or changes in law, government
policy, operating conditions, costs, project schedules, operating performance, demand for oil and natural gas,
commercial negotiations or other technical and economic factors.

30%

In 2030, global energy demand will be about
30% higher compared to today’s level.

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Chairman’s letter

Growing responsibly

At Imperial, our primary role is to provide energy responsibly while delivering a superior
return to our shareholders. We fulﬁ ll this role by balancing environmental protection,
economic growth, and social advancement.

The global recession challenged our industry as a whole and further reinforced the
importance of energy to Canada’s economic performance. Imperial responded to the
uncertainty associated with the economic downturn by following our proven approach
of focusing on those elements of the business within our control and taking a long-term
view of development. Our focus on prudent ﬁ nancial management and disciplined capital
investment enabled us to progress several key growth projects in a challenging business
environment, while capitalizing on lower costs and higher productivity. This approach will
continue to reward shareholders.

As a result of these challenging economic times, we generated net income of $1.6 billion,
compared to record earnings of $3.9 billion in 2008. We distributed $833 million to
shareholders through share repurchases and dividends. Over the last ﬁ ve years, we have
distributed more than $10 billion to shareholders.

Despite the challenges and uncertainty, our capital and exploration investments increased
to $2.4 billion. Over the next ﬁ ve years, we expect to invest record amounts – more than
$20 billion – primarily directed to future growth projects to more than double Upstream
production volumes by 2020.

Safety is a priority in everything we do. Our relentless pursuit of a workplace where
Nobody Gets Hurt saw employees and contractors achieve best-ever safety results in
2009. This was an outcome of a signiﬁ cant commitment across the entire organization,
and reﬂ ects Imperial’s focus on operational excellence. We know that our focus on safety
performance requires discipline, commitment and improving the fundamentals of day-to-
day management of the business.

The Kearl oil sands project is central to our growth strategy. It will ultimately produce more
than 300,000 barrels of bitumen a day before royalties, of which our share would be over
210,000 barrels. Phase one of this multi-phase, multi-billion dollar project was approved
by Imperial’s board of directors in May, with ﬁ rst oil from phase one expected in late 2012.
Planning for phase two of Kearl is already underway.

As a company, we are committed to ﬁ nding innovative solutions for delivering reliable and
affordable energy from the oil sands in a responsible manner, building on our track record of
40 years of continuous improvement.

Imperial’s Cold Lake operation produced its one billionth barrel in 2009, a reﬂ ection
of our ongoing commitment to innovation. Over the last four decades, technological
advancements have nearly tripled recovery rates at Cold Lake while signiﬁ cantly reducing
fresh water use and surface land disturbance.

Aside from oil sands projects, the company is advancing a diverse portfolio of high-quality
opportunities including shale gas in northeast British Columbia and natural gas and liquids
from the onshore Mackenzie Delta region. In the offshore, we began an extensive data
collection program to support future exploration in the Beaufort Sea, and we ﬁ nalized plans
for a second exploration well in the Orphan Basin off Canada’s east coast.

All told, our total proved and non-
proved resource base is about 15 billion
oil-equivalent barrels after royalties,
representing more than 150 years of
production at current levels.

All of this energy will be needed. Even
with signiﬁ cant gains in energy efﬁ ciency,
the world’s requirements for energy will
grow by about 30 percent in the next two
decades. Canada’s oil sands resource will
play an increasingly important role in the
global supply picture.

In our Downstream and Chemical
operations, we will continue to focus
on the business elements within our
control while overall product demand
remains soft. These elements include
relentlessly controlling costs, continuing to
improve energy efﬁ ciency and investing in
emissions reduction technology.

Our employees have delivered many
Imperial Oil achievements and they are
the reason the future holds much promise
for the company. We have a talented
workforce dedicated to continuous
improvement. We’re focused on research
and technology development that enables
us to unlock the potential of our resource
base while minimizing environmental
impact. Our employees have a clear
vision of the business and are committed
not only to their results, but also to the
business ethics and standards used to
achieve those results.

We believe that we can have reliable and
affordable energy, a strong economy and a
clean environment, and we’re committed
to making it happen.

Original signed by

Bruce March

Chairman, president and chief executive ofﬁ cer
February 26, 2010

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Imperial Oil Limited 2009 Summary annual report

The Imperial Oil
advantage

We adhere to a proven, consistent strategy that focuses on long-term
growth in shareholder value based on four corporate priorities:
■ target ﬂ awless execution in everything we do
■ grow proﬁ table sales volumes
■ attain best-in-class cost structures in each business
■ improve the productivity of our asset mix

We are developing one of Canada’s leading resource positions
responsibly and safely – balancing the need for energy and economic growth while
addressing environmental risks.

We care for the environment
through responsible operations and development of resources.

We are developing new technologies
improving existing operations, unlocking energy resources, reducing environmental
impacts and improving our products.

We focus on operational excellence
enhancing safety, environmental performance, reliability and efﬁ ciency throughout the company.

We create shareholder value
relentlessly controlling costs and generating superior long-term investment returns.

Significant resource
base
billions of oil-equivalent barrels – 2009

Superior shareholder
returns
percentage

Resource development:
building production volume
thousands of oil-equivalent barrels a day before royalties

Conventional,
including frontier

In-situ oil sands

Minable oil sands

Net production
Proved reserves (a)
Non-proved resources (b)

■ Signiﬁ cant resource base of nearly
15 billion oil-equivalent barrels.

■ Proved reserves life index of

greater than 25 years.

■ Non-proved resources of more
than 12 billion oil-equivalent
barrels, of which more than
10 billion barrels are oil sands.

750

600

450

300

150

5 year

10 year

20 year

2009

2020

Imperial Oil
S&P/TSX Composite Index
S&P/TSX Composite Energy Index

Source: Bloomberg and TMX -
annualized returns to December 31, 2009

Conventional
Cold Lake
Syncrude
Kearl
Athabasca
Development natural gas
Other opportunities

(a)

Reserves estimates based on the average ﬁ rst-day-of-the-month price for each month during the
last 12-month period ending December 31.

(b) Pursuant to National Instrument 51-101 disclosure guidelines, and using Canadian Oil and Gas

Evaluation Handbook deﬁ nitions, Imperial’s non-proved resources are classiﬁ ed as a “contingent
resource.” Such resources are a best estimate of the company’s net interest after royalties at year-
end 2009, as determined by Imperial’s internal qualiﬁ ed reserves evaluator. Contingent resources are
considered to be potentially recoverable from known accumulations using established technology or
technology under development, but are currently not considered to be commercially recoverable due
to one or more contingencies. There is no certainty that it will be economically viable or technically
feasible to produce any portion of the resource. See discussion on pages 8-12 in the Upstream
section for additional information on components of the contingent resource base, including
undeveloped oil sands acreage and the Mackenzie natural gas project.

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CHAIRMAN’S LETTER || YEAR IN REVIEW || UPSTREAM | CHEMICAL | DOWNSTREAM | FINANCIAL SUMMARY

Growing responsibly at
Cold Lake
Cold Lake

Our Cold Lake operation produced its one billionth barrel in October, the only in-situ operation
in Canada to have achieved this milestone. This success represents 40 years of perseverance,
a commitment to research and development of new technologies, and continuous improvement
across every facet of the operation.

When we purchased the Cold Lake leases decades ago, the technology to produce the
resource economically did not exist.

We challenged our research teams to devise new recovery technologies that would reduce
costs while minimizing environmental impacts, and they responded by developing and patenting
cyclic steam stimulation in 1966 and steam-assisted gravity drainage in 1982, two processes
that have underpinned the development of in-situ oil sands in Canada.

To reduce costs and optimize development, our engineers designed a long-term, phased
approach to growth. This was a departure from the megaproject convention of the time, but
paced development provided the platform for responsible growth that continues today. It
enabled us to improve every step of the way – continuously investing in research and steadily
reducing the environmental footprint of our operations.

To reduce the surface footprint of the thousands of wells required for an expanding commercial
operation, we developed the megapad approach. It employs multiple wells drilled from a single
surface location, enabling a smaller footprint, more efﬁ cient resource recovery, reduced
development costs and improved economics. Application of improvements to drilling and
recovery technology for our next expansion will reduce the number of well pads required to
access the resource, and as a result will reduce the associated surface disturbance by more
than 40 percent.

From the outset, Imperial also recognized the need to reduce fresh water requirements.
We pioneered water recycling techniques at Cold Lake, and through application of these
technologies, fresh water requirements have dropped to about half a barrel for each barrel
of bitumen produced. This is 88 percent less fresh water per unit of production than in the
mid-1970s. Today, the operation recycles about 95 percent of the produced water that
is recovered with the oil. Research and ﬁ eld pilots are ongoing to develop new solvent-based
techniques to reduce the amount of steam required to recover the bitumen.

Our model of continuous improvement
extends to working with communities as
well. Over the years we have consulted
with neighbours through each phase of
development, acting on their concerns and
integrating that knowledge into future work.
The Imperial Native Network was established
with employees of Aboriginal descent to
raise awareness about Aboriginal people
and create stronger relationships with the
region’s First Nations and Métis communities.

Cold Lake has grown to become Imperial’s
largest single source of production.
Technological advancements have nearly
tripled recovery rates while reducing fresh
water use and surface land disturbance.
Our cogeneration facilities reduce carbon
dioxide emissions by 40 percent compared
with generating electricity from coal-ﬁ red
power plants and producing steam from
conventional boilers. In addition, the cost of
producing a barrel of oil has been reduced
by about one-third. Looking to the future,
Imperial’s research effort continues with
pilot operations that are testing methods
to further enhance resource recovery
efﬁ ciency.

We are committed to continuous
improvement across all facets of the
Cold Lake operation and the responsible
development of Canada’s oil sands.

“ Since Imperial set up operations at Cold Lake, they’ve

been committed to creating a strong community with a
solid economic base. We look forward to strengthening
our relationship with Imperial as they grow their operation.
Together we’re building a brighter future for the region.”
Craig Copeland, Mayor, Cold Lake, Alberta

Cold Lake

is the world’s largest thermal in-situ
heavy oil operation.

Imperial’s megapad approach
involves drilling multiple wells
from centralized pads and
minimizing surface disturbance.

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Imperial Oil Limited 2009 Summary annual report

2009 Year in review
Operating highlights

SAFETY AND ENVIRONMENT
■ Achieved best-ever safety results for both employees and contractors.

■ Capital and operating expenditures for environmental protection totaled about $770 million.

■ Updated plans for the Cold Lake Nabiye expansion include technology to reduce

sulphur dioxide emissions, a cogeneration facility to improve energy efﬁ ciency, and
fewer well pads. The reduction in the number of well pads required to access the
resource will reduce surface disturbance by more than 40 percent.

■ Continued construction of a ﬁ sh habitat compensation lake at the Kearl oil sands site.

■ Advanced work on projects to reduce sulphur dioxide emissions at the Sarnia

manufacturing site and Dartmouth reﬁ nery.

■ Advanced use of optical imaging equipment to better detect and reduce fugitive

emissions at reﬁ neries and chemical plants.

■ Continued construction of additional facilities at the Sarnia site that will improve its

capacity to capture and store water runoff during periods of high rainfall.

■ Trained 180 managers and supervisors in environmental leadership to support our

focus: “Protect Tomorrow. Today.”

ADVANCED MAJOR PROJECTS AND NEW OPPORTUNITIES
■ Continued phase one construction of the Kearl project with a workforce of about 2,500
employees and contractors and a cumulative investment of about $2 billion by year-end,
of which Imperial’s share was about $1.5 billion.

■ Added 155 million barrels to Imperial’s net proved reserves through further evaluation of

geologic data for phase one of Kearl.

■ Completed a four-well winter exploration drilling program at the Horn River shale gas play

in northeast British Columbia. Work is underway on a production pilot to evaluate
reservoir productivity and scale, improve completion practices and evaluate opportunities
to reduce program costs.

■ Progressed planning and design work at the Cold Lake Nabiye expansion that has the

potential to add 30,000 barrels of production a day.

■ Completed injection at 10 Cold Lake well pads with Liquid Addition to Steam to Enhance
Recovery (LASER). This technology enables more resource to be recovered from mature
wells, resulting in environmental and economic beneﬁ ts. Production from these wells is
ongoing. LASER is the result of over a decade of research and piloting. This technology
entered its ﬁ rst phase of commercialization in 2009, and research continues to reﬁ ne
LASER for future phases of implementation.

Best-ever

safety performance in 2009.

Making sure our employees and
contractors work in an environment
where Nobody Gets Hurt remains a top
priority. The 280,000-hour Horn River
2008/09 winter drilling program achieved
zero recordable safety incidents.

■ Utilized our strong balance sheet to
acquire oil sands mining leases with
ExxonMobil Canada (50-50 interest)
totaling a combined 16,600 net acres in
Alberta’s Athabasca region. The new
leases are adjacent to existing
undeveloped oil sands acreage held by
Imperial in the area.

■ The Joint Review Panel released its
report on the environmental, social
and cultural impacts of the Mackenzie
natural gas project, with the ﬁ nal
regulatory decision expected in
September 2010 from the National
Energy Board.

■ Finalized plans with co-venturers for
a second exploration well in the
Orphan Basin, located off the east
coast of Newfoundland.

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CORPORATE CITIZENSHIP
■ Continued the company’s long
tradition of contributing to the
communities where it operates
by creating jobs and investing in
community initiatives. Imperial’s
funding in this area totaled more
than $22 million in 2009.

■ Special contributions included a
$1-million commitment to the
University of Calgary’s School of
Public Policy, an $8-million aircraft
to the Southern Alberta Institute of
Technology for use in its School of
Transportation’s aircraft maintenance,
avionics and structures programs, and
more than $2 million toward math and
science programs across Canada.

■ Committed $2.5 million to support
the creation of a national Aboriginal
women’s leadership program.
Imperial’s newly developed Aboriginal
employee network is helping to
promote this initiative.

■ Imperial’s campaign from employees

and retirees raised a record amount for
United Way-Centraide.

■ Hired over 400 employees.

■ For more information, please see

Imperial’s corporate citizenship report
at www.imperialoil.ca.

RESERVES GROWTH AND VOLUME PERFORMANCE
■ Increased proved reserves after royalties from 2.3 billion oil-equivalent barrels at year-

end 2008 to more than 2.5 billion oil-equivalent barrels at year-end 2009.

■ Daily production of crude oil, natural gas and natural gas liquids averaged 293,000 oil-

equivalent barrels a day before royalties.

■ Net petroleum product sales volumes averaged 409,000 barrels a day.

RESEARCH AND DEVELOPMENT
■ Total research expenditures in Canada were $78 million in 2009 and through its

relationship with ExxonMobil, Imperial had access to more than $1 billion of industry-
leading research worldwide.

■ At Imperial’s Calgary Research Centre, several innovative research projects are being

pursued for in-situ oil sands production:

■

Solvent-Assisted Steam-Assisted Gravity Drainage (SA-SAGD) adds solvent to the steaming
process. This improves recovery, lowers energy intensity and decreases greenhouse gas
emissions intensity. Imperial’s Cold Lake pilot of this technology was selected to be eligible
for royalty credit under Alberta Energy’s Innovative Energy Technologies Program. The
program recognizes projects that use innovative technologies to increase recovery from
existing reserves and encourage responsible development of oil, natural gas and in-situ
oil sands.

Continuous Steam Flooding (CSF) improves resource recovery and reduces greenhouse gas
emissions intensity in mature areas of Cold Lake. Imperial continues piloting this technology
and is assessing further application of CSF in other parts of Cold Lake operations.

Cyclic Solvent Process (CSP) is a recovery technology that uses solvent instead of steam and
could signiﬁ cantly reduce greenhouse gas emissions. Analysis of ﬁ eld trial results is underway.

■ In the area of oil sands mining, Imperial’s Calgary Research Centre has been

advancing research studies and laboratory experiments on a non-aqueous bitumen
extraction technology. This technology has the potential to signiﬁ cantly reduce water
use and the size of tailings ponds with the production of dry stackable tailings.

■ The Imperial Oil-Alberta Ingenuity Centre for Oil Sands Innovation research portfolio
continued to grow and now engages researchers from ﬁ ve Canadian universities.
The research portfolio comprises over 20 research projects in ﬁ ve key program areas
aimed at the responsible development of Alberta’s oil sands and improved
environmental performance.

■ Through Imperial’s Sarnia Research Centre, the company is developing new and

improved products and processes, including bio-fuels designed to meet the rigours
of the Canadian environment, improved hydroprocessing technologies to maximize
on-road diesel production and enhanced soil remediation processes. The centre
recently assumed the role of the advanced technical support lab for ExxonMobil’s
global lubricants and specialties business.

Giovanna Stea, a research technologist at
Imperial’s Calgary Research Centre,
is looking at ways to improve the responsible
development of Alberta’s oil sands.

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Imperial Oil Limited 2009 Summary annual report

Net income
millions of dollars

Return on capital
employed (ROCE)
percent

50 %

2005

2006

2007

2008

2009

Imperial Oil ROCE
Canadian integrated oil companies ROCE
Net income

Source: Bloomberg and quarterly reports

2009 Year in review
Financial highlights

■ Achieved earnings of $1.6 billion or $1.84 per share.

■ Achieved an industry-leading return on capital employed (ROCE) of 17 percent.

ROCE is a key measure of success in a capital-intensive industry, to both evaluate
management’s performance and demonstrate to shareholders that capital has been
used wisely over the long term.

■ Annual per-share dividends paid increased for the 15th year in a row.

■ Distributed $833 million to shareholders through dividend payments of $341 million
and share repurchases of $492 million. With increases in capital expenditures during
2009 and anticipated in future years, Imperial did not make any signiﬁ cant share
repurchases after the second quarter of 2009, consistent with its view that the ﬁ rst
and best use of surplus cash is to invest in quality growth projects.

■ Sustained a strong balance sheet. Debt as a percentage of total capital was at two
percent at year-end, and interest coverage was 276 times on an earnings basis.
Imperial’s strong ﬁ nancial position enables it to advance business plans in challenging
economic times.

4 000

3 500

3 000

2 500

2 000

1 500

1 000

500

FINANCIAL HIGHLIGHTS

millions of dollars

Operating revenues (a)
Net income
Cash ﬂ ow from operating activities
and asset sales (b)
Cash and cash equivalents at year-end
Total debt at year-end
Average capital employed (c)
Capital and exploration expenditures

2009
21 292
1 579

2008
31 240
3 878

2007
25 069
3 188

2006
24 505
3 044

2005
27 797
2 600

1 658
513
140
9 432
2 438

4 535
1 974
143
8 684
1 363

3 905
1 208
146
8 509
978

3 799
2 158
1 437
8 515
1 209

3 891
1 661
1 439
7 976
1 475

(a) Operating revenues include $4,894 million for 2005 for purchases/sales contracts with the same counterparty.
Associated costs were included in purchases of crude oil and products. Effective January 1, 2006, these
purchases/sales were recorded on a net basis.

(b) The deﬁ nition of cash ﬂ ow from operating activities and asset sales can be found on page 23.
(c) The deﬁ nition of average capital employed can be found on page 23.

KEY FINANCIAL RATIOS

Net income per share – diluted (dollars) (a)
Return on average capital employed

(percent) (b)

Return on average shareholders’ equity

(percent) (c)

Annual shareholders’ return (percent) (d)
Debt to capital (percent) (e)

2009
1.84

16.8

17.1
0.2
2

2008
4.36

44.7

45.7
(24.3)
2

2007
3.41

37.7

41.6
28.0
2

2006
3.11

35.9

43.4
12.5
17

2005
2.53

32.6

40.2
64.0
18

(a) Calculated by reference to the average number of shares outstanding, weighted monthly (page 22).
(b) The deﬁ nition of return on average capital employed can be found on page 23.
(c) Net income divided by average shareholders’ equity (page 20).
(d) Includes share appreciation and dividends.
(e) Current and long-term portions of debt (page 20) and the company’s share of equity company debt,

divided by debt and shareholders’ equity (page 20).

$1.6 billion

in net income, return on capital employed of 17%.

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Capital and exploration
expenditures
millions of dollars

2006

2007

2008

2009

2010
plan

3 500

3 000

2 500

2 000

1 500

1 000

500

■ Maintained a “AAA” rating from Standard & Poor’s – Imperial is the only Canadian

industrial company with this rating.

■ Imperial does not use derivatives, hedging or other special-purpose ﬁ nancial instruments.

■ Continued a long history of productivity improvement and prudent cost management.

Since 1999, Imperial has offset inﬂ ation in overhead, with total overhead costs
unchanged over that time frame.

■ Continued to follow a disciplined approach to identifying and managing ﬁ nancial and
business control risks. Company-wide bad debt losses were less than one-tenth of
one percent of revenues despite challenging economic conditions.

■ Completed a $2.4-billion capital and exploration program focused on advancing major

Upstream projects as well as investments in environmental initiatives and retail
network enhancements.

■ Planned capital and exploration expenditures in 2010 are $3.2 billion, up 33 percent

from 2009, as Imperial focuses on future volume growth and productivity improvements.

■ Entered into a ﬂ oating rate loan agreement with ExxonMobil that provides for

borrowings of up to $5 billion at interest equivalent to Canadian market rates. This
facility will enable Imperial to efﬁ ciently access funds as necessary in the future.
The company did not draw from the loan in 2009.

Capital investment in the retail business focused on upgrades to the company-owned
network in major urban markets.

800 million

Number of barrels Phase one has added to proved reserves

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Imperial Oil Limited 2009 Summary annual report

Development planning is underway for
all major portions of the resource base,
with plans to more than double Upstream
production volumes by 2020.

Imperial’s portfolio of opportunities to add
future reserves and production includes:

■ future phases of Kearl, Cold Lake

and Syncrude

■ oil sands development in the

Athabasca area

■ unconventional shale gas in northeast

British Columbia

■ natural gas and liquids from the
onshore Mackenzie Delta region

■ hydrocarbons from the Beaufort Sea
and the Orphan Basin off Canada’s
east coast

Upstream

Bringing new energy supplies to market
responsibly and profitably

Imperial’s Upstream strategies are to identify and pursue all attractive exploration
opportunities, invest in projects that deliver superior returns, and maximize the proﬁ tability
of existing oil and gas production. These strategies are underpinned by a commitment to
the development and use of innovative technologies and continuous improvement in all
the company’s operations.

Contractor safety performance was best-ever in 2009. This achievement is the result
of our ongoing commitment to a broad range of safety initiatives focused on building
relationships and working more closely with contractors.

The business generated earnings of $1,324 million, cash ﬂ ow from operating activities and
asset sales of $997 million and return on average capital employed of 23 percent.

Daily production of crude oil, natural gas and natural gas liquids averaged 293,000
oil-equivalent barrels a day before royalties.

Capital and exploration spending in the Upstream totaled $2.2 billion in 2009, with
about $2.9 billion planned in 2010, driven by selective investment in a strong portfolio
of development projects for production growth, an active exploration program for future
reserve additions, and continued investment to maximize the value of existing assets.

THE RESOURCE BASE
Production from existing assets is signiﬁ cant, but small in comparison to the company’s
resource potential.

The total proved and non-proved resource base is about 15 billion oil-equivalent barrels
after royalties, representing more than 150 years of production at current levels – a leading
position in terms of size and quality. The resource base includes about 2.5 billion oil-
equivalent barrels of proved reserves. This includes the addition of 155 million barrels in
2009 through further evaluation of geologic data for phase one of Kearl. The resource base
also has more than 12 billion oil-equivalent barrels of non-proved resources, which consist
primarily of oil sands.

AT A GLANCE

Net income (millions of dollars)
Cash ﬂ ow from operating activities and
asset sales (millions of dollars)
Gross crude oil and NGL production

(thousands of barrels a day)

Gross natural gas production

(millions of cubic feet a day)

Average capital employed (millions of dollars)
Return on average capital employed

(percent)

Capital and exploration expenditures

(millions of dollars)

2009
1 324

2008
2 923

2007
2 369

2006
2 376

2005
2 008

997

3 712

2 661

3 151

2 805

244

256

275

272

261

295
5 798

310
4 526

458
4 258

556
3 993

580
3 928

22.8

64.6

55.6

59.5

51.1

2 167

1 110

744

787

937

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Crude oil and NGL
production by source
thousands of barrels a day before royalties

2005

2006

2007

2008

2009

Syncrude
Cold Lake
Conventional and NGLs

Natural gas production
millions of cubic feet a day before royalties

2005

2006

2007

2008

2009

300

200

100

600

500

400

300

200

100

OIL SANDS
As conventional oil resources become
more difﬁ cult to develop globally, demand
for unconventional resources will increase.
Canada holds the world’s largest reserves
of oil sands. This resource represents
a national opportunity, but there are
challenges to bringing the resource to
market efﬁ ciently and in an environmentally
responsible manner. As an oil sands
pioneer, Imperial is using its technological
and operational expertise to overcome
these challenges.

Cold Lake
Cold Lake is the world’s largest thermal
in-situ heavy oil operation, representing
more than four percent of Canada’s
total oil production. Proved reserves are
about 700 million barrels after royalties,
which translates to more than 15 years of
production at current rates. Cold Lake’s
non-proved resources are more than two
billion barrels.

Production averaged 141,000 barrels a
day before royalties for the year – down
from 147,000 barrels a day in 2008. Lower
production volumes were due to the cyclic
nature of production and well repairs in
the northern part of the ﬁ eld. Drilling and
steaming activities have since resumed
in this area, and production is expected to
return to normal levels.

Imperial continued to test and advance
recovery technologies that enable more
production while lowering greenhouse gas
emission intensity.

Work on the Nabiye expansion continued,
and when sanctioned, could add about
30,000 barrels a day of production.
Imperial’s proposed amendments will result
in improved energy efﬁ ciency with the
addition of a cogeneration facility. Nabiye
has the potential to access 250 million
barrels of previously undeveloped resource
at Cold Lake.

Syncrude
Imperial holds a 25-percent interest in
Syncrude, an integrated mining, extraction
and upgrading facility located north of
Fort McMurray, Alberta. Syncrude has
proved reserves of about 2.8 billion
barrels of synthetic crude oil after
royalties, translating into about 30 years
of production at current rates. Syncrude’s
non-proved resources are more than nine
billion barrels of synthetic crude oil.

Imperial’s share of production averaged
70,000 barrels a day before royalties –
down from 72,000 barrels a day in 2008.
Planned maintenance activities in the
ﬁ rst half of 2009, which included design
modiﬁ cations to improve long-term
operational performance, contributed to the
reduced production for the full year in 2009.

Production from Syncrude represents about
nine percent of Canadian oil production
and offers strong opportunities for future
growth, including mine expansion projects
as well as the continued de-bottlenecking
of the existing upgrader operation.

Imperial and ExxonMobil continue to
contribute expertise in a number of
areas through the Management Services
Agreement, which was implemented in
2007. These include sharing of operating
best practices, capital efﬁ ciency,
engineering, procurement and major
project management.

Double by 2020

Plans are in place to more than double Upstream production volumes by 2020.

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Imperial Oil Limited 2009 Summary annual report

Kearl
The ﬁ rst phase of the Kearl oil sands mining
project was approved when most in the
industry were suspending or cancelling
their projects. Imperial expects to capture
signiﬁ cant cost savings through higher
construction productivity.

Construction of phase one is well
underway, and we are applying 40 years
of oil sands experience and project
management expertise to a project with
a total estimated recoverable resource
of 4.6 billion barrels of bitumen before
royalties – in which Imperial holds a
71-percent interest.

The ﬁ rst phase of Kearl will cost about
$8 billion and initially produce about
110,000 barrels of bitumen a day before
royalties, of which Imperial’s share would
be about 78,000 barrels a day. Production
is expected in late 2012.

The project has an estimated lifespan of
more than 40 years, and will ultimately
produce over 300,000 barrels of bitumen
a day before royalties.

Located north of Fort McMurray, Kearl is a
long-life opportunity that represents one of
the best undeveloped deposits of minable
oil sands in the region. Ore grade and the
quantity of bitumen that can be produced

for a given volume of mined material are
better than other undeveloped leases,
providing the project with an inherent
cost advantage.

To access this high-quality resource,
Imperial will employ proven technologies
such as truck and shovel mining and
hydro transport. The company will also
apply innovative new technology – like
its proprietary parafﬁ nic froth treatment
process – the ﬁ rst commercial technology
for mined bitumen that makes a product
that meets both pipeline shipping
speciﬁ cations and reﬁ nery quality
requirements. Processing bitumen once,
rather than twice (in an upgrader and a
reﬁ nery), reduces both carbon dioxide
emissions and development costs.

NET PROVED DEVELOPED AND UNDEVELOPED RESERVES (a) (b)

year ended

2005 (e)
2006 (e)
2007 (e)
2008 (e)
2009 (e)

Liquids (c)

Natural gas

Synthetic oil
(Syncrude)

Bitumen
(Cold Lake
and Kearl)

Total oil-
equivalent
basis (d)

millions of barrels

billions of cubic feet

millions of barrels

83
71
82
64
63

747
710
635
593
590

738
718
694
734
691

551
741
717
1 437
1 661

1 497
1 648
1 599
2 334
2 513

(a)

Net reserves are the company’s share of reserves after deducting the shares of mineral owners or governments or both. All
reported reserves are located in Canada.

(b) Prior to 2009, synthetic oil and mined bitumen reserves were reported separately as mining reserves in the company’s Form 10-K.
In 2008, the company reported for the ﬁ rst time 807 million barrels of mined bitumen reserves, net share, from the Kearl project.

(c) Liquids include crude, condensate and natural gas liquids (NGLs).
(d) Gas converted to oil-equivalent at six million cubic feet per one thousand barrels.
(e) Reserves were calculated based upon the SEC’s pricing requirement. Beginning with 2009 year-end, reserves were calculated

based on the amended SEC’s pricing requirement that applied the average of the ﬁ rst-day-of-the-month price for each month during
the last 12-month period.

The Kearl oil sands project was signiﬁ cantly
advanced in 2009. Imperial is committed to
developing the project responsibly through
new technology, operational excellence, and
ongoing consultation with stakeholders.

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In 2009, pipeline transportation was
secured, infrastructure construction
continued and more than half of the
detailed engineering work was completed.
Imperial also continued work on building a
lake that fulﬁ lls its commitment to replace
ﬁ sh habitat – by a two-to-one ratio – that
will be lost due to construction and mining
activities.

In 2010, construction activities will
focus on the water intake facility, the ore
preparation plant and the main processing
plant site. Delivery of plant modules will
also begin. Planning for phase two of Kearl
is already underway.

FUTURE GROWTH OPPORTUNITIES
Horn River
The Horn River Basin, one of North
America’s most promising shale gas plays,
is located in northeast British Columbia. In
2009, Imperial utilized its strong balance
sheet to acquire about 157,000 net acres
with ExxonMobil Canada (50-50 interest) at
favourable prices. This brings the combined
companies’ position to 309,000 net acres –
industry’s largest acreage position in
the area.

Signiﬁ cant advances in horizontal drilling
and fracturing technology have made
development of this resource possible.
A four-well winter drilling program designed
to determine shale gas resource distribution
and quality was completed in the ﬁ rst
quarter of 2009, and work is underway
on a production pilot to evaluate reservoir
productivity and scale, improve completion
practices and evaluate opportunities
to reduce program costs. A second
exploration program commenced in the
fourth quarter of 2009 that is expected to
see up to 11 shale gas wells drilled
this winter.

The companies continue to work closely
with area producers, local stakeholders,
and the British Columbia government
to engage on local issues related to
land and water use, contracting and
economic development.

Undeveloped oil sands acreage
Imperial holds extensive undeveloped
acreage with promising mining and in-
situ development opportunities in the
Athabasca region of Alberta. In 2009,
Imperial and ExxonMobil Canada (50-50
interest) acquired a combined 16,600 net
acres of additional leases located next to
their existing acreage position.

Mackenzie natural gas project
Even with the potential for signiﬁ cant
growth in North American shale gas and
other unconventional gas sources, new
supplies from the Mackenzie Delta and
other Arctic frontier resources will be
needed to meet growing North American
demands for natural gas.

The proposed Mackenzie natural gas
project would create the infrastructure to
bring an estimated six trillion cubic feet
of onshore natural gas to North American
markets from three ﬁ elds, with the Taglu
ﬁ eld (100-percent Imperial) containing
resources of three trillion cubic feet alone.

The project represents a signiﬁ cant, vital
new supply source for the North American
market. It will provide employment and
business opportunities to the people of
the North, billions of dollars in royalties,
taxes and other revenues to governments
as well as helping to establish Canada’s
sovereignty in the Arctic.

Exploration drilling continued in the
Horn River Basin, a promising shale
gas area in northern British Columbia.
Imperial and ExxonMobil Canada hold
industry’s largest acreage position in
the basin.

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Imperial Oil Limited 2009 Summary annual report

The Joint Review Panel issued its report
on the environmental, social and cultural
impacts of the Mackenzie natural gas
project at year-end. The panel concluded
that the project “offers a unique
opportunity to build a sustainable future in
the Mackenzie Valley and Beaufort Delta
regions.”

Current activities are focused on advancing
the regulatory process, ﬁ nalizing remaining
beneﬁ ts and access agreements with
Aboriginal communities along the proposed
pipeline route, and establishing a ﬁ scal
framework with the federal government.

The project cannot commence without
regulatory approval. The National Energy
Board (NEB) and federal government
are currently reviewing the Joint Review
Panel’s report. The NEB will then complete
its public hearings and issue its decision
on the project, which is expected in
September 2010.

OFFSHORE EXPLORATION
In addition to advancing oil sands and
gas-related projects, Imperial continued
to explore for major discoveries, including
opportunities located in remote and
technically challenging areas.

Beaufort Sea
About 180 kilometres northwest of
Tuktoyaktuk, Northwest Territories, in the
Beaufort Sea, Imperial and ExxonMobil
Canada (50-50 interest) hold a multi-year
exploration licence covering more than
500,000 acres.

In 2009, Imperial began a data collection
program to support environmental
studies and safe future exploration
drilling operations. Joint research was
also conducted with Cornell University
on whale acoustic monitoring and with
the Department of Fisheries and Oceans,
Geological Survey of Canada and ArcticNet
on the physical and biological environment.

Orphan Basin
The Orphan Basin, located about
400 kilometres northeast of St. John’s,
Newfoundland, is a relatively unexplored
and operationally challenging area to drill.
Imperial holds a 15-percent interest in
4.2 million acres in this deepwater
frontier area.

The ﬁ rst exploration well was drilled in
2007, and a second well has been approved
by co-venturers for drilling in 2010.

CONVENTIONAL PRODUCTION
Imperial remains a large domestic producer
of conventional crude oil and natural gas.
Production before royalties averaged about
33,000 barrels a day of crude oil and natural
gas liquids, and about 295 million cubic feet
a day of natural gas, for a combined total of
approximately 82,000 oil-equivalent barrels
a day.

Western Canada
Conventional production in Western
Canada is at a mature stage. To help ensure
proﬁ tability, Imperial focuses on cost
control, maximizing production of existing
assets, and pursuing projects with the
potential for attractive returns. In 2009,
these included new drilling at Norman
Wells in the Northwest Territories and the
ongoing shallow gas drilling program in
southeastern Alberta.

Imperial’s operation in Norman Wells,
Northwest Territories, is the company’s
largest source of conventional oil
production.

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Chemical

Imperial is one of Canada’s leading producers of chemical
products, with the largest market share in North America
for polyethylene used in rotational molding

The Chemical business operates in a competitive global marketplace that is highly cyclical.

Through the current down cycle, the Chemical segment has focused on the key elements
of the business within its control. It is expanding feedstock ﬂ exibility to lower costs and
increase yields. The ability to process feedstocks from diverse sources enables the business
to quickly respond to changes in feedstock quality, availability, and cost. Feedstock ﬂ exibility
not only captures additional value, it strengthens the Chemical segment’s ability to reliably
meet its customers’ needs in any economic environment.

To help ensure proﬁ table operations throughout the entire business cycle, the Chemical
business also continues to integrate petrochemical manufacturing with reﬁ nery operations.
Integration enables feedstocks and production to be adjusted to current market conditions
– and reduces costs by sharing management, leveraging common site infrastructure and
efﬁ ciently managing energy needs across the site.

The Chemical segment’s operational performance in 2009 was characterized by strong
safety results and solid manufacturing reliability. Proven business controls, including
sustained application of stringent credit management practices, supported ﬁ nancial results
in a challenging economic environment.

These initiatives helped the Chemical business retain a leadership position in both cost
and productivity.

Chemical net earnings were $46 million, down from $100 million in 2008, reﬂ ecting
declines in both customer demand and margins.

Return on average capital employed was
27 percent, and cash ﬂ ow from operating
activities and asset sales totaled
$67 million.

Total sales of petrochemical products
were about 2,800 tonnes a day,
consistent with 2008, despite the
economic downturn.

Capital expenditures of $15 million
in 2009 were primarily focused on
continued investments to increase
feedstock ﬂ exibility and further upgrade
water management and safety systems.

Planned capital expenditures in 2010
are about $20 million, and will include
completion of the feedstock ﬂ exibility
project and continued investment in
energy efﬁ ciency initiatives and water
management system enhancements.

AT A GLANCE

Net income (millions of dollars)
Cash ﬂ ow from operating activities and
asset sales (millions of dollars)
Chemical sales volumes
(thousands of tonnes a day)

Average capital employed (millions of dollars)
Return on average capital employed

(percent)

Capital expenditures (millions of dollars)

2009
46

2.8
169

27.2
15

2008
100

183

2.8
199

50.4
13

2007
97

109

3.1
230

42.2
11

2006
143

162

3.0
261

54.8
13

2005
121

3.0
272

44.6
19

Typical end uses of Imperial’s
polyethylene production include
food packaging, toys, pails and
various other containers.

800 million

Chemical uses the Responsible Care® ethic and principles in all areas of the business.
Over the past year, Imperial has been active in the upgrade of the program to stay
current with public expectations.
Number of barrels Phase one has added to proved reserves

Responsible Care is a registered trademark of the Chemistry Industry Association of Canada.

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Imperial Oil Limited 2009 Summary annual report

Downstream

A responsible operator improving operational excellence,
committed to long-term shareholder value

Markets for reﬁ ned products in Canada are mature and highly competitive. In this
environment, the Downstream’s goals continue to be best-in-class operations, providing
quality products and services, and achieving operational excellence through a sustained
focus on:

■ Maintaining high standards of operating reliability to supply energy in a

safe, environmentally responsible and efﬁ cient manner. This includes actions
at reﬁ neries to further improve reﬁ nery reliability and energy efﬁ ciency to reduce
greenhouse gas emissions and operating costs while meeting market demand for
products.

■ Adhering to stringent business standards and ﬁ nancial controls. The business
follows a disciplined approach to identify and manage ﬁ nancial and business control
risks. Even in the current economic downturn, bad debt losses have been kept to less
than one-tenth of one percent of sales revenues.

■ Disciplined and selective investments for advantaged returns followed by efﬁ cient

project execution to ensure projects are completed on time and on budget.

Adherence to these strategies continues to build competitive advantage across Imperial’s
considerable Downstream operations:

■ Largest reﬁ ner and a leading marketer of petroleum products in Canada, holding a

signiﬁ cant share in all major petroleum product market sectors, including retail motor
fuels and ﬁ nished lubricants.

■ Crude processing capacity of more than 500,000 barrels a day and conversion capacity

of 215,000 barrels a day.

■ Production of more than 650 different petroleum products that consumers and

businesses use daily.

■ Reﬁ ning and marketing operations across Canada.

■ A national distribution network and about 1,850 retail service stations.

■ Serving retail customers and distributors in addition to the mining, manufacturing,

forestry, construction and transportation industries.

In 2009, the Downstream achieved industry-leading safety performance, with best-ever
employee and contractor safety.

In this challenging economic environment, the reﬁ ning business focused on operational
initiatives to improve energy efﬁ ciency, optimize margins and enhance operating
reliability. Ongoing capital and operational initiatives have enabled the business to capture
opportunities to reduce the amount of energy used in its operations, a key contributor to
cost management. Imperial has consistently outpaced Canadian industry in reﬁ nery energy
efﬁ ciency and total unit cost. Also in 2009, the business continued to optimize margins by
expanding the crude slate, with the addition of 13 new crudes that offer a higher reﬁ ning
incentive. The product mix was managed to ensure that the highest-value products
were produced. As well, reﬁ nery reliability was signiﬁ cantly improved, and maintenance
activities were completed as planned.

The fuels marketing business continued
to leverage the complete range of
customer channels, serving retail,
industrial, wholesale, aviation and marine
customers during the year. Despite
the weak economy, the retail business
achieved numerous sales records. Total
retail fuel sales volume was the highest
in the history of the business. In the
company-owned chain, same-store fuel
sales increased by one percent in a soft
market, and site productivity increased
by four percent. In addition, convenience
store sales revenues saw best-ever
levels. The sales growth, combined with a
relentless focus on operational efﬁ ciency,
led to best-in-class unit cash costs again
in 2009.

The lubricants and specialties business
continued to focus on growing sales of
Mobil-branded products. Imperial is the
Canadian distributor for Mobil 1 synthetic
lubricants, and in 2009 Mobil 1 sales
grew by 17 percent. Also in the year,
Mobil Delvac 1 ESP 0W40 was
introduced, providing heavy-duty diesel
engine customers with superior low-
temperature performance, longer oil drain
intervals and improved fuel economy. The
Mobil 1 Lube Express franchise continued
to be expanded, ending the year with 21
outlets – an increase of more than
60 percent over 2008.

About 400 Esso-branded retail sites are anchored by On the Run convenience
stores, which offer customers a convenient shopping experience and high-
quality product choices. The On the Run franchise program is a growing part of
the convenience store business and in 2009, we more than doubled the number
of On the Run franchises. The retail offer also includes Canada’s largest network
of car washes and strong alliances with Tim Hortons, Royal Bank of Canada,
and Aeroplan.

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Heading

Sub heading

Net earnings in the Downstream were
body
$278 million, down from $796 million in
2008, when Imperial realized a gain of
$187 million from the sale of Rainbow Pipe
Line Company Ltd. Earnings were impacted
by lower overall margins and decreased
sales volumes due to the slowdown in the
Canadian economy.

Total reﬁ nery throughput was 413,000
barrels a day, down from 2008, and
average reﬁ nery utilization was 82 percent.
Production gains from operating and
reliability improvements through the year
were offset by the impact of declining
economic conditions that did not support
running the reﬁ neries to full capacity, and
also resulted in lower total net petroleum
product sales of 409,000 barrels a day.

Return on average capital employed was
eight percent, and cash ﬂ ow from operating
activities and asset sales totaled $700 million.

Capital spending totaled $251 million
in 2009. The key reﬁ ning investments
were directed to reducing sulphur
dioxide emissions, water management
system upgrades, feedstock ﬂ exibility
enhancements and energy efﬁ ciency
improvements. Capital investment in the
retail chain focused on upgrades to the
company-owned network in major urban
markets and a new point-of-sale system
that will prepare the network for new card
payment standards.

Planned capital expenditures in 2010 are
about $290 million. Reﬁ ning investments
will be focused on reliability, feedstock
ﬂ exibility, air quality and water management
system upgrades, and energy efﬁ ciency
initiatives to ensure responsible operations.
Capital investment in the retail chain will
continue, including further advancement of
the new point-of-sale system.

AT A GLANCE

Net income (millions of dollars)
Cash ﬂ ow from operating activities and
asset sales (millions of dollars)
Reﬁ nery throughput

(thousands of barrels a day)
Reﬁ nery utilization (percent)
Net petroleum product sales

(thousands of barrels a day)*

Average capital employed (millions of dollars)
Return on average capital employed

(percent)

Capital expenditures (millions of dollars)

2009
278

700

413
82

409
3 598

7.7
251

2008
796

2007
921

539

1 180

446
89

438
3 460

23.0
232

442
88

448
3 257

28.3
187

2006
624

562

442
88

453
3 161

19.7
361

2005
694

874

466
93

465
2 906

23.9
478

* Net petroleum product sales do not include sales under purchases/sales contracts with the same counterparty.

17%
800 million

growth in Mobil 1 sales.
Number of barrels Phase one has added to proved reserves

Annual throughput –
company-owned or leased
retail service stations
millions of litres per site

2005

2006

2007

2008

2009

Refinery utilization
percent

100

2005

2006

2007

2008

2009

Refinery utilization declined, reflecting
weak market conditions.

Trademarks:

■ Mobil, Mobil 1, Delvac, and the pegasus design are
trademarks of Exxon Mobil Corporation or one of its
subsidiaries. Imperial Oil licensee.

■ On the Run is a registered trademark of Exxon Mobil

Corporation in Canada. Imperial Oil licensee.

■ RBC and Royal Bank are registered trademarks of

Royal Bank of Canada.

■ Tim Hortons is a registered trademark of The

TDL Marks Corporation.

■ Aeroplan is a registered trademark of Aeroplan

Canada Inc.

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Imperial Oil Limited 2009 Summary annual report

Responsible development
in action

As an integrated energy company in business for
130 years, we explore, produce, refine and market
products that are essential to society and economic
growth. All of our businesses are managed by the
same principles of responsible development.

Reducing greenhouse gas emissions
We’re focused on technologies that reduce energy use and greenhouse gas emissions.
■ We continue to leverage capital investments, improved practices, computing technology
and a sustained employee focus on day-to-day operational improvements to increase
energy efﬁ ciency at our reﬁ neries. As a result, our reﬁ neries are 15 percent more energy
efﬁ cient than they were in 1990.

■ We continued a multi-year program to install energy conservation technology at retail sites.

To date, 115 of our largest sites have been upgraded.

■ Kearl will be the ﬁ rst oil sands mining operation that does not require an upgrader to

make a saleable crude oil. Processing bitumen once, rather than twice (in an upgrader
and a reﬁ nery), reduces both carbon dioxide emissions and development costs.

Applying cogeneration technology
Cogeneration reduces energy requirements by producing electricity and steam at the same
time, reducing greenhouse gas emissions.
■ We have about 260 megawatts of cogeneration capacity at Cold Lake and Sarnia,

and about 270 megawatts proposed for the Cold Lake expansion and Kearl.

■ Cold Lake’s cogeneration facilities reduce carbon dioxide emissions by 40 percent

compared with generating electricity from coal-ﬁ red power plants and producing steam
from conventional boilers.

■ Kearl’s cogeneration facilities will reduce carbon dioxide emissions by half a million tonnes

a year compared to purchased power for the ﬁ rst phase of the project.

Improving air quality
■ We continued construction on a new unit at the Sarnia manufacturing site, that when
coupled with operational enhancements, will enable the site to reduce sulphur dioxide
emissions by more than 50 percent.

■ We continued construction on a project at Dartmouth reﬁ nery that will enable sulphur

dioxide emissions to be reduced by more than 25 percent.

Through cogeneration facilities like this
at Cold Lake, we can produce electricity
to power our operations while also
capturing heat to make processing
steam. This provides a more efﬁ cient
power source than purchasing electricity
from a local utility, saving energy and
reducing greenhouse gas emissions.

■ We invested more than $200 million in the Syncrude Emissions Reduction (SER) project to

date. When combined with already completed improvements, the SER project is
anticipated to reduce sulphur emissions by about 60 percent from current approved levels.
■ We expanded our use of advanced optical imaging equipment to better detect and reduce

Through reliable operations, open
communication and responding
promptly to community questions,
our reﬁ neries maintain the trust and
conﬁ dence of its neighbours.

fugitive emissions.

$770 million

Imperial’s environmental capital and operating expenditures totaled about $770 million in 2009, spent primarily on
emissions reductions at company-owned facilities and Syncrude, remediation of idled facilities and operations, as well
as on protection of fresh water near Imperial facilities.

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Minimizing water use
■ Cold Lake now uses half a barrel of fresh water for each recovered barrel of bitumen.

This is 88 percent less fresh water per unit of production than in the mid-1970s.

■ We applied for renewal of the Cold Lake Water Act License, which includes a

commitment to continue to reduce fresh water use. Conservation initiatives are
underway that, if successful, will reduce fresh water use at Cold Lake by up to 30 percent
from current uses.

■ Kearl plans to improve on existing tailings technologies in order to recycle water sooner
and reduce water demand. It will also use water storage to lessen water withdrawals
from the river during winter low-ﬂ ow periods.

■ In our conventional business, where there’s declining oil production, we’ve voluntarily

reviewed our water licences and have returned a signiﬁ cant volume of unneeded water
allocation to the Alberta government.

Protecting water quality and ﬁ sh habitat
■ We progressed a multi-year program at our Sarnia site to install water hold-and-treat

systems to prevent releases to the St. Clair River.

■ We continued work on building a lake that fulﬁ lls our commitment to replace ﬁ sh habitat –

by a two-to-one ratio – that will be lost due to construction and mining activities.

■ We completed a free-span bridge that does not disturb aquatic habitat over the Muskeg

River at the Kearl project.

Minimizing our footprint, reclaiming land that we disturb
We manage potential impacts to land throughout all phases of our operations, from project
planning and construction to decommissioning and remediation.
■ At the Cold Lake in-situ operation:

■ At the end of 2008, more than 1,700 acres of the disturbed land had been permanently

reclaimed. In 2009, 85,000 tree seedlings and shrubs were planted as part of our
ongoing permanent reclamation program.

■ Updated plans for the Cold Lake Nabiye expansion include technology to reduce sulphur
dioxide emissions, a cogeneration facility to improve energy efﬁ ciency, and fewer well
pads. The reduction in the number of well pads required to access the resource will
reduce surface disturbance by more than 40 percent.

■ At the Kearl mining operation:

■ During site clearing, topsoil and peat were stockpiled in order to progressively reclaim

land as mined-out areas become available.

■ We are engaging local stakeholders in progressive reclamation planning so that the lands

reclaimed will be accessible for traditional use by the local community.

■ At Horn River, we will minimize surface disturbance through the use of horizontal pad
drilling, low-impact methods for conducting seismic surveys, efﬁ cient designs that
decrease lease dimensions, and by sharing infrastructure with other area producers.

Our reﬁ neries are 15 percent more energy
efﬁ cient than they were in 1990.

Our in-situ operation at Cold Lake,
Alberta, has a relatively small
surface footprint.

Fort McKay Elders toured the Kearl site
in late 2008. Community consultation
is an integral part of responsible
development, and we plan to continue
these annual First Nations tours as
part of our ongoing consultation with
stakeholders in the region.

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Imperial Oil Limited 2009 Summary annual report

Financial Summary

INDEPENDENT AUDITORS’ REPORT
To the Shareholders of Imperial Oil
Limited:

We have audited, in accordance with
the standards of the Public Company
Accounting Oversight Board (United
States), the ﬁ nancial position of Imperial
Oil Limited and its subsidiaries as of
December 31, 2009, and 2008, and
the results of their operations and their
cash ﬂ ows for each of the three years
in the period ended December 31,
2009, and in our report dated February
26, 2010, we expressed an unqualiﬁ ed
opinion thereon. The consolidated
ﬁ nancial statements referred to above
(not presented herein) appear in
Appendix A to the Management Proxy
Circular for the 2010 annual meeting of
shareholders of the Company.

In our opinion, the information set
forth in the accompanying condensed
consolidated ﬁ nancial statements
(pages 18 to 21) is fairly stated, in all
material respects, in relation to the
consolidated ﬁ nancial statements
from which it has been derived.

/s/ PricewaterhouseCoopers LLP

Chartered Accountants
Calgary, Alberta, Canada
February 26, 2010

SUMMARY OF ACCOUNTING POLICIES AND PRACTICES
The company’s accounting and ﬁ nancial reporting fairly reﬂ ect its straightforward
business model involving the extracting, reﬁ ning and marketing of hydrocarbons and
hydrocarbon-based products. The summary ﬁ nancial statements have been prepared
in accordance with generally accepted accounting principles of the United States of
America (GAAP). The summary ﬁ nancial statements include certain estimates that
reﬂ ect management’s best judgment. All amounts are in Canadian dollars unless
otherwise indicated.

The summary ﬁ nancial statements include the accounts of Imperial Oil Limited and
its subsidiaries. Intercompany accounts and transactions are eliminated. Subsidiaries
include those companies in which Imperial has both an equity interest and the
continuing ability to unilaterally determine strategic, operating, investing and ﬁ nancing
policies. A signiﬁ cant portion of the company’s Upstream activities is conducted
jointly with other companies. The accounts reﬂ ect the company’s share of undivided
interest in such activities, including its 25 percent interest in the Syncrude joint
venture and its nine percent interest in the Sable offshore energy project.

Revenues associated with sales of crude oil, natural gas, petroleum and chemical
products are recognized when the products are delivered and title passes to the
customer.

Inventories of crude oil, products and merchandise are carried at the lower of current
market value or cost (generally determined under the last-in, ﬁ rst-out method – LIFO).

The company does not use ﬁ nancing structures for the purpose of altering accounting
outcomes or removing debt from the balance sheet. The company does not use
derivative instruments to speculate on the future direction of currency or
commodity prices.

The company’s exploration and production activities are accounted for under the
“successful efforts” method. Depreciation, depletion and amortization are primarily
determined under either the unit-of-production method or the straight-line method.
Unit-of-production rates are based on the amount of proved developed reserves of oil
and gas that are estimated to be recoverable from existing facilities. The straight-line
method is based on estimated asset service life.

The company incurs retirement obligations for certain assets at the time they are
installed. The fair values of these obligations are recorded as liabilities on a discounted
basis and are accreted over time for the change in their present value. The costs
associated with these liabilities are capitalized as part of the related assets and
depreciated. Liabilities for environmental costs are recorded when it is probable that
obligations have been incurred and the amounts can be reasonably estimated.

The company recognizes the underfunded or overfunded status of deﬁ ned beneﬁ t
pension and other post-retirement plans as a liability or asset in the balance sheet with
the offset in shareholders’ equity, net of deferred taxes.

A variety of claims have been made against Imperial Oil and certain of its consolidated
subsidiaries in a number of pending lawsuits and tax disputes. For further information
on tax contingencies and litigation, see Notes 4 and 10 to the Consolidated Financial
Statements in Appendix A of Imperial Oil’s 2009 Proxy Statement.

The company awards share-based compensation to employees in the form of
restricted stock units. Compensation expense is measured each reporting period
based on the company’s current stock price and is recorded in the consolidated
statement of income over the requisite service period of each award.

Further information on the company’s accounting policies and practices can be found
in Appendix A of Imperial Oil’s 2009 Proxy Statement (Critical Accounting Policies and
Note 1 to the Consolidated Financial Statements).

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Summary statement of income (U.S. GAAP)

millions of Canadian dollars
For the years ended December 31

Revenues and other income
Operating revenues (a) (b)
Investment and other income
Total revenues and other income

Expenses
Exploration
Purchases of crude oil and products (c)
Production and manufacturing (d)
Selling and general
Federal excise tax (a)
Depreciation and depletion
Financing costs
Total expenses

Income before income taxes

Income taxes

Net income

Per-share information (Canadian dollars)
Net income per common share – basic
Net income per common share – diluted
Dividends

2009

2008

2007

21 292
106
21 398

153
11 934
3 951
1 106
1 268
781
5
19 198

31 240
339
31 579

132
18 865
4 228
1 038
1 312
728
–
26 303

25 069
374
25 443

106
14 026
3 474
1 335
1 307
780
36
21 064

2 200

5 276

4 379

621

1 398

1 191

1 579

3 878

3 188

1.86
1.84
0.40

4.39
4.36
0.38

3.43
3.41
0.35

(a) Operating revenues include federal excise tax of $1,268 million (2008 – $1,312 million, 2007 – $1,307 million).
(b) Operating revenues include amounts from related parties of $1,699 million (2008 – $2,150 million, 2007 – $1,772 million).
(c) Purchases of crude oil and products include amounts from related parties of $3,111 million (2008 – $4,729 million, 2007 – $3,331 million).
(d) Production and manufacturing expenses include amounts to related parties of $217 million (2008 – $169 million, 2007 – $154 million).

The information in the Summary Statement of Income (for 2007 to 2009), the Summary Balance Sheet (for 2008 and 2009), and the Summary
Statement of Cash Flows (for 2007 to 2009), shown on pages 19 through 21, corresponds to the information in the Consolidated Statement
of Income, Consolidated Balance Sheet, and the Consolidated Statement of Cash Flows in the ﬁ nancial statements of Imperial Oil’s 2010
Management Proxy Circular. For complete consolidated ﬁ nancial statements, including notes, please refer to Appendix A of Imperial Oil’s
2010 Management Proxy Circular. See also Management’s Discussion and Analysis of Financial Condition and Results of Operations and other
information in Appendix A of the 2010 Management Proxy Circular.

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Imperial Oil Limited 2009 Summary annual report

Summary balance sheet (U.S. GAAP)

millions of Canadian dollars
At December 31

Assets
Current assets
Cash
Accounts receivable, less estimated doubtful amounts

Inventories of crude oil and products
Materials, supplies and prepaid expenses
Deferred income tax assets
Total current assets
Long-term receivables, investments and other long-term assets
Property, plant and equipment, less accumulated depreciation and depletion
Goodwill
Other intangible assets, net
Total assets

Liabilities
Current liabilities
Notes and loans payable
Accounts payable and accrued liabilities (a)

Income taxes payable

Total current liabilities
Capitalized lease obligations
Other long-term obligations
Deferred income tax liabilities
Total liabilities

Commitments and contingent liabilities (b)

Shareholders’ equity
Common shares at stated value (c)
Earnings reinvested
Accumulated other comprehensive income
Total shareholders’ equity

Total liabilities and shareholders’ equity

2009

2008

513
1 714
564
247
467
3 505
854
12 852
204
58
17 473

109
2 811
848
3 768
31
2 839
1 396
8 034

1 974
1 455
673
180
361
4 643
881
11 248
204
59
17 035

109
2 586
1 498
4 193
34
2 254
1 489
7 970

1 508
9 252
(1 321)
9 439

1 528
8 484
(947)
9 065

17 473

17 035

(a) Accounts payable and accrued liabilities include amounts to related parties of $59 million (2008 – $127 million).
(b) For more information, please refer to Note 10 to the Consolidated Financial Statements, included in appendix A of Imperial Oil’s 2010 Management Proxy Circular.
(c) Number of common shares outstanding was 848 million (2008 – 859 million).

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Summary statement of cash ﬂ ows (U.S. GAAP)

millions of Canadian dollars
Inﬂ ow/(outﬂ ow)
For the years ended December 31

Operating activities
Net income
Adjustments for non-cash items:
Depreciation and depletion
(Gain)/loss on asset sales

Deferred income taxes and other
Changes in operating assets and liabilities:
Accounts receivable

Inventories and prepaids
Income taxes payable

Accounts payable
All other items – net (a)
Cash from operating activities

Investing activities
Additions to property, plant and equipment and intangibles
Proceeds from asset sales
Loans to equity company
Cash from (used in) investing activities

Financing activities
Short-term debt – net
Repayment of long-term debt
Long-term debt issued
Reduction in capitalized lease obligations
Issuance of common shares under stock option plan
Common shares purchased
Dividends paid
Cash from (used in) ﬁ nancing activities

Increase (decrease) in cash
Cash at beginning of year
Cash at end of year (b)

2009

2008

2007

1 579

3 878

3 188

781
(45)
(61)

(261)
42
(650)
271
(65)
1 591

(2 285)
67
2

(2 216)

–
–
–
(4)
1
(492)
(341)
(836)

(1 461)
1 974
513

728
(241)
387

679
(159)
–
(798)
(211)
4 263

(1 231)
272
(2)
(961)

–
–
–
(3)
7
(2 210)
(330)
(2 536)

766
1 208
1 974

780
(215)
75

(261)
13
(77)
250
(127)
3 626

(899)
279
–
(620)

(65)
(1 722)
500

(4)
12
(2 358)
(319)
(3 956)

(950)
2 158
1 208

Includes contribution to registered pension plans of $180 million (2008 – $165 million, 2007 – $163 million).

(a)
(b) Cash is composed of cash in bank and cash equivalents at cost. Cash equivalents are all highly liquid securities with maturity of three months or less when purchased.

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Imperial Oil Limited 2009 Summary annual report

Share ownership, trading and performance

Share ownership
Average number outstanding, weighted monthly (thousands)
Number of shares outstanding at December 31 (thousands)
Shares held in Canada at December 31 (percent)
Number of registered shareholders at December 31 (a)
Number of shareholders registered in Canada

Shares traded (thousands)

Share prices (dollars) (b)

Toronto Stock Exchange

High
Low
Close at December 31

NYSE Amex (U.S. dollars)

High
Low
Close at December 31

Net income per share (dollars)

- basic
- diluted

Price ratios at December 31

Share price to net earnings (c)

Dividends declared (d)
Total (millions of dollars)

Per share (dollars)

2009

2008

2007

2006

2005

849 760
847 600
10.8
13 157
11 621

882 604
859 402
11.1
13 206
11 620

928 527
903 263
12.1
13 108
11 450

975 128
952 988
13.0
13 561
11 844

1 024 119
997 875
13.8
14 096
12 331

318 055

477 574

292 888

321 245

357 633

49.11
35.95
40.66

43.13
28.44
38.66

1.86
1.84

62.54
28.79
40.99

63.08
23.84
33.72

4.39
4.36

56.26
37.40
54.62

61.48
31.87
54.78

3.43
3.41

45.20
34.31
42.93

40.38
29.99
36.83

45.79
22.50
38.47

39.14
18.27
33.20

3.12
3.11

2.54
2.53

22.1

9.4

16.0

13.8

15.2

340
0.40

334
0.38

324
0.35

311
0.32

320
0.31

(a) Exxon Mobil Corporation owns 69.6 percent of Imperial’s shares.
(b) Imperial’s shares are listed on the Toronto Stock Exchange. The company’s shares also trade in the United States of America on the NYSE Amex LLC. Imperial has unlisted
privileges on the NYSE Amex LLC, a subsidiary of NYSE Euronext. The symbol on these exchanges for Imperial’s common shares is IMO. Share prices were obtained from
stock exchange records. U.S. dollar share price presented is based on consolidated U.S. market data.

(c) Closing share price at December 31 at the Toronto Stock Exchange, divided by net income per share – diluted.
(d) The fourth-quarter dividend is paid on January 1 of the succeeding year.

Employees

2009

5 015

2008

4 843

2007

4 785

2006

4 869

2005

5 096

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Frequently used terms

Listed below are how three of Imperial’s frequently used ﬁ nancial performance measures are calculated.

Capital employed
Capital employed is a measure of net investment. When viewed from the perspective of how capital is used by the business, it includes the
company’s property, plant and equipment and other assets, less liabilities, excluding both short-term and long-term debt. When viewed from
the perspective of the sources of capital employed for the whole company, it includes total debt and equity. Both of these views include the
company’s share of amounts applicable to equity companies.

millions of dollars

2009

2008

2007

2006

2005

Business uses: asset and liability perspective
Total assets
Less: total current liabilities excluding short-term debt and
current portion of long-term debt
Less: total long-term liabilities excluding long-term debt
Add: Imperial’s share of equity company debt
Total capital employed

millions of dollars

Total company sources: debt and equity perspective
Short-term debt and current portion of long-term debt
Long-term debt
Shareholders’ equity
Add: Imperial’s share of equity company debt
Total capital employed

17 473

17 035

16 287

16 141

15 582

(3 659)
(4 235)
36
9 615

(4 084)
(3 743)
40
9 248

(4 833)
(3 385)
50
8 119

(4 270)
(3 028)
55
8 898

(4 569)
(2 941)
59
8 131

2009

2008

2007

2006

2005

109
31
9 439
36
9 615

109
34
9 065
40
9 248

108
38
7 923
50
8 119

1 078
359
7 406
55
8 898

576
863
6 633
59
8 131

Return on average capital employed (ROCE)
ROCE is a ﬁ nancial performance ratio. For each of the company’s business segments, ROCE is annual business-segment net income divided by
average business-segment capital employed (an average of the beginning-and end-of-year amounts). Segment net income includes Imperial’s
share of segment net income of equity companies, consistent with the deﬁ nition used for capital employed, and excludes the cost of ﬁ nancing.
The company’s total ROCE is net income excluding the after-tax cost of ﬁ nancing divided by total average capital employed. The company has
consistently applied its ROCE deﬁ nition for many years and views it as the best measure of historical capital productivity in a capital-intensive,
long-term industry to both evaluate management’s performance and demonstrate to shareholders that capital has been used wisely over the
long term. Additional measures, which tend to be more cash ﬂ ow based, are used to make investment decisions.

millions of dollars

Net income
Financing costs (after tax), including Imperial’s share
of equity companies
Net income excluding ﬁ nancing costs

Average capital employed
Return on average capital employed (percent)

2009

1 579

2
1 581

9 432
16.8

2008

3 878

2
3 880

8 684
44.7

2007

3 188

18
3 206

8 509
37.7

2006

3 044

10
3 054

8 515
35.9

2005

2 600

3
2 603

7 976
32.6

Cash ﬂ ow from operating activities and asset sales
Cash ﬂ ow from operating activities and asset sales is the sum of the net cash provided by operating activities and proceeds from asset sales
reported in the consolidated statement of cash ﬂ ows. This cash ﬂ ow is the total source of cash both from operating the company’s assets and
from the divesting of assets. The company employs a long-standing, disciplined regular review process to ensure that all assets are contributing
to the company’s strategic and ﬁ nancial objectives. Assets are divested when they no longer meet these objectives or are worth considerably
more to others. Because of the regular nature of this activity, management believes it is useful for investors to consider sales proceeds together
with cash provided by operating activities when evaluating cash available for investment in the business and ﬁ nancing activities, including
shareholder distributions.

millions of dollars

Cash from operating activities
Proceeds from asset sales
Total cash ﬂ ow from operating activities and asset sales

2009

1 591
67
1 658

2008

4 263
272
4 535

2007

3 626
279
3 905

2006

3 587
212
3 799

2005

3 451
440
3 891

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Imperial Oil Limited 2009 Summary annual report

Information for investors

Head ofﬁ ce
Imperial Oil Limited
P.O. Box 2480, Station ‘M’
Calgary, Alberta
Canada T2P 3M9

Telephone: 1-800-567-3776
Fax: 1-800-367-0585

Annual meeting
The annual meeting of shareholders will be held on
Thursday, April 29, 2010, at 9:30 a.m., local time at the
Sheraton Suites Calgary Eau Claire, Wildrose Ballroom,
255 Barclay Parade S.W., Calgary, Alberta, Canada.

Shareholder account matters
To change your address, transfer shares, eliminate multiple
mailings, elect to receive dividends in U.S. funds, have dividends
deposited directly into accounts at ﬁ nancial institutions in Canada
that provide electronic fund-transfer services, enroll in the dividend
reinvestment and share purchase plan, or enroll for electronic
delivery of shareholder reports, please contact Imperial’s transfer
agent, CIBC Mellon Trust Company.

CIBC Mellon Trust Company
P.O. Box 7010
Adelaide Street Postal Station
Toronto, Ontario, Canada M5C 2W9
Telephone: 1-800-387-0825 (from Canada or U.S.A.)
or 416-643-5500
Fax: 416-643-5501

E-mail: inquiries@cibcmellon.com

Website: www.cibcmellon.com

United States resident shareholders may transfer their shares
through BNY Mellon Shareowner Service.

BNY Mellon Shareowner Service
480 Washington Boulevard
Jersey City, New Jersey
U.S.A. 07310-1900
Telephone: 1-800-526-0801

Dividend reinvestment and share-purchase plan
This plan provides shareholders with two ways to add to their
shareholdings at a reduced cost. The plan enables shareholders
to reinvest their cash dividends in additional shares at an average
market price. Shareholders can also invest between $50 and
$5,000 each calendar quarter in additional shares at an average
market price.

Funds directed to the dividend reinvestment and share-purchase
plan are used to buy existing shares on a stock exchange rather
than newly issued shares.

Imperial online
Imperial publishes a wide range of information on its website,
including annual and interim reports, SEC ﬁ lings, proxy circulars
and forms, key dates for investors and shareholders, as well as
other information that should be helpful to our shareholders in the
day-to-day management of their shares. Should you not be able to
ﬁ nd the information you are looking for, please contact customer
service at 1-800-567-3776.

Website: www.imperialoil.ca

Investor information
Information is also available by writing to the investor relations
manager at Imperial’s head ofﬁ ce or by:

E-mail: investor.relations@esso.ca
Telephone: 403-237-4538
Fax: 403-237-2075

For all other shareholder services related inquiries,
please contact:

Brian W. Livingston
Vice-president, general counsel
and corporate secretary
Telephone: 403-237-2915
Fax: 403-237-2490

Version française du rapport
Pour obtenir la version française du rapport de la Compagnie
Pétrolière Impériale Ltée, veuillez écrire à la division des Relations
avec les investisseurs, Compagnie Pétrolière Impériale Ltée,
P.O. Box 2480, Station ’M’, Calgary, Alberta, Canada T2P 3M9.

Included in this Summary Annual Report are ﬁ nancial and
operating highlights and summary ﬁ nancial statements. For
complete ﬁ nancial statements, including notes, please refer to
the Management Proxy Circular for Imperial Oil’s 2010 annual
meeting. The Management Proxy Circular also includes
Management’s Discussion and Analysis of Financial Condition
and Results of Operations. The Information for Investors section
of Imperial Oil’s website (www.imperialoil.ca) contains the
Management Proxy Circular.

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Directors and ofﬁ cers

Imperial Oil Limited Board of Directors from left to right,
Jack M. Mintz, Victor L. Young, Krystyna T. Hoeg, Bruce H. March, Sheelagh D. Whittaker, Roger Phillips, Paul A. Smith and Robert C. Olsen.

BOARD OF DIRECTORS
Krystyna T. Hoeg
Retired president and
chief executive ofﬁ cer
Corby Distilleries Limited
Toronto, Ontario

Bruce H. March
Chairman, president and
chief executive ofﬁ cer
Imperial Oil Limited
Calgary, Alberta

Jack M. Mintz
Palmer Chair in Public Policy
University of Calgary
Calgary, Alberta

Robert C. Olsen
Executive vice-president
ExxonMobil Production Company
Houston, Texas

Roger Phillips
Retired president and
chief executive ofﬁ cer
IPSCO Inc.
Regina, Saskatchewan

Paul A. Smith
Senior vice-president
ﬁ nance and administration
and treasurer
Imperial Oil Limited
Calgary, Alberta

Sheelagh D. Whittaker
Corporate director
London, England

Victor L. Young
Corporate director
St. John’s, Newfoundland and Labrador

EXECUTIVE RESOURCES COMMITTEE
R. Phillips, chair
V.L. Young, vice-chair
K.T. Hoeg
J.M. Mintz
R.C. Olsen
S.D. Whittaker

OTHER OFFICERS
Randy L. Broiles
Senior vice-president
resources division

Sean R. Carleton
Controller

Brian W. Livingston
Vice-president
general counsel
and corporate secretary

AUDIT COMMITTEE
V.L. Young, chair
S.D. Whittaker, vice-chair
K.T. Hoeg
J.M. Mintz
R. Phillips

NOMINATIONS AND CORPORATE
GOVERNANCE COMMITTEE
S.D. Whittaker, chair
J.M. Mintz, vice-chair
K.T. Hoeg
R.C. Olsen
R. Phillips
V.L. Young

ENVIRONMENT, HEALTH AND
SAFETY COMMITTEE
J.M. Mintz, chair
K.T. Hoeg, vice-chair
R.C. Olsen
R. Phillips
S.D. Whittaker
V.L. Young

IMPERIAL OIL FOUNDATION
K.T. Hoeg, chair
R. Phillips, vice-chair
J.M. Mintz, director
R.C. Olsen, director
P.A. Smith, director
S.D. Whittaker, director
V.L. Young, director

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Imperial Oil Limited
P.O. Box 2480, Station ‘M’
Calgary, Alberta T2P 3M9

Imperial Oil is one of Canada’s largest corporations and a leading
member of the country’s petroleum industry. The company is a major
producer of crude oil and natural gas, Canada’s largest petroleum
reﬁ ner and a leading marketer with a coast-to-coast supply network
that includes about 1,850 retail service stations.

This report is printed on 10-percent post-consumer waste ﬁ bre
that is certiﬁ ed by the Forest Stewardship Council.

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