10-Q

FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

[✓]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

OR

[    ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from —- to —-

Commission file number 0-12014

IMPERIAL OIL LIMITED

(Exact name of registrant as specified in its charter)

CANADA	98-0017682
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)
505 Quarry Park Boulevard S.E.
Calgary, Alberta, Canada	T2C 5N1
(Address of principal executive offices)	(Postal Code)

Registrant’s telephone number, including area code: 1-800-567-3776                

The registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 91 days.

YES    ✓    NO           

The registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES    ✓    NO           

The registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act of 1934).

Large accelerated filer	✓	Smaller reporting company
Non-accelerated filer		Emerging growth company
Accelerated filer

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.          

The registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act of 1934).

YES            NO     ✓  

The number of common shares outstanding, as of March 31, 2018 was 824,036,825.

IMPERIAL OIL LIMITED

Table of contents

		Page
PART I. FINANCIAL INFORMATION		3
Item 1.	Financial statements	3
	Consolidated statement of income	3
	Consolidated statement of comprehensive income	4
	Consolidated balance sheet	5
	Consolidated statement of cash flows	6
	Notes to the consolidated financial statements	7
Item 2.	Management’s discussion and analysis of financial condition and results of operations	15
Item 3.	Quantitative and qualitative disclosures about market risk	18
Item 4.	Controls and procedures	18
PART II. OTHER INFORMATION		19
Item 1.	Legal proceedings	19
Item 2.	Unregistered sales of equity securities and use of proceeds	19
Item 6.	Exhibits	20
SIGNATURES		21

In this report all dollar amounts are expressed in Canadian dollars unless otherwise stated. This report should be read in conjunction with the company’s annual report on Form 10-K for the year ended December 31, 2017. Note that numbers may not add due to rounding.

The term “project” as used in this report can refer to a variety of different activities and does not necessarily have the same meaning as in any government payment transparency reports.

In this report, unless the context otherwise indicates, reference to “the company” or “Imperial” includes Imperial Oil Limited and its subsidiaries.

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IMPERIAL OIL LIMITED

PART I. FINANCIAL INFORMATION

Item 1.   Financial statements

Consolidated statement of income (U.S. GAAP, unaudited)

		Three Months to March 31
millions of Canadian dollars		2018		2017
Revenues and other income
Revenues (a)			7,900		6,958
Investment and other income (note 5)			34		198
Total revenues and other income			7,934		7,156
Expenses
Exploration			8		22
Purchases of crude oil and products (b)			4,780		4,333
Production and manufacturing (c)			1,431		1,345
Selling and general (c)			194		203
Federal excise tax			397		394
Depreciation and depletion			377		392
Non-service pension and postretirement benefit (d)			27		33
Financing (note 7)			23		14
Total expenses			7,237		6,736
Income (loss) before income taxes			697		420
Income taxes			181		87
Net income (loss)			516		333
Per share information (Canadian dollars)
Net income (loss) per common share - basic (note 10)			0.62		0.39
Net income (loss) per common share - diluted (note 10)			0.62		0.39
Dividends per common share			0.16		0.15
(a)	Amounts from related parties included in revenues.		1,373		1,037
(b)	Amounts to related parties included in purchases of crude oil and products.		892		609
(c)	Amounts to related parties included in production and manufacturing, and selling and general expenses.		141		141
(d)	Prior year amounts have been reclassified. See note 2 for additional details.

The information in the notes to consolidated financial statements is an integral part of these statements.

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IMPERIAL OIL LIMITED

Consolidated statement of comprehensive income (U.S. GAAP, unaudited)

	Three Months to March 31
millions of Canadian dollars	2018			2017
Net income (loss)		516			333
Other comprehensive income (loss), net of income taxes
Postretirement benefits liability adjustment (excluding amortization)		(19	)		41
Amortization of postretirement benefits liability adjustment included in net periodic benefit costs		34			36
Total other comprehensive income (loss)		15			77
Comprehensive income (loss)		531			410

The information in the notes to consolidated financial statements is an integral part of these statements.

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IMPERIAL OIL LIMITED

Consolidated balance sheet (U.S. GAAP, unaudited)

millions of Canadian dollars	As at Mar 31 2018			As at Dec 31 2017
Assets
Current assets
Cash		1,425			1,195
Accounts receivable, less estimated doubtful accounts (a)		2,285			2,712
Inventories of crude oil and products		1,262			1,075
Materials, supplies and prepaid expenses		455			425
Total current assets		5,427			5,407
Investments and long-term receivables (b)		850			865
Property, plant and equipment,		53,031			52,778
less accumulated depreciation and depletion		(18,679	)		(18,305	)
Property, plant and equipment, net		34,352			34,473
Goodwill		186			186
Other assets, including intangibles, net (note 9)		765			670
Total assets		41,580			41,601
Liabilities
Current liabilities
Notes and loans payable (c)		202			202
Accounts payable and accrued liabilities (a) (note 9)		3,461			3,877
Income taxes payable		73			57
Total current liabilities		3,736			4,136
Long-term debt (d) (note 8)		4,999			5,005
Other long-term obligations (e) (note 9)		3,851			3,780
Deferred income tax liabilities		4,410			4,245
Total liabilities		16,996			17,166
Shareholders’ equity
Common shares at stated value (f) (note 10)		1,523			1,536
Earnings reinvested (note 11)		24,861			24,714
Accumulated other comprehensive income (loss) (note 12)		(1,800	)		(1,815	)
Total shareholders’ equity		24,584			24,435
Total liabilities and shareholders’ equity		41,580			41,601

(a) Accounts receivable, less estimated doubtful accounts included net amounts receivable from related parties of $354 million (2017 - $509 million).

(b) Investments and long-term receivables included amounts from related parties of $25 million (2017 - $19 million).

(c) Notes and loans payable included amounts to related parties of $75 million (2017 - $75 million).

(d) Long-term debt included amounts to related parties of $4,447 million (2017 - $4,447 million).

(e) Other long-term obligations included amounts to related parties of $49 million (2017 - $60 million).

(f) Number of common shares authorized and outstanding were 1,100 million and 824 million, respectively (2017 - 1,100 million and 831 million, respectively).

The information in the notes to consolidated financial statements is an integral part of these statements.

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IMPERIAL OIL LIMITED

Consolidated statement of cash flows (U.S. GAAP, unaudited)

Inflow (outflow)	Three Months     to March 31
millions of Canadian dollars	2018			2017
Operating activities
Net income (loss)		516			333
Adjustments for non-cash items:
Depreciation and depletion		377			392
(Gain) loss on asset sales (note 5)		(10	)		(182	)
Deferred income taxes and other		185			200
Changes in operating assets and liabilities:
Accounts receivable		427			278
Inventories, materials, supplies and prepaid expenses		(217	)		(72	)
Income taxes payable		16			(464	)
Accounts payable and accrued liabilities		(415	)		(210	)
All other items - net (a) (b)		106			79
Cash flows from (used in) operating activities		985			354
Investing activities
Additions to property, plant and equipment (b)		(371	)		(122	)
Proceeds from asset sales (note 5)		12			183
Loans to equity company		(6	)		-
Cash flows from (used in) investing activities		(365	)		61
Financing activities
Reduction in capitalized lease obligations (note 8)		(6	)		(7	)
Dividends paid		(134	)		(127	)
Common shares purchased (note 10)		(250	)		-
Cash flows from (used in) financing activities		(390	)		(134	)
Increase (decrease) in cash		230			281
Cash at beginning of period		1,195			391
Cash at end of period (c)		1,425			672
(a)  Included contribution to registered pension plans.		(44)			(40)

(b)  The impact of carbon emission programs are included in additions to property, plant and equipment, and all other items, net.

(c)   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.

The information in the notes to consolidated financial statements is an integral part of these statements.

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IMPERIAL OIL LIMITED

Notes to consolidated financial statements (unaudited)

1. Basis of financial statement preparation

These unaudited consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (GAAP) and follow the same accounting policies and methods of computation as, and should be read in conjunction with, the most recent annual consolidated financial statements filed with the U.S. Securities and Exchange Commission (SEC) in the company’s 2017 annual report on Form 10-K. In the opinion of the company, the information furnished herein reflects all known accruals and adjustments necessary for a fair statement of the results for the periods reported herein. All such adjustments are of a normal recurring nature. Prior year’s data has been reclassified in certain cases to conform to the current presentation basis.

The company’s exploration and production activities are accounted for under the “successful efforts” method.

The results for the three months ended March 31, 2018, are not necessarily indicative of the operations to be expected for the full year.

All amounts are in Canadian dollars unless otherwise indicated.

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IMPERIAL OIL LIMITED

2. Accounting changes

Effective January 1, 2018, Imperial adopted the Financial Accounting Standards Board’s standard, Revenue from Contracts with Customers, as amended. The standard establishes a single revenue recognition model for all contracts with customers, eliminates industry and transaction specific requirements, and expands disclosure requirements. The standard was adopted using the modified retrospective method, under which prior year results are not restated, but supplemental information is provided for any material impacts of the standard on 2018 results. The adoption of the standard did not have a material impact on any of the lines reported in the company’s consolidated financial statements. The cumulative effect of adoption of the new standard was de minimis. The company did not elect any practical expedients that require disclosure. See note 4 for additional details.

Effective January 1, 2018, Imperial adopted the Financial Accounting Standards Board’s standard update, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The update requires separate presentation of the service cost component from other components of net benefit costs. The other components are reported in a new line on the company’s consolidated statement of income, “Non-service pension and postretirement benefit”. Imperial elected to use the practical expedient to use the amounts disclosed in the pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements, as it is impracticable to determine the amounts capitalized in those periods. Beginning in 2018, the other components of net benefit costs are included in the Corporate and other expenses. The “Non-service pension and postretirement benefit” line reflects the non-service costs, which primarily includes interest costs, expected return on plan assets, and amortization of actuarial gains and losses, that were previously included in “Production and manufacturing” and “Selling and general” expenses. Additionally, only the service cost component of net benefit costs is eligible for capitalization in situations where it is otherwise appropriate to capitalize employee costs in connection with the construction or production of an asset.

The impact of the retrospective presentation change on Imperial’s consolidated statement of income for the period ended March 31, 2018, is shown below.

millions of Canadian dollars	Three Months to March 31, 2017
	As reported		Change			As adjusted
Production and manufacturing		1,375		(30	)		1,345
Selling and general		206		(3	)		203
Non-service pension and postretirement benefit		-		33			33

Effective January 1, 2018, Imperial adopted the Financial Accounting Standards Board’s standard update, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The standard requires investments in equity securities other than consolidated subsidiaries and equity method investments to be measured at fair value, with changes in the fair value recognized through net income. The company elected a modified approach for equity securities that do not have a readily determinable fair value. This modified approach measures investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. There was no cumulative effect related to the adoption of this standard. The carrying value of equity securities without readily determinable fair values as at March 31, 2018 were not significant to Imperial.

The standard also expanded disclosures related to financial statements. The company’s only notable financial instrument is long-term debt ($4,447 million, excluding capitalized lease obligations), where the difference between fair value and carrying value was de minimis. The fair value of long-term debt was primarily a level 2 measurement.

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IMPERIAL OIL LIMITED

3. Business segments

Three Months to March 31	Upstream						Downstream						Chemical
millions of Canadian dollars	2018			2017			2018			2017			2018		2017
Revenues and other income
Revenues (a)		1,989			1,711			5,607			4,974			304		273
Intersegment sales		657			618			362			309			73		67
Investment and other income (note 5)		1			5			22			191			-		1
		2,647			2,334			5,991			5,474			377		341
Expenses
Exploration		8			22			-			-			-		-
Purchases of crude oil and products		1,374			1,116			4,294			4,009			202		201
Production and manufacturing (b)		1,012			973			368			349			51		53
Selling and general (b)		-			3			173			188			21		22
Federal excise tax		-			-			397			394			-		-
Depreciation and depletion		318			336			51			48			3		3
Non-service pension and postretirement benefit (b)		-			-			-			-			-		-
Financing (note 7)		-			4			-			-			-		-
Total expenses		2,712			2,454			5,283			4,988			277		279
Income (loss) before income taxes		(65	)		(120	)		708			486			100		62
Income taxes		(21	)		(34	)		187			106			27		17
Net income (loss)		(44	)		(86	)		521			380			73		45
Cash flows from (used in) operating activities		337			308			590			56			83		(23	)
Capital and exploration expenditures (c)		206			103			57			34			4		4
Total assets as at March 31		34,463			35,898			5,034			4,251			417		391
Three Months to March 31	Corporate and Other						Eliminations						Consolidated
millions of Canadian dollars	2018			2017			2018			2017			2018		2017
Revenues and other income
Revenues (a)		-			-			-			-			7,900		6,958
Intersegment sales		-			-			(1,092	)		(994	)		-		-
Investment and other income (note 5)		11			1			-			-			34		198
		11			1			(1,092	)		(994	)		7,934		7,156
Expenses
Exploration		-			-			-			-			8		22
Purchases of crude oil and products		-			-			(1,090	)		(993	)		4,780		4,333
Production and manufacturing (b)		-			-			-			-			1,431		1,375
Selling and general (b)		2			(6	)		(2	)		(1	)		194		206
Federal excise tax		-			-			-			-			397		394
Depreciation and depletion		5			5			-			-			377		392
Non-service pension and postretirement benefit (b)		27			-			-			-			27		-
Financing (note 7)		23			10			-			-			23		14
Total expenses		57			9			(1,092	)		(994	)		7,237		6,736
Income (loss) before income taxes		(46	)		(8	)		-			-			697		420
Income taxes		(12	)		(2	)		-			-			181		87
Net income (loss)		(34	)		(6	)		-			-			516		333
Cash flows from (used in) operating activities		(25	)		13			-			-			985		354
Capital and exploration expenditures (c)		7			12			-			-			274		153
Total assets as at March 31		1,934			1,128			(268	)		(258	)		41,580		41,410

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IMPERIAL OIL LIMITED

(a) Included export sales to the United States of $1,207 million (2017 - $899 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.

(b) As part of the implementation of Accounting Standard Update, Compensation – Retirement Benefits (Topic 715), beginning January 1, 2018, Corporate and other includes all non-service pension and postretirement benefit expense. Prior to 2018, the majority of these costs were allocated to the operating segments. See note 2 for additional details.

(c) Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to capital leases, additional investments and acquisitions. CAPEX excludes the purchase of carbon emission credits.

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IMPERIAL OIL LIMITED

4. Accounting policy for revenue recognition

Imperial generally sells crude oil, natural gas and petroleum and chemical products under short-term agreements at prevailing market prices. In some cases, products may be sold under long-term agreements, with periodic price adjustments to reflect market conditions.

Revenue is recognized at the amount the company expects to receive when the customer has taken control, which is typically when title transfers and the customer has assumed the risks and rewards of ownership. The prices of certain sales are based on price indexes that are sometimes not available until the next period. In such cases, estimated realizations are accrued when the sale is recognized, and are finalized when final information is available. Such adjustments to revenue from performance obligations satisfied in previous periods are not significant. Payment for revenue transactions is typically due within 30 days. Future volume delivery obligations that are unsatisfied at the end of the period are expected to be fulfilled through ordinary production or purchases. These performance obligations are based on market prices at the time of the transaction and are fully constrained due to market price volatility.

“Revenues” and “Accounts receivable, less estimated doubtful accounts” primarily arise from contracts with customers. Long-term receivables are primarily from non-customers. Contract assets are mainly from marketing assistance programs and are not significant. Contract liabilities are mainly customer prepayments, loyalty programs and accruals of expected volume discounts, and are not significant.

5. Investment and other income

Investment and other income included gains and losses on asset sales as follows:

	Three Months to March 31
millions of Canadian dollars	2018		2017
Proceeds from asset sales		12		183
Book value of asset sales		2		1
Gain (loss) on asset sales, before tax (a)		10		182
Gain (loss) on asset sales, after tax (a)		7		158

(a) First quarter 2017 included a gain of $174 million ($151 million after tax) from the sale of surplus property in Ontario.

6. Employee retirement benefits

The components of net benefit cost were as follows:

	Three Months to March 31
millions of Canadian dollars	2018		2017
Pension benefits:
Current service cost		60		55
Interest cost		76		79
Expected return on plan assets		(101)		(101)
Amortization of prior service cost		1		3
Amortization of actuarial loss (gain)		44		44
Net periodic benefit cost		80		80
Other postretirement benefits:
Current service cost		4		4
Interest cost		5		6
Amortization of actuarial loss (gain)		2		2
Net periodic benefit cost		11		12

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IMPERIAL OIL LIMITED

7. Financing and additional notes and loans payable information

	Three Months to March 31
millions of Canadian dollars	2018			2017
Debt-related interest		30			22
Capitalized interest		(7	)		(12	)
Net interest expense		23			10
Other interest		-			4
Total financing		23			14

8. Long-term debt

		As at Mar 31		As at      Dec 31
millions of Canadian dollars	2018		2017
Long-term debt		4,447		4,447
Capital leases		552		558
Total long-term debt		4,999		5,005

9. Other long-term obligations

	As at Mar 31		As at    Dec 31
millions of Canadian dollars	2018		2017
Employee retirement benefits (a)		1,535		1,529
Asset retirement obligations and other environmental liabilities (b)		1,460		1,460
Share-based incentive compensation liabilities		96		99
Other obligations (c)		760		692
Total other long-term obligations		3,851		3,780

(a) Total recorded employee retirement benefits obligations also included $56 million in current liabilities (2017 - $56 million).

(b) Total asset retirement obligations and other environmental liabilities also included $101 million in current liabilities (2017 - $101 million).

(c) Included carbon emission program obligations. Carbon emission program credits are recorded under other assets, including intangibles, net.

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IMPERIAL OIL LIMITED

10. Common shares

	As of Mar 31		As of Dec 31
thousands of shares	2018		2017
Authorized		1,100,000		1,100,000
Common shares outstanding		824,037		831,242

The 12-month normal course issuer bid program that was in place throughout the first quarter of 2018 came into effect in June of 2017. The program enabled the company to purchase up to a maximum of 25,395,927 common shares (3 percent of the total shares on June 13, 2017), which included shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid. As in the past, Exxon Mobil Corporation participated to maintain its ownership percentage at approximately 69.6 percent. The excess of the purchase cost over the stated value of shares purchased has been recorded as a distribution of earnings reinvested.

On April 27, 2018, the company announced an amendment to its normal course issuer bid to increase the number of common shares that it may purchase. Under the amendment, the number of common shares that may be purchased will increase to a maximum of 42,326,545 common shares (5 percent of the total shares on June 13, 2017) during the period June 27, 2017 to June 26, 2018, which includes shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid. No other provisions of the normal course issuer bid have changed.

The company’s common share activities are summarized below:

	Thousands of shares			Millions of dollars
Balance as at December 31, 2016		847,599			1,566
Issued under employee share-based awards		2			-
Purchases at stated value		(16,359	)		(30	)
Balance as at December 31, 2017		831,242			1,536
Issued under employee share-based awards		-			-
Purchases at stated value		(7,205	)		(13	)
Balance as at March 31, 2018		824,037			1,523

The following table provides the calculation of basic and diluted earnings per common share:

	Three Months to March 31
	2018		2017
Net income (loss) per common share - basic
Net income (loss) (millions of Canadian dollars)		516		333
Weighted average number of common shares outstanding (millions of shares)		829.0		847.6
Net income (loss) per common share (dollars)		0.62		0.39
Net income (loss) per common share - diluted
Net income (loss) (millions of Canadian dollars)		516		333
Weighted average number of common shares outstanding (millions of shares)		829.0		847.6
Effect of employee share-based awards (millions of shares)		2.5		2.7
Weighted average number of common shares outstanding, assuming dilution (millions of shares)		831.5		850.3
Net income (loss) per common share (dollars)		0.62		0.39

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11. Earnings reinvested

	Three Months     to March 31
millions of Canadian dollars	2018			2017
Earnings reinvested at beginning of period		24,714			25,352
Net income (loss) for the period		516			333
Share purchases in excess of stated value		(237	)		-
Dividends declared		(132	)		(127	)
Earnings reinvested at end of period		24,861			25,558

12. Other comprehensive income (loss) information

Changes in accumulated other comprehensive income (loss):

millions of Canadian dollars	2018			2017
Balance at January 1		(1,815	)		(1,897	)
Postretirement benefits liability adjustment:
Current period change excluding amounts reclassified from accumulated other comprehensive income		(19	)		41
Amounts reclassified from accumulated other comprehensive income		34			36
Balance at March 31		(1,800	)		(1,820	)

Amounts reclassified out of accumulated other comprehensive income (loss) - before tax income (expense):

	Three Months to March 31
millions of Canadian dollars	2018			2017
Amortization of postretirement benefits liability adjustment included in net periodic benefit cost (a)		(46	)		(49	)

(a) This accumulated other comprehensive income component is included in the computation of net periodic benefit cost (note 6).

Income tax expense (credit) for components of other comprehensive income (loss):

	Three Months to March 31
millions of Canadian dollars	2018			2017
Postretirement benefits liability adjustments:
Postretirement benefits liability adjustment (excluding amortization)		(7	)		16
Amortization of postretirement benefits liability adjustment included in net periodic benefit cost		12			13
Total		5			29

13. Recently issued accounting standards

Effective January 1, 2019, Imperial will adopt the Financial Accounting Standards Board’s standard, Leases, as amended. The standard requires all leases with an initial term greater than one year be recorded on the balance sheet as an asset and a lease liability. Imperial is gathering and evaluating data, and recently acquired a system to facilitate implementation. The company continues to progress an assessment of the magnitude of the effect on the company’s financial statements.

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Item 2. Management’s discussion and analysis of financial condition and results of operations

Operating results

First quarter 2018 vs. first quarter 2017

The company’s net income for the first quarter of 2018 was $516 million or $0.62 per share on a diluted basis, an increase of $183 million compared to the net income of $333 million or $0.39 per share, for the same period last year.

Upstream recorded a net loss in the first quarter of $44 million compared to a net loss of $86 million in the same period of 2017. The results reflect the impact of higher Canadian crude oil realizations of about $90 million, partially offset by unfavourable foreign exchange effects.

West Texas Intermediate (WTI) averaged US$62.89 per barrel in the first quarter of 2018, up from US$51.78 per barrel in the same quarter of 2017. Western Canada Select (WCS) averaged US$38.67 per barrel and US$37.26 per barrel respectively for the same periods. The WTI / WCS differential widened significantly to 39 percent in the first quarter of 2018, from 28 percent in the same period of 2017.

The Canadian dollar averaged US$0.79 in the first quarter of 2018, an increase of US$0.03 from the first quarter of 2017.

Imperial’s average Canadian dollar realizations for bitumen and synthetic crudes moved generally in line with the North American benchmarks, adjusted for changes in exchange rates and transportation costs. Bitumen realizations averaged $35.61 per barrel for the first quarter of 2018, a decrease of $0.60 per barrel versus the first quarter of 2017. Synthetic crude realizations averaged $77.26 per barrel, an increase of $9.47 per barrel for the same period of 2017.

Gross production of Cold Lake bitumen averaged 153,000 barrels per day in the first quarter, compared to 158,000 barrels per day in the same period last year. Lower production was mainly due to a number of small operational constraints.

Gross production of Kearl bitumen averaged 182,000 barrels per day in the first quarter (129,000 barrels Imperial’s share) unchanged from the first quarter of 2017.

The company’s share of gross production from Syncrude averaged 65,000 barrels per day, compared to 66,000 barrels per day in the first quarter of 2017.

Downstream net income was $521 million in the first quarter, up from $380 million in the first quarter of 2017. Earnings increased mainly due to stronger margins of about $310 million, partially offset by the absence of the $151 million gain on the sale of a surplus property in 2017.

Refinery throughput averaged 408,000 barrels per day, up from 398,000 barrels per day in the first quarter of 2017. Capacity utilization increased to 96 percent.

Petroleum product sales were 478,000 barrels per day, compared to 486,000 barrels per day in the first quarter of 2017.

Chemical net income was $73 million in the first quarter, up from $45 million in the same quarter of 2017, primarily due to stronger margins.

15

IMPERIAL OIL LIMITED

Corporate and other expenses were $34 million in the first quarter, compared with $6 million in the same period of 2017. As part of the implementation of the Financial Accounting Standards Board’s update, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, beginning January 1, 2018, Corporate and other includes all non-service pension and postretirement benefit expenses. Prior to 2018, the majority of these costs were allocated to the operating segments.

16

IMPERIAL OIL LIMITED

Liquidity and capital resources

Cash flow generated from operating activities was $985 million in the first quarter, an increase of $631 million from the corresponding period in 2017, reflecting higher earnings and working capital effects.

Investing activities used net cash of $365 million in the first quarter, compared with $61 million cash generated from investing activities in the same period in 2017, reflecting higher additions to property, plant and equipment, and lower proceeds from asset sales.

Cash used in financing activities was $390 million in the first quarter, compared with $134 million in the first quarter of 2017. Dividends paid in the first quarter of 2018 were $134 million. The per share dividend paid in the first quarter was $0.16, up from $0.15 in the same period of 2017. During the first quarter, the company purchased about 7.2 million shares for approximately $250 million.

The company’s cash balance was $1,425 million at March 31, 2018, versus $672 million at the end of first quarter 2017.

On April 27, 2018, the company announced by news release that it had received final approval from the Toronto Stock Exchange for an amendment to its normal course issuer bid to increase the number of common shares that it may purchase. Under the amendment, the number of common shares that may be purchased will increase to a maximum of 42,326,545 common shares during the period June 27, 2017 to June 26, 2018, which includes shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid. No other provisions of the normal course issuer bid have changed.

Recently issued accounting standards

Effective January 1, 2019, Imperial will adopt the Financial Accounting Standards Board’s standard, Leases, as amended. The standard requires all leases with an initial term greater than one year be recorded on the balance sheet as an asset and a lease liability. Imperial is gathering and evaluating data, and recently acquired a system to facilitate implementation. The company continues to progress an assessment of the magnitude of the effect on the company’s financial statements.

Forward-looking statements

Statements in this report regarding future events or conditions are forward-looking statements. Actual future financial and operating results could differ materially due to the impact of market conditions, changes in law or governmental policy, changes in operating conditions and costs, changes in project schedules, operating performance, demand for oil and gas, commercial negotiations or other technical and economic factors.

17

IMPERIAL OIL LIMITED

Item 3. Quantitative and qualitative disclosures about market risk

Information about market risks for the three months ended March 31, 2018, does not differ materially from that discussed on page 24 of the company’s annual report on Form 10-K for the year ended December 31, 2017.

Item 4. Controls and procedures

As indicated in the certifications in Exhibit 31 of this report, the company’s principal executive officer and principal financial officer have evaluated the company’s disclosure controls and procedures as of

March 31, 2018. Based on that evaluation, these officers have concluded that the company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to them in a manner that allows for timely decisions regarding required disclosures and are effective in ensuring that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There has not been any change in the company’s internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.

18

IMPERIAL OIL LIMITED

PART II.  OTHER INFORMATION

Item 1.  Legal proceedings

On April 5, 2018, Imperial was charged by the Ontario Crown in the Ontario Court of Justice with committing the offence of discharging or causing or permitting the discharge of wastewater with a low pH from Imperial’s refinery in Sarnia, Ontario into the St. Clair River, which may impair the quality of the water contrary to section 30(1) of the Ontario Water Resources Act, R.S.O. 1990, c. O.40, as amended, which offence was alleged to have occurred on April 19, 2016. No determination of impact can be made at this time.

Item 2.  Unregistered sales of equity securities and use of proceeds

Issuer purchases of equity securities

	Total number of shares purchased		Average price paid per share (Canadian dollars)		Total number of shares purchased as part of publicly announced plans or programs		Maximum number of shares that may yet be purchased under the plans or programs (a)
January 2018		-		-		-		12,323,485
(January 1 - January 31)
February 2018		3,144,161		34.75		3,144,161		9,179,324
(February 1 - February 28)
March 2018		4,061,321		34.65		4,061,321		5,118,003	(b)
(March 1 - March 31)

(a) On June 22, 2017, the company announced by news release that it had received final approval from the Toronto Stock Exchange for a new normal course issuer bid and will continue its existing share purchase program. The program enables the company to purchase up to a maximum of 25,395,927 common shares during the period June 27, 2017 to June 26, 2018, which includes shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid. As in the past, Exxon Mobil Corporation has advised the company that it intends to participate to maintain its ownership percentage at approximately 69.6 percent. The program will end should the company purchase the maximum allowable number of shares, or on June 26, 2018.

(b) In its most recent quarterly earnings release, the company stated that it anticipates maximizing its share purchases in the second quarter of 2018, taking into account the amendment on April 27, 2018, as described below. Purchase plans may be modified at any time without prior notice.

On April 27, 2018, the company announced by news release that it had received final approval from the Toronto Stock Exchange for an amendment to its normal course issuer bid to increase the number of common shares that it may purchase. Under the amendment, the number of common shares that may be purchased will increase to a maximum of 42,326,545 common shares during the period June 27, 2017 to June 26, 2018, which includes shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid. No other provisions of the normal course issuer bid have changed.

The company will continue to evaluate its share purchase program in the context of its overall capital activities.

19

IMPERIAL OIL LIMITED

Item 6. Exhibits

(31.1) Certification by the principal executive officer of the company pursuant to Rule 13a-14(a).

(31.2) Certification by the principal financial officer of the company pursuant to Rule 13a-14(a).

(32.1) Certification by the chief executive officer of the company pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350.

(32.2) Certification by the chief financial officer of the company pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350.

(101) Interactive data files.

20

IMPERIAL OIL LIMITED

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Imperial Oil Limited (Registrant)
Date: May 2, 2018	/s/ Daniel E. Lyons
	(Signature)
	Daniel E. Lyons
	Senior vice-president, finance and administration, and controller
	(Principal accounting officer)
Date: May 2, 2018	/s/ Cathryn Walker
	(Signature)
	Cathryn Walker
	Assistant corporate secretary

21

EX-31.1

IMPERIAL OIL LIMITED

Exhibit (31.1)

Certifications

I, Richard M. Kruger, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Imperial Oil Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:    May 2, 2018

/s/ Richard M. Kruger

Richard M. Kruger

Chairman, president and

chief executive officer

(Principal executive officer)

22

EX-31.2

IMPERIAL OIL LIMITED

Exhibit (31.2)

Certifications

I, Daniel E. Lyons, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Imperial Oil Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:     May 2, 2018

/s/ Daniel E. Lyons

Daniel E. Lyons

Senior vice-president, finance and

administration, and controller

(Principal financial officer)

23

EX-32.1

IMPERIAL OIL LIMITED

Exhibit (32.1)

Certification of Periodic Financial Report

Pursuant to 18 U.S.C. Section 1350

For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Richard M. Kruger, the chief executive officer of Imperial Oil Limited (the “company”), hereby certifies that, to his knowledge:

(i) The quarterly report on Form 10-Q of the company for the quarter ended March 31, 2018 as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the company.

Date:    May 2, 2018

/s/ Richard M. Kruger

Richard M. Kruger

Chairman, president and

chief executive officer

(Principal executive officer)

24

EX-32.2

IMPERIAL OIL LIMITED

Exhibit (32.2)

Certification of Periodic Financial Report

Pursuant to 18 U.S.C. Section 1350

For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Daniel E. Lyons, the chief financial officer of Imperial Oil Limited (the “company”), hereby certifies that, to his knowledge:

(i) The quarterly report on Form 10-Q of the company for the quarter ended March 31, 2018 as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company.

Date:     May 2, 2018

/s/ Daniel E. Lyons

Daniel E. Lyons

Senior vice-president, finance and

administration, and controller

(Chief financial officer)

25

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2018 shares
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Trading Symbol	IMO
Entity Registrant Name	IMPERIAL OIL LTD
Entity Central Index Key	0000049938
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	824,036,825

XML

Consolidated statement of income - CAD ($) $ in Millions		3 Months Ended
		Mar. 31, 2018		Mar. 31, 2017
Revenues and other income
Revenues	[1],[2]	$ 7,900		$ 6,958
Investment and other income (note 5)		34		198
Total revenues and other income		7,934		7,156
Expenses
Exploration		8		22
Purchases of crude oil and products	[3]	4,780		4,333
Production and manufacturing	[4]	1,431		1,345
Selling and general	[4]	194		203
Federal excise tax		397		394
Depreciation and depletion		377		392
Non-service pension and postretirement benefit	[6]	27	[5]	33
Financing (note 7)		23		14
Total expenses		7,237		6,736
Income (loss) before income taxes		697		420
Income taxes		181		87
Net income (loss)		$ 516		$ 333
Per share information (Canadian dollars)
Net income (loss) per common share - basic (note 10)		$ 0.62		$ 0.39
Net income (loss) per common share - diluted (note 10)		0.62		0.39
Dividends per common share		$ 0.16		$ 0.15

[1] Amounts from related parties included in revenues. $1,373, $1,037

[2] Included export sales to the United States of $1,207 million (2017 - $899 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.

[3] Amounts to related parties included in purchases of crude oil and products. $892, $609

[4] Amounts to related parties included in production and manufacturing, and selling and general expenses $141, $141

[5] As part of the implementation of Accounting Standard Update, Compensation - Retirement Benefits (Topic 715), beginning January 1, 2018, Corporate and other includes all non-service pension and postretirement benefit expense. Prior to 2018, the majority of these costs were allocated to the operating segments. See note 2 for additional details.

[6] Prior year amounts have been reclassified. See note 2 for additional details.

XML

Consolidated statement of income (Parenthetical) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Amounts from related parties included in revenues.	$ 1,373	$ 1,037
Amounts to related parties included in purchases of crude oil and products.	892	609
Amounts to related parties included in production and manufacturing, and selling and general expenses.	$ 141	$ 141

XML

Consolidated statement of comprehensive income - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Net income (loss)	$ 516	$ 333
Other comprehensive income (loss), net of income taxes
Postretirement benefits liability adjustment (excluding amortization)	(19)	41
Amortization of postretirement benefits liability adjustment included in net periodic benefit costs	34	36
Total other comprehensive income (loss)	15	77
Comprehensive income (loss)	$ 531	$ 410

XML

Consolidated balance sheet - CAD ($) $ in Millions		Mar. 31, 2018		Dec. 31, 2017
Current assets
Cash		$ 1,425	[1]	$ 1,195
Accounts receivable, less estimated doubtful accounts	[2]	2,285		2,712
Inventories of crude oil and products		1,262		1,075
Materials, supplies and prepaid expenses		455		425
Total current assets		5,427		5,407
Investments and long-term receivables	[3]	850		865
Property, plant and equipment,		53,031		52,778
less accumulated depreciation and depletion		(18,679)		(18,305)
Property, plant and equipment, net		34,352		34,473
Goodwill		186		186
Other assets, including intangibles, net (note 9)		765		670
Total assets		41,580		41,601
Current liabilities
Notes and loans payable	[4]	202		202
Accounts payable and accrued liabilities (note 9)	[2]	3,461		3,877
Income taxes payable		73		57
Total current liabilities		3,736		4,136
Long-term debt (note 8)	[5]	4,999		5,005
Other long-term obligations (note 9)	[6]	3,851		3,780
Deferred income tax liabilities		4,410		4,245
Total liabilities		16,996		17,166
Shareholders' equity
Common shares at stated value (note 10)	[7]	1,523		1,536
Earnings reinvested (note 11)		24,861		24,714
Accumulated other comprehensive income (loss) (note 12)		(1,800)		(1,815)
Total shareholders' equity		24,584		24,435
Total liabilities and shareholders' equity		$ 41,580		$ 41,601

[1] 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.

[2] Accounts receivable, less estimated doubtful accounts included net amounts receivable from related parties of $354 million (2017 - $509 million).

[3] Investments and long-term receivables included amounts from related parties of $25 million (2017 - $19 million).

[4] Notes and loans payable included amounts to related parties of $75 million (2017 - $75 million).

[5] Long-term debt included amounts to related parties of $4,447 million (2017 - $4,447 million).

[6] Other long-term obligations included amounts to related parties of $49 million (2017 - $60 million).

[7] Number of common shares authorized and outstanding were 1,100 million and 824 million, respectively (2017 - 1,100 million and 831 million, respectively).

XML

Consolidated balance sheet (Parenthetical) - CAD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Amounts receivable (payable) from (to) related parties	$ 354	$ 509
Due to related parties, current	$ 75	$ 75
Common shares authorized	1,100,000,000	1,100,000,000
Common shares outstanding	824,037,000	831,242,000
Investments and Long Term Receivables
Due from related parties	$ 25	$ 19
Long-term debt
Due to related parties	4,447	4,447
Other long-term obligations
Due to related parties	$ 49	$ 60

XML

Consolidated statement of cash flows - CAD ($) $ in Millions		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017
Operating activities
Net income (loss)		$ 516	$ 333
Adjustments for non-cash items:
Depreciation and depletion		377	392
(Gain) loss on asset sales (note 5)	[1]	(10)	(182)
Deferred income taxes and other		185	200
Changes in operating assets and liabilities:
Accounts receivable		427	278
Inventories, materials, supplies and prepaid expenses		(217)	(72)
Income taxes payable		16	(464)
Accounts payable and accrued liabilities		(415)	(210)
All other items - net	[2],[3]	106	79
Cash flows from (used in) operating activities		985	354
Investing activities
Additions to property, plant and equipment	[3]	(371)	(122)
Proceeds from asset sales (note 5)		12	183
Loans to equity company		(6)
Cash flows from (used in) investing activities		(365)	61
Financing activities
Reduction in capitalized lease obligations (note 8)		(6)	(7)
Dividends paid		(134)	(127)
Common shares purchased (note 10)		(250)
Cash flows from (used in) financing activities		(390)	(134)
Increase (decrease) in cash		230	281
Cash at beginning of period		1,195	391
Cash at end of period	[4]	$ 1,425	$ 672

[1] First quarter 2017 included a gain of $174 million ($151 million after tax) from the sale of surplus property in Ontario.

[2] Included contribution to registered pension plans. $44, $40

[3] The impact of carbon emission programs are included in additions to property, plant and equipment, and all other items, net.

[4] 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.

XML

Consolidated statement of cash flows (Parenthetical) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Included contribution to registered pension plans	$ (44)	$ (40)

XML

Basis of financial statement preparation

3 Months Ended

Mar. 31, 2018

Basis of financial statement preparation

1. Basis of financial statement preparation

These unaudited consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (GAAP) and follow the same accounting policies and methods of computation as, and should be read in conjunction with, the most recent annual consolidated financial statements filed with the U.S. Securities and Exchange Commission (SEC) in the company’s 2017 annual report on Form 10-K. In the opinion of the company, the information furnished herein reflects all known accruals and adjustments necessary for a fair statement of the results for the periods reported herein. All such adjustments are of a normal recurring nature. Prior year’s data has been reclassified in certain cases to conform to the current presentation basis.

The company’s exploration and production activities are accounted for under the “successful efforts” method.

The results for the three months ended March 31, 2018, are not necessarily indicative of the operations to be expected for the full year.

All amounts are in Canadian dollars unless otherwise indicated.

XML

Accounting changes

3 Months Ended

Mar. 31, 2018

Accounting changes

2. Accounting changes

Effective January 1, 2018, Imperial adopted the Financial Accounting Standards Board’s standard, Revenue from Contracts with Customers, as amended. The standard establishes a single revenue recognition model for all contracts with customers, eliminates industry and transaction specific requirements, and expands disclosure requirements. The standard was adopted using the modified retrospective method, under which prior year results are not restated, but supplemental information is provided for any material impacts of the standard on 2018 results. The adoption of the standard did not have a material impact on any of the lines reported in the company’s consolidated financial statements. The cumulative effect of adoption of the new standard was de minimis. The company did not elect any practical expedients that require disclosure. See note 4 for additional details.

Effective January 1, 2018, Imperial adopted the Financial Accounting Standards Board’s standard update, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The update requires separate presentation of the service cost component from other components of net benefit costs. The other components are reported in a new line on the company’s consolidated statement of income, “Non-service pension and postretirement benefit”. Imperial elected to use the practical expedient to use the amounts disclosed in the pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements, as it is impracticable to determine the amounts capitalized in those periods. Beginning in 2018, the other components of net benefit costs are included in the Corporate and other expenses. The “Non-service pension and postretirement benefit” line reflects the non-service costs, which primarily includes interest costs, expected return on plan assets, and amortization of actuarial gains and losses, that were previously included in “Production and manufacturing” and “Selling and general” expenses. Additionally, only the service cost component of net benefit costs is eligible for capitalization in situations where it is otherwise appropriate to capitalize employee costs in connection with the construction or production of an asset.

The impact of the retrospective presentation change on Imperial’s consolidated statement of income for the period ended March 31, 2018, is shown below.

millions of Canadian dollars	Three Months to March 31, 2017
	As reported		Change			As adjusted
Production and manufacturing		1,375		(30	)	1,345
Selling and general		206		(3	)	203
Non-service pension and postretirement benefit		—		33		33

Effective January 1, 2018, Imperial adopted the Financial Accounting Standards Board’s standard update, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The standard requires investments in equity securities other than consolidated subsidiaries and equity method investments to be measured at fair value, with changes in the fair value recognized through net income. The company elected a modified approach for equity securities that do not have a readily determinable fair value. This modified approach measures investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. There was no cumulative effect related to the adoption of this standard. The carrying value of equity securities without readily determinable fair values as at March 31, 2018 were not significant to Imperial.

The standard also expanded disclosures related to financial statements. The company’s only notable financial instrument is long-term debt ($4,447 million, excluding capitalized lease obligations), where the difference between fair value and carrying value was de minimis. The fair value of long-term debt was primarily a level 2 measurement.

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Business segments

3 Months Ended

Mar. 31, 2018

Business segments

3. Business segments

Three Months to March 31 millions of Canadian dollars	Upstream						Downstream						Chemical
	2018			2017			2018			2017			2018		2017
Revenues and other income
Revenues (a)		1,989			1,711			5,607			4,974			304		273
Intersegment sales		657			618			362			309			73		67
Investment and other income (note 5)		1			5			22			191			—		1
		2,647			2,334			5,991			5,474			377		341
Expenses
Exploration		8			22			—			—			—		—
Purchases of crude oil and products		1,374			1,116			4,294			4,009			202		201
Production and manufacturing (b)		1,012			973			368			349			51		53
Selling and general (b)		—			3			173			188			21		22
Federal excise tax		—			—			397			394			—		—
Depreciation and depletion		318			336			51			48			3		3
Non-service pension and postretirement benefit (b)		—			—			—			—			—		—
Financing (note 7)		—			4			—			—			—		—
Total expenses		2,712			2,454			5,283			4,988			277		279
Income (loss) before income taxes		(65	)		(120	)		708			486			100		62
Income taxes		(21	)		(34	)		187			106			27		17
Net income (loss)		(44	)		(86	)		521			380			73		45
Cash flows from (used in) operating activities		337			308			590			56			83		(23	)
Capital and exploration expenditures (c)		206			103			57			34			4		4
Total assets as at March 31		34,463			35,898			5,034			4,251			417		391
Three Months to March 31 millions of Canadian dollars	Corporate and Other						Eliminations						Consolidated
	2018			2017			2018			2017			2018		2017
Revenues and other income
Revenues (a)		—			—			—			—			7,900		6,958
Intersegment sales		—			—			(1,092	)		(994	)		—		—
Investment and other income (note 5)		11			1			—			—			34		198
		11			1			(1,092	)		(994	)		7,934		7,156
Expenses
Exploration		—			—			—			—			8		22
Purchases of crude oil and products		—			—			(1,090	)		(993	)		4,780		4,333
Production and manufacturing (b)		—			—			—			—			1,431		1,375
Selling and general (b)		2			(6	)		(2	)		(1	)		194		206
Federal excise tax		—			—			—			—			397		394
Depreciation and depletion		5			5			—			—			377		392
Non-service pension and postretirement benefit (b)		27			—			—			—			27		—
Financing (note 7)		23			10			—			—			23		14
Total expenses		57			9			(1,092	)		(994	)		7,237		6,736
Income (loss) before income taxes		(46	)		(8	)		—			—			697		420
Income taxes		(12	)		(2	)		—			—			181		87
Net income (loss)		(34	)		(6	)		—			—			516		333
Cash flows from (used in) operating activities		(25	)		13			—			—			985		354
Capital and exploration expenditures (c)		7			12			—			—			274		153
Total assets as at March 31		1,934			1,128			(268	)		(258	)		41,580		41,410

(a) Included export sales to the United States of $1,207 million (2017 - $899 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.

(b) As part of the implementation of Accounting Standard Update, Compensation – Retirement Benefits (Topic 715), beginning    January 1, 2018, Corporate and other includes all non-service pension and postretirement benefit expense. Prior to 2018, the majority of these costs were allocated to the operating segments. See note 2 for additional details.

(c) Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to capital leases, additional investments and acquisitions. CAPEX excludes the purchase of carbon emission credits.

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Accounting policy for revenue recognition

3 Months Ended

Mar. 31, 2018

Accounting policy for revenue recognition

4. Accounting policy for revenue recognition

Imperial generally sells crude oil, natural gas and petroleum and chemical products under short-term agreements at prevailing market prices. In some cases, products may be sold under long-term agreements, with periodic price adjustments to reflect market conditions.

Revenue is recognized at the amount the company expects to receive when the customer has taken control, which is typically when title transfers and the customer has assumed the risks and rewards of ownership. The prices of certain sales are based on price indexes that are sometimes not available until the next period. In such cases, estimated realizations are accrued when the sale is recognized, and are finalized when final information is available. Such adjustments to revenue from performance obligations satisfied in previous periods are not significant. Payment for revenue transactions is typically due within 30 days. Future volume delivery obligations that are unsatisfied at the end of the period are expected to be fulfilled through ordinary production or purchases. These performance obligations are based on market prices at the time of the transaction and are fully constrained due to market price volatility.

“Revenues” and “Accounts receivable, less estimated doubtful accounts” primarily arise from contracts with customers. Long-term receivables are primarily from non-customers. Contract assets are mainly from marketing assistance programs and are not significant. Contract liabilities are mainly customer prepayments, loyalty programs and accruals of expected volume discounts, and are not significant.

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Investment and other income

3 Months Ended

Mar. 31, 2018

Investment and other income

5. Investment and other income

Investment and other income included gains and losses on asset sales as follows:    

	Three Months
	to March 31
millions of Canadian dollars	2018		2017
Proceeds from asset sales		12		183
Book value of asset sales		2		1
Gain (loss) on asset sales, before tax (a)		10		182
Gain (loss) on asset sales, after tax (a)		7		158

(a) First quarter 2017 included a gain of $174 million ($151 million after tax) from the sale of surplus property in Ontario.

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Employee retirement benefits

3 Months Ended

Mar. 31, 2018

Employee retirement benefits

6. Employee retirement benefits

The components of net benefit cost were as follows:     

	Three Months
	to March 31
millions of Canadian dollars	2018			2017
Pension benefits:
Current service cost		60			55
Interest cost		76			79
Expected return on plan assets		(101	)		(101	)
Amortization of prior service cost		1			3
Amortization of actuarial loss (gain)		44			44
Net periodic benefit cost		80			80
Other postretirement benefits:
Current service cost		4			4
Interest cost		5			6
Amortization of actuarial loss (gain)		2			2
Net periodic benefit cost		11			12

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Financing and additional notes and loans payable information

3 Months Ended

Mar. 31, 2018

Financing and additional notes and loans payable information

7. Financing and additional notes and loans payable information

	Three Months
	to March 31
millions of Canadian dollars	2018			2017
Debt-related interest		30			22
Capitalized interest		(7	)		(12	)
Net interest expense		23			10
Other interest		—			4
Total financing		23			14

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Long-term debt

3 Months Ended

Mar. 31, 2018

Long-term debt

8. Long-term debt

	As at		As at
	Mar 31		Dec 31
millions of Canadian dollars	2018		2017
Long-term debt		4,447		4,447
Capital leases		552		558
Total long-term debt		4,999		5,005

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Other long-term obligations

3 Months Ended

Mar. 31, 2018

Other long-term obligations

9.    Other long-term obligations

	As at		As at
	Mar 31		Dec 31
millions of Canadian dollars	2018		2017
Employee retirement benefits (a)		1,535		1,529
Asset retirement obligations and other environmental liabilities (b)		1,460		1,460
Share-based incentive compensation liabilities		96		99
Other obligations (c)		760		692
Total other long-term obligations		3,851		3,780

(a) Total recorded employee retirement benefits obligations also included $56 million in current liabilities (2017 - $56 million).

(b) Total asset retirement obligations and other environmental liabilities also included $101 million in current liabilities (2017 - $101 million).

(c) Included carbon emission program obligations. Carbon emission program credits are recorded under other assets, including intangibles, net.

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Common shares

3 Months Ended

Mar. 31, 2018

Common shares

10.     Common shares

	As of		As of
	Mar 31		Dec 31
thousands of shares	2018		2017
Authorized		1,100,000		1,100,000
Common shares outstanding		824,037		831,242

The 12-month normal course issuer bid program that was in place throughout the first quarter of 2018 came into effect in June of 2017. The program enabled the company to purchase up to a maximum of 25,395,927 common shares (3 percent of the total shares on June 13, 2017), which included shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid. As in the past, Exxon Mobil Corporation participated to maintain its ownership percentage at approximately 69.6 percent. The excess of the purchase cost over the stated value of shares purchased has been recorded as a distribution of earnings reinvested.

On April 27, 2018, the company announced an amendment to its normal course issuer bid to increase the number of common shares that it may purchase. Under the amendment, the number of common shares that may be purchased will increase to a maximum of 42,326,545 common shares (5 percent of the total shares on June 13, 2017) during the period June 27, 2017 to June 26, 2018, which includes shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid. No other provisions of the normal course issuer bid have changed.

The company’s common share activities are summarized below:    

	Thousands of shares			Millions of dollars
Balance as at December 31, 2016		847,599			1,566
Issued under employee share-based awards		2			—
Purchases at stated value		(16,359	)		(30	)
Balance as at December 31, 2017		831,242			1,536
Issued under employee share-based awards		—			—
Purchases at stated value		(7,205	)		(13	)
Balance as at March 31, 2018		824,037			1,523

The following table provides the calculation of basic and diluted earnings per common share:

	Three Months
	to March 31
	2018		2017
Net income (loss) per common share - basic
Net income (loss) (millions of Canadian dollars)		516		333
Weighted average number of common shares outstanding (millions of shares)		829.0		847.6
Net income (loss) per common share (dollars)		0.62		0.39
Net income (loss) per common share - diluted
Net income (loss) (millions of Canadian dollars)		516		333
Weighted average number of common shares outstanding (millions of shares)		829.0		847.6
Effect of employee share-based awards (millions of shares)		2.5		2.7
Weighted average number of common shares outstanding, assuming dilution (millions of shares)		831.5		850.3
Net income (loss) per common share (dollars)		0.62		0.39

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Earnings reinvested

3 Months Ended

Mar. 31, 2018

Earnings reinvested

11. Earnings reinvested

	Three Months
	to March 31
millions of Canadian dollars	2018			2017
Earnings reinvested at beginning of period		24,714			25,352
Net income (loss) for the period		516			333
Share purchases in excess of stated value		(237	)		—
Dividends declared		(132	)		(127	)
Earnings reinvested at end of period		24,861			25,558

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Other comprehensive income (loss) information

3 Months Ended

Mar. 31, 2018

Other comprehensive income (loss) information

12. Other comprehensive income (loss) information

Changes in accumulated other comprehensive income (loss):

millions of Canadian dollars	2018			2017
Balance at January 1		(1,815	)		(1,897	)
Postretirement benefits liability adjustment:
Current period change excluding amounts reclassified from accumulated other comprehensive income		(19	)		41
Amounts reclassified from accumulated other comprehensive income		34			36
Balance at March 31		(1,800	)		(1,820	)

Amounts reclassified out of accumulated other comprehensive income (loss) - before tax income (expense):

	Three Months
	to March 31
millions of Canadian dollars	2018			2017
Amortization of postretirement benefits liability adjustment included in net periodic benefit cost (a)		(46	)		(49	)

(a) This accumulated other comprehensive income component is included in the computation of net periodic benefit cost (note 6).

Income tax expense (credit) for components of other comprehensive income (loss):

	Three Months
	to March 31
millions of Canadian dollars	2018			2017
Postretirement benefits liability adjustments:
Postretirement benefits liability adjustment (excluding amortization)		(7	)		16
Amortization of postretirement benefits liability adjustment included in net periodic benefit cost		12			13
Total		5			29

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Recently issued accounting standards

3 Months Ended

Mar. 31, 2018

Recently issued accounting standards

13. Recently issued accounting standards

Effective January 1, 2019, Imperial will adopt the Financial Accounting Standards Board’s standard, Leases, as amended. The standard requires all leases with an initial term greater than one year be recorded on the balance sheet as an asset and a lease liability. Imperial is gathering and evaluating data, and recently acquired a system to facilitate implementation. The company continues to progress an assessment of the magnitude of the effect on the company’s financial statements.

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Accounting changes (Policies)

3 Months Ended

Mar. 31, 2018

Accounting changes

Effective January 1, 2018, Imperial adopted the Financial Accounting Standards Board’s standard, Revenue from Contracts with Customers, as amended. The standard establishes a single revenue recognition model for all contracts with customers, eliminates industry and transaction specific requirements, and expands disclosure requirements. The standard was adopted using the modified retrospective method, under which prior year results are not restated, but supplemental information is provided for any material impacts of the standard on 2018 results. The adoption of the standard did not have a material impact on any of the lines reported in the company’s consolidated financial statements. The cumulative effect of adoption of the new standard was de minimis. The company did not elect any practical expedients that require disclosure. See note 4 for additional details.

Effective January 1, 2018, Imperial adopted the Financial Accounting Standards Board’s standard update, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The update requires separate presentation of the service cost component from other components of net benefit costs. The other components are reported in a new line on the company’s consolidated statement of income, “Non-service pension and postretirement benefit”. Imperial elected to use the practical expedient to use the amounts disclosed in the pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements, as it is impracticable to determine the amounts capitalized in those periods. Beginning in 2018, the other components of net benefit costs are included in the Corporate and other expenses. The “Non-service pension and postretirement benefit” line reflects the non-service costs, which primarily includes interest costs, expected return on plan assets, and amortization of actuarial gains and losses, that were previously included in “Production and manufacturing” and “Selling and general” expenses. Additionally, only the service cost component of net benefit costs is eligible for capitalization in situations where it is otherwise appropriate to capitalize employee costs in connection with the construction or production of an asset.

Effective January 1, 2018, Imperial adopted the Financial Accounting Standards Board’s standard update, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The standard requires investments in equity securities other than consolidated subsidiaries and equity method investments to be measured at fair value, with changes in the fair value recognized through net income. The company elected a modified approach for equity securities that do not have a readily determinable fair value. This modified approach measures investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. There was no cumulative effect related to the adoption of this standard. The carrying value of equity securities without readily determinable fair values as at March 31, 2018 were not significant to Imperial.

Accounting policy for revenue recognition

Imperial generally sells crude oil, natural gas and petroleum and chemical products under short-term agreements at prevailing market prices. In some cases, products may be sold under long-term agreements, with periodic price adjustments to reflect market conditions.

Revenue is recognized at the amount the company expects to receive when the customer has taken control, which is typically when title transfers and the customer has assumed the risks and rewards of ownership. The prices of certain sales are based on price indexes that are sometimes not available until the next period. In such cases, estimated realizations are accrued when the sale is recognized, and are finalized when final information is available. Such adjustments to revenue from performance obligations satisfied in previous periods are not significant. Payment for revenue transactions is typically due within 30 days. Future volume delivery obligations that are unsatisfied at the end of the period are expected to be fulfilled through ordinary production or purchases. These performance obligations are based on market prices at the time of the transaction and are fully constrained due to market price volatility.

“Revenues” and “Accounts receivable, less estimated doubtful accounts” primarily arise from contracts with customers. Long-term receivables are primarily from non-customers. Contract assets are mainly from marketing assistance programs and are not significant. Contract liabilities are mainly customer prepayments, loyalty programs and accruals of expected volume discounts, and are not significant.

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Accounting changes (Tables)

3 Months Ended

Mar. 31, 2018

Presentation Change on Consolidated Statement of Income

The impact of the retrospective presentation change on Imperial’s consolidated statement of income for the period ended March 31, 2018, is shown below.

millions of Canadian dollars	Three Months to March 31, 2017
	As reported		Change			As adjusted
Production and manufacturing		1,375		(30	)	1,345
Selling and general		206		(3	)	203
Non-service pension and postretirement benefit		—		33		33

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Business segments (Tables)

3 Months Ended

Mar. 31, 2018

Business Segments

Three Months to March 31 millions of Canadian dollars	Upstream						Downstream						Chemical
	2018			2017			2018			2017			2018		2017
Revenues and other income
Revenues (a)		1,989			1,711			5,607			4,974			304		273
Intersegment sales		657			618			362			309			73		67
Investment and other income (note 5)		1			5			22			191			—		1
		2,647			2,334			5,991			5,474			377		341
Expenses
Exploration		8			22			—			—			—		—
Purchases of crude oil and products		1,374			1,116			4,294			4,009			202		201
Production and manufacturing (b)		1,012			973			368			349			51		53
Selling and general (b)		—			3			173			188			21		22
Federal excise tax		—			—			397			394			—		—
Depreciation and depletion		318			336			51			48			3		3
Non-service pension and postretirement benefit (b)		—			—			—			—			—		—
Financing (note 7)		—			4			—			—			—		—
Total expenses		2,712			2,454			5,283			4,988			277		279
Income (loss) before income taxes		(65	)		(120	)		708			486			100		62
Income taxes		(21	)		(34	)		187			106			27		17
Net income (loss)		(44	)		(86	)		521			380			73		45
Cash flows from (used in) operating activities		337			308			590			56			83		(23	)
Capital and exploration expenditures (c)		206			103			57			34			4		4
Total assets as at March 31		34,463			35,898			5,034			4,251			417		391
Three Months to March 31 millions of Canadian dollars	Corporate and Other						Eliminations						Consolidated
	2018			2017			2018			2017			2018		2017
Revenues and other income
Revenues (a)		—			—			—			—			7,900		6,958
Intersegment sales		—			—			(1,092	)		(994	)		—		—
Investment and other income (note 5)		11			1			—			—			34		198
		11			1			(1,092	)		(994	)		7,934		7,156
Expenses
Exploration		—			—			—			—			8		22
Purchases of crude oil and products		—			—			(1,090	)		(993	)		4,780		4,333
Production and manufacturing (b)		—			—			—			—			1,431		1,375
Selling and general (b)		2			(6	)		(2	)		(1	)		194		206
Federal excise tax		—			—			—			—			397		394
Depreciation and depletion		5			5			—			—			377		392
Non-service pension and postretirement benefit (b)		27			—			—			—			27		—
Financing (note 7)		23			10			—			—			23		14
Total expenses		57			9			(1,092	)		(994	)		7,237		6,736
Income (loss) before income taxes		(46	)		(8	)		—			—			697		420
Income taxes		(12	)		(2	)		—			—			181		87
Net income (loss)		(34	)		(6	)		—			—			516		333
Cash flows from (used in) operating activities		(25	)		13			—			—			985		354
Capital and exploration expenditures (c)		7			12			—			—			274		153
Total assets as at March 31		1,934			1,128			(268	)		(258	)		41,580		41,410

(a) Included export sales to the United States of $1,207 million (2017 - $899 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.

(b) As part of the implementation of Accounting Standard Update, Compensation – Retirement Benefits (Topic 715), beginning    January 1, 2018, Corporate and other includes all non-service pension and postretirement benefit expense. Prior to 2018, the majority of these costs were allocated to the operating segments. See note 2 for additional details.

(c) Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to capital leases, additional investments and acquisitions. CAPEX excludes the purchase of carbon emission credits.

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Investment and other income (Tables)

3 Months Ended

Mar. 31, 2018

Gains and Losses on Asset Sales

Investment and other income included gains and losses on asset sales as follows:    

	Three Months
	to March 31
millions of Canadian dollars	2018		2017
Proceeds from asset sales		12		183
Book value of asset sales		2		1
Gain (loss) on asset sales, before tax (a)		10		182
Gain (loss) on asset sales, after tax (a)		7		158

(a) First quarter 2017 included a gain of $174 million ($151 million after tax) from the sale of surplus property in Ontario.

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Employee retirement benefits (Tables)

3 Months Ended

Mar. 31, 2018

Schedule of Components of Net Benefit Cost

The components of net benefit cost were as follows:     

	Three Months
	to March 31
millions of Canadian dollars	2018			2017
Pension benefits:
Current service cost		60			55
Interest cost		76			79
Expected return on plan assets		(101	)		(101	)
Amortization of prior service cost		1			3
Amortization of actuarial loss (gain)		44			44
Net periodic benefit cost		80			80
Other postretirement benefits:
Current service cost		4			4
Interest cost		5			6
Amortization of actuarial loss (gain)		2			2
Net periodic benefit cost		11			12

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Financing and additional notes and loans payable information (Tables)

3 Months Ended

Mar. 31, 2018

Financing and Additional Notes and Loans Payable Information

	Three Months
	to March 31
millions of Canadian dollars	2018			2017
Debt-related interest		30			22
Capitalized interest		(7	)		(12	)
Net interest expense		23			10
Other interest		—			4
Total financing		23			14

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Long-term debt (Tables)

3 Months Ended

Mar. 31, 2018

Long-Term Debt

	As at		As at
	Mar 31		Dec 31
millions of Canadian dollars	2018		2017
Long-term debt		4,447		4,447
Capital leases		552		558
Total long-term debt		4,999		5,005

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Other long-term obligations (Tables)

3 Months Ended

Mar. 31, 2018

Other Long-Term Obligations

	As at		As at
	Mar 31		Dec 31
millions of Canadian dollars	2018		2017
Employee retirement benefits (a)		1,535		1,529
Asset retirement obligations and other environmental liabilities (b)		1,460		1,460
Share-based incentive compensation liabilities		96		99
Other obligations (c)		760		692
Total other long-term obligations		3,851		3,780

(a) Total recorded employee retirement benefits obligations also included $56 million in current liabilities (2017 - $56 million).

(b) Total asset retirement obligations and other environmental liabilities also included $101 million in current liabilities (2017 - $101 million).

(c) Included carbon emission program obligations. Carbon emission program credits are recorded under other assets, including intangibles, net.

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Common shares (Tables)

3 Months Ended

Mar. 31, 2018

Summary of Common Shares

	As of		As of
	Mar 31		Dec 31
thousands of shares	2018		2017
Authorized		1,100,000		1,100,000
Common shares outstanding		824,037		831,242

Common Share Activities

The company’s common share activities are summarized below:    

	Thousands of shares			Millions of dollars
Balance as at December 31, 2016		847,599			1,566
Issued under employee share-based awards		2			—
Purchases at stated value		(16,359	)		(30	)
Balance as at December 31, 2017		831,242			1,536
Issued under employee share-based awards		—			—
Purchases at stated value		(7,205	)		(13	)
Balance as at March 31, 2018		824,037			1,523

Calculation of Basic and Diluted Earnings Per Share

The following table provides the calculation of basic and diluted earnings per common share:

	Three Months
	to March 31
	2018		2017
Net income (loss) per common share - basic
Net income (loss) (millions of Canadian dollars)		516		333
Weighted average number of common shares outstanding (millions of shares)		829.0		847.6
Net income (loss) per common share (dollars)		0.62		0.39
Net income (loss) per common share - diluted
Net income (loss) (millions of Canadian dollars)		516		333
Weighted average number of common shares outstanding (millions of shares)		829.0		847.6
Effect of employee share-based awards (millions of shares)		2.5		2.7
Weighted average number of common shares outstanding, assuming dilution (millions of shares)		831.5		850.3
Net income (loss) per common share (dollars)		0.62		0.39

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Earnings reinvested (Tables)

3 Months Ended

Mar. 31, 2018

Summary of Earnings Reinvested

	Three Months
	to March 31
millions of Canadian dollars	2018			2017
Earnings reinvested at beginning of period		24,714			25,352
Net income (loss) for the period		516			333
Share purchases in excess of stated value		(237	)		—
Dividends declared		(132	)		(127	)
Earnings reinvested at end of period		24,861			25,558

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Other comprehensive income (loss) information (Tables)

3 Months Ended

Mar. 31, 2018

Changes in Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss):

millions of Canadian dollars	2018			2017
Balance at January 1		(1,815	)		(1,897	)
Postretirement benefits liability adjustment:
Current period change excluding amounts reclassified from accumulated other comprehensive income		(19	)		41
Amounts reclassified from accumulated other comprehensive income		34			36
Balance at March 31		(1,800	)		(1,820	)

Amounts Reclassified Out of Accumulated Other Comprehensive Income (Loss) - Before-Tax Income (Expense)

Amounts reclassified out of accumulated other comprehensive income (loss) - before tax income (expense):

	Three Months
	to March 31
millions of Canadian dollars	2018			2017
Amortization of postretirement benefits liability adjustment included in net periodic benefit cost (a)		(46	)		(49	)

(a) This accumulated other comprehensive income component is included in the computation of net periodic benefit cost (note 6).

Income Tax Expense (Credit) for Components of Other Comprehensive Income (Loss)

Income tax expense (credit) for components of other comprehensive income (loss):

	Three Months
	to March 31
millions of Canadian dollars	2018			2017
Postretirement benefits liability adjustments:
Postretirement benefits liability adjustment (excluding amortization)		(7	)		16
Amortization of postretirement benefits liability adjustment included in net periodic benefit cost		12			13
Total		5			29

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Accounting changes - Presentation Change on Consolidated Statement of Income (Detail) - CAD ($) $ in Millions		3 Months Ended
		Mar. 31, 2018		Mar. 31, 2017
Change in Accounting Estimate [Line Items]
Production and manufacturing	[1]	$ 1,431		$ 1,345
Selling and general	[1]	194		203
Non-service pension and postretirement benefit	[3]	$ 27	[2]	33
Previously reported
Change in Accounting Estimate [Line Items]
Production and manufacturing				1,375
Selling and general				206
Change higher/(lower)
Change in Accounting Estimate [Line Items]
Production and manufacturing				(30)
Selling and general				(3)
Non-service pension and postretirement benefit				$ 33

[1] Amounts to related parties included in production and manufacturing, and selling and general expenses $141, $141

[2] As part of the implementation of Accounting Standard Update, Compensation - Retirement Benefits (Topic 715), beginning January 1, 2018, Corporate and other includes all non-service pension and postretirement benefit expense. Prior to 2018, the majority of these costs were allocated to the operating segments. See note 2 for additional details.

[3] Prior year amounts have been reclassified. See note 2 for additional details.

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Accounting Changes - Additional Information (Detail) - CAD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of long-term debt	$ 4,447	$ 4,447
Financial Instruments | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of long-term debt	$ 4,447

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Business Segments (Detail) - CAD ($) $ in Millions		3 Months Ended
		Mar. 31, 2018		Mar. 31, 2017	Dec. 31, 2017
Revenues and other income
Revenues	[1],[2]	$ 7,900		$ 6,958
Investment and other income (note 5)		34		198
Total revenues and other income		7,934		7,156
Expenses
Exploration		8		22
Purchases of crude oil and products	[3]	4,780		4,333
Production and manufacturing	[4]	1,431		1,375
Selling and general	[4]	194		206
Federal excise tax		397		394
Depreciation and depletion		377		392
Non-service pension and postretirement benefit	[5]	27	[4]	33
Financing (note 7)		23		14
Total expenses		7,237		6,736
Income (loss) before income taxes		697		420
Income taxes		181		87
Net income (loss)		516		333
Cash flows from (used in) operating activities		985		354
Capital and exploration expenditures	[6]	274		153
Total assets as at March 31		41,580		41,410	$ 41,601
Upstream
Revenues and other income
Revenues	[2]	1,989		1,711
Intersegment sales		657		618
Investment and other income (note 5)		1		5
TOTAL OPERATING REVENUES, INTERSEGMENT SALES, INVESTMENT AND OTHER INCOME		2,647		2,334
Expenses
Exploration		8		22
Purchases of crude oil and products		1,374		1,116
Production and manufacturing	[4]	1,012		973
Selling and general	[4]			3
Depreciation and depletion		318		336
Non-service pension and postretirement benefit	[4]	0		0
Financing (note 7)				4
Total expenses		2,712		2,454
Income (loss) before income taxes		(65)		(120)
Income taxes		(21)		(34)
Net income (loss)		(44)		(86)
Cash flows from (used in) operating activities		337		308
Capital and exploration expenditures	[6]	206		103
Total assets as at March 31		34,463		35,898
Downstream
Revenues and other income
Revenues	[2]	5,607		4,974
Intersegment sales		362		309
Investment and other income (note 5)		22		191
TOTAL OPERATING REVENUES, INTERSEGMENT SALES, INVESTMENT AND OTHER INCOME		5,991		5,474
Expenses
Purchases of crude oil and products		4,294		4,009
Production and manufacturing	[4]	368		349
Selling and general	[4]	173		188
Federal excise tax		397		394
Depreciation and depletion		51		48
Non-service pension and postretirement benefit	[4]	0		0
Total expenses		5,283		4,988
Income (loss) before income taxes		708		486
Income taxes		187		106
Net income (loss)		521		380
Cash flows from (used in) operating activities		590		56
Capital and exploration expenditures	[6]	57		34
Total assets as at March 31		5,034		4,251
Chemical
Revenues and other income
Revenues	[2]	304		273
Intersegment sales		73		67
Investment and other income (note 5)				1
TOTAL OPERATING REVENUES, INTERSEGMENT SALES, INVESTMENT AND OTHER INCOME		377		341
Expenses
Purchases of crude oil and products		202		201
Production and manufacturing	[4]	51		53
Selling and general	[4]	21		22
Depreciation and depletion		3		3
Non-service pension and postretirement benefit	[4]	0		0
Total expenses		277		279
Income (loss) before income taxes		100		62
Income taxes		27		17
Net income (loss)		73		45
Cash flows from (used in) operating activities		83		(23)
Capital and exploration expenditures	[6]	4		4
Total assets as at March 31		417		391
Corporate and Other
Revenues and other income
Investment and other income (note 5)		11		1
TOTAL OPERATING REVENUES, INTERSEGMENT SALES, INVESTMENT AND OTHER INCOME		11		1
Expenses
Selling and general	[4]	2		(6)
Depreciation and depletion		5		5
Non-service pension and postretirement benefit	[4]	27		0
Financing (note 7)		23		10
Total expenses		57		9
Income (loss) before income taxes		(46)		(8)
Income taxes		(12)		(2)
Net income (loss)		(34)		(6)
Cash flows from (used in) operating activities		(25)		13
Capital and exploration expenditures	[6]	7		12
Total assets as at March 31		1,934		1,128
Consolidation, Eliminations
Revenues and other income
Intersegment sales		(1,092)		(994)
TOTAL OPERATING REVENUES, INTERSEGMENT SALES, INVESTMENT AND OTHER INCOME		(1,092)		(994)
Expenses
Purchases of crude oil and products		(1,090)		(993)
Selling and general	[4]	(2)		(1)
Non-service pension and postretirement benefit	[4]	0		0
Total expenses		(1,092)		(994)
Total assets as at March 31		$ (268)		$ (258)

[1] Amounts from related parties included in revenues. $1,373, $1,037

[2] Included export sales to the United States of $1,207 million (2017 - $899 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.

[3] Amounts to related parties included in purchases of crude oil and products. $892, $609

[4] As part of the implementation of Accounting Standard Update, Compensation - Retirement Benefits (Topic 715), beginning January 1, 2018, Corporate and other includes all non-service pension and postretirement benefit expense. Prior to 2018, the majority of these costs were allocated to the operating segments. See note 2 for additional details.

[5] Prior year amounts have been reclassified. See note 2 for additional details.

[6] Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to capital leases, additional investments and acquisitions. CAPEX excludes the purchase of carbon emission credits.

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Business Segments (Parenthetical) (Detail) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
United States Exports
Segment Reporting Information [Line Items]
Operating revenues	$ 1,207	$ 899

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Gains and Losses on Asset Sales (Detail) - CAD ($) $ in Millions		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017
Investment And Other Income [Line Items]
Proceeds from asset sales		$ 12	$ 183
Book value of asset sales		2	1
Gain (loss) on asset sales, before tax	[1]	10	182
Gain (loss) on asset sales, after tax	[1]	$ 7	$ 158

[1] First quarter 2017 included a gain of $174 million ($151 million after tax) from the sale of surplus property in Ontario.

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Gains and Losses on Asset Sales (Parenthetical) (Detail) - CAD ($) $ in Millions		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017
Investment And Other Income [Line Items]
Gain (loss) on asset sales, before tax	[1]	$ 10	$ 182
Gain (loss) on asset sales, after tax	[1]	$ 7	158
Surplus Property
Investment And Other Income [Line Items]
Gain (loss) on asset sales, before tax			174
Gain (loss) on asset sales, after tax			$ 151

[1] First quarter 2017 included a gain of $174 million ($151 million after tax) from the sale of surplus property in Ontario.

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Components of Net Periodic Benefit Cost (Detail) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Pension benefits
Defined Benefit Plan Disclosure [Line Items]
Current service cost	$ 60	$ 55
Interest cost	76	79
Expected return on plan assets	(101)	(101)
Amortization of prior service cost	1	3
Amortization of actuarial loss (gain)	44	44
Net periodic benefit cost	80	80
Other postretirement benefits
Defined Benefit Plan Disclosure [Line Items]
Current service cost	4	4
Interest cost	5	6
Amortization of actuarial loss (gain)	2	2
Net periodic benefit cost	$ 11	$ 12

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Financing and Additional Notes and Loans Payable Information (Detail) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Debt-related interest	$ 30	$ 22
Capitalized interest	(7)	(12)
Net interest expense	23	10
Other interest		4
Total financing	$ 23	$ 14

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Long-Term Debt (Detail) - CAD ($) $ in Millions		Mar. 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Long-term debt		$ 4,447	$ 4,447
Capital leases		552	558
Total long-term debt	[1]	$ 4,999	$ 5,005

[1] Long-term debt included amounts to related parties of $4,447 million (2017 - $4,447 million).

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Other Long-Term Obligations (Detail) - CAD ($) $ in Millions		Mar. 31, 2018	Dec. 31, 2017
Schedule of Other Liabilities [Line Items]
Employee retirement benefits	[1]	$ 1,535	$ 1,529
Asset retirement obligations and other environmental liabilities	[2]	1,460	1,460
Share-based incentive compensation liabilities		96	99
Other obligations	[3]	760	692
Total other long-term obligations	[4]	$ 3,851	$ 3,780

[1] Total recorded employee retirement benefits obligations also included $56 million in current liabilities (2017 - $56 million).

[2] Total asset retirement obligations and other environmental liabilities also included $101 million in current liabilities (2017 - $101 million).

[3] Included carbon emission program obligations. Carbon emission program credits are recorded under other assets, including intangibles, net.

[4] Other long-term obligations included amounts to related parties of $49 million (2017 - $60 million).

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Other Long-Term Obligations (Parenthetical) (Detail) - CAD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Schedule of Other Liabilities [Line Items]
Employee retirement benefit obligations in current liabilities	$ 56	$ 56
Asset retirement obligations and other environmental liabilities in current liabilities	$ 101	$ 101

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Summary of Common Shares (Detail) - shares	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Class of Stock [Line Items]
Authorized	1,100,000,000	1,100,000,000
Common shares outstanding	824,037,000	831,242,000	847,599,000

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Common Shares - Additional Information (Detail) - shares	3 Months Ended
	Mar. 31, 2018	Apr. 27, 2018	Jun. 13, 2017
Class of Stock [Line Items]
Exxon Mobil Corporation's ownership interest in Imperial	69.60%
Normal course issuer bid share repurchase shares authorized	25,395,927	42,326,545
Percent of total shares			3.00%
Normal course issuer bid share repurchase term, months	12 months
Percent of total shares			5.00%

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Common Share Activities (Detail) - CAD ($) shares in Thousands, $ in Millions		3 Months Ended		12 Months Ended
		Mar. 31, 2018		Dec. 31, 2017
Class of Stock [Line Items]
Common stock beginning balance, shares		831,242		847,599
Issued under employee share-based awards, shares				2
Purchases at stated value, shares		(7,205)		(16,359)
Common stock, ending balance, shares		824,037		831,242
Common stock beginning balance, value		$ 1,536	[1]	$ 1,566
Issued under employee share-based awards, value		0		0
Common stock, ending balance, value	[1]	1,523		1,536
Common Stock
Class of Stock [Line Items]
Purchases at stated value, value		$ (13)		$ (30)

[1] Number of common shares authorized and outstanding were 1,100 million and 824 million, respectively (2017 - 1,100 million and 831 million, respectively).

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Net Income (Loss) Per Share (Detail) - CAD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Net income (loss) per common share - basic
Net income (loss)	$ 516	$ 333
Weighted average number of common shares outstanding (millions of shares)	829.0	847.6
Net income (loss) per common share (dollars)	$ 0.62	$ 0.39
Net income (loss) per common share - diluted
Net income (loss)	$ 516	$ 333
Weighted average number of common shares outstanding (millions of shares)	829.0	847.6
Effect of employee share-based awards (millions of shares)	2.5	2.7
Weighted average number of common shares outstanding, assuming dilution (millions of shares)	831.5	850.3
Net income (loss) per common share (dollars)	$ 0.62	$ 0.39

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Summary of Earnings Reinvested (Detail) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Retained Earnings Adjustments [Line Items]
Earnings reinvested at beginning of period	$ 24,714	$ 25,352
Net income (loss) for the period	516	333
Share purchases in excess of stated value	(237)
Dividends declared	(132)	(127)
Earnings reinvested at end of period	$ 24,861	$ 25,558

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Changes in Accumulated Other Comprehensive Income (Loss) (Detail) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at January 1	$ (1,815)	$ (1,897)
Current period change excluding amounts reclassified from accumulated other comprehensive income	(19)	41
Amounts reclassified from accumulated other comprehensive income	34	36
Balance at March 31	$ (1,800)	$ (1,820)

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Amounts Reclassified Out of Accumulated Other Comprehensive Income (Loss) (Detail) - CAD ($) $ in Millions		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017
Reclassification Adjustment out of Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Amortization of postretirement benefits liability adjustment included in net periodic benefit cost	[1]	$ (46)	$ (49)

[1] This accumulated other comprehensive income component is included in the computation of net periodic benefit cost (note 6).

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Income Tax Expense (Credit) for Components of Other Comprehensive Income (Loss) (Detail) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Accumulated Other Comprehensive Income (Loss) [Line Items]
Postretirement benefits liability adjustment (excluding amortization)	$ (7)	$ 16
Amortization of postretirement benefits liability adjustment included in net periodic benefit cost	12	13
Total	$ 5	$ 29