Imperial Oil meets weekly on oil sands deal
Imperial Oil, ranked as Canada’s fourth-largest crude oil producer, indicated that it may eventually double output, but CEO John Whelan linked this expansion to governments finalizing an oilsands investment agreement by November. His remarks came during a conference call following the company’s record third-quarter earnings, which surpassed analyst projections.
Imperial Oil Ltd.’s shares rose by three percent to $188.70 on Friday’s Toronto Stock Exchange trading session. The company closed the quarter with $2.9 billion in cash reserves and stated its operations remain profitable even when oil prices sit at $35 per barrel.
Oilsands Investment Deal
This summer, oilsands operators and both federal and provincial governments agreed to a tentative framework outlining tax, royalty, and regulatory terms designed to attract global investment in new projects. While a November 15 deadline has been set, Whelan emphasized that significant work remains before any final deals are secured.
Whelan noted that he and other Oil Sands Alliance leaders discuss the investment agreement weekly, while their teams collaborate daily with government officials. He stressed that there is strong commitment from all sides to reach binding terms.
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When asked about potential royalty incentives from Alberta to support expansion projects, Whelan deferred to the province’s timeline. He argued that clearer financial policies and regulatory adjustments could create substantial opportunities, particularly for Imperial, which he called well-positioned for significant growth.
Surplus Cash and Share Buybacks
Until then, surplus cash keeps flowing back to Imperial’s shareholders. The company ended the quarter with $2.9 billion in cash after covering its capital spending, dividend and accelerated share buybacks. Dan Lyons, senior vice-president, finance and administration, said Imperial expects to complete its buyback program this quarter and, under stock exchange rules, can’t renew it until the end of next June.
A normal course issuer bid is a regulator-approved program that lets a company buy a set number of its own shares on the open market over a 12-month period. The term accelerated refers to Imperial using the full year’s allotment in about six months. By doing so, the company has to refrain from buying more of its own shares for the rest of the term.
Any buybacks before then, which in Imperial’s case is the first half of 2027, would have to come through a workaround known as a substantial issuer bid. These are one-time offers to buy shares directly from shareholders. Lyons observed that, with oil prices at present levels, Imperial’s cash reserves may continue growing in the fourth quarter despite the accelerated buyback. The company expects to finish the year with substantial liquidity and plans to distribute it to shareholders, maintaining its established capital strategy. Whelan reiterated that their approach to allocating funds remains unchanged.
Over the past five years, Imperial has returned $24 billion of its $25 billion in free cash flow to investors. Buybacks have become a preferred method for oil firms with excess capital to reward shareholders, as they boost per-share earnings without the same backlash risks as dividend hikes during downturns.
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As Imperial steers surplus cash to shareholders, the company is weighing whether to accelerate its biggest growth project in years, the Aspen project. The company’s Aspen project is an undeveloped oilsands lease where Imperial first approved a project in 2018 to use solvent-assisted steam to pump bitumen to the surface. It’s now testing a newer enhanced bitumen recovery technology there, with a pilot starting in early 2027, and is weighing whether to start building sooner with the proven solvent-assisted steam method.
Imperial first approved Aspen in November 2018, committing $2.6 billion to a 75,000 barrel a day project less than an hour’s drive northeast of Fort McMurray. At the time, the company said Aspen could eventually be expanded to 150,000 barrels a day if the first phase performed well and market conditions allowed. The first phase alone would boost Imperial’s upstream production by close to 20 per cent from the 418,000 barrels a day it averaged in the third quarter.
Shareholder Return Plans and Upcoming Issuer Bids
“There’s no lack of energy or desire to get to definitive agreements,” the chief executive said.
James Rose, a Financial Post reporter who joined in 2026, covers Canada’s energy sector. He is a native of Invermere, B.C., and began his journalism career in Calgary, Canada.
