Imperial Oil stock falls as 2025 spending plans blow past consensus estimates

Imperial Oil (IMO.TO)(IMO) shares fell on Thursday as the company announced spending plans for 2025 that surpassed previous analyst estimates.

Calgary-based Imperial estimates capital spending between $1.9 billion to $2.1 billion for next year. Investments are expected to include technology to improve bitumen recovery at its Kearl oil sands asset in Alberta, and expansion of drilling operations at its Cold Lake site. At the same time, Imperial aims to complete its Strathcona renewable diesel project, with launch expected around mid-year. The company also plans to finish its Leming redevelopment project using steam-assisted gravity drainage recovery technology, with start-up expected late in 2025.

“Many projects we have been pursuing are multiple year in nature. Where it makes sense for us to accelerate that work, we’re doing that, so we can be most efficient with the capital dollars,” chief executive officer Brad Corson explained on a conference call.

“Ultimately, it’s translating into stronger volume performance than what we initially guided towards for 2024, and stronger, better unit cash cost performance.”

All told, Imperial’s capital spending guidance for next year topped consensus estimates by 16 per cent at the midpoint, according to Scotiabank Global Equity Research analyst Jason Bouvier.

Toronto-listed shares fell as much as 6 per cent on Thursday afternoon.

Canadian oil producers have lifted their production targets in response to new export capacity from the Trans Mountain Pipeline expansion, which went into service earlier this year. Imperial’s 2025 guidance estimates production of 433,000 to 456,000 barrels of oil equivalent per day (boepd), compared to the 420,000 to 442,000 boepd it forecast for 2024.

Peers Cenovus Energy (CVE.TO)(CVE) and Suncor Energy (SU.TO)(SU) also released capital spending and production plans on Thursday. Suncor’s $6.1 billion to $6.3 billion capital program was in-line with analyst estimates. Cenovus’s $4.6 billion to $5 billion plan was also closely aligned with forecasts.

Suncor aims to produce between 810,000 and 840,000 boepd next year, up from its 2024 estimate of 770,000 to 810,000 boepd. Cenovus expects to produce 805,000 to 845,000 boepd in 2025.

Suncor’s stock was down less than two per cent on Thursday afternoon. Cenovus shares dipped by about one per cent.

In recent years, Canadian oil producers have prioritized dividend growth and stock buybacks over growth-focused investments. Corson affirmed this remains the case at Imperial.

“Our plans support further robust dividend growth,” he said. “Our shareholder return philosophy is unchanged. We remain committed to returning surplus cash in a timely and efficient manner.”

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