Imperial Oil Caps 2025 with Record Cash Flow and Major Dividend Hike, Weathers Operational Headwinds

CALGARY – Imperial Oil Ltd. (NYSEAMERICAN: IMO) closed a financially potent 2025, leveraging strong operational performance to deliver substantial cash returns to shareholders even as extreme weather tested its flagship oil sands site. On its year-end earnings call, executives framed the results as a testament to the company's resilience and strategic focus on capital discipline.

"We've built a business that generates significant free cash flow across the cycle," said Chairman, President and CEO John Whelan. The company reported operating cash flow of CAD 1.9 billion for the quarter and CAD 6.7 billion for the full year. This financial strength funded a capital program and allowed for a CAD 4.6 billion return to shareholders in 2025 via dividends and share buybacks.

The most headline-grabbing announcement was a 20% increase in the quarterly dividend to CAD 0.87 per share, the largest nominal hike in Imperial's history. Since 2020, the company has increased its dividend by 295% and bought back 34% of its shares. Dan Lyons, Senior Vice President of Finance, emphasized the dividend's foundation in long-term confidence, not short-term commodity swings, and confirmed plans to renew the share repurchase program in June.

Operational Snapshot: Records and Resilience

Upstream production averaged 444,000 oil-equivalent barrels per day in Q4, contributing to an annual average of 438,000 – the highest in over three decades. This was achieved despite a significant challenge at the Kearl operation, where October's "extremely wet conditions" hampered equipment movement and access to higher-quality ore, dragging quarterly output down to 274,000 barrels per day. Operations rebounded sharply by December, however, achieving the site's second-highest monthly production on record.

"The team's response at Kearl demonstrates our operational agility," Whelan noted, adding that the company is evaluating infrastructure improvements to mitigate future weather impacts. The company remains on a cost-reduction path, with annual unit cash costs at Kearl, excluding one-time items, tracking below $20 per barrel toward a target of $18.

Progress was also highlighted at Cold Lake, where the new Leming SAGD project began production, and in the downstream business. The Strathcona renewable diesel facility, launched mid-year, is now operational, reducing reliance on imported products. Refining utilization remained high at 94% for the quarter.

Strategic Restructuring and Outlook

Management confirmed its previously announced restructuring plan, involving a 20% reduction in "above field" staff and relocations to Strathcona and Edmonton, is on track. The move is projected to yield CAD 150 million in annual net savings by 2028.

Looking to 2026, Whelan outlined priorities: profitable volume growth, further cost reductions, and increased cash flow generation, all while sustaining a reliable and growing dividend. The strategy underscores Imperial's focus on shareholder returns amid a volatile energy market landscape.

Market Voices:

"The dividend increase is a powerful signal of boardroom confidence," said Anya Sharma, energy analyst at Veritas Capital. "In an industry often criticized for capital hoarding, Imperial is demonstrating a clear, shareholder-first framework. The underlying cost control, even at Kearl, is impressive."

Michael T. Brennan, portfolio manager at Prairie Rock Advisors, offered a tempered view: "The numbers are strong, no doubt. But the market is pricing in stability. The real test is whether they can maintain this level of buybacks and dividend growth if WTI dips back into the $50s for a prolonged period. The 'path' to 300,000 barrels at Kearl has been a long one."

Janet Kowalski, a retired geologist and long-time observer of the oil sands, reacted sharply: "Another quarter, another billion in buybacks. It's staggering. While they celebrate moving money to shareholders, where's the commensurate investment in accelerating decarbonization at these massive sites? Record production is not a badge of honor in 2025; it's a liability. They're optimizing the past, not investing enough in the future."

David Chen, an institutional investor, focused on the bottom line: "The financial execution is textbook. Generating $1.4 billion in free cash flow in a sub-$60 WTI quarter is exceptional. The restructuring savings are a future tailwind. For income and buyback-focused investors, this remains a top-tier Canadian energy holding."