Fort McMurray wildfires eat into Imperial Oil earnings
Canadian crude producer Imperial Oil (TSX:IMO) posted a surprise $181-million loss in its second quarter, mainly as a result of to the wildfires that raged through northern Alberta in May, sparking a massive evacuation and curbing oil sands production.
The Calgary-based firm, Canada’s No.2 integrated oil producer and refiner, said the wildfires accounted for $170 million of the reduction in its net income from last year’s second quarter, when the company was profitable.
Imperial, in which Exxon Mobil Corp holds a 69.6% stake, reduced its production by 60,000 barrels per day due to the blazes. Without them, the company estimated that output would have increased by 45,000 barrels per day or 13%.
Operations in the quarter were further impacted by planned maintenance activities at Kearl, Syncrude and at the Strathcona and Nanticoke refineries, the company said.
The planned maintenance reduced liquids production by an estimated 40,000 barrels per day (Imperial’s share) and reduced refinery throughput by an estimated 163,000 barrels per day in the quarter. As a result, earnings decreased by an estimated $85 million compared to the same quarter in 2015.
This year’s wildfires in Alberta severely hit Canada’s economy, driving the country into its worst one-month performance since the darkest days of the Great Recession.
According to data published Friday by Statistics Canada, the nation’s real gross domestic product dropped 0.6% in May, a number that revealed the extent of the economic fallout caused by the disaster, which led to the evacuation of Fort McMurray, destroyed more than 2,000 structures and shut down key crude operations.
Statistics Canada said the wildfires were the main contributor to the 6.4% drop in the overall natural resources sector and the 2.8% decline in the output of all goods-producing industries.
In early July, the Bank of Canada said the wildfires would likely fuel a contraction of 1% in the second quarter, a period that includes April, May and June.
The central bank estimated the blazes trimmed 1.1 percentage points from second quarter growth. In April, before the wildfires, the bank had forecast the economy would grow in the quarter by 1%