Imperial renews annual normal course issuer bid
Imperial Oil has received approval from the Toronto Stock Exchange for a normal course issuer bid (NCIB) to repurchase up to five percent of its outstanding common shares, equaling a maximum of 26,791,840 shares, from June 29, 2024, to June 28, 2025. This program aims to return surplus liquidity to shareholders and manage share dilution from stock units. The NCIB will also include purchases from ExxonMobil to maintain its 69.6% ownership. Share purchases will occur through the TSX and alternative trading systems in Canada.
- Imperial Oil received approval for a new NCIB to repurchase up to 26,791,840 shares.
- The program reflects Imperial's strong financial position and ability to return cash to shareholders.
- The NCIB provides a tax-efficient way of distributing surplus liquidity.
- The new program ensures the elimination of dilution from shares issued via the restricted stock unit plan.
- Imperial's previous NCIB was completed successfully, purchasing the maximum 29,207,635 shares.
- The program might reduce the number of outstanding shares, potentially limiting liquidity.
- ExxonMobil’s continual participation may maintain high ownership concentration, limiting diversity in shareholder base.
Insights
Imperial Oil's renewal of its normal course issuer bid (NCIB) to repurchase up to
The fact that ExxonMobil, Imperial's majority shareholder, is set to participate in the NCIB is noteworthy. It ensures that ExxonMobil maintains its
However, investors should be aware that the significant outlay for share repurchases can also be seen as an indication that the company does not foresee better opportunities to invest this capital in growth projects or acquisitions. This could be interpreted as a lack of growth opportunities, potentially limiting future earnings growth.
The tax efficiency of the NCIB and its flexibility are attractive features for shareholders. It allows the company to manage its capital more effectively during different market conditions. Importantly, the establishment of an automatic purchase plan ensures that repurchases can continue even during blackout periods, supporting consistent shareholder value distribution.
From a market perspective, Imperial Oil's strategy aligns with its historical actions and market norms. The NCIB is a common practice among large-cap companies looking to manage surplus liquidity and support their stock price. This is particularly relevant in the energy sector where capital projects are significant and cash generation can be volatile.
Investors should note the timing and volume of the repurchases. The program is set to begin on June 29, 2024 and will end on June 28, 2025, unless the maximum shares are repurchased earlier. The daily purchase limit of 254,907 shares helps ensure that the repurchases do not overly influence daily trading volumes, thus minimizing market distortion.
For retail investors, understanding the broader market context is key. Share repurchase programs often lead to a temporary boost in stock prices, but the long-term impact on value depends on the company's overall financial health and growth strategy. Given Imperial's robust cash flow and balance sheet strength, this NCIB likely positions the company well for both stability and shareholder returns.
The new one-year program will begin on June 29, 2024, and will end should the company purchase the maximum allowable number of shares, or on June 28, 2025.
Imperial has established an automatic share purchase plan with its designated broker to facilitate the purchase of common shares, both under the NCIB and concurrently from ExxonMobil, during times when Imperial would ordinarily not be permitted to purchase due to regulatory restrictions or self-imposed black-out periods. Before entering a black-out period, Imperial may, but is not required to, instruct the broker to make purchases under the NCIB based on parameters set by Imperial in accordance with the share purchase plan, TSX rules and applicable securities laws. The plan has been pre-cleared by the TSX and will be implemented effective June 29, 2024.
Consistent with the company’s balance sheet strength, low capital requirements and strong cash generation, this announcement reflects the company’s priority and capacity to return cash to shareholders. The NCIB represents a flexible and tax-efficient way of distributing surplus liquidity to shareholders who choose to participate by selling their shares. In addition, the NCIB will be used to eliminate dilution from shares issued in conjunction with Imperial’s restricted stock unit plan.
ExxonMobil will be permitted to sell its shares to Imperial under the NCIB in order to maintain its proportionate share ownership at approximately 69.6 percent. ExxonMobil advised Imperial that it intends to participate, as it has in prior years, and has established an automatic share disposition plan to facilitate the sale of its shares.
All share purchases will be made through the Toronto Stock Exchange and alternative trading systems in
As of the close of business on June 15, 2024, Imperial has 535,836,803 issued and outstanding common shares. The average daily trading volume of Imperial’s common shares over the six calendar months prior to the date of this announcement was 1,019,629 shares per day. Imperial’s daily purchase limit under the new program for shares held by shareholders other than ExxonMobil will be 254,907 shares, which represents 25 percent of the average daily trading volume.
The acceptance marks the continuation of Imperial’s most recent normal course share repurchase program that was completed on October 19, 2023. Under the most recent program, the company purchased the maximum 29,207,635 shares that were available, with 8,879,143 shares purchased on the open market and a corresponding 20,328,492 shares purchased from ExxonMobil to maintain its proportionate share ownership at 69.6 percent, representing a total cost of about
Cautionary statement: Statements of future events or conditions in this release, including projections, expectations and estimates are forward-looking statements. Forward-looking statements in this release include references to the company’s low capital requirements, strong cash generation, and priority and capacity to return cash to shareholders; and ExxonMobil’s intention to participate concurrent with the NCIB. Forward-looking statements are based on the company's current expectations, estimates, projections and assumptions at the time the statements are made. Actual future financial and operating results, including expectations and assumptions concerning future energy demand, supply and mix; commodity prices, foreign exchange rates and general market conditions; capital and environmental expenditures; the capture of efficiencies within and between business lines and the ability to maintain near-term cost reductions as ongoing efficiencies; production rates, growth and mix across various assets; project plans, timing, costs, technical evaluations and capacities and the company’s ability to effectively execute on these plans and operate its assets; that any required support from policymakers and other stakeholders for various new technologies such as carbon capture and storage will be provided; and applicable laws and government policies including with respect to climate change, greenhouse gas emissions reductions and low carbon fuels, could differ materially depending on a number of factors. These factors include global, regional or local changes in supply and demand for oil, natural gas, petroleum and petrochemical products, feedstocks and other market factors, economic conditions or seasonal fluctuations and resulting demand, price, differential and margin impacts, including foreign government action with respect to supply levels and prices; availability and allocation of capital; availability and performance of third-party service providers; management effectiveness and disaster response preparedness; political or regulatory events, including changes in law or government policy, applicable royalty rates, and tax laws including taxes on share repurchases; unanticipated technical or operational difficulties; cybersecurity incidents; operational hazards and risks; currency exchange rates; general economic conditions; and other factors discussed in Item 1A risk factors and Item 7 management’s discussion and analysis of Imperial’s most recent annual report on Form 10-K.
Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, some that are similar to other oil and gas companies and some that are unique to Imperial Oil Limited. Imperial’s actual results may differ materially from those expressed or implied by its forward-looking statements and readers are cautioned not to place undue reliance on them. Imperial undertakes no obligation to update any forward-looking statements contained herein, except as required by applicable law.
Source: Imperial
After more than a century, Imperial continues to be an industry leader in applying technology and innovation to responsibly develop Canada’s energy resources. As Canada’s largest petroleum refiner, a major producer of crude oil, a key petrochemical producer and a leading fuels marketer from coast to coast, our company remains committed to high standards across all areas of our business.
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Source: Imperial
FAQ
What is the maximum number of shares Imperial Oil can repurchase under the new NCIB?
When does Imperial Oil 's new NCIB program start and end?
How will the NCIB affect ExxonMobil's ownership in Imperial Oil ?
How many shares did Imperial Oil repurchase under its previous NCIB program?
What is the daily purchase limit for Imperial Oil under the new NCIB?
