Imperial Oil cuts 130 jobs as it continues a painful restructuring

A tank at Imperial's oil refinery in Sarnia, Ont. Photo by Postmedia

Article content

Calgary-based Imperial Oil Ltd. says it cut 130 jobs in the first three months of the year as part of its broader restructuring plan to move its headquarters outside of the oilpatch capital in the coming years.

Article content

Imperial, majority owned by ExxonMobil Corp., announced last fall it was selling its sprawling headquarters in southeast Calgary, cutting 900 jobs and moving roles to various locations around the world.

Article content

Article content

Article content

On a quarterly earnings call Friday, Imperial chief executive John Whelan said the restructuring was “progressing well.” He said about 40 per cent of the job cuts will come from finding efficiencies, while the remaining 60 per cent will involve outsourcing work to ExxonMobil’s global hubs in places like Houston, Texas, and India.

Article content

Article content

“As we move these workflows into global capability centers, we see greater opportunity, (with) AI, machine learning and so on, to further automate those workflows,” Whalen said on the analyst call.

Article content

“We’re going to be able to do that more quickly and at scale.”

Article content

The company is slashing costs at a time when conflict in the Middle East has driven oil prices above US$100 per barrel. Imperial is among an early batch of oilpatch producers to reveal earnings for the first quarter, which ended in March, the first full month of the conflict that created a global energy crisis.

Article content

Imperial reported $940 million in profits, down from nearly $1.3 billion a year earlier.

Article content

Profits took a hit partly because of a dramatic runup in the company’s stock price, a rally that continued with the war in Iran. Part of the company’s compensation package for executives is linked to its share price — when the price goes up, so does the value of compensation.

Article content

Article content

The company’s stock rose by close to 50 per cent during the first few months of the year, resulting in “higher incentive compensation charges,” which weighed on profits, said Daniel Lyons, senior vice-president of finance and administration.

Article content

Article content

The charges amounted to $143 million after tax, Lyons said.

Article content

Imperial also faced a number of operational challenges during the quarter, with its refineries operating at 88 per cent of capacity, down from 91 per cent a year earlier, partly due to unplanned downtime.

Article content

Imperial said it returned $350 million to shareholders through dividend payments during the quarter.

Article content

But its share price dropped by four per cent on its earnings report Friday.

Article content

Article content