Imperial Oil Up Nearly 1% as Credit Suisse Looks Again At Its Q1

Credit Suisse kept a Neutral rating and $55 target price on Imperial Oil Ltd (IMO.TO) as it fine-tuned its Forecasts on Q1'11 Disclosure.

Fine-Tuning Estimates: "With Imperial having now provided additional disclosure with the filing of its Q111 financial statements, we are revising our operating EPS/CFPS forecasts from C$3.67/C$5.10 to C$3.78/C$4.89 for 2011, from C$3.90/C$5.43 to C$3.95/C$5.45 for 2012 and from C$4.91/C$6.66 to C$4.96/C$6.72 for 2013."

Q1 Recap: "On April 28th, Imperial reported 'clean' operating EPS of C$0.98 for Q11, above our C$0.92 estimate but in line with consensus of C$0.98. The better than expected results were driven mainly by the Upstream (C$0.03) and Chemical (C$0.02) divisions. Total production averaged 310 kboe/d for Q111, above our 304 kboe/d forecast, due mainly to record Cold Lake production of 157 kb/d which was above our 148 kb/d forecast."

Major Projects Update: "The Kearl initial development is nearly 60% complete and is progressing on schedule with expected start-up in late 2012. Production from the initial development will be at 110,000 b/d of bitumen. A second phase expansion with debottlenecking of both phases will be used to reach the regulatory capacity of 345,000 b/d as approved under the original three-phase strategy. Full lease unit development costs are expected to remain the same. In the Horn River, drilling has begun on Imperial's multi-well horizontal pilot production pad to evaluate longer term well productivity and cost performance. Proposed start up is late 2012. We expect to hear details at the company's Investor Day on Thursday, May 26th in Toronto."

Valuation: "Imperial Oil's shares are currently trading at 9.2x 2011E EBIDAX versus an average of 6.8x for its North American peers. As illustrated in the full report, during the past 3-, 5- and 10-year periods, Imperial's shares have traded, on average, at 10.8x, 10.4x and 9.4x respectively, the current year's EBIDAX. As such, we continue to apply 10.0x 2011E EBIDAX of C$4,651 million to derive our C$55.00 target price."

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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