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IMPERIAL OIL LIMITED - DCF ANALYSIS

INTRINSIC VALUE
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per share (US$)
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DCF BASELINE SOURCE
EDIT MODEL
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UPLOAD A NEW SEC FILING

Drops new numbers into the FROM THE FILING block below. Assumptions are left alone — you maintain those yourself. Nothing changes until you press APPLY CHANGES.

DROP AN SEC FILING HERE
Must be a .htm filing downloaded from sec.gov/search-filings
A 10-K (annual) or 10-Q (quarterly).
Open the filing and save the main document — the large .htm containing the financial statements. Not FilingSummary.xml, not an R*.htm exhibit, not the plain-text wrapper, and not a PDF or print-to-file copy.
It reads the inline XBRL tags SEC filings carry, so filings from roughly 2019 onward work.

FROM THE FILING

Reported figures. A new filing overwrites these.

InputValueStatusSource

ASSUMPTIONS — NOT IN THE FILING

Judgement and market data. Uploading a filing never touches these.

InputValueStatusUsed inNote

Business segment mix → unlevered beta

Enter each segment as a % of segment earnings, not revenue — see Section 1.1 for why. Anything short of 100% is picked up automatically by a residual Other row at the generic beta.

Segment% of Segment EarningsUnlevered Beta

Geographic mix → country risk premium

Same idea — percentages, with a residual Other row at the generic CDS spread.

Region% of RevenueCDS Spread (%)

CALCULATED FROM THE ABOVE

Outputs, not inputs. Change the bases above and these move.

ValueResultBuilt from

Changes are saved in this browser.

1. BETA CALCULATION - COST OF EQUITY
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1.1 Business Segment Mix & Unlevered Beta

Segment% of Segment EarningsUnlevered BetaWeighted Contribution

Weighted by segment earnings, not revenue — deliberately. Imperial is vertically integrated: Downstream buys almost all of its crude from Upstream, so on an external-revenue basis Downstream is 97% of the company (C$27,603M of C$28,397M) and Upstream is under 1%. That mix would say nothing about where the risk sits. Segment pre-tax earnings for H1 2026 — Upstream C$2,310M, Downstream C$1,829M, Chemical C$118M (10-Q Note 8) — give the split shown above. Not auto-updated when a new filing is dropped in — re-read Note 8 and update here. Betas are judgement: oil-sands production carries direct crude-price exposure, refining margins are counter-cyclical to crude and so damp the swing, and chemicals sit in between. Chemical is under 3% of earnings and barely moves the result.

Imperial Oil SEC Filings Imperial Oil on Yahoo Finance

1.2 Relevering Beta for Imperial Oil's Capital Structure

Imperial Oil Capital Structure (June 30, 2026):
Total Debt: C$3,988M | Market Value of Equity: C$85,000M | Tax Rate: 23.5%


Levered Beta = Unlevered Beta × [1 + (1 - Tax Rate) × D/E]
= 0.769 × [1 + (1 - 0.23) × (16,593/22,034)]
= 0.769 × [1 + 0.77 × 0.753]
= 0.769 × 1.580
= 1.214
2. DIVIDEND DISCOUNT MODEL - MARKET RISK PREMIUM
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2.1 S&P 500 Dividend Discount Model

MetricValue

2.2 DDM Formula - Solving for Rm

2.3 Market Risk Premium

The dividend model below is a US-market calculation, so it is differenced against the US 10-year Treasury. The equity risk premium it produces is treated as currency-neutral and carried into the Canadian-dollar CAPM in Section 4 — a standard simplification, and a defensible one for two deeply integrated developed markets.

3. COUNTRY RISK ASSESSMENT
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3.1 Geographic Exposure & CDS Spreads

Region% of RevenueCDS Spread (bps)Country Risk Premium

Revenue by destination from the 10-Q: C$5,633M of the C$28,397M half-year total was sold into the United States, the rest in Canada. Not auto-updated when a filing is dropped in. Imperial's assets, reserves and operations are entirely Canadian, so this split flatters nothing — and it barely matters either way. Canada and the United States are both top-tier sovereigns trading at a handful of basis points, so the country risk premium lands near 0.29% on any reasonable weighting. This section is close to a rounding error for this name, which is itself worth knowing.

Imperial Oil SEC Filings

3.2 Weighted Average Country Risk Premium

4. COST OF EQUITY CALCULATION
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4.1 Cost of Equity (CAPM)

Cost of Equity = Rf + β × (Rm - Rf) + Country Risk Premium

Where:
• Rf = 3.3% (Government of Canada 10-year — a C$ discount rate for C$ cash flows)
• β = 1.214 (Levered Beta from Section 1)
• Rm - Rf = 5.00% (Market Risk Premium from Section 2)
• Country Risk Premium = 0.38% (from Section 3)

Calculation:
Cost of Equity = 3.3% + (1.038 × 5.00%) + 0.29%
= 3.3% + 5.190% + 0.29%
= 8.780%

Why a Canadian risk-free rate. The free cash flows in Section 7 are Canadian dollars, and a discount rate has to be denominated in the same currency as the cash flows it discounts — otherwise the expected inflation differential between the two currencies is silently dropped. So the CAPM here uses the Government of Canada 10-year, while the S&P dividend model in Section 2 is differenced against the US 10-year, which is what it is actually built from. The two risk-free rates are separate inputs under EDIT MODEL. The conversion to US dollars happens once, at the end, in Section 9.3.

5. COST OF DEBT CALCULATION
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5.1 Debt & Cost of Debt Inputs

InputValueSource

Cost of debt is derived from the filing, not assumed. Note 5 reports debt-related interest of C$64M for the six months; annualised that is C$128M against total debt of C$3,988M, or 3.21%. Almost all of the long-term debt — C$3,447M of C$3,969M — is owed to ExxonMobil affiliates rather than to public bondholders, which is why the rate is low and why there is no bond tranche table to show. Note also how little this matters: debt is roughly 4% of total capital, so the cost of debt moves the WACC by only a few basis points. Imperial is financed almost entirely with equity.

Imperial Oil SEC Filings

5.2 After-Tax Cost of Debt

After-Tax Cost of Debt = Pre-Tax Cost of Debt × (1 − Tax Rate)

= 4.72% × (1 − 0.25)

= 3.54%
6. WEIGHTED AVERAGE COST OF CAPITAL (WACC)
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6.1 Capital Structure

ComponentValue (C$M)Weight
Market Value of Equity22,03457.04%
Market Value of Debt16,59342.96%
Total Capital38,627100.00%

6.2 WACC Calculation (Using Values from Previous Sections)

WACC = (E/V × Cost of Equity) + (D/V × Cost of Debt × (1 - Tax Rate))

Where:
• E/V = 57.04% (from capital structure above)
• D/V = 42.96% (from capital structure above)
• Cost of Equity = 7.069% (from Section 4)
• Cost of Debt = 4.77% (from Section 5)
• Tax Rate = 23%

Calculation:
WACC = (0.5704 × 7.069%) + (0.4296 × 4.77% × 0.77)
= 4.032% + 1.578%
= 5.61%
7. FREE CASH FLOW ANALYSIS
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7.1 Normalized Base Free Cash Flow (H1 2026 Annualized)

Line Item H1 2026 (C$M) Annualized (C$M) Source

Reconciliation to the filing's own cash flow statement — and why they differ.
This table builds free cash flow the standard way: tax the operating result, add back non-cash D&A, subtract capital spending. Imperial's cash flow statement tells a somewhat different story for the same six months, and the gap is worth understanding before relying on the number above.

Cash from operating activities was C$3,460M for the half; capital and exploration expenditures were C$1,009M. Annualised, that is roughly C$6,920M less C$2,010M, or about C$4,910M of actual free cash flow — against the C$6,253M this model uses. The difference comes from three places, all visible in the filing: cash taxes ran ahead of book taxes by C$386M in the half (the deferred income tax line), working capital absorbed roughly C$259M, and pension contributions took another C$74M.

Those are timing items rather than permanent leakage, which is the usual argument for ignoring them in a going-concern DCF — and it is why the model leaves the change in net working capital at zero. But they have run in the same direction here, so treat the figure above as the optimistic end. Setting the change in net working capital to about 260 per period under EDIT MODEL moves the base free cash flow to the cash statement's neighbourhood, and the valuation with it.

One item the parser cannot see. Note 11 records a C$50M release of the 2025 restructuring provision, credited to Selling and general — so it lifts the reported pre-tax income above. It is tagged only inside a dimensional context, which this page's reader deliberately skips, so the restructuring line above reads zero. To remove it, enter −50 in that field under EDIT MODEL. It is worth about 0.6% of the valuation.
Imperial Oil SEC Filings

7.2 FCF Projection Assumptions (5-Year Forecast)

READ THIS BEFORE TRUSTING THE NUMBER: the base period is a strong one.
Imperial is a commodity producer, and this model annualises a half-year in which crude and refining margins were favourable. H1 2026 pre-tax income was C$4,092M against C$2,932M in H1 2025 — up 40%. The second quarter alone was C$2,860M against C$1,244M — up 130%. Doubling that half-year, as the model does, assumes the whole of the next five years looks like the best six months in recent memory.

This is the single largest source of error in the valuation, and it is much larger than any beta or discount-rate debate. At the H1 2025 run rate the base free cash flow — and with it the whole answer — is roughly 30% lower. Two honest ways to handle it: drop in the FY 10-K instead of this 10-Q so the base spans a full cycle year, or edit income before income taxes down by hand to a mid-cycle figure under EDIT MODEL.
Years 1-3:
- Production is capacity-constrained: Imperial's oil sands assets grow volumes in the low single digits, not by step change
- Capital spending of C$1,009M for the half against D&A of C$1,031M — capex is running at maintenance level, which supports flat-to-slow real growth and no more
- Crude prices are assumed to neither rise nor fall in real terms, since forecasting them is not something this model is equipped to do
- Assumed FCF Growth Rate: 2% per year — essentially inflation, no volume story

Years 4-5:
- Same reasoning; nothing in the filing supports an inflection either way
- Assumed FCF Growth Rate: 2% per year

Terminal Growth Rate: 2.1% (long-term GDP growth)
Rationale: a mature producer in a mature economy should not compound faster than the economy forever. Note that for a company facing eventual decline in its end market, even 2.1% in perpetuity is an optimistic assumption rather than a conservative one.
8. EXPLICIT FORECAST PERIOD (5 YEARS)
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8.1 Year-by-Year FCF Projections

YearGrowth RateFCF (C$M)Calculation

8.2 Terminal Value Calculation

Terminal Value = FCF(Year 5) × (1 + Terminal Growth Rate) / (WACC - Terminal Growth Rate)

Where:
• FCF(Year 5) = C$6,700M
• Terminal Growth Rate = 2.1% (from Section 7)
• WACC = 5.61% (from Section 6)

Terminal Value = 4,026 × 1.021 / (0.0561 - 0.021)
= 4,111 / 0.0351
= C$100,000M
9. DCF VALUATION MODEL
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9.1 Discounted Cash Flow to Enterprise Value

YearFCF (C$M)Discount FactorPV (C$M)

9.2 Enterprise Value & Equity Value

Enterprise Value (from 9.1) = C$80,000M

Less: Net Debt (Debt - Cash)
Total Debt = 16,593 | Cash = 3,655 | Net Debt = 12,938


Equity Value = Enterprise Value - Net Debt
= 104,610 - 12,938
= C$78,851M

9.3 Intrinsic Value Per Share

Shares Outstanding = 485 million (diluted weighted-average for the period)

Equity Value (from 9.2) ÷ Shares Outstanding
= 78,851 ÷ 485
= C$162.58 per share

Currency conversion. Everything above is in Canadian dollars, because that is the currency Imperial reports in. The NYSE line trades in US dollars, so the last step divides by the C$/US$ rate:

Intrinsic Value (US$) = C$162.58 ÷ 1.3700 C$/US$
= US$118.67

The FX rate is an assumption you maintain, not a figure from the filing — set it under EDIT MODEL. It scales the answer proportionally: a 5% move in the Canadian dollar moves the US$ intrinsic value by 5%. It also feeds Section 1.2 and Section 6, where the US$ market capitalisation is converted up into C$ so that equity and debt are weighed in the same currency.

Current IMO Price Imperial Oil SEC Filings