Imperial Oil stock (Toronto symbol IMO) is Canada’s second-largest publicly traded oil company, after Suncor Energy.

Buying Imperial Oil stock (Toronto symbol IMO) gives you a share of Canada’s second-largest publicly traded oil company, after Suncor Energy.  Imperial Oil stock is 69.6%-owned by U.S.-based ExxonMobil (New York symbol XOM).

About 90% of Imperial’s crude production comes from its Alberta oil sands operations, including its 25% stake in the Syncrude project.

The company also has conventional oil and natural gas operations in Western Canada and owns stakes in projects off the coast of Atlantic Canada. Based on its current daily output, Imperial Oil’s 4.0 billion barrels of proven reserves should last 32 years.

In 2014, the company’s oil and gas properties supplied just 25% of its revenue but roughly 50% of its earnings. The remaining 75% of revenue and 50% of earnings came from its three refineries (one in Alberta and two in Ontario), petrochemical operations and 1,700 gas stations, which are operated by franchisees under the Esso banner.

In April 2015, Imperial Oil formed a joint venture to build a new rail terminal in Edmonton that can handle 210,000 barrels of crude a day. Further upgrades could boost its capacity to 250,000 barrels a day.

Bonus Tip: Investing in oil

Oil optimists assume that demand for oil will keep on growing indefinitely, as more people around the world buy cars. But oil supply can also keep on expanding indefinitely. That’s thanks to technological advances that have opened up vast new oil reserves in shale deposits around the world. Environmental regulations make it difficult to tap into these deposits in some areas, of course. Meanwhile, political turmoil in the Middle East and Venezuela make future supplies of conventional oil more erratic and uncertain.

Politics, weather and market sentiment will determine whether oil users stock up on oil, or cut down on new buying while they use up existing inventory. This can have a big impact on oil-price trends and the health of oil company stocks.

When oil company stocks hit bottom, including Imperial Oil stock, they may turn around and shoot back up again, as they have a number of times in the past. Or they may instead go sideways for months or years.

No matter how intently you read the news on oil, you won’t gain any worthwhile advantage. You have too much competition. This market is simply too big and too widely traded for anybody to figure it out.

Instead, stick to our three-part Successful Investor approach: Invest mainly in well-established, dividend-paying stocks; spread your money out across most if not all of the five main economic sectors; downplay or avoid stocks in the broker/media limelight.

Then put perhaps half the money you intend to invest in the Resources sector into oil company stocks and gas stocks. But only buy these or any stocks if you are prepared to hold them for at least the next several years.

Resource stocks, though volatile, tend to rise with inflation

The resource sector, which includes oil company stocks, is subject to wide and unpredictable swings in the prices it gets for its products. In the rising phase of the business cycle, when business is booming, resource demand expands faster than resource supply, so resource prices shoot up. This balloons the profits for resource companies. When the economy slumps, resource prices fall, and this drags down resource profits and stock prices.

In addition to rising and falling with the business cycle, however, resource stocks have a history of rising along with long-term inflationary trends. This gives them a rare ability: they provide a hedge against inflation.

Investor awareness goes through cyclical swings

When times are good in the stock market cycle, some investors ignore investment drawbacks and pitfalls.

Resource companies produce and sell commodities. So it’s hard for them to bring a distinct product to market. But they can distinguish themselves by how well they find and produce their products. Today’s resource projects call for a great deal of engineering, financial and political expertise. The top resource companies—like Imperial Oil or Encana—acquire a lasting competitive advantage—through all stock market cycles—by developing their expertise in these areas.

This expertise is another type of hidden asset. It doesn’t appear on the balance sheet, but it gives the top resource stocks an advantage in every project they undertake.

Do you own Imperial Oil stock, or other oil stocks? What has your experience been like? Please share in the comments.