The Successful Investor Hotline – Friday, June 19, 2015

Article Excerpt

IMPERIAL OIL LTD., $46.95, Toronto symbol IMO, has started up the second phase of its Kearl oil sands project in northern Alberta. The company owns 71% of Kearl; ExxonMobil (New York symbol XOM) holds the remaining 29%. Exxon also owns 69.9% of Imperial. Kearl’s first phase began operating in April 2013 and produced an average of 95,000 barrels a day (67,000 to Imperial) in the three months ended March 31, 2015. Imperial’s share of Kearl’s output represented 20% of the company’s overall production of 333,000 barrels. This new phase will ultimately double Kearl’s capacity to 220,000 barrels a day (156,200 to Imperial). The company spent $9 billion on the expansion, which is equal to 23% of its $39.8-billion market cap (or the value of all of its outstanding shares). However, Kearl’s reserves should last 40 years. In addition, Imperial is using its own process to treat Kearl’s bitumen, eliminating the need for a costly on-site upgrader. Imperial Oil is a buy. Imperial Oil was recently…