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Business segments
 12 Months Ended
Dec. 31, 2019
Business segments
The company operates its business in Canada. The Upstream, Downstream and Chemical functions best define the operating segments of the business that are reported separately. The factors used to identify these reportable segments are based on the nature of the operations that are undertaken by each segment and the structure of the company’s internal organization. The Upstream segment is organized and operates to explore for and ultimately produce crude oil and its equivalent, and natural gas. The Downstream segment is organized and operates to refine crude oil into petroleum products and to distribute and market these products. The Chemical segment is organized and operates to manufacture and market hydrocarbon-based chemicals and chemical products. The above segmentation has been the long-standing practice of the company and is broadly understood across the petroleum and petrochemical industries.
These functions have been defined as the operating segments of the company because they are the segments (a) that engage in business activities from which revenues are earned and expenses are incurred; (b) whose operating results are regularly reviewed by the company’s chief operating decision maker to make decisions about resources to be allocated to each segment and assess its performance; and (c) for which discrete financial information is available.
Corporate and other includes assets and liabilities that do not specifically relate to business segments – primarily cash, capitalized interest costs, short-term borrowings, long-term debt and liabilities associated with incentive compensation, pension and other postretirement benefit liabilities. Net earnings effects under Corporate and other activities primarily include debt-related financing, corporate governance costs,
non-service
pension and postretirement benefit costs, share-based incentive compensation expenses and interest income.
Segment accounting policies are the same as those described in the summary of significant accounting policies. Upstream, Downstream and Chemical expenses include amounts allocated from Corporate and other activities. The allocation is based on proportional segment expenses. Transfers of assets between segments are recorded at book amounts. Intersegment sales are made essentially at prevailing market prices. Assets and liabilities that are not identifiable by segment are allocated.
 
     
             
      
             
      
             
      
             
      
             
      
             
      
             
      
             
      
             
  
   
Upstream
    
Downstream
    
Chemical
  
millions of Canadian dollars
  
    2019
    
    2018
    
    2017
    
    2019
    
    2018
    
      2017
    
    2019
    
    2018
    
    2017
  
Revenues and other income
                                                                         
Revenues
(a)
   
 
9,479
 
     8,525       7,302    
 
23,591
 
     25,200       20,714    
 
932
 
     1,239       1,109  
Intersegment sales   
 
3,763
 
     2,634       2,264    
 
1,597
 
     1,542       1,155    
 
229
 
     279       262  
Investment and other income
(note 9)
   
 
17
 
     11       16    
 
47
 
     95       269    
 
-
 
     -       -  
 
   
 
13,259
 
     11,170       9,582    
 
25,235
 
     26,837       22,138    
 
1,161
 
     1,518       1,371  
Expenses
                                                                         
Exploration
(b) (note 16)
   
 
47
 
     19       183    
 
-
 
     -       -    
 
-
 
     -       -  
Purchases of crude oil and products   
 
6,528
 
     5,833       4,526    
 
19,332
 
     19,326       16,543    
 
667
 
     831       751  
Production and manufacturing
(c)
   
 
4,440
 
     4,305       3,913    
 
1,829
 
     1,606       1,576    
 
251
 
     210       209  
Selling and general
(c)
   
 
-
 
     -       -    
 
774
 
     773       772    
 
86
 
     87       78  
Federal excise tax and fuel charge   
 
-
 
     -       -    
 
1,808
 
     1,667       1,673    
 
-
 
     -       -  
Depreciation and depletion
(b) (d)
   
 
1,374
 
     1,278       1,939    
 
186
 
     242       202    
 
16
 
     14       12  
Non-service
pension and postretirement benefit
(c)
   
 
-
 
     -       -    
 
-
 
     -       -    
 
-
 
     -       -  
Financing
(note 13)
   
 
3
 
     1       13    
 
-
 
     2       -    
 
-
 
     -       -  
Total expenses
   
 
12,392
 
     11,436       10,574    
 
23,929
 
     23,616       20,766    
 
1,020
 
     1,142       1,050  
Income (loss) before income taxes
   
 
867
 
     (266 )      (992 )   
 
1,306
 
     3,221       1,372    
 
141
 
     376       321  
Income tax expense
(benefit)
(e) (note 4)
   
 
(481
) 
     (128 )      (286 )   
 
345
 
     855       332    
 
33
 
     101       86  
Net income (loss)
   
 
1,348
 
     (138 )      (706 )   
 
961
 
     2,366       1,040    
 
108
 
     275       235  
Cash flows from (used in) operating activities
   
 
2,423
 
     916       1,257    
 
1,965
 
     2,749       1,396    
 
172
 
     354       235  
Capital and exploration expenditures
(f)
   
 
1,248
 
     991       416    
 
484
 
     383       200    
 
34
 
     25       17  
Property, plant and equipment
                                                                         
Cost   
 
47,050
 
     46,435       45,542    
 
6,123
 
     5,900       5,683    
 
954
 
     916       888  
Accumulated depreciation and depletion   
 
(15,889
) 
     (15,050 )      (13,844 )   
 
(3,830
) 
     (3,763 )      (3,594 )   
 
(680
) 
     (662 )      (644 ) 
Net property, plant and equipment
(g)
   
 
31,161
 
     31,385       31,698    
 
2,293
 
     2,137       2,089    
 
274
 
     254       244  
Total assets
(h) (i)
   
 
34,554
 
     34,829       35,044    
 
5,179
 
     5,119       4,890    
 
416
 
     438       399  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     
             
      
             
      
             
      
             
      
             
      
             
      
             
      
             
      
             
  
   
Corporate and other
    
Eliminations
    
Consolidated
  
millions of Canadian dollars
  
    2019
    
    2018
    
    2017
    
      2019
    
    2018
    
    2017
    
    2019
    
    2018
    
    2017
  
Revenues and other income
                                                                         
Revenues
(a)
   
 
-
 
     -       -    
 
-
 
     -       -    
 
34,002
 
  
 
 34,964
 
     29,125  
Intersegment sales   
 
-
 
     -       -    
 
(5,589
) 
     (4,455 )      (3,681 )   
 
-
 
     -       -  
Investment and other income
(note 9)
   
 
35
 
     29       14    
 
-
 
     -       -    
 
99
 
     135       299  
 
   
 
35
 
     29       14    
 
(5,589
) 
     (4,455 )      (3,681 )   
 
34,101
 
  
 
 35,099
 
     29,424  
Expenses
                                                                         
Exploration
(b) (note 16)
   
 
-
 
     -       -    
 
-
 
     -       -    
 
47
 
     19       183  
Purchases of crude oil and products   
 
-
 
     -       -    
 
(5,581
) 
     (4,449 )      (3,675 )   
 
20,946
 
     21,541       18,145  
Production and manufacturing
(c)
   
 
-
 
     -       -    
 
-
 
     -       -    
 
6,520
 
     6,121       5,698  
Selling and general
(c)
   
 
48
 
     54       49    
 
(8
) 
     (6 )      (6 )   
 
900
 
     908       893  
Federal excise tax and fuel charge   
 
-
 
     -       -    
 
-
 
     -       -    
 
1,808
 
     1,667       1,673  
Depreciation and depletion
(b) (d)
   
 
22
 
     21       19    
 
-
 
     -       -    
 
1,598
 
     1,555       2,172  
Non-service
pension and postretirement benefit
(c)
   
 
143
 
     107       -    
 
-
 
     -       -    
 
143
 
     107       -  
Financing
(note 13)
   
 
90
 
     105       65    
 
-
 
     -       -    
 
93
 
     108       78  
Total expenses
   
 
303
 
  
 
287
 
  
 
133
 
  
 
(5,589
) 
  
 
(4,455
) 
  
 
(3,681
) 
  
 
32,055
 
  
 
32,026
 
  
 
28,842
 
Income (loss) before income taxes
   
 
(268
) 
     (258 )      (119 )   
 
-
 
     -       -    
 
2,046
 
     3,073       582  
Income tax expense (benefit)
(e) (note 4)
   
 
(51
) 
     (69 )      (40 )   
 
-
 
     -       -    
 
(154
) 
     759       92  
Net income (loss)
   
 
(217
) 
     (189 )      (79 )   
 
-
 
     -       -    
 
2,200
 
     2,314       490  
Cash flows from (used in) operating activities
   
 
(124
) 
     (116 )      (125 )   
 
(7
) 
     19       -    
 
4,429
 
     3,922       2,763  
Capital and exploration expenditures
(f)
   
 
48
 
     28       38    
 
-
 
     -       -    
 
1,814
 
     1,427       671  
Property, plant and equipment
                                                                         
Cost   
 
741
 
     693       665    
 
-
 
     -       -    
 
54,868
 
     53,944       52,778  
Accumulated depreciation and depletion   
 
(266
) 
     (244 )      (223 )   
 
-
 
     -       -    
 
(20,665
) 
     (19,719 )      (18,305 ) 
Net property, plant and equipment
(g)
   
 
475
 
     449       442    
 
-
 
     -       -    
 
34,203
 
     34,225       34,473  
Total assets
(h) (i)
   
 
2,536
 
     1,548       1,703    
 
(498
) 
     (478 )      (435 )   
 
42,187
 
     41,456       41,601  
 
 
 
 
 
 
 
 
(a) Includes export sales to the United States of $7,190 million (2018 - $6,661 million, 2017 - $4,392 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(b) The Upstream segment in 2017 includes
non-cash
impairment charges of $396 million, before tax, associated with the Horn River development and $379 million, before tax, associated with the Mackenzie gas project. The impairment charges are recognized in the lines “Exploration” and “Depreciation and depletion” on the Consolidated statement of income, and the “Accumulated depreciation and depletion” line of the Consolidated balance sheet.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(c) As part of the implementation of Accounting Standard Update, Compensation – Retirement Benefits (Topic 715), beginning January 1, 2018, Corporate and other includes all
non-service
pension and postretirement benefit expense. Prior to 2018, the majority of these costs were allocated to the operating segments.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(d) In 2018, the Downstream segment included a
non-cash
impairment charge of $46 million, before tax, associated with the Government of Ontario’s revocation of its cap and trade legislation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(e) Segment results in 2019 include a largely
non-
cash
 
favourable impact of $662 million associated with the Alberta corporate income tax rate decrease, with the largest impact in the Upstream segment.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(f) Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to
finance
leases, additional investments and acquisitions. CAPEX excludes the purchase of carbon emission credits.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(g) Includes property, plant and equipment under construction of $2,149 million (2018 - $1,553 million, 2017 - $1,047 million).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(h) Effective January 1, 2019, Imperial adopted the Financial Accounting Standards Board’s standard,
Leases (Topic 842)
, as amended. As at December 31, 2019, Total assets include operating lease right of use assets of $260 million. An election was made not to restate prior periods. See note 14 for additional details.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(i) In 2019, the company removed $570 million from Total assets and corresponding liabilities in the Downstream segment associated with the Government of Ontario’s revocation of its cap and trade legislation
.