Imperial Oil Limited

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Imperial Oil Limited

Company Analysis

Introduction

The company chosen by our audit team is Imperial Oil Limited; a Canadian petroleum company. Our team consists of seven independent, and competent individuals, that is tasked to form an audit plan for Imperial is based on the following strategic analysis. The first part of this project focuses on revenue and product streams, company’s location and size, history and life cycle stage of the company, associated companies, image and impression of the business. As Canada’s second-largest integrated oil company^[1], our audit team will require the use of strong and detailed evidence in the preparation of the audit plan.

Primary products and  Raw materials

The main raw material required for its products is crude oil. From this single material, Imperial produces a variety of petrochemical products including automotive products, aviation fuel products, asphalt, and chemical products.  

It's automotive products like gasoline, and diesel fuel are among its primary products. It offers a variety of gasoline grades including lead-free, regular and premium grade gasoline. Other products include marine fuels, oil lubricant and oil gear for machinery. These products are mainly distributed through resellers  including Imperial’s own branded reseller Esso. Aviation products include aviation gasoline, aviation turbine gasoline fuel, and diesel fuel for internal combustion engines. Chemical products include polyethylene resins, paints, adhesives and pesticides that are important ingredients in production of various household products^[2].

Another major product by Imperial Oil Limited is the asphalt. Asphalt is a mixture of crushed rocks and asphalt cement used for roofing, waterproofing and roads surfacing. To produce asphalt, Imperial Oil Limited uses extra raw materials such as crushed rocks, sand, and stone dust. The process begins with crashing stones and selecting the best combination of each material. Then, these materials are mixed with asphalt cement. Asphalt cement is the residue left after crude oil processing and refinery^[3].

Scale and Scope of Operations 

Imperial Oil Limited was founded in 1880 London, Ontario, and went public on May 1978. Imperial’s primary location is on the western coast of Canada as this area is heavily focused on the oil market. The company’s headquarters is based in Calgary, Alberta. Imperial is primarily focused on expanding and improving the Cold Lake operation located in northeastern Alberta^[4], which could begin as early as 2019. Imperial also has proposed contracts for expansion across the western and northern coast of Canada. Some of these proposed investment opportunities include: Aspen situ oil sands development in Fort McMurray, Horn Riven for the shale gas wells development, Mackenzie Gas Project located in Northwest Territories for creating an onshore natural gas resource^[5].

Imperial is currently worth $33.56 billion and employs 5,700 workers on a full time basis^[6]. The combination of these employees and assets totaling $43.17 billion has  allowed the company to bring in $26.756 billion in revenue in 2015^[7].These figures are significant as it solidifies Imperial’s position as the second largest oil and gas company on the Toronto Stock Exchange (TSX).

Stage in Organizational Life Cycle 

We have determined that Imperial is in its mature stage of the organization life cycle. A mature organization is large in size, has several subsidiaries and has a complex division of labor. That being said, Imperial is a 136 year old organization with a 20% of return on investment^[8], several subsidies, and has a strong historical organizational culture. Imperial operates in several business segments such as upstream, downstream, and chemical, thus requiring large and diverse set of labour. Imperial is also a multinational corporation and the second largest oil producer in Canada with earnings of $3.8 billion^[9], and with 20 years of continuous dividends paid^[10]. The company is currently headquartered in Calgary Alberta and is governed with 8 board of directors, a solid team and a CEO.