Imperial Oil Limited (IMO) announced that it has received final acceptance from the Toronto Stock Exchange (TSX) for a normal course issuer bid (NCIB) to repurchase up to five percent of its 636,676,182 outstanding common shares as of June 15, 2022, or a maximum of 31,833,809 shares during the next 12 months. This maximum will be reduced by the number of shares purchased from Exxon Mobil Corporation (ExxonMobil), Imperialís majority shareholder, as described below.
The new one year program will begin on June 29, 2022, and will end should the company purchase the maximum allowable number of shares, or on June 28, 2023.
Imperial has established an automatic share purchase plan with its designated broker to facilitate the purchase of common shares, both under the NCIB and concurrently from ExxonMobil, during times when Imperial would ordinarily not be permitted to purchase due to regulatory restrictions or self-imposed black-out periods. Before entering a black-out period, Imperial may, but is not required to, instruct the broker to make purchases under the NCIB based on parameters set by Imperial in accordance with the share purchase plan, TSX rules and applicable securities laws. The plan has been pre-cleared by the TSX and will be implemented effective June 29, 2022.
Consistent with the companyís balance sheet strength, low capital requirements and strong cash generation, this announcement reflects the companyís priority and capacity to return cash to shareholders. The NCIB represents a flexible and tax-efficient way of distributing surplus liquidity to shareholders who choose to participate by selling their shares. In addition, the NCIB will be used to eliminate dilution from shares issued in conjunction with Imperialís restricted stock unit plan.
ExxonMobil will be permitted to sell its shares to Imperial outside of, but concurrent with, the NCIB in order to maintain its proportionate share ownership at approximately 69.6 percent. ExxonMobil advised Imperial that it intends to participate, as it has in prior years, and has established an automatic share disposition plan to facilitate the sale of its shares concurrent with the NCIB.
All share purchases will be made through the Toronto Stock Exchange and through other designated exchanges and published markets in Canada. Shares purchased under the NCIB are cancelled and restored to the status of authorized but unissued shares.
As of the close of business on June 15, 2022, Imperial has 636,676,182 issued and outstanding common shares. The average daily trading volume of Imperialís common shares over the six calendar months prior to the date of this announcement was 1,434,622 shares per day. Imperialís daily purchase limit under the new program will be 358,655 shares, which represents 25 percent of the average daily trading volume.
The acceptance marks the continuation of Imperialís most recent normal course share repurchase program that was completed on January 31, 2022. Under the most recent program, the company purchased the maximum 35,583,671 shares that were available, with 10,822,142 shares purchased on the open market and a corresponding 24,761,529 shares purchased from ExxonMobil to maintain its proportionate share ownership at 69.6 percent, representing a total cost of about $1,529 million and an average cost of $42.97 per share.
Imperial also recently completed a substantial issuer bid that commenced on May 6, 2022 and expired on June 10, 2022. Under this substantial issuer bid, Imperial purchased 32,467,532 common shares at a price of $77.00 per share, which included 22,597,379 shares from ExxonMobil to maintain its proportionate share ownership at 69.6 percent, for an aggregate purchase of $2.5 billion and 4.9 percent of Imperialís issued and outstanding shares (as of the close of business on May 2, 2022).