##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
    
    Commission file number: 0-12014
 IMPERIAL OIL LIMITED
  CANADA
    
    98-0017682(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)237 FOURTH AVENUE S.W., CALGARY, AB, CANADA
    
    T2P 3M9(Address of principal executive offices)
    
    (Zip Code)
 
 Securities registered pursuant to Section 12(b) of the Act:
 Name of each exchange onTitle of each class
    
    which registeredNone
    
    None
 Securities registered pursuant to Section 12(g) of the Act:
Common Shares (without par value)
 
 (Title of Class)
 þ o
 o þ
 þ o
 þ o
  þ o o
 o þ




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##### 



PagePART IItem 1.BusinessFinancial Information by Operating Segments
    
    
    3Natural Resources
    
    
    4Petroleum and Natural Gas Production
    
    
    4Land Holdings
    
    
    9Exploration and Development
    
    
    9Petroleum Products
    
    
    11Supply
    
    
    11Refining
    
    
    11Distribution
    
    
    12Marketing
    
    
    12Chemicals
    
    
    13Research
    
    
    13Environmental Protection
    
    
    14Human Resources
    
    
    14Competition
    
    
    14Government Regulation
    
    
    14The Company Online
    
    
    15Item 1A.Risk Factors
    
    
    15Item 2.Properties
    
    
    17Item 3.Legal Proceedings
    
    
    17Item 4.Submission of Matters to a Vote of Security Holders
    
    
    17PART IIItem 5.Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    18Item 6.Selected Financial Data
    
    
    19Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operation
    
    
    19Item 7A.Quantitative and Qualitative Disclosures about Market Risk
    
    
    31Item 8.Financial Statements and Supplementary Data
    
    
    31Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    37Item 9A.Controls and Procedures
    
    
    37PART IIIItem 10.Directors and Executive Officers of the Registrant
    
    
    38Item 11.Executive Compensation
    
    
    41Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    49Item 13.Certain Relationships and Related Transactions
    
    
    49Item 14.Principal Accountant Fees and Services
    
    
    50PART IVItem 15.Exhibits and Financial Statement Schedules
    
    
    51Index to Financial Statements
    
    
    F-1Managements Report on Internal Control over Financial Reporting
    
    
    F-2Report of Independent Registered Public Accounting Firm
    
    
    F-2
  All dollar amounts set forth in this report are in Canadian dollars, except where otherwise
indicated.
Note that numbers may not add due to rounding.
  2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(dollars)Rate at end of period
    
    
    0.8579
    
    
    
    0.8310
    
    
    
    0.7738
    
    
    
    0.6329
    
    
    
    0.6279Average rate during period
    
    
    0.8276
    
    
    
    0.7702
    
    
    
    0.7186
    
    
    
    0.6368
    
    
    
    0.6444High
    
    
    0.8690
    
    
    
    0.8493
    
    
    
    0.7738
    
    
    
    0.6619
    
    
    
    0.6697Low
    
    
    0.7872
    
    
    
    0.7158
    
    
    
    0.6349
    
    
    
    0.6200
    
    
    
    0.6241
  2




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This report contains forward looking information on future production, project start ups and
future capital spending. Actual results could differ materially as a result of market conditions
or changes in law, government policy, operating conditions, costs, project schedules, operating
performance, demand for oil and natural gas, commercial negotiations or other technical and
economic factors.
 
 PART I
 
 Item 1. Business.
    
 Financial Information by Operating Segments (under U.S. GAAP)
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(millions)External sales (1):Natural resources
    
    $
    4,702
    
    
    $
    3,689
    
    
    $
    3,390
    
    
    $
    2,573
    
    
    $
    3,144Petroleum products
    
    
    21,793
    
    
    
    17,503
    
    
    
    14,710
    
    
    
    13,362
    
    
    
    13,079Chemicals
    
    
    1,302
    
    
    
    1,216
    
    
    
    994
    
    
    
    955
    
    
    
    930Corporate and other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    27,797
    
    
    $
    22,408
    
    
    $
    19,094
    
    
    $
    16,890
    
    
    $
    17,153Intersegment sales:Natural resources
    
    $
    3,487
    
    
    $
    2,891
    
    
    $
    2,224
    
    
    $
    2,217
    
    
    $
    2,166Petroleum products
    
    
    2,224
    
    
    
    1,666
    
    
    
    1,294
    
    
    
    1,038
    
    
    
    1,300Chemicals
    
    
    363
    
    
    
    293
    
    
    
    238
    
    
    
    209
    
    
    
    245Net income (2)(3):Natural resources
    
    $
    2,008
    
    
    $
    1,517
    
    
    $
    1,174
    
    
    $
    1,052
    
    
    $
    953Petroleum products
    
    
    694
    
    
    
    556
    
    
    
    462
    
    
    
    147
    
    
    
    376Chemicals
    
    
    121
    
    
    
    109
    
    
    
    44
    
    
    
    54
    
    
    
    26Corporate and other (4)/eliminations
    
    
    (223
    )
    
    
    (130
    )
    
    
    25
    
    
    
    (39
    )
    
    
    (132
    )$
    2,600
    
    
    $
    2,052
    
    
    $
    1,705
    
    
    $
    1,214
    
    
    $
    1,223Identifiable assets at December 31 (3)(5):Natural resources
    
    $
    7,347
    
    
    $
    6,866
    
    
    $
    6,417
    
    
    $
    6,007
    
    
    $
    5,384Petroleum products
    
    
    6,287
    
    
    
    5,555
    
    
    
    5,287
    
    
    
    5,113
    
    
    
    4,414Chemicals
    
    
    504
    
    
    
    497
    
    
    
    440
    
    
    
    427
    
    
    
    383Corporate and other/eliminations
    
    
    1,444
    
    
    
    1,109
    
    
    
    193
    
    
    
    456
    
    
    
    707$
    15,582
    
    
    $
    14,027
    
    
    $
    12,337
    
    
    $
    12,003
    
    
    $
    10,888Capital and exploration expenditures:Natural resources
    
    $
    937
    
    
    $
    1,113
    
    
    $
    1,007
    
    
    $
    986
    
    
    $
    746Petroleum products
    
    
    478
    
    
    
    283
    
    
    
    478
    
    
    
    589
    
    
    
    339Chemicals
    
    
    19
    
    
    
    15
    
    
    
    41
    
    
    
    25
    
    
    
    30Corporate and other
    
    
    41
    
    
    
    34
    
    
    
    33
    
    
    
    12
    
    
    
    $
    1,475
    
    
    $
    1,445
    
    
    $
    1,559
    
    
    $
    1,612
    
    
    $
    1,115
 
 (1)
    
    Export sales are reported in note 2 to the consolidated financial statements on page
F-11.(2)
    
    These amounts are presented as if each segment were a separate business entity and,
accordingly, include the financial effect of transactions between the segments.
Intersegment sales are made essentially at prevailing market prices.(3)
    
    Previous years data has been reclassified to reflect that incentive compensation
expenses, previously included in the operating segments, are now reported in the corporate
and other segment.(4)
    
    Includes primarily interest charges on the debt obligations of the Company, interest
income on investments, incentive compensation expenses, and intersegment consolidating
adjustments.(5)
    
    The identifiable assets in each operating segment represent the net book value of the
tangible and intangible assets attributed to such segment. 3




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Natural Resources
 
 Petroleum and Natural Gas Production
  2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(thousands a day)Conventional (including natural gas liquids):Cubic metres
    
     Gross     (1)
    
    
    11.0
    
    
    
    12.1
    
    
    
    11.8
    
    
    
    12.4
    
    
    
    13.2 Net     (2)
    
    
    8.6
    
    
    
    9.4
    
    
    
    9.1
    
    
    
    9.5
    
    
    
    10.2Barrels
    
     Gross     (1)
    
    
    69
    
    
    
    76
    
    
    
    74
    
    
    
    78
    
    
    
    83 Net     (2)
    
    
    54
    
    
    
    59
    
    
    
    57
    
    
    
    60
    
    
    
    64Oil Sands (Cold Lake):Cubic metres
    
     Gross     (1)
    
    
    22.1
    
    
    
    20.0
    
    
    
    20.5
    
    
    
    17.8
    
    
    
    20.4 Net     (2)
    
    
    19.7
    
    
    
    17.7
    
    
    
    18.4
    
    
    
    16.9
    
    
    
    19.2Barrels
    
     Gross (1)
    
    
    139
    
    
    
    126
    
    
    
    129
    
    
    
    112
    
    
    
    128 Net     (2)
    
    
    124
    
    
    
    112
    
    
    
    116
    
    
    
    106
    
    
    
    121Tar Sands (Syncrude):Cubic metres
    
     Gross     (1)
    
    
    8.4
    
    
    
    9.5
    
    
    
    8.4
    
    
    
    9.1
    
    
    
    8.9 Net     (2)
    
    
    8.4
    
    
    
    9.4
    
    
    
    8.3
    
    
    
    9.1
    
    
    
    8.3Barrels
    
     Gross     (1)
    
    
    53
    
    
    
    60
    
    
    
    53
    
    
    
    57
    
    
    
    56 Net     (2)
    
    
    53
    
    
    
    59
    
    
    
    52
    
    
    
    57
    
    
    
    52Total:Cubic metres
    
     Gross     (1)
    
    
    41.5
    
    
    
    41.6
    
    
    
    40.7
    
    
    
    39.3
    
    
    
    42.5 Net     (2)
    
    
    36.7
    
    
    
    36.5
    
    
    
    35.8
    
    
    
    35.5
    
    
    
    37.7Barrels
    
     Gross     (1)
    
    
    261
    
    
    
    262
    
    
    
    256
    
    
    
    247
    
    
    
    267 Net     (2)
    
    
    231
    
    
    
    230
    
    
    
    225
    
    
    
    223
    
    
    
    237
 
 (1)
    
    Gross production of crude oil is the Companys share of production from conventional
wells, Syncrude tar sands and Cold Lake oil sands, and gross production of natural gas
liquids is the amount derived from processing the Companys share of production of natural
gas (excluding purchased gas), in each case before deduction of the mineral owners or
governments share or both.(2)
    
    Net production is gross production less the mineral owners or governments share or
both.  4




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2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(millions a day)Sales (1):Cubic metres
    
    
    15.2
    
    
    
    14.7
    
    
    
    13.0
    
    
    
    14.1
    
    
    
    14.2Cubic feet
    
    
    536
    
    
    
    520
    
    
    
    460
    
    
    
    499
    
    
    
    502Gross Production (2):Cubic metres
    
    
    16.4
    
    
    
    16.1
    
    
    
    14.5
    
    
    
    15.0
    
    
    
    16.2Cubic feet
    
    
    580
    
    
    
    569
    
    
    
    513
    
    
    
    530
    
    
    
    572Net Production (2):Cubic metres
    
    
    14.6
    
    
    
    14.7
    
    
    
    12.9
    
    
    
    13.1
    
    
    
    13.2Cubic feet
    
    
    514
    
    
    
    518
    
    
    
    457
    
    
    
    463
    
    
    
    466
 
 (1)
    
    Sales are sales of the Companys share of production (before deduction of the mineral
owners and/or governments share) and sales of gas purchased, processed and/or resold.(2)
    
    Gross production of natural gas is the Companys share of production (excluding
purchases) before deducting the shares of mineral owners or governments or both. Net
production excludes those shares. Production data include amounts used for internal
consumption with the exception of amounts reinjected.    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Average Sales Price:Crude oil and natural gas liquids:Per cubic metre
    
    $
    234.04
    
    
    $
    207.26
    
    
    $
    181.92
    
    
    $
    174.72
    
    
    $
    134.16Per barrel
    
    
    37.21
    
    
    
    32.95
    
    
    
    28.92
    
    
    
    27.78
    
    
    
    21.33Natural gas:Per thousand cubic metres
    
    $
    317.71
    
    
    $
    239.34
    
    
    $
    232.99
    
    
    $
    141.91
    
    
    $
    201.92Per thousand cubic feet
    
    
    9.00
    
    
    
    6.78
    
    
    
    6.60
    
    
    
    4.02
    
    
    
    5.72Average Production (Lifting) Costs PerUnit of Net Production (1)(2):Per cubic metre
    
    $
    67.82
    
    
    $
    58.16
    
    
    $
    60.78
    
    
    $
    53.09
    
    
    $
    48.55Per barrel
    
    $
    10.78
    
    
    
    9.25
    
    
    
    9.66
    
    
    
    8.44
    
    
    
    7.72
 
 (1)
    
    Average production (lifting) costs do not include depreciation and depletion of
capitalized acquisition, exploration and development costs. Administrative expenses are
included. Average production (lifting) costs per unit of net production were computed after
converting gas production into equivalent units of oil on the basis of relative energy
content.(2)
    
    Previous years data has been reclassified to reflect that incentive compensation
expenses, previously included in the natural resource segment, are now reported in the
corporate and other segment. The data is computed using production expenses disclosed
pursuant to Statement of Financial Accounting Standards No. 69, Disclosures about Oil and
Gas Producing Activities.    5




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Crude Oil
    
    
    Natural Gas
    
    
    TotalGross (1)
    
    
    Net (2)
    
    
    Gross (1)
    
    
    Net (2)
    
    
    Gross (1)
    
    
    Net (2)Conventional wells
    
    
    1,446
    
    
    
    836
    
    
    
    4,570
    
    
    
    2,445
    
    
    
    6,016
    
    
    
    3,281Oil Sands (Cold Lake) wells
    
    
    3,923
    
    
    
    3,923
    
    
    
    
    
    
    
    
    
    
    
    3,923
    
    
    
    3,923
 
 (1)
    
    Gross wells are wells in which the Company owns a working interest.(2)
    
    Net wells are the sum of the fractional working interests owned by the Company in gross
wells, rounded to the nearest whole number. Conventional Oil and Gas
     Cold Lake
    6




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Other Oil Sands Activity
   Syncrude Mining Operations
      7




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##### Table of Contents



2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Total mined overburden (1)millions of cubic metres
    
    
    74.2
    
    
    
    76.6
    
    
    
    83.5
    
    
    
    77.9
    
    
    
    90.3millions of cubic yards
    
    
    97.1
    
    
    
    100.3
    
    
    
    109.2
    
    
    
    102.0
    
    
    
    118.3Mined overburden to tar sands ratio (1)
    
    
    1.02
    
    
    
    0.94
    
    
    
    1.15
    
    
    
    1.05
    
    
    
    1.15Tar sands minedmillions of tonnes
    
    
    152.7
    
    
    
    170.9
    
    
    
    152.4
    
    
    
    156.5
    
    
    
    164.8millions of tons
    
    
    168.0
    
    
    
    188.0
    
    
    
    168.0
    
    
    
    172.1
    
    
    
    181.2Average bitumen grade (weight percent)
    
    
    11.1
    
    
    
    11.1
    
    
    
    11.0
    
    
    
    11.2
    
    
    
    11.0Crude bitumen in mined tar sandsmillions of tonnes
    
    
    16.9
    
    
    
    19.0
    
    
    
    16.8
    
    
    
    17.5
    
    
    
    18.1millions of tons
    
    
    18.6
    
    
    
    20.9
    
    
    
    18.5
    
    
    
    19.2
    
    
    
    19.9Average extraction recovery (percent)
    
    
    89.1
    
    
    
    87.3
    
    
    
    88.6
    
    
    
    89.9
    
    
    
    87.0Crude bitumen production (2)millions of cubic metres
    
    
    15.1
    
    
    
    16.4
    
    
    
    14.7
    
    
    
    15.5
    
    
    
    15.5millions of barrels
    
    
    94.2
    
    
    
    103.3
    
    
    
    92.3
    
    
    
    97.8
    
    
    
    97.6Average upgrading yield (percent)
    
    
    85.3
    
    
    
    85.5
    
    
    
    86.0
    
    
    
    86.3
    
    
    
    84.5Gross synthetic crude oil producedmillions of cubic metres
    
    
    12.6
    
    
    
    14.1
    
    
    
    12.5
    
    
    
    13.5
    
    
    
    13.1millions of barrels
    
    
    79.3
    
    
    
    88.4
    
    
    
    78.4
    
    
    
    84.8
    
    
    
    82.4Companys net share (3)millions of cubic metres
    
    
    3.1
    
    
    
    3.4
    
    
    
    3.0
    
    
    
    3.3
    
    
    
    3.0millions of barrels
    
    
    19.3
    
    
    
    21.6
    
    
    
    19.1
    
    
    
    20.7
    
    
    
    18.9
 
 (1)
    
    Includes pre-stripping of mine areas and reclamation volumes.(2)
    
    Crude bitumen production is equal to crude bitumen in mined tar sands multiplied by the
average extraction recovery and the appropriate conversion factor.(3)
    
    Reflects the Companys 25 percent interest in production, less applicable royalties
payable to the Province of Alberta. 8




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##### Table of Contents



Other Tar Sands Activity
  
 Land Holdings
  Hectares
    
    
    AcresDeveloped
    
    
    Undeveloped
    
    
    Total
    
    
    Developed
    
    
    Undeveloped
    
    
    Total2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004(thousands)Western ProvincesConventional
Gross (1)
    
    
    1,055
    
    
    
    1,080
    
    
    
    181
    
    
    
    173
    
    
    
    1,236
    
    
    
    1,253
    
    
    
    2,607
    
    
    
    2,669
    
    
    
    447
    
    
    
    427
    
    
    
    3,054
    
    
    
    3,096Net (2)
    
    
    430
    
    
    
    446
    
    
    
    109
    
    
    
    118
    
    
    
    539
    
    
    
    564
    
    
    
    1,063
    
    
    
    1,102
    
    
    
    269
    
    
    
    292
    
    
    
    1,332
    
    
    
    1,394Oil Sands (Cold Lake
and other) Gross (1)
    
    
    41
    
    
    
    42
    
    
    
    193
    
    
    
    193
    
    
    
    234
    
    
    
    235
    
    
    
    101
    
    
    
    104
    
    
    
    477
    
    
    
    477
    
    
    
    578
    
    
    
    581Net (2)
    
    
    41
    
    
    
    41
    
    
    
    105
    
    
    
    104
    
    
    
    146
    
    
    
    145
    
    
    
    101
    
    
    
    101
    
    
    
    260
    
    
    
    257
    
    
    
    361
    
    
    
    358Tar Sands (Syncrude
and other) Gross (1)
    
    
    47
    
    
    
    45
    
    
    
    72
    
    
    
    73
    
    
    
    119
    
    
    
    118
    
    
    
    116
    
    
    
    111
    
    
    
    178
    
    
    
    180
    
    
    
    294
    
    
    
    291Net (2)
    
    
    11
    
    
    
    11
    
    
    
    31
    
    
    
    31
    
    
    
    42
    
    
    
    42
    
    
    
    27
    
    
    
    27
    
    
    
    77
    
    
    
    77
    
    
    
    104
    
    
    
    104Canada Lands (3):Conventional
Gross (1)
    
    
    31
    
    
    
    31
    
    
    
    322
    
    
    
    321
    
    
    
    353
    
    
    
    352
    
    
    
    77
    
    
    
    77
    
    
    
    795
    
    
    
    793
    
    
    
    872
    
    
    
    870Net (2)
    
    
    3
    
    
    
    3
    
    
    
    98
    
    
    
    98
    
    
    
    101
    
    
    
    101
    
    
    
    7
    
    
    
    7
    
    
    
    242
    
    
    
    242
    
    
    
    249
    
    
    
    249Atlantic OffshoreConventional
Gross (1)
    
    
    17
    
    
    
    17
    
    
    
    2,600
    
    
    
    2,603
    
    
    
    2,617
    
    
    
    2,620
    
    
    
    42
    
    
    
    42
    
    
    
    6,425
    
    
    
    6,432
    
    
    
    6,467
    
    
    
    6,474Net (2)
    
    
    2
    
    
    
    2
    
    
    
    616
    
    
    
    832
    
    
    
    618
    
    
    
    834
    
    
    
    5
    
    
    
    5
    
    
    
    1,522
    
    
    
    2,056
    
    
    
    1,527
    
    
    
    2,061Total (4):Gross (1)
    
    
    1,191
    
    
    
    1,215
    
    
    
    3,368
    
    
    
    3,363
    
    
    
    4,559
    
    
    
    4,578
    
    
    
    2,943
    
    
    
    3,003
    
    
    
    8,322
    
    
    
    8,309
    
    
    
    11,265
    
    
    
    11,312Net (2)
    
    
    487
    
    
    
    503
    
    
    
    959
    
    
    
    1,183
    
    
    
    1,446
    
    
    
    1,686
    
    
    
    1,203
    
    
    
    1,242
    
    
    
    2,370
    
    
    
    2,924
    
    
    
    3,573
    
    
    
    4,166
 
 (1)
    
    Gross hectares or acres include the interests of others.(2)
    
    Net hectares or acres exclude the interests of others.(3)
    
    Canada Lands include the Arctic Islands, Beaufort Sea/Mackenzie Delta, and Other
Northwest Territories, Nunavut and the Yukon.(4)
    
    Certain land holdings are subject to modification under agreements whereby others may
earn interests in the Companys holdings by performing certain exploratory work (farm-out)
and whereby the Company may earn interests in others holdings by performing certain
exploratory work (farm-in). 
 Exploration and Development
   9




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##### Table of Contents



2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Western and Atlantic Provinces:ConventionalExploratory
Oil
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gas
    
    
    
    
    
    
    2
    
    
    
    3
    
    
    
    1
    
    
    
    1Dry Holes
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    Development
Oil
    
    
    2
    
    
    
    3
    
    
    
    4
    
    
    
    1
    
    
    
    17Gas
    
    
    155
    
    
    
    207
    
    
    
    89
    
    
    
    42
    
    
    
    68Dry Holes
    
    
    1
    
    
    
    1
    
    
    
    3
    
    
    
    3
    
    
    
    Oil Sands (Cold Lake and other)Development
Oil
    
    
    87
    
    
    
    218
    
    
    
    118
    
    
    
    332
    
    
    
    307Total
    
    
    245
    
    
    
    432
    
    
    
    218
    
    
    
    381
    
    
    
    393
   Western Provinces
  Beaufort Sea/Mackenzie Delta
      10




---



##### Table of Contents



Arctic Islands
  Atlantic Offshore
      
 Petroleum Products
 
 Supply
    
 Refining
   11




---



##### Table of Contents



Average Daily Volumes of
    
    
    Daily RatedRefinery Throughput (1)
    
    
    Capacities atYear Ended December 31
    
    
    December 31 (2)2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2005
    
    
    2000(thousands of cubic metres)Strathcona, Alberta
    
    
    27.6
    
    
    
    27.1
    
    
    
    27.6
    
    
    
    26.0
    
    
    
    25.4
    
    
    
    29.8
    
    
    
    28.6Sarnia, Ontario
    
    
    16.9
    
    
    
    17.2
    
    
    
    14.7
    
    
    
    16.5
    
    
    
    16.5
    
    
    
    19.2
    
    
    
    19.2Dartmouth, Nova Scotia
    
    
    12.5
    
    
    
    12.7
    
    
    
    13.0
    
    
    
    12.5
    
    
    
    12.3
    
    
    
    13.1
    
    
    
    13.1Nanticoke, Ontario
    
    
    17.2
    
    
    
    17.3
    
    
    
    16.3
    
    
    
    16.2
    
    
    
    17.2
    
    
    
    17.8
    
    
    
    17.8Total
    
    
    74.1
    
    
    
    74.3
    
    
    
    71.6
    
    
    
    71.2
    
    
    
    71.4
    
    
    
    79.9
    
    
    
    78.7
 Average Daily Volumes of
    
    
    Daily RatedRefinery Throughput (1)
    
    
    Capacities atYear Ended December 31
    
    
    December 31 (2)2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2005
    
    
    2000(thousands of barrels)Strathcona, Alberta
    
    
    174
    
    
    
    170
    
    
    
    174
    
    
    
    163
    
    
    
    160
    
    
    
    187
    
    
    
    180Sarnia, Ontario
    
    
    106
    
    
    
    108
    
    
    
    92
    
    
    
    104
    
    
    
    104
    
    
    
    121
    
    
    
    121Dartmouth, Nova Scotia
    
    
    79
    
    
    
    80
    
    
    
    82
    
    
    
    78
    
    
    
    77
    
    
    
    82
    
    
    
    82Nanticoke, Ontario
    
    
    108
    
    
    
    109
    
    
    
    102
    
    
    
    102
    
    
    
    108
    
    
    
    112
    
    
    
    112Total
    
    
    466
    
    
    
    467
    
    
    
    450
    
    
    
    447
    
    
    
    449
    
    
    
    502
    
    
    
    495
 
 (1)
    
    Refinery throughput is the volume of crude oil and feedstocks that is processed in the
refinery atmospheric distillation units.(2)
    
    Rated capacities are based on definite specifications as to types of crude oil and
feedstocks that are processed in the refinery atmospheric distillation units, the products
to be obtained and the refinery process, adjusted to include an estimated allowance for
normal maintenance shutdowns. Accordingly, actual capacities may be higher or lower than
rated capacities due to changes in refinery operation and the type of crude oil available
for processing.  
 Distribution
   
 Marketing
    12




---



##### Table of Contents



2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(thousands a day)Gasolines:Cubic metres
    
    
    33.4
    
    
    
    33.2
    
    
    
    33.0
    
    
    
    32.9
    
    
    
    32.3Barrels
    
    
    210
    
    
    
    209
    
    
    
    208
    
    
    
    207
    
    
    
    203Heating, Diesel and Jet Fuels:Cubic metres
    
    
    26.9
    
    
    
    27.3
    
    
    
    26.2
    
    
    
    25.0
    
    
    
    26.5Barrels
    
    
    169
    
    
    
    172
    
    
    
    165
    
    
    
    157
    
    
    
    166Heavy Fuel Oils:Cubic metres
    
    
    6.0
    
    
    
    5.9
    
    
    
    5.4
    
    
    
    4.9
    
    
    
    5.4Barrels
    
    
    38
    
    
    
    37
    
    
    
    34
    
    
    
    31
    
    
    
    34Lube Oils and Other Products (1)Cubic metres
    
    
    7.6
    
    
    
    7.0
    
    
    
    5.8
    
    
    
    6.4
    
    
    
    5.4Barrels
    
    
    48
    
    
    
    44
    
    
    
    36
    
    
    
    41
    
    
    
    34Net petroleum product sales:Cubic metres
    
    
    73.9
    
    
    
    73.4
    
    
    
    70.4
    
    
    
    69.2
    
    
    
    69.6Barrels
    
    
    465
    
    
    
    462
    
    
    
    443
    
    
    
    436
    
    
    
    437Sales under purchase and sale agreements:Cubic metres
    
    
    15.2
    
    
    
    14.2
    
    
    
    14.6
    
    
    
    13.9
    
    
    
    11.6Barrels
    
    
    95
    
    
    
    89
    
    
    
    92
    
    
    
    87
    
    
    
    73Total:Cubic metres
    
    
    89.1
    
    
    
    87.6
    
    
    
    85.0
    
    
    
    83.1
    
    
    
    81.2Barrels
    
    
    560
    
    
    
    551
    
    
    
    535
    
    
    
    523
    
    
    
    510
 
 (1)
    
    Includes about one thousand cubic metres (six thousand barrels) per day of butane
commencing in 2002. Butane is not included in 2001.  2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    200193.8
    %
    
    
    93.0
    %
    
    
    93.3
    %
    
    
    91.5
    %
    
    
    93.4
    %
  
 Chemicals
   2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(thousands a day)Petrochemicals:Tonnes
    
    
    3.0
    
    
    
    3.3
    
    
    
    3.3
    
    
    
    3.5
    
    
    
    3.3Tons
    
    
    3.3
    
    
    
    3.6
    
    
    
    3.6
    
    
    
    3.9
    
    
    
    3.6
 
 Research
   13




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##### Table of Contents



Environmental Protection
   
 Human Resources
  
 Competition
  
 Government Regulation
 Petroleum and Natural Gas Rights
  Crude Oil
 Production
  Exports
  14




---



##### Table of Contents



Natural Gas
 Production
  Exports
   Royalties
   Investment Canada Act
   
 The Company Online
  
 Item 1A.
Risk Factors.
 Volatility of Oil and Natural Gas Prices
    15




---



##### Table of Contents



Competitive Factors
   Environmental Risks
   Kyoto Protocol
 Climate Change and Emissions Management Act
 Other Regulatory Risk
  16




---



##### Table of Contents



Need to Replace Reserves
  Other Business Risks
  Uncertainty of Reserve Estimates
   Project Factors
  Market Risk Factors
  
 Item 2. Properties.
  
 Item 3. Legal Proceedings.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  17




---



##### Table of Contents



PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
 Information for Security Holders Outside Canada
     Quarterly Financial and Stock Trading Data
 2005
    
    
    2004three months ended
    
    
    three months endedMar. 31
    
    
    June 30
    
    
    Sept. 30
    
    
    Dec. 31
    
    
    Mar. 31
    
    
    June 30
    
    
    Sept. 30
    
    
    Dec. 31Financial data(millions of dollars)Total revenues and other income
    
    
    5,958
    
    
    
    6,802
    
    
    
    7,711
    
    
    
    7,743
    
    
    
    5,067
    
    
    
    5,466
    
    
    
    5,814
    
    
    
    6,113Total expenses
    
    
    5,370
    
    
    
    5,989
    
    
    
    6,753
    
    
    
    6,184
    
    
    
    4,347
    
    
    
    4,767
    
    
    
    4,986
    
    
    
    5,333Income before income taxes
    
    
    588
    
    
    
    813
    
    
    
    958
    
    
    
    1,559
    
    
    
    720
    
    
    
    699
    
    
    
    828
    
    
    
    780Income taxes
    
    
    (195
    )
    
    
    (274
    )
    
    
    (306
    )
    
    
    (543
    )
    
    
    (254
    )
    
    
    (195
    )
    
    
    (284
    )
    
    
    (242
    )Net income
    
    
    393
    
    
    
    539
    
    
    
    652
    
    
    
    1,016
    
    
    
    466
    
    
    
    504
    
    
    
    544
    
    
    
    538Per-share information(dollars)Net earnings  basic
    
    
    1.13
    
    
    
    1.56
    
    
    
    1.92
    
    
    
    3.01
    
    
    
    1.29
    
    
    
    1.40
    
    
    
    1.53
    
    
    
    1.53Net earnings  diluted
    
    
    1.12
    
    
    
    1.56
    
    
    
    1.91
    
    
    
    3.00
    
    
    
    1.29
    
    
    
    1.40
    
    
    
    1.53
    
    
    
    1.52Dividends (declared quarterly)
    
    
    0.22
    
    
    
    0.24
    
    
    
    0.24
    
    
    
    0.24
    
    
    
    0.22
    
    
    
    0.22
    
    
    
    0.22
    
    
    
    0.22Share prices(dollars)Toronto Stock ExchangeHigh
    
    
    94.33
    
    
    
    104.97
    
    
    
    137.37
    
    
    
    136.18
    
    
    
    64.45
    
    
    
    64.25
    
    
    
    66.76
    
    
    
    73.65Low
    
    
    67.51
    
    
    
    82.10
    
    
    
    100.00
    
    
    
    96.85
    
    
    
    56.42
    
    
    
    58.40
    
    
    
    59.50
    
    
    
    65.28Close
    
    
    92.02
    
    
    
    102.02
    
    
    
    134.01
    
    
    
    115.41
    
    
    
    58.87
    
    
    
    62.40
    
    
    
    65.48
    
    
    
    71.15American Stock Exchange ($U.S.)High
    
    
    77.20
    
    
    
    85.15
    
    
    
    117.41
    
    
    
    116.78
    
    
    
    48.70
    
    
    
    47.13
    
    
    
    52.22
    
    
    
    62.45Low
    
    
    54.80
    
    
    
    64.70
    
    
    
    82.38
    
    
    
    82.41
    
    
    
    42.34
    
    
    
    43.17
    
    
    
    45.50
    
    
    
    51.43Close
    
    
    76.14
    
    
    
    83.31
    
    
    
    115.06
    
    
    
    99.60
    
    
    
    44.84
    
    
    
    46.82
    
    
    
    51.71
    
    
    
    59.38
    18




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##### Table of Contents



Issuer purchases of equity securities (1)
 (d) Maximum number(a) Total number
    
    
    
    
    
    
    (c) Total number of shares
    
    
    (or approximate dollar value)of shares
    
    
    (b) Average price
    
    
    purchased as part of
    
    
    of shares that may yet be(or units)
    
    
    paid per share
    
    
    publicly announced plans
    
    
    purchased under the plans orPeriod
    
    purchased
    
    
    (or unit)
    
    
    or programs
    
    
    programsOctober 2005
(October 1  October 31)
    
    
    807,443
    
    
    $116.01
    
    
    
    807,443
    
    
    
    10,841,799November 2005 
(November 1  November 30)
    
    
    1,948,195
    
    
    $108.48
    
    
    
    1,948,195
    
    
    
    8,871,168December 2005 
(December 1  December 31)
    
    
    1,067,128
    
    
    $115.33
    
    
    
    1,067,128
    
    
    
    7,784,211
 
 (1)
    
    The purchases were pursuant to a 12 month normal course share purchase program that
was renewed on June 23, 2005 under which the Company may purchase up to 17,080,605 of its
outstanding common shares less any shares purchased by the employee savings plan and
Company pension fund. If not previously terminated, the program will terminate on June 22,
2006. 
 Item 6. Selected Financial Data.
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(millions)Total operating revenues
    
    $
    27,797
    
    
    $
    22,408
    
    
    $
    19,094
    
    
    $
    16,890
    
    
    $
    17,153Net income
    
    
    2,600
    
    
    
    2,052
    
    
    
    1,705
    
    
    
    1,214
    
    
    
    1,223Total assets
    
    
    15,582
    
    
    
    14,027
    
    
    
    12,337
    
    
    
    12,003
    
    
    
    10,888Long term debt
    
    
    863
    
    
    
    367
    
    
    
    859
    
    
    
    1,466
    
    
    
    1,029Other long term obligations
    
    
    1,728
    
    
    
    1,525
    
    
    
    1,314
    
    
    
    1,822
    
    
    
    1,303(dollars)Net income/share  basic
    
    
    7.62
    
    
    
    5.75
    
    
    
    4.58
    
    
    
    3.20
    
    
    
    3.11Net income/share  diluted
    
    
    7.59
    
    
    
    5.74
    
    
    
    4.58
    
    
    
    3.20
    
    
    
    3.11Cash dividends/share
    
    
    0.94
    
    
    
    0.88
    
    
    
    0.87
    
    
    
    0.84
    
    
    
    0.83
  
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operation.
 Overview
    19




---



##### Table of Contents



Business environment and outlook
 Natural resources
      Petroleum products
    Chemicals
  Results of operations
  20




---



##### Table of Contents



Natural Resources
   Financial statistics
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(millions)Net income
    
    $
    2,008
    
    
    $
    1,517
    
    
    $
    1,174
    
    
    $
    1,052
    
    
    $
    953Operating revenues
    
    
    8,189
    
    
    
    6,580
    
    
    
    5,584
    
    
    
    4,790
    
    
    
    5,310
    21




---



##### Table of Contents



Average realizations and prices
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(Canadian dollars)Conventional crude oil realizations (a barrel)
    
    $
    64.48
    
    
    $
    48.96
    
    
    $
    40.10
    
    
    $
    36.81
    
    
    $
    35.56Natural gas liquids realizations (a barrel)
    
    
    40.00
    
    
    
    33.78
    
    
    
    32.09
    
    
    
    23.38
    
    
    
    29.31Natural gas realizations (a thousand cubic feet)
    
    
    9.00
    
    
    
    6.78
    
    
    
    6.60
    
    
    
    4.02
    
    
    
    5.72Par crude oil price at Edmonton (a barrel)
    
    
    69.86
    
    
    
    53.26
    
    
    
    43.93
    
    
    
    40.44
    
    
    
    39.64Heavy crude oil price at Hardisty (Bow River, a barrel)
    
    
    45.62
    
    
    
    37.98
    
    
    
    33.00
    
    
    
    31.85
    
    
    
    25.11
        Crude oil and NGLs  production and sales
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001gross
    
    
    net
    
    
    gross
    
    
    net
    
    
    gross
    
    
    net
    
    
    gross
    
    
    net
    
    
    gross
    
    
    net(thousands of barrels a day)Cold Lake
    
    
    139
    
    
    
    124
    
    
    
    126
    
    
    
    112
    
    
    
    129
    
    
    
    116
    
    
    
    112
    
    
    
    106
    
    
    
    128
    
    
    
    121Syncrude
    
    
    53
    
    
    
    53
    
    
    
    60
    
    
    
    59
    
    
    
    53
    
    
    
    52
    
    
    
    57
    
    
    
    57
    
    
    
    56
    
    
    
    52Conventional crude oil
    
    
    38
    
    
    
    29
    
    
    
    43
    
    
    
    33
    
    
    
    46
    
    
    
    35
    
    
    
    51
    
    
    
    39
    
    
    
    55
    
    
    
    42Total crude oil production
    
    
    230
    
    
    
    206
    
    
    
    229
    
    
    
    204
    
    
    
    228
    
    
    
    203
    
    
    
    220
    
    
    
    202
    
    
    
    239
    
    
    
    215NGLs available for sale
    
    
    31
    
    
    
    25
    
    
    
    33
    
    
    
    26
    
    
    
    28
    
    
    
    22
    
    
    
    27
    
    
    
    21
    
    
    
    28
    
    
    
    22Total crude oil and NGL production
    
    
    261
    
    
    
    231
    
    
    
    262
    
    
    
    230
    
    
    
    256
    
    
    
    225
    
    
    
    247
    
    
    
    223
    
    
    
    267
    
    
    
    237Cold Lake sales, include diluent (b)
    
    
    183
    
    
    
    
    
    
    
    167
    
    
    
    
    
    
    
    170
    
    
    
    
    
    
    
    145
    
    
    
    
    
    
    
    167NGL sales
    
    
    39
    
    
    
    
    
    
    
    42
    
    
    
    
    
    
    
    39
    
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    43
 Natural gas  production and sales
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001gross
    
    
    net
    
    
    gross
    
    
    net
    
    
    gross
    
    
    net
    
    
    gross
    
    
    net
    
    
    gross
    
    
    net(millions of cubic feet a day)Production (c)
    
    
    580
    
    
    
    514
    
    
    
    569
    
    
    
    518
    
    
    
    513
    
    
    
    457
    
    
    
    530
    
    
    
    463
    
    
    
    572
    
    
    
    466Sales
    
    
    536
    
    
    
    
    
    
    
    520
    
    
    
    
    
    
    
    460
    
    
    
    
    
    
    
    499
    
    
    
    
    
    
    
    502
 
 (a)
    
    Daily volumes are calculated by dividing total volumes for the year by the number of
days in the year. Gross production is the Companys share of production (excluding
purchases) before deducting the share of mineral owners or governments or both. Net
production excludes those shares.(b)
    
    Includes natural gas condensate added to the Cold Lake bitumen to facilitate
transportation to market by pipeline.(c)
    
    Production of natural gas includes amounts used for internal consumption with the
exception of the amounts reinjected.   22




---



##### Table of Contents



Petroleum products
   Financial statistics
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(millions)Net income
    
    $
    694
    
    
    $
    556
    
    
    $
    462
    
    
    $
    147
    
    
    $
    376Operating revenues
    
    
    24,017
    
    
    
    19,169
    
    
    
    16,004
    
    
    
    14,400
    
    
    
    14,379
 Sales of petroleum products
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(millions of litres a day (a))Gasolines
    
    
    33.4
    
    
    
    33.2
    
    
    
    33.0
    
    
    
    32.9
    
    
    
    32.3Heating, diesel and jet fuels
    
    
    26.9
    
    
    
    27.3
    
    
    
    26.2
    
    
    
    25.0
    
    
    
    26.5Heavy fuel oils
    
    
    6.0
    
    
    
    5.9
    
    
    
    5.4
    
    
    
    4.9
    
    
    
    5.4Lube oils and other products
    
    
    7.6
    
    
    
    7.0
    
    
    
    5.8
    
    
    
    6.4
    
    
    
    5.4Net petroleum product sales
    
    
    73.9
    
    
    
    73.4
    
    
    
    70.4
    
    
    
    69.2
    
    
    
    69.6Sales under purchase and sale agreements
    
    
    15.2
    
    
    
    14.2
    
    
    
    14.6
    
    
    
    13.9
    
    
    
    11.6Total sales of petroleum products
    
    
    89.1
    
    
    
    87.6
    
    
    
    85.0
    
    
    
    83.1
    
    
    
    81.2Total domestic sales of petroleum products (percent)
    
    
    93.8
    
    
    
    93.0
    
    
    
    93.3
    
    
    
    91.5
    
    
    
    93.4
 Refinery utilization
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(millions of litres a day (a))Total refinery throughput (b)
    
    
    74.1
    
    
    
    74.3
    
    
    
    71.6
    
    
    
    71.2
    
    
    
    71.4Refinery capacity at December 31
    
    
    79.9
    
    
    
    79.9
    
    
    
    79.9
    
    
    
    79.4
    
    
    
    79.1Utilization of total refinery capacity (percent)
    
    
    93
    
    
    
    93
    
    
    
    90
    
    
    
    90
    
    
    
    90
 
 (a)
    
    Volumes a day are calculated by dividing total volumes for the year by the number of
days in the year.(b)
    
    Crude oil and feedstocks sent directly to atmospheric distillation units.       23




---



##### Table of Contents



Chemicals
  Financial statistics
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(millions of dollars)Net income
    
    $
    121
    
    
    $
    109
    
    
    $
    44
    
    
    $
    54
    
    
    $
    26Operating revenues
    
    
    1,665
    
    
    
    1,509
    
    
    
    1,232
    
    
    
    1,164
    
    
    
    1,175
 Sales volumes
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(thousands of tonnes a day (a))Polymers and basic chemicals
    
    
    2.1
    
    
    
    2.4
    
    
    
    2.4
    
    
    
    2.5
    
    
    
    2.4Intermediate and others
    
    
    0.9
    
    
    
    0.9
    
    
    
    0.9
    
    
    
    1.0
    
    
    
    0.9Total chemicals
    
    
    3.0
    
    
    
    3.3
    
    
    
    3.3
    
    
    
    3.5
    
    
    
    3.3
 
 (a)
    
    Volumes a day are calculated by dividing total volumes for the year by the number of
days in the year.      Corporate and other
  Liquidity and capital resources
 Sources and uses of cash
 2005
    
    
    2004(millions of dollars)Cash provided by/(used in)Operating activities
    
    $
    3,451
    
    
    $
    3,312Investing activities
    
    
    (992
    )
    
    
    (1,306
    )Financing activities
    
    
    (2,077
    )
    
    
    (1,175
    )Increase/(decrease) in cash and cash equivalents
    
    
    382
    
    
    
    831Cash and cash equivalents at end of year
    
    $
    1,661
    
    
    $
    1,279
   24




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##### Table of Contents



Cash flow from operating activities
  Capital and exploration expenditures
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(millions of dollars)Exploration
    
    $
    43
    
    
    $
    60
    
    
    $
    57
    
    
    $
    39
    
    
    $
    49Production
    
    
    232
    
    
    
    234
    
    
    
    181
    
    
    
    143
    
    
    
    109Heavy oil
    
    
    662
    
    
    
    819
    
    
    
    769
    
    
    
    804
    
    
    
    588Total capital and exploration expenditures
    
    $
    937
    
    
    $
    1,113
    
    
    $
    1,007
    
    
    $
    986
    
    
    $
    746
      25




---



##### Table of Contents



2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(millions of dollars)Marketing
    
    $
    91
    
    
    $
    85
    
    
    $
    91
    
    
    $
    133
    
    
    $
    171Refining and supply
    
    
    368
    
    
    
    178
    
    
    
    369
    
    
    
    399
    
    
    
    118Other (a)
    
    
    19
    
    
    
    20
    
    
    
    18
    
    
    
    57
    
    
    
    50Total capital expenditures
    
    $
    478
    
    
    $
    283
    
    
    $
    478
    
    
    $
    589
    
    
    $
    339
 
 (a)
    
    Consists primarily of real estate purchases.    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(millions of dollars)Chemicals
    
    $
    19
    
    
    $
    15
    
    
    $
    41
    
    
    $
    25
    
    
    $
    30
    Cash flow from financing activities
      26




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##### Table of Contents



Financial percentages and ratios
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Total debt as a percentage of capital (a)
    
    
    18
    
    
    
    19
    
    
    
    21
    
    
    
    24
    
    
    
    26Interest coverage ratiosEarnings basis (b)
    
    
    88
    
    
    
    83
    
    
    
    64
    
    
    
    46
    
    
    
    26Cash-flow basis (c)
    
    
    101
    
    
    
    108
    
    
    
    80
    
    
    
    63
    
    
    
    36
 
 (a)
    
    Current and long-term portions of debt (page F-5), divided by debt and shareholders
equity (page F-5)(b)
    
    Net income (page F-3), debt-related interest before capitalization (page F-22, note 14)
and income taxes (page F-3) divided by debt-related interest before capitalization.(c)
    
    Cash flow from net-income adjusted for the cumulative effect of accounting change and
other non-cash items (page F-4), current income tax expense (page F-13, note 4) and
debt-related interest before capitalization (page F-22, note 14) divided by debt-related
interest before capitalization.   Contractual obligations
  Financial
    
    Payment due by periodStatement
    
    
    
    
    
    2007 to
    
    
    2011 and
    
    
    TotalNote Reference

    
    2006
    
    
    2010
    
    
    beyond
    
    
    amount(millions of dollars)Long-term debt and capital leases
    
    Note 3
    
    $
    477
    
    
    $
    833
    
    
    $
    30
    
    
    $
    1,340Companys share of equity company debt
    
    
    
    
    59
    
    
    
    
    
    
    
    
    
    
    
    59Operating leases
    
    Note 11
    
    
    48
    
    
    
    168
    
    
    
    57
    
    
    
    273Unconditional purchase obligations (a)
    
    Note 11
    
    
    94
    
    
    
    145
    
    
    
    20
    
    
    
    259Firm capital commitments (b)
    
    Note 11
    
    
    196
    
    
    
    36
    
    
    
    
    
    
    
    232Pension obligations (c)
    
    Note 6
    
    
    416
    
    
    
    80
    
    
    
    346
    
    
    
    842Asset retirement obligations (d)
    
    Note 7
    
    
    36
    
    
    
    141
    
    
    
    190
    
    
    
    367Other long-term agreements (e)
    
    Note 11
    
    
    403
    
    
    
    1,022
    
    
    
    356
    
    
    
    1,781
 
 (a)
    
    Unconditional purchase obligations mainly pertain to pipeline throughput agreements.(b)
    
    Firm capital commitments related to capital projects, shown on an undiscounted basis,
totalled approximately $232 million at the end of 2005, compared with $171 million at
year-end 2004. The largest commitment outstanding at year-end 2005 was associated with the
Companys share of upstream capital projects of $72 million offshore Canadas East Coast.(c)
    
    The amount by which accumulated benefit obligations (ABO) exceeded the fair value of
fund assets at year-end (page F-14, note 6). For funded pension plans, this difference was
$489 million at December 31, 2005. For unfunded plans, this was the ABO amount of $353
million. The payments by period include expected contributions to funded pension plans in
2006 and estimated benefit payments for unfunded plans in all years.(d)
    
    Asset retirement obligations represent the discounted present value of legal
obligations associated with site restoration on the retirement of assets with determinable
useful lives.(e)
    
    Other long-term agreements include primarily raw material supply and transportation
services agreements.   27




---



##### Table of Contents



Recently issued Statement of Financial Accounting Standards
 Share-based payments
   Accounting for purchases and sales of inventory with the same counterparty
    Critical accounting policies
  28




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##### Table of Contents



Hydrocarbon reserves
         Impact of reserves on depreciation
  29




---



##### Table of Contents



Impact of reserves and prices on testing for impairment
      Retirement benefits
  Asset retirement obligations and other environmental liabilities
   30




---



##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
      millions
of dollars after taxSix dollars (U.S.) a barrel change in crude oil prices
    
    
    +(-
    )
    
    
    300One dollar and ten cents a thousand cubic feet change in natural gas prices
    
    
    +(-
    )
    
    
    66One cent a litre change in sales margins for total petroleum products
    
    
    +(-
    )
    
    
    175One cent (U.S.) a pound change in sales margins for polyethylene
    
    
    +(-
    )
    
    
    7One quarter percent decrease (increase) in short term interest rates
    
    
    +(-
    )
    
    
    2Nine cents decrease (increase) in the value of the Canadian dollar versus the U.S. dollar
    
    
    +(-
    )
    
    
    475
   
 Item 8. Financial Statements and Supplementary Data.
  Syncrude Mining Operations
  31




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##### Table of Contents



Synthetic Crude OilBase Mine andNorth Mine
    
    Aurora Mine
    
    Total(millions of cubic metres)Beginning of year 2003
    
    
    55
    
    
    
    72
    
    
    
    127Revision of previous estimate
    
    
    
    
    
    
    
    
    
    
    Production
    
    
    (2
    )
    
    
    (1
    )
    
    
    (3
    )End of year 2003
    
    
    53
    
    
    
    71
    
    
    
    124Revision of previous estimate
    
    
    (16
    )
    
    
    16
    
    
    
    0Production
    
    
    (2
    )
    
    
    (2
    )
    
    
    (4
    )End of year 2004
    
    
    35
    
    
    
    85
    
    
    
    120Revision of previous estimate
    
    
    
    
    
    
    
    
    
    
    Production
    
    
    (1
    )
    
    
    (2
    )
    
    
    (3
    )End of year 2005
    
    
    34
    
    
    
    83
    
    
    
    117
 Synthetic Crude OilBase Mine andNorth Mine
    
    Aurora Mine
    
    Total(millions of barrels)Beginning of year 2003
    
    
    344
    
    
    
    456
    
    
    
    800Revision of previous estimate
    
    
    
    
    
    
    
    
    
    
    Production
    
    
    (13
    )
    
    
    (6
    )
    
    
    (19
    )End of year 2003
    
    
    331
    
    
    
    450
    
    
    
    781Revision of previous estimate
    
    
    (103
    )
    
    
    100
    
    
    
    (3
    )Production
    
    
    (11
    )
    
    
    (10
    )
    
    
    (21
    )End of year 2004
    
    
    217
    
    
    
    540
    
    
    
    757Revision of previous estimate
    
    
    
    
    
    
    
    
    
    
    Production
    
    
    (9
    )
    
    
    (10
    )
    
    
    (19
    )End of year 2005
    
    
    208
    
    
    
    530
    
    
    
    738
 Oil and Gas Producing Activities
  Results of Operations
 2005
    
    
    2004
    
    
    2003(millions of dollars)Sales to
customers (1)
    
    $
    2,739
    
    
    $
    2,160
    
    
    $
    2,067Intersegment
sales (1) (2)
    
    
    1,013
    
    
    
    976
    
    
    
    665$
    3,752
    
    
    $
    3,136
    
    
    $
    2,732Production expenses
    
    
    1,035
    
    
    
    870
    
    
    
    883Exploration expenses
    
    
    31
    
    
    
    44
    
    
    
    55Depreciation and depletion
    
    
    583
    
    
    
    565
    
    
    
    463Income taxes
    
    
    716
    
    
    
    547
    
    
    
    376Results of operations
    
    $
    1,387
    
    
    $
    1,110
    
    
    $
    955
 32




---



##### Table of Contents



Capital and exploration expenditures
 2005
    
    2004
    
    2003(millions of dollars)Property costs (3)Proved
    
    $
    
    
    
    $
    
    
    
    $
    Unproved
    
    
    7
    
    
    
    1
    
    
    
    2Exploration costs
    
    
    37
    
    
    
    43
    
    
    
    55Development costs
    
    
    330
    
    
    
    408
    
    
    
    339Total capital and exploration expenditures
    
    $
    374
    
    
    $
    452
    
    
    $
    396
 Property, plant and equipment
 2005
    
    

2004(millions of dollars)Property costs (3)Proved
    
    $
    3,231
    
    
    $
    3,328Unproved
    
    
    162
    
    
    
    141Producing assets
    
    
    6,111
    
    
    
    6,099Support facilities
    
    
    174
    
    
    
    122Incomplete construction
    
    
    432
    
    
    
    235Total cost
    
    $
    10,110
    
    
    $
    9,925Accumulated depreciation and depletion
    
    
    6,934
    
    
    
    6,514Net property, plant and equipment
    
    $
    3,176
    
    
    $
    3,411
 
 (1)
    
    Sales to customers or intersegment sales do not include the sale of natural gas and
natural gas liquids purchased for resale, as well as royalty payments. These items are
reported gross in note 2 in External sales, Intersegment sales and in Purchases of
crude oil and products.(2)
    
    Sales of crude oil to consolidated affiliates are at market value, using posted field
prices. Sales of natural gas liquids to consolidated affiliates are at prices estimated to
be obtainable in a competitive, arms-length transaction.(3)
    
    Property costs are payments for rights to explore for petroleum and natural gas and
for purchased reserves (acquired tangible and intangible assets such as gas plants,
production facilities and producing-well costs are included under Producing assets).
Proved represents areas where successful drilling has delineated a field capable of
production. Unproved represents all other areas. 33




---



##### Table of Contents



Net
proved developed and undeveloped reserves (1)
 Crude oil and natural gas liquidsConventional
    
    Cold Lake
    
    Total
    
    Natural Gas(millions of cubic metres)
    
    (billions of cubic metres)Beginning of year 2003
    
    
    23
    
    
    
    127
    
    
    
    150
    
    
    
    35Revisions and improved recovery
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    (1
    )(Sale)/purchase of reserves in place
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Discoveries and extensions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Production
    
    
    (3
    )
    
    
    (7
    )
    
    
    (10
    )
    
    
    (5
    )End of year 2003
    
    
    20
    
    
    
    121
    
    
    
    141
    
    
    
    29Revisions and improved recovery
    
    
    1
    
    
    
    (3
    )
    
    
    (2
    )
    
    
    1(Sale)/purchase of reserves in place
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Discoveries and extensions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Production
    
    
    (3
    )
    
    
    (6
    )
    
    
    (9
    )
    
    
    (5
    )Total before year end price/cost revisions
    
    
    18
    
    
    
    112
    
    
    
    130
    
    
    
    25Year end price/cost revisions
    
    
    
    
    
    
    (75
    )
    
    
    (75
    )
    
    
    (3
    )End of year 2004
    
    
    18
    
    
    
    37
    
    
    
    55
    
    
    
    22Remove 2004 year end price/cost revisions
    
    
    
    
    
    
    75
    
    
    
    75
    
    
    
    3Total before 2004 year end price/cost revisions
    
    
    18
    
    
    
    112
    
    
    
    130
    
    
    
    25Revisions and improved recovery
    
    
    (1
    )
    
    
    1
    
    
    
    
    
    
    
    2(Sale)/purchase of reserves in place
    
    
    (2
    )
    
    
    
    
    
    
    (2
    )
    
    
    Discoveries and extensions
    
    
    
    
    
    
    3
    
    
    
    3
    
    
    
    Production
    
    
    (3
    )
    
    
    (7
    )
    
    
    (10
    )
    
    
    (5
    )Total before 2005 year end price/cost revisions
    
    
    12
    
    
    
    109
    
    
    
    121
    
    
    
    22Year end price/cost revisions
    
    
    1
    
    
    
    (21
    )
    
    
    (20
    )
    
    
    (1
    )End of year 2005
    
    
    13
    
    
    
    88
    
    
    
    101
    
    
    
    21
 
 (1)
    
    Net reserves are the Companys share of reserves after deducting the shares of mineral
owners or governments or both. All reported reserves are located in Canada. Reserves of
natural gas are calculated at a pressure of 101.325 kilopascals absolute at 15 degrees
Celsius. 34




---



##### Table of Contents



Crude oil and natural gas liquidsConventional
    
    Cold Lake
    
    Total
    
    Natural Gas(millions of barrels)
    
    (billions of cubic feet)Beginning of year 2003
    
    
    146
    
    
    
    801
    
    
    
    947
    
    
    
    1,224Revisions and improved recovery
    
    
    1
    
    
    
    5
    
    
    
    6
    
    
    
    (40
    )(Sale)/purchase of reserves in place
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Discoveries and extensions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6Production
    
    
    (21
    )
    
    
    (43
    )
    
    
    (64
    )
    
    
    (167
    )End of year 2003
    
    
    126
    
    
    
    763
    
    
    
    889
    
    
    
    1,023Revisions and improved recovery
    
    
    6
    
    
    
    (20
    )
    
    
    (14
    )
    
    
    57(Sale)/purchase of reserves in place
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13
    )Discoveries and extensions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Production
    
    
    (22
    )
    
    
    (41
    )
    
    
    (63
    )
    
    
    (190
    )Total before year end price/cost revisions
    
    
    110
    
    
    
    702
    
    
    
    812
    
    
    
    880Year end price/cost revisions
    
    
    5
    
    
    
    (470
    )
    
    
    (465
    )
    
    
    (89
    )End of year 2004
    
    
    115
    
    
    
    232
    
    
    
    347
    
    
    
    791Remove 2004 year end price/cost revisions
    
    
    (5
    )
    
    
    470
    
    
    
    465
    
    
    
    89Total before 2004 year end price/cost revisions
    
    
    110
    
    
    
    702
    
    
    
    812
    
    
    
    880Revisions and improved recovery
    
    
    (1
    )
    
    
    9
    
    
    
    8
    
    
    
    65(Sale)/purchase of reserves in place
    
    
    (12
    )
    
    
    
    
    
    
    (12
    )
    
    
    (6
    )Discoveries and extensions
    
    
    
    
    
    
    17
    
    
    
    17
    
    
    
    14Production
    
    
    (20
    )
    
    
    (45
    )
    
    
    (65
    )
    
    
    (188
    )Total before 2005 year end price/cost revisions
    
    
    77
    
    
    
    683
    
    
    
    760
    
    
    
    765Year end price/cost revisions
    
    
    6
    
    
    
    (132
    )
    
    
    (126
    )
    
    
    (18
    )End of year 2005
    
    
    83
    
    
    
    551
    
    
    
    634
    
    
    
    747
 
 (1)
    
    Net reserves are the Companys share of reserves after deducting the shares of mineral
owners or governments or both. All reported reserves are located in Canada. Reserves of
natural gas are calculated at a pressure of 14.73 pounds per square inch at 60°F.      35




---



##### Table of Contents



Net
proved developed and undeveloped reserves of crude oil and natural
gas (1)
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(millions)Crude Oil:Conventional:Cubic metres
    
    
    13
    
    
    
    18
    
    
    
    20
    
    
    
    23
    
    
    
    26Barrels
    
    
    83
    
    
    
    115
    
    
    
    126
    
    
    
    146
    
    
    
    165Oil Sands (Cold Lake crude bitumen):Cubic metres
    
    
    88
    
    
    
    37
    
    
    
    121
    
    
    
    127
    
    
    
    128Barrels
    
    
    551
    
    
    
    232
    
    
    
    763
    
    
    
    801
    
    
    
    807Total:Cubic metres
    
    
    101
    
    
    
    55
    
    
    
    141
    
    
    
    150
    
    
    
    154Barrels
    
    
    634
    
    
    
    347
    
    
    
    889
    
    
    
    947
    
    
    
    972Natural Gas:
    

(billions)Cubic metres
    
    
    21
    
    
    
    22
    
    
    
    29
    
    
    
    35
    
    
    
    40Cubic feet
    
    
    747
    
    
    
    791
    
    
    
    1,023
    
    
    
    1,224
    
    
    
    1,414
 Net
proved developed reserves of crude oil and natural gas (1)
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(millions)Crude Oil:Conventional:Cubic metres
    
    
    13
    
    
    
    18
    
    
    
    19
    
    
    
    22
    
    
    
    25Barrels
    
    
    81
    
    
    
    111
    
    
    
    121
    
    
    
    139
    
    
    
    157Oil Sands (Cold Lake crude bitumen):Cubic metres
    
    
    58
    
    
    
    37
    
    
    
    63
    
    
    
    49
    
    
    
    34Barrels
    
    
    368
    
    
    
    232
    
    
    
    398
    
    
    
    308
    
    
    
    216Total:Cubic metres
    
    
    71
    
    
    
    55
    
    
    
    82
    
    
    
    71
    
    
    
    59Barrels
    
    
    449
    
    
    
    343
    
    
    
    519
    
    
    
    447
    
    
    
    373Natural Gas:
    
    (billions)Cubic metres
    
    
    18
    
    
    
    20
    
    
    
    24
    
    
    
    27
    
    
    
    30Cubic feet
    
    
    643
    
    
    
    704
    
    
    
    859
    
    
    
    959
    
    
    
    1,060
 
 (1)
    
    Net reserves are the Companys share of reserves after deducting the shares of mineral
owners or governments or both. 36




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##### Table of Contents



Standardized measure of discounted future net cash flows related to proved oil and gas
reserves
  2005
    
    
    2004
    
    
    2003(millions)Future cash flows
    
    $
    21,911
    
    
    $
    11,625
    
    
    $
    27,611Future production costs
    
    
    (11,376
    )
    
    
    (3,123
    )
    
    
    (10,871
    )Future development costs
    
    
    (2,039
    )
    
    
    (1,492
    )
    
    
    (3,084
    )Future income taxes
    
    
    (2,777
    )
    
    
    (2,260
    )
    
    
    (5,543
    )Future net cash flows
    
    
    5,719
    
    
    
    4,750
    
    
    
    8,113Annual discount of 10 percent for estimated timing of cash flows
    
    
    (1,405
    )
    
    
    (1,433
    )
    
    
    (3,375
    )Discounted future net cash flows
    
    $
    4,314
    
    
    $
    3,317
    
    
    $
    4,738
 Changes in standardized measure of discounted future net cash flows related to proved oil and gas reserves
 2005
    
    2004
    
    2003(millions)Balance at beginning of year
    
    $
    3,317
    
    
    $
    4,738
    
    
    $
    8,201Changes resulting from:Sales and transfers of oil and gas produced, net of production costs
    
    
    (2,650
    )
    
    
    (2,240
    )
    
    
    (2,075
    )Net changes in prices, development costs and production costs
    
    
    3,343
    
    
    
    (3,692
    )
    
    
    (4,395
    )Extensions, discoveries, additions and improved recovery,
less related costs
    
    
    (513
    )
    
    
    (43
    )
    
    
    22Development costs incurred during the year
    
    
    272
    
    
    
    345
    
    
    
    281Revisions of previous quantity estimates
    
    
    660
    
    
    
    1,838
    
    
    
    (368
    )Accretion of discount
    
    
    417
    
    
    
    663
    
    
    
    1,108Net change in income taxes
    
    
    (532
    )
    
    
    1,708
    
    
    
    1,964Net change
    
    
    997
    
    
    
    (1,421
    )
    
    
    (3,463
    )Balance at end of year
    
    $
    4,314
    
    
    $
    3,317
    
    
    $
    4,738
  
 Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  
 Item 9A. Controls and Procedures.
     37




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##### Table of Contents



PART III
 
 Item 10. Directors and Executive Officers of the Registrant.
     Last majorposition or office with theName and current principal
    
    
    Company or Exxon Mobiloccupation or employment
    
    
    Corporation
    
    
    Director since
    
    
    Holdings (2)(3)R.L. (Randy) Broiles
    
    
    Global planning
    
    
    July 21, 2005
    
    
    Common shares ofSenior vice-president,
    
    
    manager,
    
    
    
    
    
    Imperial Oil Limited
    
    
    1000resources division,
    
    
    ExxonMobil ProductionImperial Oil Limited
    
    
    Company
    
    
    
    
    
    Deferred share units ofImperial Oil Limited
    
    
    0Restricted stock units ofImperial Oil Limited
    
    
    0Shares of ExxonMobil Corporation (4)
    
    
    53,244T.J. (Tim) Hearn
    
    
    President,
    
    
    January 1, 2002
    
    
    Common shares ofChairman, president and
    
    
    Imperial Oil Limited

    
    
    
    
    
    Imperial Oil Limited
    
    
    30,342chief executive officer,Imperial Oil Limited
    
    
    
    
    
    
    
    
    Deferred share units ofImperial Oil Limited
    
    
    101Restricted stock units ofImperial Oil Limited
    
    
    213,800Shares of ExxonMobil Corporation
    
    
    10,107J.M. (Jack) Mintz
    
    
    
    
    
    April 21, 2005
    
    
    Common shares ofPresident and chief
    
    
    
    
    
    
    
    
    Imperial Oil Limited
    
    
    100executive officer,The C.D. Howe Institute
    
    
    
    
    
    
    
    
    Deferred share units of(public policy institute) and
    
    
    
    
    
    
    
    
    Imperial Oil Limited
    
    
    0professor, Joseph L. RotmanSchool of Management,
    
    
    
    
    
    
    
    
    Restricted stock units ofUniversity
of Toronto (1)
    
    
    
    
    
    
    
    
    Imperial Oil Limited
    
    
    1,000Shares of ExxonMobil Corporation
    
    
    0R. (Roger) Phillips
    
    
    
    
    
    April 23, 2002
    
    
    Common shares ofRetired president and
    
    
    
    
    
    
    
    
    Imperial Oil Limited
    
    
    3,000chief executive officer,IPSCO Inc.
    
    
    
    
    
    
    
    
    Deferred share units of(steel
manufacturing) (1)
    
    
    
    
    
    
    
    
    Imperial Oil Limited
    
    
    3,943Restricted stock units ofImperial Oil Limited
    
    
    3,375Shares of ExxonMobil Corporation
    
    
    2,000
  38




---



##### Table of Contents



Last majorposition or office with theName and current principal
    
    
    Company or Exxon Mobiloccupation or employment
    
    
    Corporation
    
    
    Director since
    
    
    Holdings (2)(3)J.F. (Jim) Shepard
    
    
    
    
    
    October 21, 1997
    
    
    Common shares ofRetired chairman and
    
    
    
    
    
    
    
    
    Imperial Oil Limited
    
    
    3,000chief executive officer,Finning International Inc.
    
    
    
    
    
    
    
    
    Deferred share units of(sale, lease, repair and
    
    
    
    
    
    
    
    
    Imperial Oil Limited
    
    
    6,564financing of heavyequipment) (1)
    
    
    
    
    
    
    
    
    Restricted stock units ofImperial Oil Limited
    
    
    3,375Shares of ExxonMobil Corporation
    
    
    0P.A. (Paul) Smith
    
    
    Corporate finance
    
    
    February 1, 2002
    
    
    Common shares ofController and
    
    
    manager, Exxon
    
    
    
    
    
    Imperial Oil Limited
    
    
    4,434senior vice-president,
    
    
    Mobil Corporationfinance and
    
    
    
    
    
    
    
    
    Deferred share units ofadministration,
    
    
    
    
    
    
    
    
    Imperial Oil Limited
    
    
    0Imperial Oil LimitedRestricted stock units ofImperial Oil Limited
    
    
    60,650Shares of ExxonMobil Corporation
    
    
    1,190S.D. (Sheelagh) Whittaker
    
    
    
    
    
    April 19, 1996
    
    
    Common shares ofRetired managing director,
    
    
    
    
    
    
    
    
    Imperial Oil Limited
    
    
    3,000Electronic Data Systems Limited(business and information
    
    
    
    
    
    
    
    
    Deferred share units oftechnology
services) (1)
    
    
    
    
    
    
    
    
    Imperial Oil Limited
    
    
    9,053Restricted stock units ofImperial Oil Limited
    
    
    3,375Shares of ExxonMobil Corporation
    
    
    0V.L. (Victor) Young
    
    
    
    
    
    April 23, 2002
    
    
    Common shares ofCorporate director of
    
    
    
    
    
    
    
    
    Imperial Oil Limited
    
    
    3,000several
corporations (1)Deferred share units ofImperial Oil Limited
    
    
    1,379Restricted stock units ofImperial Oil Limited
    
    
    3,375Shares of ExxonMobil Corporation
    
    
    0
 
 (1)
    
    Member of audit committee; member of environment, health and safety committee; member
of executive resources committee; member of nominations and corporate governance committee;
and member of Imperial Oil Foundation board of directors.(2)
    
    The information includes the beneficial ownership of common shares of Imperial Oil
Limited and shares of Exxon Mobil Corporation, which information not being within the
knowledge of the Company, has been provided by the nominees individually.(3)
    
    The Companys plans for deferred share units and restricted stock units for selected
employees and nonemployee directors are described on page 46 and pages 47 and 48,
respectively.(4)
    
    R. L. Broiles holds 16,244 common shares and 37,000 restricted shares of Exxon Mobil
Corporation.   39




---



##### Table of Contents



Name and Office
    
    Office held sinceTimothy J. Hearn
chairman of the board, president
and chief executive officer
    
    April 23, 2002Paul A. Smith
controller and senior vice-president,
finance and administration
    
    February 1, 2002Randy L. Broiles
senior vice-president, resources division
    
    July 1, 2005Robert F. Lipsett
vice-president, human resources
    
    October 1, 1999John F. Kyle
vice-president and treasurer
    
    June 1, 1991
  Audit committee
  Audit committee financial expert
  Code of ethics
  40




---



##### Table of Contents



Item 11. Executive Compensation.
 Composition of the Companys compensation committee
  
  Executive Resources Committee Report on Executive Compensation
    Base Salary
   Cash Bonus
   41




---



##### Table of Contents



Long-Term Incentive Compensation
       Directors compensation
    42




---



##### Table of Contents



Senior executive compensation  Summary Compensation Table
   Annual Compensation
    
    
    Long Term CompensationAwards
    
    
    PayoutsSecurities
    
    
    Shares or Units
    
    
    Shares or UnitsOther Annual
    
    
    Under
    
    
    Subject to Resale
    
    
    Subject to Resale
    
    
    LTIP
    
    
    All OtherName and
    
    
    
    
    
    
    
    
    
    
    
    Compensation
    
    
    Options/SARs
    
    
    Restrictions
    
    
    Restrictions
    
    
    Payouts
    
    
    CompensationPrincipal
    
    
    
    
    
    Salary
    
    
    Bonus (2)
    
    
    (3)
    
    
    Granted (4)
    
    
    (5) (6)
    
    
    (5) (6)
    
    
    (7)
    
    
    (8)Position
    
    
    Year
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    (#)
    
    
    (#)
    
    
    (#)
    
    
    (8) ($)
    
    
    ($)T.J. Hearn
    
    
    2005
    
    
    1,100,000
    
    
    900,000
    
    
    385,028
    
    
    
    
    
    64,400
    
    
    7,432,404
    
    
    870,000
    
    
    33,000Chairman, president
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    restricted stock unitsand chief executive
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    94officer
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    deferred share unit2004
    
    
    1,000,000
    
    
    872,266
    
    
    246,249
    
    
    
    
    
    64,400
    
    
    4,582,060
    
    
    750,000
    
    
    30,000restricted stock units100
    
    
    7,034deferred share units2003
    
    
    825,000
    
    
    750,000
    
    
    182,072
    
    
    
    
    
    60,000
    
    
    3,451,800
    
    
    738,000
    
    
    24,750U.S. 293,450
    
    
    
    
    
    restricted stock units0
    
    
    0deferred share unitsP.A. Smith
    
    
    2005
    
    
    398,333
    
    
    193,675
    
    
    87,198
    
    
    
    
    
    18,400
    
    
    2,123,544
    
    
    193,125
    
    
    23,900Controller
and senior
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    restricted stock unitsvice-president, finance
    
    
    2004
    
    
    378,333
    
    
    193,600
    
    
    67,022
    
    
    
    
    
    19,300
    
    
    1,373,195
    
    
    183,000
    
    
    22,700and administration
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    restricted stock units2003
    
    
    357,917
    
    
    183,000
    
    
    11,083
    
    
    
    
    
    16,700
    
    
    960,751
    
    
    204,510
    
    
    21,475U.S. 72,891
    
    
    
    
    
    restricted stock unitsR.L.
Broiles (1)
    
    
    2005
    
    
    U.S. 159,000
    
    
    U.S. 140,500
    
    
    U.S. 112,214
    
    
    
    
    
    11,000
    
    
    U.S. 641,740
    
    
    U.S. 116,253
    
    
    U.S. 10,175Senior
vice-president, resources
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    restricted stock unitsdivision (from
July 1, 2005)R.F. Lipsett
    
    
    2005
    
    
    360,000
    
    
    178,850
    
    
    107,810
    
    
    
    
    
    14,100
    
    
    1,627,281
    
    
    178,500
    
    
    10,800Vice-President,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    restricted stock unitshuman
resources
    
    
    2004
    
    
    340,000
    
    
    179,000
    
    
    78,581
    
    
    
    
    
    15,700
    
    
    1,117,055
    
    
    166,700
    
    
    10,200restricted stock units2003
    
    
    330,000
    
    
    166,800
    
    
    42,229
    
    
    
    
    
    13,400
    
    
    770,902
    
    
    227,010
    
    
    9,900restricted stock unitsJ.F. Kyle
    
    
    2005
    
    
    364,166
    
    
    112,500
    
    
    90,821
    
    
    
    
    
    11,300
    
    
    1,304,133
    
    
    171,375
    
    
    21,850Vice-president
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    restricted stock unitsand treasurer
    
    
    2004
    
    
    359,583
    
    
    172,105
    
    
    74,585
    
    
    
    
    
    13,200
    
    
    939,180
    
    
    171,000
    
    
    21,575restricted stock units2003
    
    
    355,000
    
    
    171,000
    
    
    41,391
    
    
    
    
    
    11,400
    
    
    655,842
    
    
    261,000
    
    
    21,300restricted stock units
 43




---



##### Table of Contents



(1)
    
    R.L. Broiles has been on a loan assignment from Exxon Mobil Corporation since July 1,
2005. His compensation was paid to him directly by Exxon Mobil Corporation in United States
dollars, and is disclosed in United States dollars. Also, he received employee benefits
under Exxon Mobil Corporations employee benefit plans, and not under the Companys
employee benefit plans. The Company reimburses Exxon Mobil Corporation for the compensation
paid and employee benefits provided to him.(2)
    
    Any part of bonus elected to be received as deferred share units is excluded.(3)
    
    Amounts under Other Annual Compensation, except for R.L. Broiles, consist of interest
paid in respect of deferred payments for long-term incentive compensation, other than the
Companys plan for deferred share units for selected executives, described on page 46,
dividend equivalent payments on restricted stock units, interest paid in respect of
deferred payments of bonuses and any costs associated with the personal use of the Company
aircraft. There is no tax assistance from the Company for taxes related to personal use of
the Company aircraft. In 2005, the dividend equivalent payments were $146,280 for T.J.
Hearn, $40,374 for P.A. Smith, $33,346 for R.F. Lipsett and $29,480 for J.F. Kyle. Also
included is an earned benefits allowance. The earned benefits allowance in 2005 was $90,000
for T.J. Hearn, $45,000 for P.A. Smith, $35,000 for R.F. Lipsett and $35,000 for J.F. Kyle.
For T.J. Hearn and P.A. Smith, the U.S. dollar amounts were payments by the Company on
account of U.S. income taxes incurred while on assignment in the U.S. For R.L. Broiles, the
amounts are the net payments by Exxon Mobil Corporation on account of Canadian income taxes
and other compensation for assignment outside of the United States. Each year, while on
assignment, T.J. Hearn and P.A. Smith paid to the Company and R.L. Broiles paid to Exxon
Mobil Corporation, amounts that were approximate to the income taxes that would have been
imposed if they were resident in their originating country of employment. For R.L. Broiles
the amount also includes dividend equivalent payments on restricted stock units from Exxon
Mobil Corporation.(4)
    
    The Company has not granted stock options since 2002. The stock option plan is
described on page 47.(5)
    
    These values include the number of units granted under the Companys restricted stock
unit plan and deferred share unit plan for selected executives described on pages 47 and 48
and page 46, respectively. The values of the restricted stock units shown are the number of
units multiplied by the closing price of the Companys shares on the date of grant. The
closing price on the date of grant of the restricted stock units was $57.53 in 2003, $71.15
in 2004 and $115.41 in 2005. The values of the deferred share units shown are the number of
units multiplied by the closing price of the Companys shares for the five consecutive days
before the grant of the deferred share unit. T.J. Hearn is the only senior executive who
holds deferred share units. R.L. Broiles participates in Exxon Mobil Corporations
restricted stock plan, which is similar to the Companys restricted stock unit plan. Under
that plan, R.L. Broiles was granted 11,000 restricted shares in 2005 whose value on the
date of grant (November 29, 2005) was $641,740, based on a closing price of Exxon Mobil
Corporation shares on the date of grant of $58.34 (U.S.).(6)
    
    The table below shows the number and value of restricted stock units and deferred share
units held as of December 31, 2005. The closing price on December 31, 2005 was $115.41. Restricted Stock Units
    
    

Deferred Share UnitsName
    

Total (#)
    
    

Total ($)
    
    

Total (#)
    
    

Total ($)T.J. Hearn
    
    
    213,800
    
    
    
    24,674,658
    
    
    
    101
    
    
    
    11,622P.A. Smith
    
    
    60,650
    
    
    
    6,999,616
    
    
    
    0
    
    
    
    0R.L. Broiles
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    R.F. Lipsett
    
    
    48,650
    
    
    
    5,614,696
    
    
    
    0
    
    
    
    0J.F. Kyle
    
    
    41,200
    
    
    
    4,754,892
    
    
    
    0
    
    
    
    0
  (7)
    
    Payouts were from 2004 earnings bonus units that reached maximum value of $3.75 per
unit in 2005. That plan is described on page 47. R.L. Broiles participates in Exxon Mobil
Corporations earnings bonus unit plan, which is similar to the Companys earnings bonus
unit plan.(8)
    
    Amounts under All Other Compensation, except for R.L. Broiles, are the Companys
contributions to the savings plan, which is a plan available to all employees. Under one of
the options of that plan to which the senior executives subscribe, except for R.L. Broiles,
the Company matched employee contributions up to six percent of base salary per year;
however, an employee may elect to receive an enhanced pension under the Companys pension
plan by foregoing three percent of the Companys matching contributions. The plan is
intended to be primarily for retirement savings, although employees may withdraw their
contributions prior to retirement. For R.L. Broiles, the amount is Exxon Mobil
Corporations contributions to its employee savings plan. 44




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##### Table of Contents



Earnings Bonus Unit Plan  awards in most recently completed financial year
  PerformanceSecurities
    
    or Other
    
    Estimated Future Payouts UnderUnits or
    
    Period Until
    
    Non-Securities-Price Based PlansOther Rights
    
    Maturation or
    
    Threshold
    
    Target
    
    MaximumName
    
    (#)
    
    Payout (1)
    
    ($)
    
    ($)(2)
    
    ($)(2)T.J. Hearn
    
    
    200,000
    
    
    Nov. 16, 2010
    
    
    0
    
    
    
    4.50
    
    
    
    4.50P.A. Smith
    
    
    42,900
    
    
    Nov. 16, 2010
    
    
    0
    
    
    
    4.50
    
    
    
    4.50R.L. Broiles (3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    R.F. Lipsett
    
    
    39,700
    
    
    Nov. 16, 2010
    
    
    0
    
    
    
    4.50
    
    
    
    4.50J.F. Kyle
    
    
    25,000
    
    
    Nov. 16, 2010
    
    
    0
    
    
    
    4.50
    
    
    
    4.50
 
 (1)
    
    Payment will be made earlier when the cumulative net earnings per outstanding common
share reach the maximum settlement value per unit prior to the fifth anniversary of the
grant date.(2)
    
    This is the maximum settlement value payable per earnings bonus unit granted in 2005.(3)
    
    R.L. Broiles participates in Exxon Mobil Corporations earnings bonus unit plan which
is similar to the Companys earnings bonus unit plan. In 2005,
R.L. Broiles was granted
37,470 units under that plan for which the maximum settlement value payable per earnings
bonus unit is U.S. $3.75. Aggregated option/SAR exercises during the most recently completed financial year and
financial year end option/SAR values
  Value ofUnexercisedUnexercised
    
    in-the-MoneyOptions/SARs
    
    Options/SARsat Financial
    
    at FinancialSecurities
    
    Aggregate
    
    Year End
    
    Year EndAcquired
    
    Value
    
    (#)
    
    ($)on Exercise
    
    Realized
    
    
    
    
    
    Unexercisable
    
    
    
    
    
    UnexercisableName
    
    (#)
    
    ($)
    
    Exercisable
    
    (1)
    
    Exercisable
    
    (1)T.J. Hearn
    
    
    
    
    
    
    743,000
    
    
    
    40,000
    
    
    
    0
    
    
    
    3,056,400
    
    
    
    0P.A. Smith
    
    
    
    
    
    
    1,708,300
    
    
    
    45,000
    
    
    
    0
    
    
    
    3,600,450
    
    
    
    0R.L. Broiles
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    R.F. Lipsett
    
    
    
    
    
    
    2,861,235
    
    
    
    25,000
    
    
    
    0
    
    
    
    1,910,250
    
    
    
    0J.F. Kyle
    
    
    
    
    
    
    6,197,460
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
 
 (1)
    
    Unexercisable units are units for which the conditions for exercise have not been met. 45




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##### Table of Contents



Value ofUnexercisedUnexercised
    
    in-the-MoneyOptions/SARs
    
    Options/SARsat Financial
    
    at FinancialSecurities
    
    Aggregate
    
    Year End
    
    Year EndAcquired
    
    Value
    
    (#)
    
    ($)on Exercise
    
    Realized
    
    
    
    
    
    
    
    
    
    
    
    UnexercisableName
    
    (#)
    
    ($)
    
    Exercisable
    
    Unexercisable(2)
    
    Exercisable
    
    (2)T.J. Hearn
    
    
    1,000
    
    
    
    34,030
    
    
    
    59,000
    
    
    
    0
    
    
    
    4,065,690
    
    
    
    0P.A. Smith
    
    
    0
    
    
    
    0
    
    
    
    25,000
    
    
    
    0
    
    
    
    1,722,750
    
    
    
    0R.L. Broiles (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    R.F. Lipsett
    
    
    0
    
    
    
    0
    
    
    
    25,000
    
    
    
    0
    
    
    
    1,722,750
    
    
    
    0J.F. Kyle
    
    
    0
    
    
    
    0
    
    
    
    29,000
    
    
    
    0
    
    
    
    1,998,390
    
    
    
    0
 
 (1)
    
    At the end of 2005, R.L. Broiles held options to acquire 123,074 Exxon Mobil
Corporation shares of which all options were exercisable. The value of R.L. Broiles
exercisable options was U.S. $2,429,836 at the end of 2005. In 2005, R.L. Broiles exercised
4,258 options and realized an aggregate value of U.S. $119,596.(2)
    
    Unexercisable units are units for which the conditions for exercise have not been met. Details of long-term and medium-term incentive compensation
      46




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##### Table of Contents



47




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##### Table of Contents



Payments to Employees Who Retire
 Remuneration for
    
    Estimated undiscounted paymentsdetermining payments
    
    on retirement at the age of 65 after years of service indicated below ($)on retirement($)
    
    20 Years
    
    25 Years
    
    30 Years
    
    35 Years
    
    40 Years100,000
    
    
    
    32,000
    
    
    
    40,000
    
    
    
    48,000
    
    
    
    56,000
    
    
    
    64,000200,000
    
    
    
    64,000
    
    
    
    80,000
    
    
    
    96,000
    
    
    
    112,000
    
    
    
    128,000300,000
    
    
    
    96,000
    
    
    
    120,000
    
    
    
    144,000
    
    
    
    168,000
    
    
    
    192,000400,000
    
    
    
    128,000
    
    
    
    160,000
    
    
    
    192,000
    
    
    
    224,000
    
    
    
    256,000500,000
    
    
    
    160,000
    
    
    
    200,000
    
    
    
    240,000
    
    
    
    280,000
    
    
    
    320,000600,000
    
    
    
    192,000
    
    
    
    240,000
    
    
    
    288,000
    
    
    
    336,000
    
    
    
    384,000800,000
    
    
    
    256,000
    
    
    
    320,000
    
    
    
    384,000
    
    
    
    448,000
    
    
    
    512,0001,000,000
    
    
    
    320,000
    
    
    
    400,000
    
    
    
    480,000
    
    
    
    560,000
    
    
    
    640,0001,500,000
    
    
    
    480,000
    
    
    
    600,000
    
    
    
    720,000
    
    
    
    840,000
    
    
    
    960,0002,000,000
    
    
    
    640,000
    
    
    
    800,000
    
    
    
    960,000
    
    
    
    1,120,000
    
    
    
    1,280,0002,500,000
    
    
    
    800,000
    
    
    
    1,000,000
    
    
    
    1,200,000
    
    
    
    1,400,000
    
    
    
    1,600,0003,000,000
    
    
    
    960,000
    
    
    
    1,200,000
    
    
    
    1,440,000
    
    
    
    1,680,000
    
    
    
    1,920,000
     48




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##### Table of Contents



Item 12.
Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.
    Equity Compensation Plan Information as of December 31, 2005
 Number of securitiesWeighted-average
    
    
    remaining available for futureNumber of securities to
    
    
    exercise price of
    
    
    issuance under equitybe issued upon exercise
    
    
    outstanding options,
    
    
    compensation plans (excludingof outstanding options
    
    
    warrants and rights
    
    
    securities reflected inwarrants and rights
    
    
    ($)
    
    
    column (a))Plan category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders (1)
    
    
    2,045,000
    
    
    
    46.50
    
    
    
    0Equity compensation
plans not approved
by security holders (2)
    
    
    1,363,510
    
    
    
    
    
    
    
    2,136,490Total
    
    
    3,408,510
    
    
    
    46.50
    
    
    
    2,136,490
 
 (1)
    
    This is the stock option plan, which is described on page 47 of this report.(2)
    
    This is the restricted stock unit plan, which is described on pages 47 and 48 of this
report. 
 Item 13. Certain Relationships and Related Transactions.
    49




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##### Table of Contents



Item 14. Principal Accountant Fees and Services.
 Audit Fees
  Dollars (thousands)
    
    2005
    
    
    2004Audit Fees
    
    
    1,117
    
    
    
    1,112Audit-Related Fees
    
    
    64
    
    
    
    92Tax Fees
    
    
    770
    
    
    
    545All Other Fees
    
    
    Nil
    
    
    
    NilTotal Fees
    
    
    1,951
    
    
    
    1,749
       50




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##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules.
 Reference is made to the Index to Financial Statements on page F-1 of this report.The following exhibits numbered in accordance with Item 601 of Regulation S-K are filed as
part of this report:
 (3)
    (i)
    Restated certificate and articles of incorporation of the Company (Incorporated
herein by reference to Exhibit (3) to the Companys Quarterly Report on Form 10-Q
for the quarter ended June 30, 1998 (File No. 0-12014)).
 (ii)
    
    By-laws of the Company (Incorporated herein by reference to Exhibit (3)(ii) to
the Companys Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 (File
No. 0-12014)).
 (4)
    
    The Companys long term debt authorized under any instrument does not exceed 10 percent
of the Companys consolidated assets. The Company agrees to furnish to the Commission upon
request a copy of any such instrument.
 (10)(ii)
    (1)
    
    Alberta Crown Agreement, dated February 4, 1975, relating to the participation
of the Province of Alberta in Syncrude (Incorporated herein by reference to Exhibit 13(a) of
the Companys Registration Statement on Form S-1, as filed with the Securities and Exchange
Commission on August 21, 1979 (File No. 2-65290)).(2)
    
    Amendment to Alberta Crown Agreement, dated January 1, 1983 (Incorporated
herein by reference to Exhibit (10)(ii)(2) of the Companys Annual Report on Form
10-K for the year ended December 31, 1983 (File No. 2-9259)).(3)
    
    Syncrude Ownership and Management Agreement, dated February 4, 1975
(Incorporated herein by reference to Exhibit 13(b) of the Companys Registration
Statement on Form S-1, as filed with the Securities and Exchange Commission on
August 21, 1979 (File No. 2-65290)).(4)
    
    Letter Agreement, dated February 8, 1982, between the Government of
Canada and Esso Resources Canada Limited, amending Schedule C to the Syncrude
Ownership and Management Agreement filed as Exhibit (10)(ii)(2) (Incorporated herein
by reference to Exhibit (20) of the Companys Annual Report on Form 10-K for the
year ended December 31, 1981 (File No. 2-9259)).(5)
    
    Norman Wells Pipeline Agreement, dated January 1, 1980, relating to the
operation, tolls and financing of the pipeline system from the Norman Wells field
(Incorporated herein by reference to Exhibit 10(a)(3) of the Companys Annual Report
on Form 10-K for the year ended December 31, 1981 (File No. 2-9259)).(6)
    
    Norman Wells Pipeline Amending Agreement, dated April 1, 1982
(Incorporated herein by reference to Exhibit (10)(ii)(5) of the Companys Annual
Report on Form 10-K for the year ended December 31, 1982 (File No. 2-9259)).(7)
    
    Letter Agreement clarifying certain provisions to the Norman Wells
Pipeline Agreement, dated August 29, 1983 (Incorporated herein by reference to
Exhibit (10)(ii)(7) of the Companys Annual Report on Form 10-K for the year ended
December 31, 1983 (File No. 2-9259)).(8)
    
    Norman Wells Pipeline Amending Agreement, made as of February 1, 1985,
relating to certain amendments ordered by the National Energy Board (Incorporated
herein by reference to Exhibit (10)(ii)(8) of the Companys Annual Report on Form
10-K for the year ended December 31, 1986 (File No. 0-12014)).(9)
    
    Norman Wells Pipeline Amending Agreement, made as of April 1, 1985,
relating to the definition of Operating Year (Incorporated herein by reference to
Exhibit (10)(ii)(9) of the Companys Annual Report on Form 10-K for the year ended
December 31, 1986 (File No. 0-12014)).(10)
    
    Norman Wells Expansion Agreement, dated October 6, 1983, relating to the
prices and royalties payable for crude oil production at Norman Wells (Incorporated
herein by reference to Exhibit (10)(ii)(8) of the Companys Annual Report on Form
10-K for the year ended December 31, 1983 (File No. 2-9259)).(11)
    
    Alberta Cold Lake Crown Agreement, dated June 25, 1984, relating to the
royalties payable and the assurances given in respect of the Cold Lake production
project (Incorporated herein by reference to Exhibit (10)(ii)(11) of the Companys
Annual Report on Form 10-K for the year ended December 31, 1986 (File No. 0-12014)).(12)
    
    Amendment to Alberta Crown Agreement, dated January 1, 1986 (Incorporated
herein by reference to Exhibit (10)(ii)(12) of the Companys Annual Report on Form
10-K for the year ended December 31, 1987 (File No. 0-12014)).
 51




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##### Table of Contents



(13)
    
    Amendment to Alberta Crown Agreement, dated November 25, 1987
(Incorporated herein by reference to Exhibit (10)(ii)(13) of the Companys Annual
Report on Form 10-K for the year ended December 31, 1987 (File No. 0-12014)).(14)
    
    Amendment to Syncrude Ownership and Management Agreement, dated March 10,
1982 (Incorporated herein by reference to Exhibit (10)(ii)(14) of the Companys
Annual Report on Form 10-K for the year ended December 31, 1989 (File No. 0-12014)).(15)
    
    Amendment to Alberta Crown Agreement, dated August 1, 1991 (Incorporated
herein by reference to Exhibit (10)(ii)(15) of the Companys Annual Report on Form
10-K for the year ended December 31, 1991 (File No. 0-12014)).(16)
    
    Norman Wells Settlement Agreement, dated July 31, 1996. (Incorporated
herein by reference to Exhibit (10)(ii)(16) of the Companys Annual Report on Form
10-K for the year ended December 31, 1996 (File No. 0-12014)).(17)
    
    Amendment to Alberta Crown Agreement, dated January 1, 1997.
(Incorporated herein by reference to Exhibit (10)(ii)(17) of the Companys Annual
Report on Form 10-K for the year ended December 31, 1996 (File No. 0-12014)).(18)
    
    Norman Wells Pipeline Amending Agreement, dated December 12, 1997.
(Incorporated herein by reference to Exhibit (10)(ii)(18) of the Companys Annual
Report on Form 10-K for the year ended December 31, 1998 (File No. 0-12014)).(19)
    
    Norman Wells Pipeline 1999 Amending Agreement, dated May 1, 1999.
(Incorporated herein by reference to Exhibit (10)(ii)(19) of the Companys Annual
Report on Form 10-K for the year ended December 31, 1999 (File No. 0-12014)).(20)
    
    Alberta Cold Lake Transition Agreement, effective January 1, 2000,
relating to the royalties payable in respect of the Cold Lake production project and
terminating the Alberta Cold Lake Crown Agreement. (Incorporated herein by reference
to Exhibit (10)(ii)(20) of the Companys Annual Report on Form 10-K for the year
ended December 31, 2001 (File No. 0-12014)).(21)
    
    Amendment to Alberta Crown Agreement effective January 1, 2001
(Incorporated herein by reference to Exhibit (10)(ii)(21) of the Companys Quarterly
Report on Form 10-Q for the quarter ended June 30, 2002 (File No. 0-12014)).(22)
    
    Amendment to Syncrude Ownership and Management Agreement effective
January 1, 2001 (Incorporated herein by reference to Exhibit (10)(ii)(22) of the
Companys Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 (File
No. 0-12014)).(23)
    
    Amendment to Syncrude Ownership and Management Agreement effective
September 16, 1994 (Incorporated herein by reference to Exhibit (10)(ii)(23) of the
Companys Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 (File
No. 0-12014)).(24)
    
    Amendment to Alberta Crown Agreement dated November 29, 1995
(Incorporated herein by reference to Exhibit (10)(ii)(24) of the Companys Quarterly
Report on Form 10-Q for the quarter ended June 30, 2002 (File No. 0-12014)).(iii)(A)(1)
    
    Form of Letter relating to Supplemental Retirement Income (Incorporated herein by
reference to Exhibit (10)(c)(3) of the Companys Annual Report on Form 10-K for the year
ended December 31, 1980 (File No. 2-9259)).(2)
    
    Incentive Share Unit Plan and Incentive Share Units granted in 2001 are
incorporated herein by reference to Exhibit (10)(iii)(A)(2) of the Companys Annual
Report on Form 10-K for the year ended December 31, 2001. Units granted in 2000 are
incorporated herein by reference to Exhibit (10)(iii)(A)(2) of the Companys Annual
Report on Form 10-K for the year ended December 31, 2000 (File No. 0-12014); units
granted in 1999 are incorporated herein by reference to Exhibit (10)(iii)(A)(3) of
the Companys Annual Report on Form 10-K for the year ended December 31, 1999 (File
No. 0-12014); units granted in 1998 are incorporated herein by reference to Exhibit
(10)(iii)(A)(3) of the Companys Annual Report on Form 10-K for the year ended
December 31, 1998 (File No. 0-12014); units granted in 1997 are incorporated herein
by reference to Exhibit (10)(iii)(A)(3) of the Companys Annual Report on Form 10-K
for the year ended December 31, 1997 (File No. 0-12014); units granted in 1996 are
incorporated herein by reference to Exhibit (10)(iii)(A)(3) of the Companys Annual
Report on Form 10-K for the year ended December 31, 1996 (File No. 0-12014).
 52




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##### Table of Contents



(3)
    
    Deferred Share Unit Plan. (Incorporated herein by reference to
Exhibit(10)(iii)(A)(5) of the Companys Annual Report on Form 10-K for the year
ended December 31, 1998 (File No. 0-12014)).(4)
    
    Deferred Share Unit Plan for Nonemployee Directors. (Incorporated herein
by reference to Exhibit (10)(iii)(A)(6) of the Companys Annual Report on Form 10-K
for the year ended December 31, 1998 (File No. 0-12014)).(5)
    
    Form of Earnings Bonus Units (Incorporated herein by reference to Exhibit
(10)(iii)(A)(5) of the Companys Annual Report on Form 10-K for the year ended
December 31, 2003 (File No. 0-12014)) and Earnings Bonus Unit Plan (Incorporated
herein by reference to Exhibit (10)(iii)(A)(5) of the Companys Annual Report on
Form 10-K for the year ended December 31, 2002 (File No. 0-12014)).(6)
    
    Incentive Stock Option Plan and Incentive Stock Options granted in 2002
(Incorporated herein by reference to Exhibit (10)(iii)(A)(6) of the Companys
Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 (File No.
0-12014)).(7)
    
    Restricted Stock Unit Plan and Restricted Stock Units granted in 2002
(Incorporated herein by reference to Exhibit (10)(iii)(A)(7) of the Companys Annual
Report on Form 10-K for the year ended December 31, 2002 (File No. 0-12014)).(8)
    
    Restricted Stock Unit Plan and Restricted Stock Units granted in 2003
(Incorporated herein by reference to Exhibit (10)(iii)(A)(8) of the Companys Annual
Report on Form 10-K for the year ended December 31, 2003 (File No. 0-12014)).(9)
    
    Restricted Stock Unit Plan and general form for Restricted Stock Units,
as amended effective December 31, 2004 (Incorporated herein by reference to Exhibit
99.1 of the Companys Form 8-K dated December 31, 2004 (File No. 0-12014)).
 (21)
    
    Imperial Oil Resources Limited, McColl-Frontenac Petroleum Inc., Imperial Oil Resources
N.W.T. Limited and Imperial Oil Resources Ventures Limited, all incorporated in Canada, are
wholly-owned subsidiaries of the Company. The names of all other subsidiaries of the
Company are omitted because, considered in the aggregate as a single subsidiary, they would
not constitute a significant subsidiary as of December 31, 2004.
 (23)(ii)
    (A)
    
    Consent of Independent Registered Public Accounting Firm
(PricewaterhouseCoopers LLP).(B)
    
    Consent of Qualified Reserves Evaluator.(31.1)
    
    
    Certification by principal executive officer of Periodic Financial Report pursuant to
Rule 13a-14(a)(31.2)
    
    
    Certification by principal financial officer of Periodic Financial Report pursuant to
Rule 13a-14(a).(32.1)
    
    
    Certification by chief executive officer of Periodic Financial Report pursuant to Rule
13a-14(b) and 18 U.S.C. Section 1350.(32.2)
    
    
    Certification by chief financial officer of Periodic Financial Report pursuant to Rule
13a-14(b) and 18 U.S.C. Section 1350.
  53




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##### Table of Contents



SIGNATURES
  Imperial Oil LimitedBy
    
    /s/  T.J. Hearn(Timothy J. Hearn, Chairman of the Board,President and Chief Executive Officer)
  Signature
    
    
    
    Title/s/  T.J. Hearn
    
    
    
    Chairman of the Board, President,(Timothy J. Hearn)
    
    
    
    Chief Executive Officer and
Director(Principal Executive Officer)/s/  Paul A. Smith
    
    
    
    Controller and Senior Vice-President,(Paul A. Smith)
    
    
    
    Finance and Administration and Director
(Principal Accounting Officer and
Principal Financial Officer)/s/  R.L. Broiles
    
    
    
    Director(Randy L. Broiles)/s/  J.M. Mintz
    
    
    
    Director(Jack M. Mintz)/s/  Roger Phillips
    
    
    
    Director(Roger Phillips)/s/  J.F. Shepard
    
    
    
    Director(James F. Shepard)/s/  Sheelagh D. Whittaker
    
    
    
    Director(Sheelagh D. Whittaker)/s/  V.L. Young
    
    
    
    Director(Victor L. Young)
 54




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##### Table of Contents



INDEX TO FINANCIAL STATEMENTS
 Pages in thisReportManagements report on internal control over financial reporting
    
    F-2Report of independent registered public accounting firm
    
    F-2Financial statements:Consolidated statement of income for the years 2003, 2004 and 2005
    
    F-3Consolidated statement of cash flows for the years 2003, 2004 and 2005
    
    F-4Consolidated balance sheet as at December 31, 2003, 2004 and 2005
    
    F-5Consolidated statement of shareholders equity as at December 31, 2003, 2004 and 2005
    
    F-6Notes to the consolidated financial statements
    
    F-7  F-23
 F-1




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##### Table of Contents



MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 Internal Control 
Integrated Framework
 /s/  T.J.
Hearn
    
    /s/  Paul A. SmithT.J. Hearn
    
    P.A. SmithChairman, president and chief executive officer
    
    Controller and senior vice-president,
finance and administration(Principal accounting officer and principal financial officer)
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 To the Shareholders of Imperial Oil Limited
  Consolidated financial statements
  Internal control over financial reporting
 Internal
Control  Integrated Framework Internal
Control  Integrated Framework
   /s/  PricewaterhouseCoopers
LLPChartered
Accountants
Toronto, Ontario, Canada
February 27, 2006
 F-2




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##### Table of Contents



Consolidated statement of income
 millions of Canadian dollarsFor the years ended December 31
    
    2005
    
    
    2004
    
    
    2003Revenues and other incomeOperating revenues (a)(b)
    
    
    27,797
    
    
    
    22,408
    
    
    
    19,094Investment and other income (note 10)
    
    
    417
    
    
    
    52
    
    
    
    114Total revenues and other income
    
    
    28,214
    
    
    
    22,460
    
    
    
    19,208ExpensesExploration
    
    
    43
    
    
    
    59
    
    
    
    55Purchases of
crude oil and products (b)
    
    
    17,168
    
    
    
    13,094
    
    
    
    10,823Production and manufacturing
    
    
    3,327
    
    
    
    2,820
    
    
    
    2,726Selling and general
    
    
    1,577
    
    
    
    1,281
    
    
    
    1,325Federal excise tax (a)
    
    
    1,278
    
    
    
    1,264
    
    
    
    1,254Depreciation and depletion
    
    
    895
    
    
    
    908
    
    
    
    755Financing costs (note 14)
    
    
    8
    
    
    
    7
    
    
    
    (120
    )Total expenses
    
    
    24,296
    
    
    
    19,433
    
    
    
    16,818Income before income taxes
    
    
    3,918
    
    
    
    3,027
    
    
    
    2,390Income taxes(note 4)
    
    
    1,318
    
    
    
    975
    
    
    
    689Income before cumulative effect of accounting change
    
    
    2,600
    
    
    
    2,052
    
    
    
    1,701Cumulative effect of accounting change, after income tax
    
    
    
    
    
    
    
    
    
    
    4Net income
    
    
    2,600
    
    
    
    2,052
    
    
    
    1,705Per-share information(Canadian dollars)Net income per common share  basic (note 12)Income
before cumulative effect of accounting change
    
    7.62
    
    
    
    5.75
    
    
    
    4.57Cumulative
effect of accounting change, after income tax
    
    
    
    
    
    
    
    
    
    0.01Net income
    
    
    7.62
    
    
    
    5.75
    
    
    
    4.58Net income per common share  diluted (note 12)Income
before cumulative effect of accounting change
    
    7.59
    
    
    
    5.74
    
    
    
    4.57Cumulative
effect of accounting change, after income tax
    
    
    
    
    
    
    
    
    
    0.01Net income
    
    
    7.59
    
    
    
    5.74
    
    
    
    4.58Dividends
    
    
    0.94
    
    
    
    0.88
    
    
    
    0.87
 (a)
    
    Operating revenues include federal excise tax of $1,278 million (2004  $1,264 million,
2003  $1,254 million).
 (b)
    
    Operating revenues include amounts for purchase / sale contracts with the same counterparty
(associated costs are included in
purchases of crude oil and products) of $4,894 million (2004  $3,584 million, 2003  $2,851
million).
  F-3




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##### Table of Contents



Consolidated statement of cash flows
 millions of Canadian dollarsInflow/(outflow)For the years ended December 31
    
    2005
    
    
    2004
    
    
    2003Operating activitiesNet income
    
    
    2,600
    
    
    
    2,052
    
    
    
    1,705Cumulative effect of accounting change, after tax
    
    
    
    
    
    
    
    
    
    
    (4
    )Adjustments for non-cash items:Depreciation and depletion
    
    
    895
    
    
    
    908
    
    
    
    755(Gain)/loss on asset sales, after tax
    
    
    (233
    )
    
    
    (32
    )
    
    
    (10
    )Deferred income taxes and other
    
    
    (116
    )
    
    
    (90
    )
    
    
    (59
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (414
    )
    
    
    (311
    )
    
    
    33Inventories and prepaids
    
    
    (67
    )
    
    
    (32
    )
    
    
    31Income taxes payable
    
    
    304
    
    
    
    462
    
    
    
    38Accounts payable
    
    
    644
    
    
    
    308
    
    
    
    74All other items  net (a)
    
    
    (162
    )
    
    
    47
    
    
    
    (336
    )Cash from operating activities
    
    
    3,451
    
    
    
    3,312
    
    
    
    2,227Investing activitiesAdditions to property, plant and equipment and intangibles
    
    
    (1,432
    )
    
    
    (1,376
    )
    
    
    (1,482
    )Proceeds from asset sales
    
    
    440
    
    
    
    102
    
    
    
    56Loans to equity company
    
    
    
    
    
    
    (32
    )
    
    
    Cash from (used in) investing activities
    
    
    (992
    )
    
    
    (1,306
    )
    
    
    (1,426
    )Financing activitiesShort-term debt  net
    
    
    18
    
    
    
    9
    
    
    
    Long-term debt issued
    
    
    
    
    
    
    
    
    
    
    818Repayment of long-term debt
    
    
    (21
    )
    
    
    (8
    )
    
    
    (818
    )Issuance of common shares under stock option plan
    
    
    38
    
    
    
    13
    
    
    
    2Common shares purchased (note 12)
    
    
    (1,795
    )
    
    
    (872
    )
    
    
    (799
    )Dividends paid
    
    
    (317
    )
    
    
    (317
    )
    
    
    (322
    )Cash from (used in) financing activities
    
    
    (2,077
    )
    
    
    (1,175
    )
    
    
    (1,119
    )Increase (decrease) in cash
    
    
    382
    
    
    
    831
    
    
    
    (318
    )Cash at beginning of year
    
    
    1,279
    
    
    
    448
    
    
    
    766Cash at end of year(b)
    
    
    1,661
    
    
    
    1,279
    
    
    
    448
 (a)
    
    Includes contribution to registered pension plans of $350 million (2004  $114 million,
2003  $511 million).
 (b)
    
    Cash is composed of cash in bank and cash equivalents at cost. Cash equivalents are all
highly liquid securities with maturity of three months or less
when purchased.
  F-4




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##### Table of Contents



Consolidated balance sheet
 millions of Canadian dollarsAt December 31
    
    2005
    
    
    2004AssetsCurrent assetsCash
    
    
    1,661
    
    
    
    1,279Accounts receivable, less estimated doubtful amounts
    
    
    2,040
    
    
    
    1,626Inventories of crude oil and products (note 13)
    
    
    481
    
    
    
    432Materials, supplies and prepaid expenses
    
    
    130
    
    
    
    112Deferred income tax assets (note 4)
    
    
    654
    
    
    
    448Total current assets
    
    
    4,966
    
    
    
    3,897Investments and other long-term assets
    
    
    127
    
    
    
    130Property, plant and equipment,
less accumulated depreciation and depletion (note 2)
    
    
    10,132
    
    
    
    9,647Goodwill (note 2)
    
    
    204
    
    
    
    204Other intangible assets, net
    
    
    153
    
    
    
    149Total assets(note 2)
    
    
    15,582
    
    
    
    14,027LiabilitiesCurrent liabilitiesShort-term debt
    
    
    99
    
    
    
    81Accounts payable and accrued liabilities (note 15)
    
    
    3,170
    
    
    
    2,525Income taxes payable
    
    
    1,399
    
    
    
    1,057Current portion of long-term debt
    
    
    477
    
    
    
    995Total current liabilities
    
    
    5,145
    
    
    
    4,658Long-term debt (note 3)
    
    
    863
    
    
    
    367Other long-term obligations (note 7)
    
    
    1,728
    
    
    
    1,525Deferred income tax liabilities (note 4)
    
    
    1,213
    
    
    
    1,155Commitments and contingent liabilities (note 11)Total liabilities
    
    
    8,949
    
    
    
    7,705Shareholders equityCommon shares at stated value (note 12)
    
    
    1,747
    
    
    
    1,801Earnings reinvested
    
    
    5,466
    
    
    
    4,889Accumulated other nonowner changes in equity
    
    
    (580
    )
    
    
    (368
    )Total shareholders equity
    
    
    6,633
    
    
    
    6,322Total liabilities and shareholders equity
    
    
    15,582
    
    
    
    14,027
   /s/  T.J.
Hearn
    
    /s/  Paul A. SmithT.J. Hearn
    
    P.A. SmithChairman, president and
    
    Controller and senior vice-president,chief executive officer
    
    finance and administration
 F-5




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##### Table of Contents



Consolidated statement of shareholders equity
 millions of Canadian dollarsAt December 31
    
    2005
    
    
    2004
    
    
    2003Common shares at stated value(note 12)At beginning of year
    
    
    1,801
    
    
    
    1,859
    
    
    
    1,939Issued under the stock option plan
    
    
    38
    
    
    
    13
    
    
    
    2Share purchases at stated value
    
    
    (92
    )
    
    
    (71
    )
    
    
    (82
    )At end of year
    
    
    1,747
    
    
    
    1,801
    
    
    
    1,859Earnings reinvestedAt beginning of year
    
    
    4,889
    
    
    
    3,952
    
    
    
    3,287Net income for the year
    
    
    2,600
    
    
    
    2,052
    
    
    
    1,705Share purchases in excess of stated value
    
    
    (1,703
    )
    
    
    (801
    )
    
    
    (717
    )Dividends
    
    
    (320
    )
    
    
    (314
    )
    
    
    (323
    )At end of year
    
    
    5,466
    
    
    
    4,889
    
    
    
    3,952Accumulated other nonowner changes in equityAt beginning of year
    
    
    (368
    )
    
    
    (266
    )
    
    
    (315
    )Minimum pension liability adjustment (note 6)
    
    
    (212
    )
    
    
    (102
    )
    
    
    49At end of year
    
    
    (580
    )
    
    
    (368
    )
    
    
    (266
    )Shareholders equity at end of year
    
    
    6,633
    
    
    
    6,322
    
    
    
    5,545Nonowner changes in equity for the yearNet income for the year
    
    
    2,600
    
    
    
    2,052
    
    
    
    1,705Other nonowner changes in equity (note 6)
    
    
    (212
    )
    
    
    (102
    )
    
    
    49Total nonowner changes in equity for the year
    
    
    2,388
    
    
    
    1,950
    
    
    
    1,754
  F-6




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##### Table of Contents



Notes to consolidated financial statements
 1.
    
    Summary of significant accounting policies
   Principles of consolidation
  Segment reporting
  Natural resources
 Petroleum products
 Chemicals
  Corporate and other
  Inventories
   Investments
   F-7




---



##### Table of Contents



Property, plant and equipment
          F-8




---



##### Table of Contents



Interest capitalization
  Goodwill and other intangible assets
   Asset retirement obligations and other environmental liabilities
   Foreign-currency translation
  Financial instruments
   Revenues
   F-9




---



##### Table of Contents



millions of dollars
    
    2005
    
    
    2004
    
    
    2003Operating revenues
    
    
    27,797
    
    
    
    22,408
    
    
    
    19,094Amounts included in operating
revenues for purchase/sale
contracts with the same
counterparty (a)
    
    
    4,894
    
    
    
    3,584
    
    
    
    2,851Percent of operating revenues
    
    
    18
    %
    
    
    16
    %
    
    
    15
    %
 (a)
    
    Associated costs are in purchases of crude oil and products
 Stock-based compensation
     millions of dollars
    
    2005
    
    
    2004
    
    
    2003Net income as shown in financial statements
    
    
    2,600
    
    
    
    2,052
    
    
    
    1,705Add: stock-based compensation expense as reported, net of tax
    
    
    238
    
    
    
    95
    
    
    
    93Deduct: stock-based compensation expense, net of tax,
determined under fair-value-based method
    
    
    (238
    )
    
    
    (97
    )
    
    
    (98
    )Pro forma net income
    
    
    2,600
    
    
    
    2,050
    
    
    
    1,700
 Net income per share (dollars)As reported  basic
    
    
    7.62
    
    
    
    5.75
    
    
    
    4.58 diluted
    
    
    7.59
    
    
    
    5.74
    
    
    
    4.58Pro forma
    basic
    
    
    7.62
    
    
    
    5.75
    
    
    
    4.57 diluted
    
    
    7.59
    
    
    
    5.73
    
    
    
    4.57
 Consumer taxes
  F-10




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##### Table of Contents



2. Business segments
 Natural resources(a)

Petroleum
products
    
    
    Chemicalsmillions of dollars
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Revenues and other incomeExternal sales (b)
    
    
    4,702
    
    
    
    3,689
    
    
    
    3,390
    
    
    
    21,793
    
    
    
    17,503
    
    
    
    14,710
    
    
    
    1,302
    
    
    
    1,216
    
    
    
    994Intersegment sales (c)
    
    
    3,487
    
    
    
    2,891
    
    
    
    2,224
    
    
    
    2,224
    
    
    
    1,666
    
    
    
    1,294
    
    
    
    363
    
    
    
    293
    
    
    
    238Investment and other income
    
    
    331
    
    
    
    45
    
    
    
    34
    
    
    
    60
    
    
    
    42
    
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    8,520
    
    
    
    6,625
    
    
    
    5,648
    
    
    
    24,077
    
    
    
    19,211
    
    
    
    16,058
    
    
    
    1,665
    
    
    
    1,509
    
    
    
    1,232ExpensesExploration
    
    
    43
    
    
    
    59
    
    
    
    55
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchases of crude oil and products
    
    
    2,837
    
    
    
    2,110
    
    
    
    1,873
    
    
    
    19,212
    
    
    
    14,769
    
    
    
    11,822
    
    
    
    1,191
    
    
    
    1,064
    
    
    
    882Production and manufacturing (d)
    
    
    1,931
    
    
    
    1,581
    
    
    
    1,551
    
    
    
    1,203
    
    
    
    1,064
    
    
    
    1,029
    
    
    
    195
    
    
    
    176
    
    
    
    148Selling and general (d)(e)
    
    
    36
    
    
    
    9
    
    
    
    11
    
    
    
    1,096
    
    
    
    1,043
    
    
    
    1,070
    
    
    
    81
    
    
    
    88
    
    
    
    113Federal excise tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,278
    
    
    
    1,264
    
    
    
    1,254
    
    
    
    
    
    
    
    
    
    
    
    Depreciation and depletion
    
    
    651
    
    
    
    633
    
    
    
    517
    
    
    
    230
    
    
    
    257
    
    
    
    211
    
    
    
    12
    
    
    
    13
    
    
    
    22Financing costs (note 14)
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Total expenses
    
    
    5,498
    
    
    
    4,393
    
    
    
    4,008
    
    
    
    23,021
    
    
    
    18,399
    
    
    
    15,388
    
    
    
    1,479
    
    
    
    1,341
    
    
    
    1,165Income before income taxes
    
    
    3,022
    
    
    
    2,232
    
    
    
    1,640
    
    
    
    1,056
    
    
    
    812
    
    
    
    670
    
    
    
    186
    
    
    
    168
    
    
    
    67Income
taxes (note 4)Current
    
    
    955
    
    
    
    771
    
    
    
    540
    
    
    
    409
    
    
    
    314
    
    
    
    75
    
    
    
    69
    
    
    
    61
    
    
    
    14Deferred
    
    
    59
    
    
    
    (56
    )
    
    
    (70
    )
    
    
    (47
    )
    
    
    (58
    )
    
    
    133
    
    
    
    (4
    )
    
    
    (2
    )
    
    
    9Total income tax expense
    
    
    1,014
    
    
    
    715
    
    
    
    470
    
    
    
    362
    
    
    
    256
    
    
    
    208
    
    
    
    65
    
    
    
    59
    
    
    
    23Income before cumulative effect of
accounting change
    
    
    2,008
    
    
    
    1,517
    
    
    
    1,170
    
    
    
    694
    
    
    
    556
    
    
    
    462
    
    
    
    121
    
    
    
    109
    
    
    
    44Cumulative effect of accounting change,
after income tax
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    2,008
    
    
    
    1,517
    
    
    
    1,174
    
    
    
    694
    
    
    
    556
    
    
    
    462
    
    
    
    121
    
    
    
    109
    
    
    
    44Cash flow from (used in) operating activities
    
    
    2,440
    
    
    
    2,331
    
    
    
    1,720
    
    
    
    799
    
    
    
    908
    
    
    
    659
    
    
    
    94
    
    
    
    126
    
    
    
    36Capital
and exploration expenditures (f)
    
    
    937
    
    
    
    1,113
    
    
    
    1,007
    
    
    
    478
    
    
    
    283
    
    
    
    478
    
    
    
    19
    
    
    
    15
    
    
    
    41Property, plant and equipmentCost
    
    
    14,229
    
    
    
    13,538
    
    
    
    12,610
    
    
    
    6,350
    
    
    
    6,078
    
    
    
    6,069
    
    
    
    701
    
    
    
    682
    
    
    
    609Accumulated depreciation and depletion
    
    
    (7,780
    )
    
    
    7,337
    
    
    
    6,813
    
    
    
    (3,037
    )
    
    
    2,959
    
    
    
    2,856
    
    
    
    (474
    )
    
    
    459
    
    
    
    401Net
property, plant and equipment (g)(h)
    
    
    6,449
    
    
    
    6,201
    
    
    
    5,797
    
    
    
    3,313
    
    
    
    3,119
    
    
    
    3,213
    
    
    
    227
    
    
    
    223
    
    
    
    208Total assets
    
    
    7,347
    
    
    
    6,866
    
    
    
    6,417
    
    
    
    6,287
    
    
    
    5,555
    
    
    
    5,287
    
    
    
    504
    
    
    
    497
    
    
    
    440
 Corporate and other
    
    
    Eliminations
    
    
    Consolidatedmillions of dollars
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Revenues and other incomeExternal sales (b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,797
    
    
    
    22,408
    
    
    
    19,094Intersegment sales (c)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,074
    )
    
    
    (4,850
    )
    
    
    (3,756
    )
    
    
    
    
    
    
    
    
    
    
    Investment and other income
    
    
    26
    
    
    
    (35
    )
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    417
    
    
    
    52
    
    
    
    11426
    
    
    
    (35
    )
    
    
    26
    
    
    
    (6,074
    )
    
    
    (4,850
    )
    
    
    (3,756
    )
    
    
    28,214
    
    
    
    22,460
    
    
    
    19,208ExpensesExploration
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43
    
    
    
    59
    
    
    
    55Purchases of crude oil and products
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,072
    )
    
    
    (4,849
    )
    
    
    (3,754
    )
    
    
    17,168
    
    
    
    13,094
    
    
    
    10,823Production and manufacturing (d)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (1
    )
    
    
    (2
    )
    
    
    3,327
    
    
    
    2,820
    
    
    
    2,726Selling and general (d)(e)
    
    
    364
    
    
    
    141
    
    
    
    131
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,577
    
    
    
    1,281
    
    
    
    1,325Federal excise tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,278
    
    
    
    1,264
    
    
    
    1,254Depreciation and depletion
    
    
    2
    
    
    
    5
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    895
    
    
    
    908
    
    
    
    755Financing costs (note 14)
    
    
    6
    
    
    
    4
    
    
    
    (123
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    7
    
    
    
    (120
    )Total expenses
    
    
    372
    
    
    
    150
    
    
    
    13
    
    
    
    (6,074
    )
    
    
    (4,850
    )
    
    
    (3,756
    )
    
    
    24,296
    
    
    
    19,433
    
    
    
    16,818Income before income taxes
    
    
    (346
    )
    
    
    (185
    )
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,918
    
    
    
    3,027
    
    
    
    2,390Income taxes(note 4)Current
    
    
    (72
    )
    
    
    (43
    )
    
    
    (19
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,361
    
    
    
    1,103
    
    
    
    610Deferred
    
    
    (51
    )
    
    
    (12
    )
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43
    )
    
    
    (128
    )
    
    
    79Total income tax expense
    
    
    (123
    )
    
    
    (55
    )
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,318
    
    
    
    975
    
    
    
    689Income before cumulative effect of
accounting change
    
    
    (223
    )
    
    
    (130
    )
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,600
    
    
    
    2,052
    
    
    
    1,701Cumulative effect of accounting change,
after income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4Net income
    
    
    (223
    )
    
    
    (130
    )
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,600
    
    
    
    2,052
    
    
    
    1,705Cash flow from (used in) operating activities
    
    
    118
    
    
    
    (53
    )
    
    
    (188
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,451
    
    
    
    3,312
    
    
    
    2,227Capital and exploration expenditures(f)
    
    
    41
    
    
    
    34
    
    
    
    33
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,475
    
    
    
    1,445
    
    
    
    1,559Property, plant and equipmentCost
    
    
    246
    
    
    
    205
    
    
    
    145
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,526
    
    
    
    20,503
    
    
    
    19,433Accumulated depreciation and depletion
    
    
    (103
    )
    
    
    101
    
    
    
    96
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,394
    )
    
    
    10,856
    
    
    
    10,166Net property, plant and equipment(g)(h)
    
    
    143
    
    
    
    104
    
    
    
    49
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,132
    
    
    
    9,647
    
    
    
    9,267Total assets
    
    
    1,867
    
    
    
    1,407
    
    
    
    501
    
    
    
    (423
    )
    
    
    (298
    )
    
    
    (308
    )
    
    
    15,582
    
    
    
    14,027
    
    
    
    12,337
 F-11




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##### Table of Contents



(a)
    
    A significant portion of activities in the natural resources segment is conducted
jointly with other companies. The segment includes the Companys share of undivided
interest in such activities as follows: millions of dollars
    
    2005
    
    
    2004
    
    
    2003Total external and intersegment sales
    
    
    3,687
    
    
    
    2,744
    
    
    
    2,494Total expenses
    
    
    1,805
    
    
    
    1,598
    
    
    
    1,577Net income, after income tax
    
    
    1,249
    
    
    
    780
    
    
    
    664Total current assets
    
    
    305
    
    
    
    367
    
    
    
    302Long-term assets
    
    
    4,742
    
    
    
    4,140
    
    
    
    3,553Total current liabilities
    
    
    1,212
    
    
    
    948
    
    
    
    913Other long-term obligations
    
    
    524
    
    
    
    330
    
    
    
    302Cash flow from operating activities
    
    
    1,424
    
    
    
    1,188
    
    
    
    883Cash (used in) investing activities
    
    
    (403
    )
    
    
    (858
    )
    
    
    (754
    )
 (b)
    
    Includes export sales to the United States, as follows:
 millions of dollars
    
    2005
    
    
    2004
    
    
    2003Natural resources
    
    
    1,633
    
    
    
    1,360
    
    
    
    1,304Petroleum products
    
    
    856
    
    
    
    1,074
    
    
    
    792Chemicals
    
    
    750
    
    
    
    678
    
    
    
    567Total export sales
    
    
    3,239
    
    
    
    3,112
    
    
    
    2,663
 (c)
    
    Intersegment sales are made essentially at prevailing market rates.(d)
    
    During 2005, incentive compensation expenses previously included in the operating
segments have been reclassified to the corporate and other segment. This change has the
effect of isolating in one segment all incentive compensation expenses and improving the
transparency of operating events in the operating segments. This change has no impact on
consolidated total expenses, net income or the cash-flow profile of the Company. Segmented
results for 2004 and 2003 have been reclassified for comparative purposes.(e)
    
    Consolidated selling and general expenses include delivery costs from final storage
areas to customers of $310 million in 2005 (2004  $307 million, 2003  $285 million).(f)
    
    There were no capital lease additions in 2005. Capital and exploration expenditures
of the petroleum products segment included non-cash capital leases of $11 million in 2004.(g)
    
    Includes property, plant and equipment under construction of
$954 million (2004 
$1,983 million).(h)
    
    Goodwill was not amortized in the past three years. All goodwill has been assigned to
the petroleum products segment. There have been no goodwill acquisitions, impairment
losses or write-offs due to sales in the past three years.
 F-12




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##### Table of Contents



3.
    
    Long-term debt
 2005
    
    
    2004Issued
    
    Maturity date
    
    Interest rate
    
    
    Millions of dollars2003
    
    $250 million due May 26, 2007 and$250 million due August 26, 2007     (a)
    
    Variable
    
    
    500
    
    
    
    2003
    
    January 19, 2008     (a)
    
    Variable
    
    
    318
    
    
    
    318Long-term debt(b)
    
    
    
    
    818
    
    
    
    318Capital leases(c)
    
    
    
    
    45
    
    
    
    49Total long-term debt(d) (e)
    
    
    
    
    863
    
    
    
    367
 (a)
    
    These are long-term variable-rate loans from Exxon Overseas Corporation, an affiliated
company of Exxon Mobil Corporation at interest equivalent to Canadian market rates. These
loans were extended during 2005 for an additional two-year period to the maturity dates
noted above.(b)
    
    The average effective rate for the loans was 2.8 percent for 2005 (2004  2.5
percent).(c)
    
    These obligations primarily relate to the capital lease for marine services, which
are provided by the lessor commencing in 2004 for a period of 10 years, extendable for an
additional five years. The average imputed rate was 10.5 percent in 2005 (2004-10.3 percent).(d)
    
    Principal payments on long-term loans of $500 million are due in 2007 and $318
million are due in 2008. Principal payments on capital leases of approximately $4 million
a year are due in each of the next five years.(e)
    
    These amounts exclude that portion of long-term debt, totalling $477 million (2004 
$995 million), which matures within one year and is included in current liabilities.
 4.
    
    Income taxes
 millions of dollars
    
    2005
    
    
    2004
    
    
    2003Current income tax expense
    
    
    1,361
    
    
    
    1,103
    
    
    
    610Deferred income tax expense (a)
    
    
    (43
    )
    
    
    (128
    )
    
    
    79Total income tax expense(b)
    
    
    1,318
    
    
    
    975
    
    
    
    689Statutory corporate tax rate (percent)
    
    
    35.6
    
    
    
    37.0
    
    
    
    38.5Increase/(decrease) resulting from:Non-deductible royalty payments to governments
    
    
    3.8
    
    
    
    3.9
    
    
    
    5.0Resource allowance in lieu of royalty deduction
    
    
    (5.2
    )
    
    
    (7.0
    )
    
    
    (7.5
    )Manufacturing and processing credit
    
    
    
    
    
    
    
    
    
    
    0.2Enacted tax rate change
    
    
    
    
    
    
    (1.8
    )
    
    
    (3.1
    )Other
    
    
    (0.6
    )
    
    
    0.1
    
    
    
    (4.3
    )Effective income tax rate
    
    
    33.6
    
    
    
    32.2
    
    
    
    28.8
 (a)
    
    The deferred income tax expense for the year is the difference in net deferred
income tax liabilities at the beginning and end of the year. The provisions for
deferred income taxes in 2005 did not have any net (charges)/credits for the
effect of changes in tax laws and rates (2004  $25 million; 2003  $72 million).(b)
    
    Cash outflow from income taxes, plus investment credits earned, was $1,024
million in 2005 (2004  $641 million; 2003  $573 million).
 Deferred income taxes are based on differences between the accounting and tax values of
assets and liabilities. These differences in value are remeasured at each year-end using the
tax rates and tax laws expected to apply when those differences are realized or settled in the
future. Components of deferred income tax liabilities and assets as at December 31 were:
 millions of dollars
    
    2005
    
    
    2004Depreciation and amortization
    
    
    1,470
    
    
    
    1,287Successful drilling and land acquisitions
    
    
    319
    
    
    
    403Pension and benefits (a)
    
    
    (354
    )
    
    
    (343
    )Site restoration
    
    
    (171
    )
    
    
    (158
    )Net tax loss carryforwards (b)
    
    
    (49
    )
    
    
    (57
    )Capitalized interest
    
    
    26
    
    
    
    26Other
    
    
    (28
    )
    
    
    (3
    )Deferred income tax liabilities
    
    
    1,213
    
    
    
    1,155LIFO inventory valuation
    
    
    (487
    )
    
    
    (343
    )Other
    
    
    (167
    )
    
    
    (105
    )Deferred income tax assets
    
    
    (654
    )
    
    
    (448
    )Valuation allowance
    
    
    
    
    
    
    Net deferred income tax liabilities
    
    
    559
    
    
    
    707
 (a)
    
    Income taxes charged directly to shareholders equity
related to minimum
pension liability adjustment were $105 million benefit in 2005 (2004  $41
million benefit; 2003  $57 million expense).(b)
    
    Tax losses can be carried forward indefinitely.
 The operations of the Company are complex, and related tax interpretations, regulations and
legislation are continually changing. As a result, there are usually some tax matters in
question. The Company believes the provision made for income taxes is adequate.
 F-13




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##### Table of Contents



5.
    
    Headquarters relocationThe relocation of the Companys head office from Toronto, Ontario to Calgary, Alberta announced
in September 2004 was completed as planned in August 2005.Expenses in connection with the headquarters relocation activity are expected to total
approximately $77 million ($52 million, after tax), about 85 percent of which has been
recognized in 2005 in conjunction with employee relocations and compensation payments for
employees who chose not to move. All such expenses are included in selling and general on the
consolidated statement of income. The change in liabilities associated with headquarters
relocation is as follows:
 millions of dollars
    
    2005
    
    
    2004Beginning as of January 1
    
    
    
    
    
    
    Additions
    
    
    65
    
    
    
    Settlement
    
    
    (48
    )
    
    
    Ending as of December 31
    
    
    17
    
    
    
    
 All operating segments are impacted by this activity, but the largest effects are in the
petroleum products segment.6.
    
    Employee retirement benefitsRetirement benefits, which cover almost all retired employees and their surviving spouses,
include pension-income and certain health-care and life-insurance benefits. They are met
through funded registered retirement plans and through unfunded supplementary benefits that are
paid directly to recipients. Funding of registered retirement plans complies with federal and
provincial pension regulations, and the Company makes contributions to the plans based upon an
independent actuarial valuation.Pension-income benefits consist mainly of company-paid defined benefit plans that are based on
years of service and final average earnings. The Company shares in the cost of health-care and
life-insurance benefits. The Companys benefit obligations are based on the projected benefit
method of valuation that includes employee service to date and present compensation levels as
well as a projection of salaries and service to retirement.The expense and obligations for both funded and unfunded benefits are determined in accordance
with United States generally accepted accounting principles and actuarial procedures. The
process for determining retirement-income expense and related obligations includes making
certain long-term assumptions regarding the discount rate, rate of return on plan assets and
rate of compensation increases.The total obligation for retirement benefits exceeded the fair value of plan assets at December
31, 2005 by $1,823 million (2004  $1,712 million), of which $1,365 million (2004  $1,276
million) was related to pension benefits and $458 million (2004  $436 million) was related to
other post-retirement benefits. The obligation and pension expense can vary significantly with
changes in the assumptions used to estimate the obligation and the expected return on plan
assets.Details of the employee retirement benefits plans are as follows:
 Pension benefits
    
    
    
    
    

Other
post-retirement benefitsmillions of dollars
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Components of net benefit costCurrent service cost
    
    
    86
    
    
    
    76
    
    
    
    71
    
    
    
    7
    
    
    
    6
    
    
    
    5Interest cost
    
    
    239
    
    
    
    237
    
    
    
    219
    
    
    
    24
    
    
    
    24
    
    
    
    22Expected return on plan assets
    
    
    (257
    )
    
    
    (223
    )
    
    
    (179
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    25
    
    
    
    27
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    Recognized actuarial loss/(gain)
    
    
    83
    
    
    
    68
    
    
    
    69
    
    
    
    7
    
    
    
    4
    
    
    
    3Net benefit cost (a)
    
    
    176
    
    
    
    185
    
    
    
    205
    
    
    
    38
    
    
    
    34
    
    
    
    30Change in benefit obligationBenefit obligation at January 1
    
    
    4,260
    
    
    
    3,761
    
    
    
    
    
    
    
    436
    
    
    
    382Current service cost
    
    
    86
    
    
    
    76
    
    
    
    
    
    
    
    7
    
    
    
    6Interest cost
    
    
    239
    
    
    
    237
    
    
    
    
    
    
    
    24
    
    
    
    24Amendments
    
    
    20
    
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    Actuarial loss/(gain)
    
    
    549
    
    
    
    405
    
    
    
    
    
    
    
    26
    
    
    
    47Other (b)
    
    
    (88
    )
    
    
    
    
    
    
    
    
    
    
    (13
    )
    
    
    Benefits paid
    
    
    (282
    )
    
    
    (256
    )
    
    
    
    
    
    
    (22
    )
    
    
    (23
    )Benefit obligation at December 31
    
    
    4,784
    
    
    
    4,260
    
    
    
    
    
    
    
    458
    
    
    
    436Accumulated benefit obligation at December 31
    
    
    4,261
    
    
    
    3,743
 F-14




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##### Table of Contents



Pension benefits
    
    

Other post-retirement benefitsmillions of dollars
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Change in plan assetsFair value of plan assets at January 1
    
    
    2,984
    
    
    
    2,786Actual return on plan assets
    
    
    370
    
    
    
    315Company contributions
    
    
    350
    
    
    
    114Payments directly to participants
    
    
    56
    
    
    
    25Other (b)
    
    
    (59
    )
    
    
    Benefits paid
    
    
    (282
    )
    
    
    (256
    )Fair value of plan assets at December 31
    
    
    3,419
    
    
    
    2,984Excess/(deficiency) of plan assets
over benefit obligations
    
    
    (1,365
    )
    
    
    (1,276
    )
    
    
    
    
    
    
    (458
    )
    
    
    (436
    )Unrecognized net actuarial loss/(gain) (c)
    
    
    1,397
    
    
    
    1,073
    
    
    
    
    
    
    
    101
    
    
    
    95Unrecognized prior service cost (c)
    
    
    94
    
    
    
    99
    
    
    
    
    
    
    
    
    
    
    
    Net amount recognized
    
    
    126
    
    
    
    (104
    )
    
    
    
    
    
    
    (357
    )
    
    
    (341
    )Amount recognized in the consolidated balance sheet consists of:Accrued benefit cost (note 7)
    
    
    (842
    )
    
    
    (759
    )
    
    
    
    
    
    
    (357
    )
    
    
    (341
    )Intangible assets
    
    
    93
    
    
    
    97
    
    
    
    
    
    
    
    
    
    
    
    Accumulated other nonowner changes in equity, minimum pension
liability adjustment
    
    
    875
    
    
    
    558
    
    
    
    
    
    
    
    
    
    
    
    Net amount recognized
    
    
    126
    
    
    
    (104
    )
    
    
    
    
    
    
    (357
    )
    
    
    (341
    )AssumptionsAssumptions used to determine benefit obligations at December 31 (percent)Discount rate (d)
    
    
    5.00
    
    
    
    5.75
    
    
    
    
    
    
    
    5.00
    
    
    
    5.75Long-term rate of compensation increase
    
    
    3.50
    
    
    
    3.50
    
    
    
    
    
    
    
    3.50
    
    
    
    3.50Assumptions used to determine net benefit cost for years ended December 31 (percent)Discount rate
    
    
    5.75
    
    
    
    6.25
    
    
    
    6.25
    
    
    
    5.75
    
    
    
    6.25
    
    
    
    6.25Long-term rate of compensation increase
    
    
    3.50
    
    
    
    3.50
    
    
    
    3.50
    
    
    
    3.50
    
    
    
    3.50
    
    
    
    3.50Long-term rate of return on funded assets
    
    
    8.25
    
    
    
    8.25
    
    
    
    8.25
    
    
    
    
    
    
    
    
    
    
    
    
 (a)
    
    A summary of net benefit cost with elements of employee future benefit costs before and
after adjustments to recognize the long-term nature of employee benefit cost is shown in
the table below:
 Pension benefits
    
    

Other post-retirement benefitsmillions of dollars
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Components of net benefit costCurrent service cost
    
    
    86
    
    
    
    76
    
    
    
    71
    
    
    
    7
    
    
    
    6
    
    
    
    5Interest cost
    
    
    239
    
    
    
    237
    
    
    
    219
    
    
    
    24
    
    
    
    24
    
    
    
    22Actual return on plan assets
    
    
    (370
    )
    
    
    (315
    )
    
    
    (377
    )
    
    
    
    
    
    
    
    
    
    
    Plan amendments for prior service
    
    
    20
    
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Actuarial loss/(gain)
    
    
    549
    
    
    
    405
    
    
    
    171
    
    
    
    26
    
    
    
    47
    
    
    
    19Elements of employee future benefit costs before
adjustments to recognize the long-term nature
of employee future benefit costs
    
    
    524
    
    
    
    440
    
    
    
    84
    
    
    
    57
    
    
    
    77
    
    
    
    46Adjustments to recognize the long-term nature of
employee future benefit costs:Difference between expected return and actual return
on plan assets for the year
    
    
    113
    
    
    
    92
    
    
    
    198
    
    
    
    
    
    
    
    
    
    
    
    Difference between amortization or prior service
costs for the year and actual plan amendments for
the year
    
    
    5
    
    
    
    (10
    )
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    Difference between actuarial (gain)/loss recognized
for the year and actuarial (gain)/loss on accrued
benefit obligation for the year
    
    
    (466
    )
    
    
    (337
    )
    
    
    (102
    )
    
    
    (19
    )
    
    
    (43
    )
    
    
    (16
    )Net benefit cost
    
    
    176
    
    
    
    185
    
    
    
    205
    
    
    
    38
    
    
    
    34
    
    
    
    30
 (b)
    
    These assets and liabilities relate to employees who provide computer and customer
support services to the Company. These employees were transferred to an affiliate of Exxon
Mobil Corporation on January 1, 2005.(c)
    
    Unrecorded assets/(liabilities) are amortized over the average remaining service life
of employees, which for 2006 and subsequent years is 12.3 years
(2005  12.6 years; 2004  13 years).(d)
    
    The discount rate is determined using the yield for high quality, long-term Canadian
corporate bonds at year end with an average maturity (or duration) approximating that of
the liabilities of the pension plan.
 F-15




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##### Table of Contents



Plan assetsThe Companys pension plan asset allocation at December 31, 2004 and 2005, and target
allocation for 2006 are as follows:
 Target
    
    
    Percentage of plan assets atallocation
    
    
    December 31Asset category (percent)
    
    2006
    
    
    2005
    
    
    2004Equities
    
    
    50  75
    
    
    
    62
    
    
    
    62Fixed income
    
    
    25  50
    
    
    
    38
    
    
    
    38Other
    
    
    0  10
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    100
    
    
    
    100
 The Company establishes the long-term expected rate of return by developing a forward-looking
long-term return assumption for each asset class, taking into account factors such as the
expected real return for the specific asset class and inflation. A single, long-term rate of
return is then calculated as the weighted average of the target asset allocation and the
long-term return assumption for each asset class. The 2005 long-term expected return of 8.25
percent used in the calculations of pension expense compares to an actual rate of return over
the past decade of 10 percent.The Companys investment strategy for benefit plan assets reflects a long-term view, a careful
assessment of the risks inherent in various asset classes and broad diversification to reduce
the risk of the total portfolio. The Company primarily invests in funds that follow an
index-based strategy to achieve its objectives of diversifying risk while minimizing costs. The
fund holds Imperial Oil Limited common shares primarily only to the extent necessary to
replicate the relevant equity index. Asset-liability studies, or simulations of the interaction
of cash flows associated with both assets and liabilities, are periodically used to establish
the preferred target asset allocation. The target asset allocation for equity securities
reflects the long-term nature of the liability. The balance of the fund is targeted to debt
securities.Cash flowsBenefit payments expected in:
 Other post-retirementmillions of dollars
    
    Pension benefits
    
    
    benefits2006
    
    
    238
    
    
    
    232007
    
    
    242
    
    
    
    252008
    
    
    246
    
    
    
    262009
    
    
    253
    
    
    
    282010
    
    
    260
    
    
    
    29Years 2011
 2015
    
    
    1,449
    
    
    
    169
 In 2006, the Company expects to make cash contributions of about $395 million to its pension
plan.A summary of the change in other nonowner changes in equity related to the minimum pension
liability adjustment is shown in the table below:
 Pension benefitsmillions of dollars
    
    2005
    
    
    2004
    
    
    2003Increase/(decrease) in accumulated other nonowner
changes in equity, before tax
    
    
    (317
    )
    
    
    (143
    )
    
    
    106Deferred income tax (charge)/credit (note 4)
    
    
    105
    
    
    
    41
    
    
    
    (57
    )Increase/(decrease) in accumulated other nonowner
changes in equity, after tax
    
    
    (212
    )
    
    
    (102
    )
    
    
    49
 A summary of pension plans with accumulated benefit obligations in excess of plan assets is
shown in the table below:
 Pension benefitsmillions of dollars
    
    2005
    
    
    2004For funded pension plans with accumulated benefit
obligations in excess of plan assets:Projected benefit obligation
    
    
    4,403
    
    
    
    3,876Accumulated benefit obligation
    
    
    3,908
    
    
    
    3,430Fair value of plan assets
    
    
    3,419
    
    
    
    2,984Accumulated benefit obligation less fair value of plan assets
    
    
    489
    
    
    
    446For unfunded plans covered by book reserves:Projected benefit obligation
    
    
    381
    
    
    
    384Accumulated benefit obligation
    
    
    353
    
    
    
    313
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##### Table of Contents



Notes to consolidated financial statements (continued)Additional expenses include contributions to the defined contribution plans, primarily the
employee savings plan of $30 million in 2005 (2004  $32 million; 2003  $31 million).The most recent independent actuarial valuation was as at December 31, 2004 and the next
required valuation will be as of December 31, 2005. The measurement date used to determine the
plan assets and the benefit obligations was December 31, 2005.A one percent change in the assumptions at which retirement liabilities could be effectively
settled is as follows:
 Increase/(decrease)
    
    One percent
    
    
    One percentmillions of dollars
    
    increase
    
    
    decreaseRate of return on plan assets:Effect on net benefit costs
    
    
    (35
    )
    
    
    35Discount rate:Effect on net benefit costs
    
    
    (50
    )
    
    
    60Effect on benefit obligations
    
    
    (605
    )
    
    
    750Rate of pay increases:Effect on net benefit costs
    
    
    30
    
    
    
    (35
    )Effect on benefit obligations
    
    
    180
    
    
    
    (165
    )
 For measurement purposes, a five percent health-care cost trend rate was assumed for 2005 and
thereafter. A one percent change in the assumed health-care cost trend rate would have the
following effects:
 Increase/(decrease)
    
    One percent
    
    
    One percentmillions of dollars
    
    increase
    
    
    decreaseEffect on service and interest cost components
    
    
    4
    
    
    
    (3
    )Effect on other post-retirement benefits obligations
    
    
    45
    
    
    
    (40
    )
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##### Table of Contents



7.
    
    Other long-term obligations
 millions of dollars
    
    2005
    
    
    2004Employee retirement benefits (note 6)(a)
    
    
    1,152
    
    
    
    1,052Asset retirement obligations and other environmental liabilities (b)
    
    
    423
    
    
    
    380Other obligations
    
    
    153
    
    
    
    93Total other long-term obligations
    
    
    1,728
    
    
    
    1,525
 (a)
    
    Total recorded employee retirement benefits obligations also include $47 million in
current liabilities (2004  $48 million).(b)
    
    Total asset retirement obligations and other environmental liabilities also include
$76 million in current liabilities (2004  $76 million). The estimated cash flows of asset
retirement obligations have been discounted at six percent. The total undiscounted amount
of the estimated cash flow required to settle the obligation is $1,717 million. Payments
to settle the obligations occur on an ongoing basis and will continue over the lives of
the operating assets, which can exceed 25 years. The change in asset retirement
obligations liability is as follows:
 millions of dollars
    
    2005
    
    
    2004Asset retirement obligations liability at January 1
    
    
    328
    
    
    
    327Additions
    
    
    53
    
    
    
    16Accretion
    
    
    20
    
    
    
    22Settlement
    
    
    (34
    )
    
    
    (37
    )Asset retirement obligations liability at December 31
    
    
    367
    
    
    
    328
 8.
    
    Derivatives and financial instrumentsNo significant energy derivatives, foreign-exchange forward
contracts or currency and interest-rate swaps were transacted in the
past three years. The Company maintains a system of controls that
includes a policy covering the authorization, reporting and
monitoring of derivative activity.The fair value of the Companys financial instruments is determined
by reference to various market data and other appropriate valuation
techniques. There are no material differences between the fair
values of the Companys financial instruments from the recorded book
value.9.
    
    Stock-based incentive compensation programsStock-based incentive compensation programs are designed to retain selected employees, reward
them for high performance and promote individual contribution to sustained improvement in the
Companys future business performance and shareholder value.Incentive share units, deferred share units and restricted stock unitsIncentive share units have value if the market price of the Companys common shares when the
unit is exercised exceeds the market value when the unit was issued. The issue price of
incentive share units is the closing price of the Companys shares on the Toronto Stock
Exchange on the grant date. Up to 50 percent of the units may be exercised after one year from
issuance; an additional 25 percent may be exercised after two years; and the remaining 25
percent may be exercised after three years. Incentive share units are eligible for exercise up
to 10 years from issuance. The units may expire earlier if employment is terminated other than
by retirement, death or disability.The deferred share unit plan is made available to selected executives and nonemployee
directors. The selected executives can elect to receive all or part of their performance bonus
compensation in units and the nonemployee directors can elect to receive all or part of their
directors fees in units. The number of units granted to executives is determined by dividing
the amount of the bonus elected to be received as deferred share units by the average of the
closing prices of the Companys shares on the Toronto Stock Exchange for the five consecutive
trading days immediately prior to the date that the bonus would have been paid. The number of
units granted to a nonemployee director is determined at the end of each calendar quarter by
dividing the amount of directors fees for the calendar quarter that the nonemployee director
elected to receive as deferred share units by the average closing price of the Companys shares
for the five consecutive trading days immediately prior to the last day of the calendar
quarter. Additional units are granted based on the cash dividend payable on the Companys
shares divided by the average closing price immediately prior to the payment date for that
dividend and multiplying the resulting number by the number of deferred share units held by the
recipient.
 F-18




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##### Table of Contents



Notes to consolidated financial statements (continued)Deferred share units cannot be exercised until after termination of employment with the Company
or resignation as a director and must be exercised no later than December 31 of the year
following termination or resignation. On the exercise date, the cash value to be received for
the units is determined based on the average closing price of the Companys shares for the five
consecutive trading days immediately prior to the date of exercise.Under the restricted stock unit plan, each unit entitles the recipient to the conditional
right to receive from the Company, upon exercise, an amount equal to the closing price of the
Companys common shares on the Toronto Stock Exchange on the exercise dates. Fifty percent of
the units are exercised three years following the grant date, and the remainder are exercised
seven years following the grant date.All units require settlement by cash payments with one exception. The restricted stock unit
plan was amended for units granted in 2003 and future years by providing that the recipient may
receive one common share of the Company per unit or elect to receive the cash payment for the
units to be exercised on the seventh anniversary of the grant date.Incentive stock optionsIn April 2002, incentive stock options were granted for the purchase of the Companys common
shares at an exercise price of $46.50 per share. Up to 50 percent of the options may be
exercised on or after January 1, 2003, a further 25 percent may be exercised on or after
January 1, 2004, and the remaining 25 percent may be exercised on or after January 1, 2005. Any
unexercised options expire after April 29, 2012. The Company has not issued incentive stock
options since 2002 and has no plans to issue incentive stock options in the future.The Company did not recognize compensation expense on the issuance of stock options because the
exercise price was equal to the market value at the date of grant. If the fair-value-based
method of accounting had been adopted, the impact on net income and earnings per share is shown
in note 1 to the consolidated financial statements on page F-7. The average fair value of each
option granted during 2002 was $12.70. The fair value was estimated at the grant date using an
option-pricing model with the following weighted average assumptions: risk-free interest rate
of 5.7 percent, expected life of five years, volatility of 25 percent and a dividend yield of
1.9 percent.The Company has purchased shares on the market to fully offset the dilutive effects from the
exercise of stock options. The practice is expected to continue.A summary of the incentive compensation programs is as follows:
 ObligationsNumber of units
    
    
    Expensed in
    
    
    outstanding atCancelled or
    
    
    Outstanding at
    
    
    period
    
    
    December 31Granted
    
    
    Exercised
    
    
    adjusted
    
    
    December 31
    
    
    (millions of dollars)
    
    
    (millions of dollars)Incentive share
units2005
    
    
    
    
    
    
    (1,987,454
    )
    
    
    (250
    )
    
    
    3,278,719
    
    
    
    230
    
    
    
    2992004
    
    
    
    
    
    
    (1,620,332
    )
    
    
    (2,575
    )
    
    
    5,266,423
    
    
    
    94
    
    
    
    2452003
    
    
    
    
    
    
    (1,142,145
    )
    
    
    19,225
    
    
    
    6,889,330
    
    
    
    109
    
    
    
    216Deferred share units2005
    
    
    2,604
    
    
    
    (5,225
    )
    
    
    
    
    
    
    46,189
    
    
    
    1
    
    
    
    32004
    
    
    4,899
    
    
    
    
    
    
    
    
    
    
    
    48,810
    
    
    
    1
    
    
    
    42003
    
    
    8,253
    
    
    
    (49,486
    )
    
    
    (379
    )
    
    
    43,911
    
    
    
    1
    
    
    
    3Incentive stock options2005
    
    
    
    
    
    
    (813,450
    )
    
    
    3,950
    
    
    
    2,045,000
    
    
    
    
    
    
    
    -2004
    
    
    
    
    
    
    (274,250
    )
    
    
    (7,400
    )
    
    
    2,854,500
    
    
    
    
    
    
    
    2003
    
    
    
    
    
    
    (49,050
    )
    
    
    (11,500
    )
    
    
    3,136,150
    
    
    
    
    
    
    
    Restricted stock units2005
    
    
    886,050
    
    
    
    
    
    
    
    (9,465
    )
    
    
    3,518,910
    
    
    
    119
    
    
    
    1582004
    
    
    987,480
    
    
    
    
    
    
    
    (5,710
    )
    
    
    2,642,325
    
    
    
    31
    
    
    
    412003
    
    
    872,085
    
    
    
    (3,300
    )
    
    
    (120
    )
    
    
    1,660,555
    
    
    
    11
    
    
    
    11
 F-19




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##### Table of Contents



10.
    
    Investment and other incomeInvestment and other income includes gains and losses on asset sales as follows:
 millions of dollars
    
    2005
    
    
    2004
    
    
    2003Proceeds from asset sales
    
    
    440
    
    
    
    102
    
    
    
    56Book value of assets sold
    
    
    96
    
    
    
    59
    
    
    
    44Gain/(loss) on asset sales, before tax(a)
    
    
    344
    
    
    
    43
    
    
    
    12Gain/(loss) on asset sales, after tax(a)
    
    
    233
    
    
    
    32
    
    
    
    10
 (a)
    
    2005 included a gain of $251 million ($163 million, after tax) from the sale of the
wholly owned Redwater and interests in the North Pembina fields.
 11. Commitments and contingent liabilities
  Aftermillions of dollars
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2010Operating leases (a)
    
    
    48
    
    
    
    46
    
    
    
    44
    
    
    
    41
    
    
    
    37
    
    
    
    57Unconditional purchase obligations (b)
    
    
    94
    
    
    
    41
    
    
    
    42
    
    
    
    42
    
    
    
    20
    
    
    
    20Firm capital commitments (c)
    
    
    196
    
    
    
    15
    
    
    
    6
    
    
    
    10
    
    
    
    5
    
    
    
    Other long-term agreements (d)
    
    
    403
    
    
    
    398
    
    
    
    241
    
    
    
    227
    
    
    
    156
    
    
    
    356
 (a)
    
    Total rental expense incurred for operating leases in 2005 was $83 million
(2004  $104 million; 2003  $124 million) which included minimum rental expenditures
of $63 million (2004  $77 million; 2003  $93 million). Related rental income was
not material.(b)
    
    Unconditional purchase obligations are those long-term commitments that are
noncancellable or cancellable only under certain conditions. These mainly pertain to
pipeline throughput agreements. Total payments under unconditional purchase
obligations were $104 million in 2005 (2004  $117 million; 2003  $114 million).(c)
    
    Firm capital commitments related to capital projects, shown on an undiscounted
basis, totalled approximately $232 million at the end of 2005
(2004  $171 million). The largest commitment outstanding at year-end 2005 was
associated with the Companys share of upstream capital projects of
$72 million offshore Canadas East Coast.(d)
    
    Other long-term agreements include primarily raw material supply and
transportation services agreements. Total payments under other long-term agreements
were $448 million in 2005 (2004  $355 million; 2003  $332 million). Payments under
other long-term agreements related to the Companys share of undivided interest in
activities conducted jointly with other companies are approximately $95 million per
year.
 Other commitments arising in the normal course of business for operating and capital needs do
not materially affect the Companys consolidated financial position.The Company was contingently liable at December 31, 2005, for a maximum of $77 million relating
to guarantees for purchasing operating equipment and other assets from its rural marketing
associates upon expiry of the associate agreement or the resignation of the associate. The
Company expects that the fair value of the operating equipment and other assets so purchased
would cover the maximum potential amount of future payment under the guarantees.The Company provides in its financial statements for asset retirement obligations and other
environmental liabilities (see note 7 to the consolidated financial statements on page F-18).
Provision is not made with respect to those manufacturing, distribution and marketing
facilities with indeterminate useful lives, because such potential obligations cannot be
measured since it is not possible to estimate the settlement dates. These are primarily
currently operated sites. These costs are not expected to have a material effect on the
Companys current consolidated financial position.Various lawsuits are pending against the Company and its subsidiaries. Based on a consideration
of all relevant facts and circumstances, the Company does not believe the ultimate outcome of
any currently pending lawsuits against the Company will have a material adverse effect upon the
Companys operations or financial condition. There are no events or uncertainties known to
management beyond those already included in reported financial information that would indicate
a material change in future operating results or financial condition.
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##### Table of Contents



12.
    
    Common sharesThe number of authorized common shares of the Company as at December 31, 2005 was
450,000,000, unchanged from January 1, 2004.On February 2, 2006, the Company proposed to subdivide the common shares of the Company on a
three-for-one basis. The proposed stock split is subject to shareholder and regulatory
approvals.From 1995 to 2004, the Company purchased shares under ten 12-month normal course share purchase
programs, as well as an auction tender. On June 23, 2005, another 12-month normal course share
purchase program was implemented with an allowable purchase of 17.1 million shares (five
percent of the total at June 21, 2005), less any shares purchased by the employee savings plan
and company pension fund. The results of these activities are shown below.
 Purchased
    
    
    Millions ofYear
    
    shares
    
    
    dollars1995 to 2003
    
    
    218,920,739
    
    
    
    5,9682004
    
    
    13,606,712
    
    
    
    8722005
    
    
    17,508,935
    
    
    
    1,795Cumulative purchases to date
    
    
    250,036,386
    
    
    
    8,635
 Exxon Mobil Corporations participation in the above maintained its ownership interest in
Imperial at 69.6 percent.The Companys common share activities are summarized below:
 Thousands of shares
    
    
    Millions of dollarsBalance as at January 1, 2003
    
    
    378,863
    
    
    
    1,939Issued for cash under the stock option plan
    
    
    49
    
    
    
    2Purchases
    
    
    (16,259
    )
    
    
    (82
    )Balance as at December 31, 2003
    
    
    362,653
    
    
    
    1,859Issued for cash under the stock option plan
    
    
    274
    
    
    
    13Purchases
    
    
    (13,607
    )
    
    
    (71
    )Balance as at December 31, 2004
    
    
    349,320
    
    
    
    1,801Issued for cash under the stock option plan
    
    
    814
    
    
    
    38Purchases
    
    
    (17,509
    )
    
    
    (92
    )Balance as at December 31, 2005
    
    
    332,625
    
    
    
    1,747
 The following table provides the calculation of basic and diluted earnings per share:
 2005
    
    
    2004
    
    
    2003Net income per common share  basicIncome before cumulative effect of accounting change (millions of dollars)
    
    
    2,600
    
    
    
    2,052
    
    
    
    1,701Net income (millions of dollars)
    
    
    2,600
    
    
    
    2,052
    
    
    
    1,705Weighted average number of common shares outstanding
(thousands of shares)
    
    
    341,373
    
    
    
    356,834
    
    
    
    372,011Net income per common share (dollars)Income before cumulative effect of accounting change
    
    
    7.62
    
    
    
    5.75
    
    
    
    4.57Cumulative effect of accounting change, after income tax
    
    
    
    
    
    
    
    
    
    
    0.01Net income
    
    
    7.62
    
    
    
    5.75
    
    
    
    4.58Net income per common share  dilutedIncome before cumulative effect of accounting change (millions of dollars)
    
    
    2,600
    
    
    
    2,052
    
    
    
    1,701Net income (millions of dollars)
    
    
    2,600
    
    
    
    2,052
    
    
    
    1,705Weighted average number of common shares outstanding
(thousands of shares)
    
    
    341,373
    
    
    
    356,834
    
    
    
    372,011Effect of employee stock-based awards (thousands of shares)
    
    
    1,393
    
    
    
    818
    
    
    
    143Weighted average number of common shares outstanding,
assuming dilution (thousands of shares)
    
    
    342,766
    
    
    
    357,652
    
    
    
    372,154Net income per common share (dollars)Income before cumulative effect of accounting change
    
    
    7.59
    
    
    
    5.74
    
    
    
    4.57Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    0.01Net income
    
    
    7.59
    
    
    
    5.74
    
    
    
    4.58
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13.
    
    Miscellaneous financial informationIn 2005, net earnings included an after-tax gain of $5 million (2004  $23 million gain; 2003 -
$9 million gain) attributable to the effect of changes in last-in, first-out (LIFO)
inventories. The replacement cost of inventories was estimated to exceed their LIFO carrying
values at December 31, 2005, by $1,429 million (2004  $1,013 million). Inventories of crude
oil and products at year-end consisted of the following:
 million of dollars
    
    2005
    
    
    2004Crude oil
    
    
    174
    
    
    
    165Petroleum products
    
    
    234
    
    
    
    190Chemical products
    
    
    63
    
    
    
    59Natural gas and other
    
    
    10
    
    
    
    18Total inventories of crude oil and products
    
    
    481
    
    
    
    432
 Research and development costs in 2005 were $68 million (2004  $70 million; 2003  $63
million) before investment tax credits earned on these expenditures of $10 million (2004  $7
million; 2003  $10 million). The net costs are included in expenses due to the uncertainty of
future benefits.Cash flow from operating activities included dividends of $21 million received from equity
investments in 2005 (2004  $18 million; 2003  $15 million).14.
    
    Financing costs
 millions of dollars
    
    2005
    
    
    2004
    
    
    2003Debt-related interest
    
    
    45
    
    
    
    37
    
    
    
    38Capitalized interest
    
    
    (41
    )
    
    
    (34
    )
    
    
    (33
    )Net interest expense
    
    
    4
    
    
    
    3
    
    
    
    5Other interest
    
    
    4
    
    
    
    4
    
    
    
    4Total interest expense(a)
    
    
    8
    
    
    
    7
    
    
    
    9Foreign-exchange expense/(gain) on long-term debt
    
    
    
    
    
    
    
    
    
    
    (129
    )Total financing costs
    
    
    8
    
    
    
    7
    
    
    
    (120
    )
 (a)
    
    Cash interest payments in 2005 were $45 million (2004  $41 million; 2003  $38
million). The weighted-average interest rate on short-term borrowings in 2005 was 2.7
percent (2004  2.3 percent).
 15.
    
    Transactions with related partiesRevenues and expenses of the Company also include the results of transactions with Exxon Mobil
Corporation and affiliated companies (ExxonMobil) in the normal course of operations. These
were conducted on terms as favourable as they would have been with unrelated parties and
primarily consisted of the purchase and sale of crude oil and petroleum and chemical products, as
well as transportation, technical and engineering services. Transactions with ExxonMobil also
included amounts paid and received in connection with the Companys participation in a number
of natural resources activities conducted jointly in Canada. The Company has existing
agreements with affiliates of Exxon Mobil Corporation to provide computer and customer support
services to the Company and to share common business and operational support services that
allow the companies to consolidate duplicate work and systems. During 2005, the Company and an
affiliate of Exxon Mobil Corporation in Canada agreed to operate their respective Western
Canada production organizations as one single organization. Under the consolidation, the
Company will operate all Western Canada properties. There are no asset ownership changes. The
amounts paid or received have been reflected in the consolidated statement of income as shown below.
 millions of dollars
    
    2005
    
    
    2004
    
    
    2003Total revenues and other income
    
    
    1,357
    
    
    
    1,176
    
    
    
    950Purchases of crude oil and products
    
    
    3,599
    
    
    
    3,133
    
    
    
    2,464Total expenses
    
    
    175
    
    
    
    43
    
    
    
    14
 Accounts payable due to Exxon Mobil Corporation at December 31, 2005, with respect to the above
transactions, were $224 million (2004  $67 million).Certain charges from ExxonMobil have been capitalized; they are not material in the aggregate.The Company borrowed $818 million (Cdn) from Exxon Overseas Corporation under two long-term
loan agreements as presented in note 3. Interest on the loans in 2005
was $23 million (2004 
$20 million).During 2004, the Company extended loans of $32 million to Montreal Pipe Line Limited, in which
the Company has an equity interest, for financing of the equity Companys capital expenditure
programs and working capital requirements.
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16.
    
    Net payments/payables to governments
 millions of dollars
    
    2005
    
    
    2004
    
    
    2003Current income tax expense (note 4)
    
    
    1,361
    
    
    
    1,103
    
    
    
    610Federal excise tax
    
    
    1,278
    
    
    
    1,264
    
    
    
    1,254Property taxes included in expenses
    
    
    99
    
    
    
    85
    
    
    
    80Payroll and other taxes included in expenses
    
    
    52
    
    
    
    50
    
    
    
    52GST/QST/HST collected (a)
    
    
    2,703
    
    
    
    2,297
    
    
    
    2,015GST/QST/HST input tax credits (a)
    
    
    (2,344
    )
    
    
    (1,948
    )
    
    
    (1,705
    )Other consumer taxes collected for governments
    
    
    1,613
    
    
    
    1,670
    
    
    
    1,662Crown royalties
    
    
    620
    
    
    
    472
    
    
    
    418Total paid or payable to governments
    
    
    5,382
    
    
    
    4,993
    
    
    
    4,386Less investment tax credits and other receipts
    
    
    9
    
    
    
    14
    
    
    
    30Net paid or payable to governments
    
    
    5,373
    
    
    
    4,979
    
    
    
    4,356Net paid or payable to:Federal government
    
    
    2,736
    
    
    
    2,472
    
    
    
    2,061Provincial governments
    
    
    2,538
    
    
    
    2,422
    
    
    
    2,215Local governments
    
    
    99
    
    
    
    85
    
    
    
    80Net paid or payable to governments
    
    
    5,373
    
    
    
    4,979
    
    
    
    4,356
 (a)
    
    The abbreviations refer to the federal goods and services tax, the Quebec sales
tax and the federal/provincial harmonized sales tax, respectively.The HST is applicable in the provinces of Nova Scotia, New Brunswick and Newfoundland and
Labrador.
 F-23