##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-Q [ ü ] Quarterly Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2004 OR 
  Commission file number 0-12014 IMPERIAL OIL LIMITED  CANADA
    
    98-0017682(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)111 St. Clair Avenue West,Toronto, Ontario, Canada
    
    M5W 1K3(Address of principal executive offices)
    
    (Postal Code)
 Registrants telephone number, including area code: 1-800-567-3776   Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES
[ü] NO [  ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Exchange Act). YES [ü] NO [  ] The number of common shares outstanding, as of June 30, 2004, was 356,802,447. - 1 -




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##### 



IMPERIAL OIL LIMITED INDEX PAGEPART I - Financial InformationItem 1 - Financial Statements:Consolidated Statement of Earnings - Three months ended June 30, 2004 and 2003Six months ended June 30, 2004 and 2003
    
    
    3Consolidated
Statement of Retained Earnings - Three months ended June 30,
2004 and 2003Six months ended June 30, 2004 and 2003
    
    
    3Consolidated Statement of Cash Flows - Three months ended June 30, 2004 and 2003Six months ended June 30, 2004 and 2003
    
    
    4Consolidated Balance Sheet - As at June 30, 2004 and December 31, 2003
    
    
    5Notes to the Consolidated Financial Statements
    
    
    6Item 2 - Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3 - Quantitative and Qualitative Disclosures about Market Risk
    
    
    17Item 4 - Controls and Procedures
    
    
    17PART II - Other InformationItem 2 - Changes in Securities, Use of Proceeds and Issuer Purchases of Securities
    
    
    18Item 6 - Exhibits and Reports on Form 8-K
    
    
    18SIGNATURES
    
    
    19
 In this report all dollar amounts are expressed in Canadian dollars. This report should be read in
conjunction with the companys Annual Report on Form 10-Kfor the year ended December 31, 2003,
and Form 10-Qfor the quarter ended March 31, 2004. Statements in this report regarding future events or conditions are forward-looking statements.
Actual results could differ materially due to the impact of market conditions, changes in law or
governmental policy, changes in operating conditions and costs, changes in project schedules,
operating performance, demand for oil and gas, commercial negotiations or other technical and
economic factors. -2-




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##### 



IMPERIAL OIL LIMITED 
 PART I - FINANCIAL INFORMATION 
 Item 1. Financial Statements 
 CONSOLIDATED STATEMENT OF EARNINGS  Six monthsSecond quarter
    
    to June 30millions of dollars
    
    2004
    
    2003
    
    2004
    
    2003REVENUESOperating revenues
    
    
    5,439
    
    
    
    4,472
    
    
    
    10,495
    
    
    
    9,924Investment and other income (4)
    
    
    27
    
    
    
    38
    
    
    
    38
    
    
    
    64TOTAL REVENUES (2)
    
    
    5,466
    
    
    
    4,510
    
    
    
    10,533
    
    
    
    9,988EXPENSESExploration
    
    
    15
    
    
    
    4
    
    
    
    31
    
    
    
    11Purchases of crude oil and
products (3)
    
    
    3,174
    
    
    
    2,464
    
    
    
    6,007
    
    
    
    5,660Operating (3) (5)
    
    
    738
    
    
    
    703
    
    
    
    1,421
    
    
    
    1,442Selling and general (5)
    
    
    304
    
    
    
    292
    
    
    
    597
    
    
    
    613Federal excise tax
    
    
    314
    
    
    
    312
    
    
    
    618
    
    
    
    614Depreciation and depletion
    
    
    217
    
    
    
    177
    
    
    
    432
    
    
    
    357Financing costs (7)
    
    
    9
    
    
    
    (57
    )
    
    
    19
    
    
    
    (114
    )TOTAL EXPENSES
    
    
    4,771
    
    
    
    3,895
    
    
    
    9,125
    
    
    
    8,583EARNINGS BEFORE INCOME TAXES
    
    
    695
    
    
    
    615
    
    
    
    1,408
    
    
    
    1,405INCOME TAXES
    
    
    241
    
    
    
    101
    
    
    
    445
    
    
    
    353NET EARNINGS (2)
    
    
    454
    
    
    
    514
    
    
    
    963
    
    
    
    1,052PER-SHARE
INFORMATION - dollarsNet earnings - basic (8)
    
    
    1.26
    
    
    
    1.38
    
    
    
    2.67
    
    
    
    2.80Net earnings - diluted (8)
    
    
    1.26
    
    
    
    1.38
    
    
    
    2.66
    
    
    
    2.80Dividends
    
    
    0.22
    
    
    
    0.22
    
    
    
    0.44
    
    
    
    0.43
 
 CONSOLIDATED STATEMENT OF RETAINED EARNINGS  Six monthsSecond quarter
    
    to June 30millions of dollars
    
    2004
    
    2003
    
    2004
    
    2003RETAINED EARNINGS AT BEGINNING OF PERIOD
    
    
    4,214
    
    
    
    3,610
    
    
    
    3,919
    
    
    
    3,277Net earnings for the period
    
    
    454
    
    
    
    514
    
    
    
    963
    
    
    
    1,052Share purchases (8)
    
    
    (198
    )
    
    
    (151
    )
    
    
    (332
    )
    
    
    (277
    )Dividends
    
    
    (78
    )
    
    
    (83
    )
    
    
    (158
    )
    
    
    (162
    )RETAINED EARNINGS AT END OF PERIOD
    
    
    4,392
    
    
    
    3,890
    
    
    
    4,392
    
    
    
    3,890
 The notes to the financial statements are part of these financial statements.  -3-




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##### 



IMPERIAL OIL LIMITED 
 CONSOLIDATED STATEMENT OF CASH FLOWS  Six monthsinflow/(outflow)
    
    Second quarter
    
    to June 30millions of dollars
    
    2004
    
    2003
    
    2004
    
    2003OPERATING ACTIVITIESNet earnings
    
    
    454
    
    
    
    514
    
    
    
    963
    
    
    
    1,052Depreciation and depletion
    
    
    217
    
    
    
    177
    
    
    
    432
    
    
    
    357(Gain)/loss on asset sales, after tax
    
    
    (13
    )
    
    
    1
    
    
    
    (14
    )
    
    
    1Future income taxes and other
    
    
    (69
    )
    
    
    (84
    )
    
    
    (158
    )
    
    
    (242
    )Cash flow from earnings
    
    
    589
    
    
    
    608
    
    
    
    1,223
    
    
    
    1,168Accounts receivable
    
    
    (4
    )
    
    
    294
    
    
    
    (183
    )
    
    
    20Inventories and prepaids
    
    
    93
    
    
    
    (146
    )
    
    
    (202
    )
    
    
    (261
    )Income taxes payable
    
    
    104
    
    
    
    (22
    )
    
    
    143
    
    
    
    121Accounts payable and other
    
    
    (130
    )
    
    
    (62
    )
    
    
    61
    
    
    
    324Change in operating assets and liabilities
    
    
    63
    
    
    
    64
    
    
    
    (181
    )
    
    
    204CASH FROM OPERATING ACTIVITIES
    
    
    652
    
    
    
    672
    
    
    
    1,042
    
    
    
    1,372INVESTING ACTIVITIESAdditions to property, plant and equipment and intangibles
    
    
    (283
    )
    
    
    (380
    )
    
    
    (602
    )
    
    
    (725
    )Proceeds from asset sales
    
    
    53
    
    
    
    17
    
    
    
    66
    
    
    
    22CASH FROM (USED IN) INVESTING ACTIVITIES
    
    
    (230
    )
    
    
    (363
    )
    
    
    (536
    )
    
    
    (703
    )FINANCING ACTIVITIESShort-term
debt - net
    
    
    9
    
    
    
    
    
    
    
    9
    
    
    
    Long-term debt issued
    
    
    
    
    
    
    546
    
    
    
    
    
    
    
    546Repayment of long-term debt
    
    
    (8
    )
    
    
    (546
    )
    
    
    (8
    )
    
    
    (546
    )Issuance of common shares under stock option plan
    
    
    1
    
    
    
    
    
    
    
    7
    
    
    
    Common shares purchased (8)
    
    
    (216
    )
    
    
    (171
    )
    
    
    (363
    )
    
    
    (312
    )Dividends paid
    
    
    (80
    )
    
    
    (80
    )
    
    
    (160
    )
    
    
    (159
    )CASH FROM (USED IN) FINANCING ACTIVITIES
    
    
    (294
    )
    
    
    (251
    )
    
    
    (515
    )
    
    
    (471
    )INCREASE (DECREASE) IN CASH
    
    
    128
    
    
    
    58
    
    
    
    (9
    )
    
    
    198CASH AT BEGINNING OF PERIOD
    
    
    311
    
    
    
    906
    
    
    
    448
    
    
    
    766CASH AT END OF PERIOD
    
    
    439
    
    
    
    964
    
    
    
    439
    
    
    
    964
 The notes to the financial statements are part of these financial statements.  -4-




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##### 



IMPERIAL OIL LIMITED 
 CONSOLIDATED BALANCE SHEET  As at
    
    As atJune 30
    
    Dec. 31millions of dollars
    
    2004
    
    2003ASSETSCurrent assetsCash
    
    
    439
    
    
    
    448Accounts receivable
    
    
    1,498
    
    
    
    1,315Inventories of crude oil and products
    
    
    569
    
    
    
    407Materials, supplies and prepaid expenses
    
    
    145
    
    
    
    105Future income tax assets
    
    
    448
    
    
    
    353Total current assets
    
    
    3,099
    
    
    
    2,628Investments and other long-term assets
    
    
    232
    
    
    
    259Property, plant and equipment at cost
    
    
    19,774
    
    
    
    19,288less accumulated depreciation and
depletion
    
    
    (10,399
    )
    
    
    (10,070
    )Property, plant and equipment, net (9)
    
    
    9,375
    
    
    
    9,218Goodwill
    
    
    204
    
    
    
    204Other intangible assets
    
    
    51
    
    
    
    52TOTAL ASSETS
    
    
    12,961
    
    
    
    12,361LIABILITIESCurrent liabilitiesShort-term debt
    
    
    81
    
    
    
    72Accounts payable and accrued liabilities
    
    
    2,239
    
    
    
    2,222Income taxes payable
    
    
    738
    
    
    
    595Current portion of long-term debt
    
    
    743
    
    
    
    501Total current liabilities
    
    
    3,801
    
    
    
    3,390Long-term debt (10)
    
    
    625
    
    
    
    859Other long-term obligations (11)
    
    
    1,003
    
    
    
    972Future income tax liabilities
    
    
    1,305
    
    
    
    1,362TOTAL LIABILITIES
    
    
    6,734
    
    
    
    6,583SHAREHOLDERS EQUITYCommon shares (8)
    
    
    1,835
    
    
    
    1,859Earnings retained and used in the business
    
    
    4,392
    
    
    
    3,919TOTAL SHAREHOLDERS EQUITY
    
    
    6,227
    
    
    
    5,778TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    
    12,961
    
    
    
    12,361
 The notes to the financial statements are part of these financial statements.  -5-




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IMPERIAL OIL LIMITED 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  In the opinion of the management, the accompanying unaudited consolidated financial statements reflect all
known accruals and adjustments necessary for a fair presentation of the financial position of the company as at
June 30, 2003, and December 31, 2003, and the results of operations and changes in cash flows for the six
months ending June 30, 2004, and 2003. All such adjustments are of a normal recurring nature. The results for the six months ending June 30, 2004, are not necessarily indicative of the operations to be
expected for the full year. All figures are in millions of Canadian dollars unless otherwise stated.  1.
    
    Adjustments under United States GAAP The financial statements of the company have been prepared in accordance with generally accepted
accounting principles (GAAP) in Canada. These principles conform in all material respects to those in the
United States except for the following. Six monthsSecond quarter
    
    to June 30millions of dollars
    
    2004
    
    2003
    
    2004
    
    2003Earnings as shown in financial statements (2)(a)
    
    
    454
    
    
    
    514
    
    
    
    963
    
    
    
    1,052Impact of U.S. accounting principles (b)Capitalized interest
    
    
    3
    
    
    
    5
    
    
    
    7
    
    
    
    7Enacted tax rate difference
    
    
    47
    
    
    
    (59
    )
    
    
    
    
    
    
    (59
    )Net earnings under U.S. GAAP before
cumulative effect of accounting change (a)
    
    
    504
    
    
    
    460
    
    
    
    970
    
    
    
    1,000Cumulative effect of accounting change (a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4Net earnings under U.S. GAAP (a)
    
    
    504
    
    
    
    460
    
    
    
    970
    
    
    
    1,004Other comprehensive income, net of tax (b):Minimum pension liability adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Comprehensive income under U.S. GAAP
    
    
    504
    
    
    
    460
    
    
    
    970
    
    
    
    1,004
 -6-




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##### 



IMPERIAL OIL LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)  1.
    
    Adjustments under United States GAAP (continued) The adjustments, on the previous page, under United States GAAP result in changes to the Consolidated
Balance Sheet of the company as follows. As at
    
    As atJune 30, 2004
    
    December 31, 2003As
    
    U. S.
    
    As
    
    U. S.millions of dollars
    
    Reported
    
    GAAP
    
    Reported
    
    GAAPCurrent assets
    
    
    2,651
    
    
    
    2,651
    
    
    
    2,275
    
    
    
    2,275Future income tax assets
    
    
    448
    
    
    
    598
    
    
    
    353
    
    
    
    502Investments and other long-term assets
    
    
    232
    
    
    
    131
    
    
    
    259
    
    
    
    97Property,
plant and equipment - cost
    
    
    19,774
    
    
    
    19,932
    
    
    
    19,288
    
    
    
    19,433Property,
plant and equipment - accumulated depreciation and depletion
    
    
    (10,399
    )
    
    
    (10,498
    )
    
    
    (10,070
    )
    
    
    (10,166
    )Goodwill
    
    
    204
    
    
    
    204
    
    
    
    204
    
    
    
    204Other intangible assets - cost
    
    
    90
    
    
    
    179
    
    
    
    87
    
    
    
    176Other
intangible assets - accumulated depreciation and depletion
    
    
    (39
    )
    
    
    (39
    )
    
    
    (35
    )
    
    
    (35
    )TOTAL ASSETS
    
    
    12,961
    
    
    
    13,158
    
    
    
    12,361
    
    
    
    12,486Current liabilities
    
    
    3,058
    
    
    
    3,058
    
    
    
    2,889
    
    
    
    2,889Current portion of long-term debt
    
    
    743
    
    
    
    743
    
    
    
    501
    
    
    
    501Long-term debt
    
    
    625
    
    
    
    625
    
    
    
    859
    
    
    
    859Other long-term obligations
    
    
    1,003
    
    
    
    1,406
    
    
    
    972
    
    
    
    1,314Future income tax liabilities
    
    
    1,305
    
    
    
    1,325
    
    
    
    1,362
    
    
    
    1,378Shareholders equity
    
    
    6,227
    
    
    
    6,001
    
    
    
    5,778
    
    
    
    5,545TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    
    12,961
    
    
    
    13,158
    
    
    
    12,361
    
    
    
    12,486Shareholders Equity:Common shares at stated valueAt beginning
    
    
    1,859
    
    
    
    1,859
    
    
    
    1,939
    
    
    
    1,939Issuance of common shares under stock option plan
    
    
    7
    
    
    
    7
    
    
    
    Share purchases at stated value
    
    
    (31
    )
    
    
    (31
    )
    
    
    (80
    )
    
    
    (80
    )At end
    
    
    1,835
    
    
    
    1,835
    
    
    
    1,859
    
    
    
    1,859Retained earningsAt beginning
    
    
    3,919
    
    
    
    3,952
    
    
    
    3,277
    
    
    
    3,287Net earnings for the period
    
    
    963
    
    
    
    970
    
    
    
    1,682
    
    
    
    1,705Issuance of common shares under stock option plan
    
    
    (332
    )
    
    
    (332
    )
    
    
    (717
    )
    
    
    (717
    )Dividends
    
    
    (158
    )
    
    
    (158
    )
    
    
    (323
    )
    
    
    (323
    )At end
    
    
    4,392
    
    
    
    4,432
    
    
    
    3,919
    
    
    
    3,952Accumulated other comprehensive incomeAt beginning
    
    
    
    
    
    
    (266
    )
    
    
    
    
    
    
    (315
    )Other comprehensive income for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49At end
    
    
    
    
    
    
    (266
    )
    
    
    
    
    
    
    (266
    )Total shareholders equity
    
    
    6,227
    
    
    
    6,001
    
    
    
    5,778
    
    
    
    5,545
 -7-




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IMPERIAL OIL LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)  1.
    
    Adjustments under United States GAAP (continued) (a) Earnings per share - basic and diluted (dollars) Six monthsSecond quarter
    
    to June 302004
    
    2003
    
    2004
    
    2003Under accounting principles ofCanada - basic
    
    
    1.26
    
    
    
    1.38
    
    
    
    2.67
    
    
    
    2.80United StatesEarnings
before cumulative effect of accounting change - basic
    
    
    1.40
    
    
    
    1.23
    
    
    
    2.69
    
    
    
    2.66Cumulative
effect of accounting change - basic
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.01Net earnings
per share - basic
    
    
    1.40
    
    
    
    1.23
    
    
    
    2.69
    
    
    
    2.67Canada - diluted
    
    
    1.26
    
    
    
    1.38
    
    
    
    2.66
    
    
    
    2.80United StatesEarnings
before cumulative effect of accounting change - diluted
    
    
    1.40
    
    
    
    1.23
    
    
    
    2.69
    
    
    
    2.66Cumulative
effect of accounting change - diluted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.01Net earnings
per share - diluted
    
    
    1.40
    
    
    
    1.23
    
    
    
    2.69
    
    
    
    2.67Weighted average number of common shares outstanding (thousands of shares)
    
    
    358,772
    
    
    
    374,194
    
    
    
    360,236
    
    
    
    376,022
 (b) Impact of accounting principles

An explanation of these items is found on pages 17 to 20 of the companys annual report on
Form 10-K for the year ended December 31, 2003. (c) The company makes limited use of derivatives. There were no significant derivatives
outstanding at January 1 or June 30, 2004, nor were any significant derivatives undertaken
during the first six months of 2004. -8-




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##### 



IMPERIAL OIL LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)  2.
    
    Business segments Second quarter
    
    Resources
    
    Products
    
    Chemicalsmillions of dollars
    
    2004
    
    2003
    
    2004
    
    2003
    
    2004
    
    2003REVENUESOperating revenues (a)
    
    
    855
    
    
    
    792
    
    
    
    4,265
    
    
    
    3,433
    
    
    
    319
    
    
    
    247Intersegment sales (b)
    
    
    692
    
    
    
    573
    
    
    
    407
    
    
    
    327
    
    
    
    73
    
    
    
    62Investment and other
income
    
    
    18
    
    
    
    19
    
    
    
    7
    
    
    
    11
    
    
    
    
    
    
    
    TOTAL REVENUES
    
    
    1,565
    
    
    
    1,384
    
    
    
    4,679
    
    
    
    3,771
    
    
    
    392
    
    
    
    309EXPENSESExploration (c)
    
    
    15
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchases (b)
    
    
    490
    
    
    
    457
    
    
    
    3,585
    
    
    
    2,735
    
    
    
    271
    
    
    
    227Operating (b)
    
    
    404
    
    
    
    410
    
    
    
    286
    
    
    
    262
    
    
    
    48
    
    
    
    38Selling and general
    
    
    6
    
    
    
    3
    
    
    
    272
    
    
    
    261
    
    
    
    26
    
    
    
    28Federal excise tax
    
    
    
    
    
    
    
    
    
    
    314
    
    
    
    312
    
    
    
    
    
    
    
    Depreciation and depletion
    
    
    156
    
    
    
    122
    
    
    
    58
    
    
    
    49
    
    
    
    3
    
    
    
    6Financing costs
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    TOTAL EXPENSES
    
    
    1,071
    
    
    
    996
    
    
    
    4,516
    
    
    
    3,619
    
    
    
    348
    
    
    
    299EARNINGS BEFORE INCOME TAXES
    
    
    494
    
    
    
    388
    
    
    
    163
    
    
    
    152
    
    
    
    44
    
    
    
    10INCOME TAXES
    
    
    173
    
    
    
    37
    
    
    
    55
    
    
    
    50
    
    
    
    15
    
    
    
    3NET EARNINGS
    
    
    321
    
    
    
    351
    
    
    
    108
    
    
    
    102
    
    
    
    29
    
    
    
    7EXPORT SALES TO THE UNITED STATES
    
    
    335
    
    
    
    305
    
    
    
    221
    
    
    
    158
    
    
    
    185
    
    
    
    147CASH FLOW FROM EARNINGS
    
    
    439
    
    
    
    386
    
    
    
    123
    
    
    
    222
    
    
    
    30
    
    
    
    13CAPEX (c)
    
    
    249
    
    
    
    232
    
    
    
    54
    
    
    
    144
    
    
    
    2
    
    
    
    13
 Second quarter
    
    Corporate
    
    Consolidatedmillions of dollars
    
    2004
    
    2003
    
    2004
    
    2003REVENUESOperating revenues (a)
    
    
    
    
    
    
    
    
    
    
    5,439
    
    
    
    4,472Intersegment sales (b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Investment and other income
    
    
    2
    
    
    
    8
    
    
    
    27
    
    
    
    38TOTAL REVENUES
    
    
    2
    
    
    
    8
    
    
    
    5,466
    
    
    
    4,510EXPENSESExploration (c)
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    4Purchases (b)
    
    
    
    
    
    
    
    
    
    
    3,174
    
    
    
    2,464Operating (b)
    
    
    
    
    
    
    
    
    
    
    738
    
    
    
    703Selling and general
    
    
    
    
    
    
    
    
    
    
    304
    
    
    
    292Federal excise tax
    
    
    
    
    
    
    
    
    
    
    314
    
    
    
    312Depreciation and depletion
    
    
    
    
    
    
    
    
    
    
    217
    
    
    
    177Financing costs
    
    
    8
    
    
    
    (57
    )
    
    
    9
    
    
    
    (57
    )TOTAL EXPENSES
    
    
    8
    
    
    
    (57
    )
    
    
    4,771
    
    
    
    3,895EARNINGS BEFORE INCOME TAXES
    
    
    (6
    )
    
    
    65
    
    
    
    695
    
    
    
    615INCOME TAXES
    
    
    (2
    )
    
    
    11
    
    
    
    241
    
    
    
    101NET EARNINGS
    
    
    (4
    )
    
    
    54
    
    
    
    454
    
    
    
    514EXPORT SALES TO THE UNITED STATES
    
    
    
    
    
    
    
    
    
    
    741
    
    
    
    610CASH FLOW FROM EARNINGS
    
    
    (3
    )
    
    
    (13
    )
    
    
    589
    
    
    
    608CAPEX (c)
    
    
    
    
    
    
    
    
    
    
    305
    
    
    
    389
  (a)
    
    Includes crude sales made by Products in order to optimize refining operations.(b)
    
    Consolidated amounts exclude intersegment transactions, as follows: 2004
    
    2003Purchases
    
    
    1,172
    
    
    
    955Operating expenses
    
    
    
    
    
    
    7Total intersegment sales
    
    
    1,172
    
    
    
    962
  (c)
    
    Capital and exploration expenditures (CAPEX) include exploration expenses, additions
to property, plant, equipment and intangibles and additions to capital leases. -9-




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##### 



IMPERIAL OIL LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)  2.
    
    Business segments (continued) Six months to June 30
    
    Resources
    
    Products
    
    Chemicalsmillions of dollars
    
    2004
    
    2003
    
    2004
    
    2003
    
    2004
    
    2003REVENUESOperating revenues (a)
    
    
    1,745
    
    
    
    1,796
    
    
    
    8,188
    
    
    
    7,601
    
    
    
    562
    
    
    
    527Intersegment sales (b)
    
    
    1,331
    
    
    
    1,208
    
    
    
    776
    
    
    
    705
    
    
    
    138
    
    
    
    127Investment and other
income
    
    
    18
    
    
    
    31
    
    
    
    15
    
    
    
    19
    
    
    
    
    
    
    
    TOTAL REVENUES
    
    
    3,094
    
    
    
    3,035
    
    
    
    8,979
    
    
    
    8,325
    
    
    
    700
    
    
    
    654EXPENSESExploration (c)
    
    
    31
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchases (b)
    
    
    968
    
    
    
    1,042
    
    
    
    6,791
    
    
    
    6,165
    
    
    
    493
    
    
    
    486Operating (b)
    
    
    785
    
    
    
    833
    
    
    
    544
    
    
    
    538
    
    
    
    92
    
    
    
    78Selling and general
    
    
    10
    
    
    
    9
    
    
    
    541
    
    
    
    546
    
    
    
    46
    
    
    
    58Federal excise tax
    
    
    
    
    
    
    
    
    
    
    618
    
    
    
    614
    
    
    
    
    
    
    
    Depreciation and depletion
    
    
    309
    
    
    
    241
    
    
    
    117
    
    
    
    103
    
    
    
    6
    
    
    
    13Financing costs
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    TOTAL EXPENSES
    
    
    2,103
    
    
    
    2,137
    
    
    
    8,612
    
    
    
    7,966
    
    
    
    637
    
    
    
    635EARNINGS BEFORE INCOME TAXES
    
    
    991
    
    
    
    898
    
    
    
    367
    
    
    
    359
    
    
    
    63
    
    
    
    19INCOME TAXES
    
    
    304
    
    
    
    208
    
    
    
    124
    
    
    
    118
    
    
    
    22
    
    
    
    6NET EARNINGS
    
    
    687
    
    
    
    690
    
    
    
    243
    
    
    
    241
    
    
    
    41
    
    
    
    13EXPORT SALES TO THE UNITED STATES
    
    
    667
    
    
    
    657
    
    
    
    475
    
    
    
    406
    
    
    
    323
    
    
    
    295CASH FLOW FROM EARNINGS
    
    
    933
    
    
    
    811
    
    
    
    254
    
    
    
    355
    
    
    
    43
    
    
    
    17CAPEX (c)
    
    
    524
    
    
    
    459
    
    
    
    118
    
    
    
    264
    
    
    
    8
    
    
    
    21TOTAL ASSETS AS AT June 30 (b)
    
    
    6,666
    
    
    
    6,172
    
    
    
    5,721
    
    
    
    5,455
    
    
    
    495
    
    
    
    390
 Six months to June 30
    
    Corporate
    
    Consolidatedmillions of dollars
    
    2004
    
    2003
    
    2004
    
    2003REVENUESOperating revenues (a)
    
    
    
    
    
    
    
    
    
    
    10,495
    
    
    
    9,924Intersegment sales (b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Investment and other income
    
    
    5
    
    
    
    14
    
    
    
    38
    
    
    
    64TOTAL REVENUES
    
    
    5
    
    
    
    14
    
    
    
    10,533
    
    
    
    9,988EXPENSESExploration (c)
    
    
    
    
    
    
    
    
    
    
    31
    
    
    
    11Purchases (b)
    
    
    
    
    
    
    
    
    
    
    6,007
    
    
    
    5,660Operating (b)
    
    
    
    
    
    
    
    
    
    
    1,421
    
    
    
    1,442Selling and general
    
    
    
    
    
    
    
    
    
    
    597
    
    
    
    613Federal excise tax
    
    
    
    
    
    
    
    
    
    
    618
    
    
    
    614Depreciation and depletion
    
    
    
    
    
    
    
    
    
    
    432
    
    
    
    357Financing costs
    
    
    18
    
    
    
    (115
    )
    
    
    19
    
    
    
    (114
    )TOTAL EXPENSES
    
    
    18
    
    
    
    (115
    )
    
    
    9,125
    
    
    
    8,583EARNINGS BEFORE INCOME TAXES
    
    
    (13
    )
    
    
    129
    
    
    
    1,408
    
    
    
    1,405INCOME TAXES
    
    
    (5
    )
    
    
    21
    
    
    
    445
    
    
    
    353NET EARNINGS
    
    
    (8
    )
    
    
    108
    
    
    
    963
    
    
    
    1,052EXPORT SALES TO THE UNITED STATES
    
    
    
    
    
    
    
    
    
    
    1,465
    
    
    
    1,358CASH FLOW FROM EARNINGS
    
    
    (7
    )
    
    
    (15
    )
    
    
    1,223
    
    
    
    1,168CAPEX (c)
    
    
    
    
    
    
    
    
    
    
    650
    
    
    
    744TOTAL ASSETS AS AT June 30 (b)
    
    
    439
    
    
    
    964
    
    
    
    12,961
    
    
    
    12,664
  (a)
    
    Includes crude sales made by Products in order to optimize refining operations.(b)
    
    Consolidated amounts exclude intersegment transactions, as follows: 2004
    
    2003Purchases
    
    
    2,245
    
    
    
    2,033Operating expenses
    
    
    
    
    
    
    7Total intersegment sales
    
    
    2,245
    
    
    
    2,040Intersegment receivables and payables
    
    
    360
    
    
    
    317
  (c)
    
    Capital and exploration expenditures (CAPEX) include exploration expenses, additions
to property, plant, equipment and intangibles and additions to capital leases. -10-




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##### 



IMPERIAL OIL LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)  3.
    
    Reporting of fuel consumed in operations Beginning in 2004, fuel consumed in operations, previously included in purchases of crude oil
and products, is reclassified as operating expenses in the consolidated statement of earnings.
Prior period amounts have been reclassified for comparative purposes. This reclassification
has no impact on total expenses and net earnings or on the cash flow profile of the company.  4.
    
    Divestments Investment and other income includes gains and losses on asset sales as follows: Six monthsSecond quarter
    
    to June 30millions of dollars
    
    2004
    
    2003
    
    2004
    
    2003Proceeds from asset sales
    
    
    53
    
    
    
    17
    
    
    
    66
    
    
    
    22Book value of assets sold (a)
    
    
    35
    
    
    
    18
    
    
    
    47
    
    
    
    23Gain/(loss) on asset sales, before tax (b)
    
    
    18
    
    
    
    (1
    )
    
    
    19
    
    
    
    (1
    )Gain/(loss) on asset sales, after tax (b)
    
    
    13
    
    
    
    (1
    )
    
    
    14
    
    
    
    (1
    )
 (a) Assets sold did not include cash. (b) Second quarter 2004 included a gain of $16 million ($12 million after income taxes) from
the sale of the companys Mid Alberta Pipeline.  5.
    
    Employee retirement benefits The components of net benefit cost included in total expenses in the consolidated
statement of earnings are as follows: Six monthsSecond quarter
    
    to June 30millions of dollars
    
    2004
    
    2003
    
    2004
    
    2003Pension benefits:Current service cost
    
    
    19
    
    
    
    18
    
    
    
    39
    
    
    
    36Interest cost
    
    
    59
    
    
    
    55
    
    
    
    118
    
    
    
    110Expected return on plan assets
    
    
    (56
    )
    
    
    (45
    )
    
    
    (112
    )
    
    
    (90
    )Amortization of prior service cost
    
    
    7
    
    
    
    6
    
    
    
    14
    
    
    
    13Recognized actuarial loss
    
    
    17
    
    
    
    17
    
    
    
    34
    
    
    
    34Net benefit cost
    
    
    46
    
    
    
    51
    
    
    
    93
    
    
    
    103Other post-retirement benefits:Current service cost
    
    
    1
    
    
    
    2
    
    
    
    3
    
    
    
    3Interest cost
    
    
    6
    
    
    
    5
    
    
    
    12
    
    
    
    11Recognized actuarial loss
    
    
    1
    
    
    
    
    
    
    
    2
    
    
    
    1Net benefit cost
    
    
    8
    
    
    
    7
    
    
    
    17
    
    
    
    15
  6.
    
    Incentive compensation programs The company accounts for its incentive compensation programs, except for the incentive stock option
plan issued prior to January 1, 2003, by using the fair-value-based method. Under this method,
compensation expense related to the units of these programs is recorded in the consolidated statement
of earnings over the vesting period. The company accounts for its incentive stock option plan by using
the intrinsic-value-based method and does not recognize compensation expense on the issuance of stock
options because the exercise price is equal to the market value at the date of grant. If the
fair-value-based method of accounting had been adopted to account for the incentive stock option plan,
the impact on net earnings and earnings per share would have been negligible. The company purchased shares on the market to fully offset the dilutive effects from the exercise of
incentive stock options. The company does not plan to issue stock options in the future. -11-




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##### 



IMPERIAL OIL LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)  7.
    
    Financing costs Six monthsSecond quarter
    
    to June 30millions of dollars
    
    2004
    
    2003
    
    2004
    
    2003Debt related interest
    
    
    7
    
    
    
    8
    
    
    
    17
    
    
    
    16Other interest
    
    
    2
    
    
    
    1
    
    
    
    2
    
    
    
    2Total interest expense
    
    
    9
    
    
    
    9
    
    
    
    19
    
    
    
    18Foreign exchange expense (gain) on long-term debt
    
    
    
    
    
    
    (66
    )
    
    
    
    
    
    
    (132
    )Total financing costs
    
    
    9
    
    
    
    (57
    )
    
    
    19
    
    
    
    (114
    )
  8.
    
    Common shares As at
    
    As atJune 30
    
    Dec. 31thousands of shares
    
    2004
    
    2003Authorized
    
    
    450,000
    
    
    
    450,000Common shares outstanding
    
    
    356,802
    
    
    
    362,653
 In 1995 through 2003, the company purchased shares under nine 12-month normal course share
purchase programs, as well as an auction tender. On June 23, 2004, another 12-month normal course
program was implemented with an allowable purchase up to 17.9 million shares (five percent of the total
on June 21, 2004), less any shares purchased by the employee savings plan and company pension fund.
The results of these activities are as shown below: millions ofYear
    
    Shares
    
    Dollars1995 - 2002
    
    
    202.7
    
    
    
    5,1692003 - Second quarter
    
    
    3.8
    
    
    
    171Full year
    
    
    16.3
    
    
    
    7992004 - Second quarter
    
    
    3.5
    
    
    
    216Full year
    
    
    6.0
    
    
    
    363Cumulative purchases to date
    
    
    225.0
    
    
    
    6,331
 Exxon Mobil Corporations participation in the above maintained its ownership interest in Imperial
at 69.6 percent. The excess of the purchase cost over the stated value of shares purchased has been recorded as a
distribution of retained earnings. The following table provides the calculation of basic and diluted earnings per share: Six monthsSecond quarter
    
    to June 302004
    
    2003
    
    2004
    
    2003Net earnings (millions of dollars)
    
    
    454
    
    
    
    514
    
    
    
    963
    
    
    
    1,052(thousands of shares)Average number of common shares
outstanding, weighted monthly
    
    
    358,772
    
    
    
    374,194
    
    
    
    360,236
    
    
    
    376,022Plus: average number of shares issued
on assumed exercise of stock options
    
    
    718
    
    
    
    
    
    
    
    705
    
    
    
    Weighted average number of
diluted common shares
    
    
    359,490
    
    
    
    374,194
    
    
    
    360,941
    
    
    
    376,022Earnings per
share - basic (dollars)
    
    
    1.26
    
    
    
    1.38
    
    
    
    2.67
    
    
    
    2.80Earnings per
share - diluted (dollars)
    
    
    1.26
    
    
    
    1.38
    
    
    
    2.66
    
    
    
    2.80
 -12-




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##### 



IMPERIAL OIL LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)  9.
    
    Investment in oil, gas and mineral leases The companys net investment in oil, gas and mineral leases reported in property, plant and equipment
as of June 30, 2004 was $819 million, and as of December 31, 2003 was $935 million.  10.
    
    Long-term debt As at
    
    As atInterest
    
    June 30
    
    Dec. 31Issued
    
    Maturity date
    
    rate
    
    2004
    
    20032003
    
    $250 million due May 26, 2005 and$250 million due August 26, 2005 (a)
    
    Variable
    
    
    250
    
    
    
    5002003
    
    January 19, 2006
    
    Variable
    
    
    318
    
    
    
    318Long-term debt
    
    
    
    
    
    
    568
    
    
    
    818Capital leases
    
    
    
    
    
    
    57
    
    
    
    41Total long-term debt
    
    
    
    
    
    
    625
    
    
    
    859
 (a) The portion of variable-rate loan from Exxon Overseas Corporation of $250 million
due on May 26, 2005 has been reclassified to the current portion of long-term debt in
the balance sheet.  11.
    
    Other long-term obligations As at
    
    As atJune 30
    
    Dec. 31millions of dollars
    
    2004
    
    2003Employee retirement benefits
    
    
    523
    
    
    
    505Asset retirement obligations and other environmental liabilities (a)
    
    
    396
    
    
    
    393Other obligations
    
    
    84
    
    
    
    74Total other long-term obligations
    
    
    1,003
    
    
    
    972
 (a) Total asset retirement obligations and other environmental liabilities also include $69 million in current
liabilities ($69 million at December 31, 2003). -13-




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##### 



IMPERIAL OIL LIMITED 
  Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations. OPERATING RESULTS The companys net earnings for the second quarter were $454 million or $1.26 a
share on a diluted basis, compared with $514 million or $1.38 a share for the
same quarter of 2003. Net earnings for the first six months of 2004 were $963
million or $2.66 a share on a diluted basis, versus $1,052 million or $2.80 a
share for the first half of 2003. Earnings in the second quarter were positively impacted by higher realizations
for crude oil and stronger refining and petrochemical margins partly offset by
lower marketing margins. Operating and volume performance was strong despite
lower production at Cold Lake due to the cyclic nature of the operation.
However, those factors were more than offset by the negative earnings impact
from the absence of tax rate reductions and settlement of tax matters totalling
about $110 million and favourable foreign exchange effects on the companys
U.S.-dollar denominated debt of about $55 million, all reported in the second
quarter of 2003. The higher Canadian dollar continued to have a negative
earnings impact of about $25 million versus the same quarter last year. For the first six months, higher realizations for crude oil, higher volumes of
crude oil and natural gas, and stronger refining and petrochemical margins
contributed positively to earnings, partly offset by lower marketing margins.
However, when compared to the first six months of 2003, more than offsetting
these factors were the combined negative effects of a higher Canadian dollar on
resource and product prices of about $130 million, the absence of favourable
foreign exchange effects on the companys U.S.-dollar denominated debt of about
$110 million, and lower benefits from tax matters of about $80 million. Total revenues were $5,466 million in the second quarter and $10,533 million in
the first half of 2004, versus $4,510 million and $9,988 million in the same
periods last year. Natural resources During the second quarter of 2004, net earnings from natural resources were
$321 million compared with $351 million in the same period last year. Net
earnings for the first six months were $687 million versus $690 million during
the same period last year. For both these periods, the positive earnings
effects of higher realizations for crude oil and higher Syncrude, natural gas
liquids (NGLs) and natural gas volumes in 2004 were partly offset by lower Cold
Lake bitumen production and higher expenses from stock-related compensation
programs. However, those factors were more than offset by lower benefits from
tax matters and the negative effects of a higher Canadian dollar. While U.S.-dollar world oil prices in both the second quarter and first six
months of 2004 were sharply higher than the same periods of 2003, increases in
the companys Canadian dollar realizations for conventional crude oil and Cold
Lake bitumen were dampened by the effects of a higher Canadian dollar. Brent
crude oil prices in U.S. dollars averaged 36 percent higher in the second
quarter and 17 percent higher for the first six months, compared with the same
periods last year. Realizations for the companys conventional crude oil in the
second quarter averaged 23 percent higher, and for the first half of the year
four percent higher than the realizations of the same periods last year. Cold
Lake bitumen realizations in the second quarter averaged about 15 percent
higher, and for the first six months about three percent lower than the
realizations of the same periods in 2003. Realizations for natural gas averaged $6.87 a thousand cubic feet in the second
quarter, compared with $6.80 a thousand cubic feet in the same quarter last
year. For the first six-month period, realizations for natural gas averaged
$6.72 a thousand cubic feet in 2004, down from $7.45 a thousand cubic feet in
the same period of 2003. -14-




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##### 



IMPERIAL OIL LIMITED  Item 2.
    Managements Discussion and Analysis of Financial Condition
and Results of Operations. (continued .....) Total gross production of crude oil and NGLs was 251 thousand barrels a day,
down from 262 thousand barrels a day in the second quarter of 2003. For the
first six months of the year, total gross production of crude oil and NGLs
averaged 256 thousand barrels a day, compared with 252 thousand barrels a day
in the same period of 2003. Gross production of Cold Lake bitumen averaged 118 thousand barrels a day
during the second quarter, down from 137 thousand barrels a day in the same
quarter last year. For the first six-month period, gross production was 119
thousand barrels a day this year, versus 129 thousand barrels a day in the same
period of 2003. Lower production was due to the cyclic nature of production at
Cold Lake. The companys share of Syncrudes gross production was 57 thousand barrels a
day in the second quarter compared with 53 thousand barrels a day during the
same period a year ago. During the first six-month period, the companys share
of gross production from Syncrude averaged 60 thousand barrels a day in 2004,
up from 50 thousand barrels a day in the same period of 2003. In the second quarter and first six months of this year, gross production of
conventional crude oil averaged 44 thousand barrels a day, compared with 47
thousand barrels a day during the corresponding periods in 2003. Gross production of NGLs available for sale was 32 thousand barrels a day in
the second quarter, up from 25 thousand barrels a day in the same quarter last
year. During the first half of 2004, gross production of NGLs available for
sale averaged 33 thousand barrels a day, compared with 26 thousand barrels a
day in the same period of 2003. Gross production of natural gas during the second quarter of 2004 increased to
535 million cubic feet a day from 489 million cubic feet a day in the same
period last year. In the first half of the year, gross production was 558
million cubic feet a day, up from 488 million cubic feet a day in the first six
months of 2003. The increased natural gas and NGLs volumes were mainly due to higher production
from the new facilities at Wizard Lake in Alberta, which were completed in the
third quarter of 2003. In April this year, the company, on behalf of the Mackenzie Gas Project
participants, completed geotechnical fieldwork planned for the past winter
session. During the same month, regulatory agencies responsible for the review
of northern natural gas development issued a news release indicating they will
be ready to receive applications on the Mackenzie Gas Project this summer. In
June this year, the Inuvialuit Game Council, the Mackenzie Valley Environmental
Impact Review Board and the Canadian Environmental Assessment Agency issued a
draft agreement for an environmental impact review of the Mackenzie Gas Project
and the draft terms of reference for the environmental impact statement for the
Mackenzie Gas Project, for public comment. On the East Coast, nine of 13 Nova Scotia exploration licenses expired on June
30, 2004, and $7 million was charged to second quarter earnings. In June this year, the company sold its Mid Alberta Pipeline for a gain of $12
million. -15-




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IMPERIAL OIL LIMITED  Item 2.
    Managements Discussion and Analysis of Financial Condition
and Results of Operations. (continued .....) Petroleum products Net earnings from petroleum products were $108 million in the second quarter,
up from $102 million in the same quarter of 2003. Earnings increased primarily
because of improved international refining margins, and were partly offset by
lower marketing margins, higher scheduled refinery turnaround impact of about
$30 million and higher expenses from stock-related compensation programs.
Six-month net earnings were $243 million, up from $241 million in the same
period of 2003. Higher earnings were primarily due to improved international
refining margins for petroleum products partly offset by lower marketing
margins. Sales volumes of petroleum products were higher both in the second
quarter and the first six months. The planned maintenance activities at the companys refineries were completed
in the second quarter on schedule and without a safety incident. Chemicals Net earnings from chemical operations were $29 million in the second quarter,
up from $7 million in the same quarter last year because of improved
polyethylene and other chemical product margins and increased sales. Six-month
net earnings were $41 million, compared with $13 million for the same period in
2003. Improved margins on sales of polyethylene and other chemical products
contributed primarily to the increase. Corporate and other Net earnings from corporate and other operations were negative $4 million in
the second quarter compared with positive $54 million in the same period of
2003. Six-month net earnings were negative $8 million versus positive $108
million last year. Lower earnings were due to the absence of the favourable
foreign exchange effects on the companys U.S.-dollar-denominated debt, which
was replaced with Canadian-dollar denominated debt in June and July of 2003. LIQUIDITY AND CAPITAL RESOURCES Cash flow from operating activities was $652 million during the second quarter
of 2004, down slightly from $672 million in the same period last year.
Year-to-date cash flow from operating activities was $1,042 million, versus
$1,372 million during the first half of 2003. The decreased cash inflow was
mainly due to the impact of higher commodity prices on working capital. Capital and exploration expenditures were $305 million in the second quarter,
down from $389 million during the same quarter of 2003, and $650 million in the
first half of 2004, versus $744 million in the same period a year ago. For the
resources segment, capital and exploration expenditures were used to invest in
long-term growth opportunities in the oil sands and Mackenzie gas. The
petroleum products segment spent its capital expenditures mainly on projects to
reduce the sulphur content of diesel fuel and to improve operating efficiency. On June 21, 2004, the company announced that it had received final acceptance
from the Toronto Stock Exchange for a new normal course issuer bid to continue
its existing share-purchase program that expired on June 22, 2004. The new
share-purchase program enables the company to repurchase up to 17.9 million
shares during the period from June 23, 2004, to June 22, 2005. During the first
half of 2004, the company repurchased about six million shares for $363
million. Cash dividends of $160 million were paid in the first six months of 2004,
compared with dividends of $159 million paid in the same period of 2003.
Per-share dividends have been increased since the second quarter of 2003,
resulting in higher dividends paid. This was partly offset by the effects of
the companys share-purchase program. -16-




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IMPERIAL OIL LIMITED  Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations. (continued .....) The above factors led to a slight decrease in the companys balance of cash and
marketable securities to $439 million at June 30, 2004, from $448 million at
the end of 2003. On May 6, 2004, the company filed a final short form shelf prospectus in Canada
in connection with the issuance of Medium Term Notes over the 25-month period
that the shelf prospectus remains valid. The unsecured notes will be issued
from time to time at the discretion of the company in an aggregate amount not
to exceed $1 billion. There have been no notes issued under this shelf
prospectus. 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk. Information about market risks for the six months ended June 30, 2004 does not
differ materially from that discussed on page 29 in the companys annual report
on Form 10-Kfor the year ended December 31, 2003 and Form 10-Qfor the quarter
ended March 31, 2004, except for the following sensitivity:  Earnings
sensitivity (a)millions of dollars after taxEight
cents decrease (increase) in the value of theCanadian dollar versus the U.S. dollar  
                 
                 
                 
                 
                 
                 
                 
                 +(-)  380
 The sensitivity to changes in the Canadian dollar versus the U.S. dollar
increased from 2003 year-end and the first quarter of 2004 by about $5 million
(after tax) for each one U.S.-cent difference due primarily to higher refining
margins at the end of the second quarter. (a) The amount quoted to illustrate the impact of the sensitivity represents a
change of about 10 percent in the value of the commodity at the end of the
second quarter 2004. The sensitivity calculation shows the impact on annual
earnings that results from a change in one factor, after tax and royalties and
holding all other factors constant. While the sensitivity is applicable under
current conditions, it may not apply proportionately to larger fluctuations. 
 Item 4. Controls and Procedures. The companys principal executive officer and principal financial officer have
evaluated the companys disclosure controls and procedures as of the end of the
period covered by this report. Based on that evaluation, these officers have
concluded that, as of the end of the period covered by this quarterly report,
the companys disclosure controls and procedures are effective for the purpose
of ensuring that information required to be disclosed by the company in the
reports that it files or submits under the Securities Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Securities and Exchange Commissions rules and forms. There has not been any change in the companys internal control over financial
reporting during the last fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the companys internal control over
financial reporting. -17-




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IMPERIAL OIL LIMITED 
 PART II - OTHER INFORMATION 
 Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities. During the period April 1, 2004 to June 30, 2004, the company issued 31,600
common shares for $46.50 per share as a result of the exercise of stock
options by the holders of the stock options, who are all employees or former
employees of the company. The sales of 30,250 of those common shares were
outside the U.S.A. and were not registered under the Securities Actin
reliance on Regulation S thereunder. Issuer Purchases of Equity Securities (1) (c) Total
    
    (d) MaximumNumber of
    
    Number (orShares (or
    
    ApproximateUnits)
    
    Dollar Value) of(a) Total
    
    
    
    
    
    Purchased as
    
    Shares (or Units)Number of
    
    (b) Average
    
    Part of Publicly
    
    that may yet beShares (or
    
    Price Paid
    
    Announced
    
    PurchasedUnits)
    
    per Share
    
    Plans or
    
    under the PlansPeriod
    
    Purchased
    
    (or Unit)
    
    Programs
    
    or ProgramsApril 1 to
April 30, 2004
    
    
    763,158
    
    
    $
    60.46
    
    
    
    763,158
    
    
    
    5,325,958May 1 to
May 31, 2004
    
    
    1,341,251
    
    
    $
    61.49
    
    
    
    1,341,251
    
    
    
    3,944,622June 1 to
June 30, 2004
    
    
    1,421,434
    
    
    $
    61.30
    
    
    
    1,421,434
    
    
    
    17,495,591Total
    
    
    3,525,843
    
    
    
    
    
    
    
    3,525,843
 (1) On June 19, 2003, the company announced by press release that it
had received final approval from the Toronto Stock Exchange for
another normal course issuer bid to continue its share repurchase
program. That enabled the company to repurchase up to a maximum of
18,632,218 common shares, including common shares purchased for the
companys employee savings plan and employee retirement plan, during
the period June 23, 2003 to June 22, 2004. That program ended on June
22, 2004. On June 21, 2004, the company announced by press release that it had
received final approval from the Toronto Stock Exchange for a new
normal course issuer bid to continue its share repurchase program.
The new program enables the company to repurchase up to a maximum of
17,864,398 common shares, including common shares purchased for the
companys employee savings plan and employee retirement plan during
the period June 23, 2004 to June 22, 2005. If not previously
terminated, the program will end on June 22, 2005. 
 Item 6. Exhibits and Reports on Form 8-K. (a) Certifications by each of the principal executive officer and principal
financial officer of the company pursuant to Rule 13a-14(a) are Exhibits
(31.1) and (31.2). Certifications by each of the chief executive officer and the chief financial
officer of the company pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350
are Exhibits (32.1) and (32.2). -18-




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IMPERIAL OIL LIMITED PART II - OTHER INFORMATION (b) Reports on Form 8-K. Except for a report on Form 8-K dated April 26, 2004, no other reports on
Form 8-K have been filed during the quarter for which this report is filed. By the report on Form 8-K dated April 26, 2004, the company submitted to the
Securities and Exchange Commission a press release and a speech by the
companys chairman, president and chief executive officer at the companys
annual meeting of shareholders, which disclosed information relating to the
companys financial condition and results of operations for the fiscal
quarter ended March 31, 2004. 
 SIGNATURES Pursuant to the requirements of the Securities Exchange Actof 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. IMPERIAL OIL LIMITED
(Registrant)Date: August 4, 2004
    /s/  Paul A. Smith(Signature)Paul A. Smith
Controller and Senior Vice-President,
Finance and Administration
(Principal Accounting Officer) Date: August 4, 2004
    /s/  Brian W. Livingston(Signature)Brian W. Livingston
Vice-President, General Counsel and
Corporate Secretary -19-




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IMPERIAL OIL LIMITED INDEX TO EXHIBITS Exhibit No.
    
    Description(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