##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-Q þ Quarterly Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2005 OR o Transition Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from _______ to _______ Commission file number 0-12014 IMPERIAL OIL LIMITED  CANADA
    
    98-0017682(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
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 þ NO o Indicate by check mark
whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES þ NO o The number of common shares outstanding, as of March 31, 2005, was 345,887,125.    -1-




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IMPERIAL OIL LIMITED INDEX PAGEPART I - Financial InformationItem 1 - Financial Statements.Consolidated Statement of Income -
Three months ended March 31, 2005 and 2004
    
    
    3Consolidated Statement of Cash Flows -
Three months ended March 31, 2005 and 2004
    
    
    4Consolidated Balance Sheet -
As at March 31, 2005 and December 31, 2004
    
    
    5Notes to the Consolidated Financial Statements
    
    
    6Item 2 - Managements Discussion and Analysis of Financial
Condition and Results of Operations.
    
    
    12Item 3 - Quantitative and Qualitative Disclosures About Market Risk.
    
    
    15Item 4 - Controls and Procedures.
    
    
    15PART II - Other InformationItem 2 - Unregistered Sales of Equity Securities and Use of Proceeds.
    
    
    16Item 4 - Submission of Matters to a Vote of Security Holders.
    
    
    17Item 6 - Exhibits.
    
    
    17SIGNATURES
    
    
    18
   In this report all dollar amounts are expressed in Canadian dollars unless otherwise stated. This
report should be read in conjunction with the companys Annual Report on Form 10-Kfor the year
ended December 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 INCOME
(U.S. GAAP, unaudited) Three monthsto March 31millions of Canadian dollars
    
    2005
    
    
    2004REVENUESOperating revenues (a)(b)(2)
    
    
    5,940
    
    
    
    5,056Investment and other income (4)
    
    
    18
    
    
    
    11TOTAL REVENUES
    
    
    5,958
    
    
    
    5,067EXPENSESExploration
    
    
    21
    
    
    
    16Purchases of crude oil and products (b)(2)
    
    
    3,639
    
    
    
    2,833Production and manufacturing (5)
    
    
    817
    
    
    
    683Selling and general (5)(6)
    
    
    346
    
    
    
    293Federal excise tax (a)
    
    
    307
    
    
    
    304Depreciation and depletion
    
    
    238
    
    
    
    216Financing costs (7)
    
    
    2
    
    
    
    2TOTAL EXPENSES
    
    
    5,370
    
    
    
    4,347INCOME BEFORE INCOME TAXES
    
    
    588
    
    
    
    720INCOME TAXES
    
    
    195
    
    
    
    254NET INCOME (3)
    
    
    393
    
    
    
    466NET INCOME PER COMMON SHARE  BASIC (dollars) (9)
    
    
    1.13
    
    
    
    1.29NET INCOME PER COMMON SHARE  DILUTED (dollars) (9)
    
    
    1.12
    
    
    
    1.29DIVIDENDS PER COMMON SHARE
    
    
    0.22
    
    
    
    0.22(a) Federal excise tax included in operating revenues
    
    
    307
    
    
    
    304(b) Amounts included in operating revenues for purchase / sale
contracts with the same counterparty (associated costs are
included in purchases of crude oil and products)
    
    
    917
    
    
    
    805
 The notes to the financial statements are part of these financial statements. Certain figures for the prior year
have been reclassified in the financial statements to conform with the current years presentation. -3-




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IMPERIAL OIL LIMITED CONSOLIDATED STATEMENT OF CASH FLOWS
(U.S. GAAP, unaudited)
inflow/(outflow) Three monthsto March 31millions of Canadian dollars
    
    2005
    
    
    2004OPERATING ACTIVITIESNet income
    
    
    393
    
    
    
    466Adjustment for non-cash items:Depreciation and depletion
    
    
    238
    
    
    
    216(Gain)/loss on asset sales, after income tax (4)
    
    
    (2
    )
    
    
    (1
    )Deferred income taxes and other
    
    
    (63
    )
    
    
    (39
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (209
    )
    
    
    (179
    )Inventories and prepaids
    
    
    (324
    )
    
    
    (295
    )Income taxes payable
    
    
    (312
    )
    
    
    39Accounts payable
    
    
    502
    
    
    
    151All other items  net (a)
    
    
    (280
    )
    
    
    40CASH FROM (USED IN) OPERATING ACTIVITIES
    
    
    (57
    )
    
    
    398INVESTING ACTIVITIESAdditions to property, plant and equipment and intangibles
    
    
    (304
    )
    
    
    (327
    )Proceeds from asset sales
    
    
    7
    
    
    
    13CASH FROM (USED IN) INVESTING ACTIVITIES
    
    
    (297
    )
    
    
    (314
    )FINANCING ACTIVITIESRepayment of long-term debt
    
    
    (1
    )
    
    
    Issuance of common shares under stock option plan
    
    
    13
    
    
    
    6Common shares purchased (9)
    
    
    (323
    )
    
    
    (147
    )Dividends paid
    
    
    (77
    )
    
    
    (80
    )CASH FROM (USED IN) FINANCING ACTIVITIES
    
    
    (388
    )
    
    
    (221
    )INCREASE (DECREASE) IN CASH
    
    
    (742
    )
    
    
    (137
    )CASH AT BEGINNING OF PERIOD
    
    
    1,279
    
    
    
    448CASH AT END OF PERIOD
    
    
    537
    
    
    
    311
  (a)

Includes contribution to registered pension plan of $339 million (2004  $2 million). The notes to the financial statements are part of these financial statements. Certain figures for the prior year
have been reclassified in the financial statements to conform with the current years presentation. -4-




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IMPERIAL OIL LIMITED CONSOLIDATED BALANCE SHEET
(U.S. GAAP, unaudited) As at
    
    
    As atMar. 31
    
    
    Dec. 31millions of Canadian dollars
    
    2005
    
    
    2004ASSETSCurrent assetsCash
    
    
    537
    
    
    
    1,279Accounts receivable, less estimated doubtful accounts
    
    
    1,835
    
    
    
    1,626Inventories of crude oil and products
    
    
    669
    
    
    
    432Materials, supplies and prepaid expenses
    
    
    198
    
    
    
    112Deferred income tax assets
    
    
    576
    
    
    
    448Total current assets
    
    
    3,815
    
    
    
    3,897Investments and other long-term assets
    
    
    127
    
    
    
    130Property, plant and equipment at cost,
    
    
    20,784
    
    
    
    20,503less accumulated depreciation and depletion
    
    
    (11,075
    )
    
    
    (10,856
    )Property, plant and equipment (net)
    
    
    9,709
    
    
    
    9,647Goodwill
    
    
    204
    
    
    
    204Other intangible assets, net
    
    
    149
    
    
    
    149TOTAL ASSETS
    
    
    14,004
    
    
    
    14,027LIABILITIESCurrent liabilitiesShort-term debt
    
    
    81
    
    
    
    81Accounts payable and accrued liabilities
    
    
    3,025
    
    
    
    2,525Income taxes payable
    
    
    745
    
    
    
    1,057Current portion of long-term debt
    
    
    1,313
    
    
    
    995Total current liabilities
    
    
    5,164
    
    
    
    4,658Long-term debt (8)
    
    
    48
    
    
    
    367Other long-term obligations (10)
    
    
    1,241
    
    
    
    1,525Deferred income tax liabilities
    
    
    1,222
    
    
    
    1,155TOTAL LIABILITIES
    
    
    7,675
    
    
    
    7,705SHAREHOLDERS EQUITYCommon shares at stated value (9)
    
    
    1,795
    
    
    
    1,801Earnings reinvested (11)
    
    
    4,902
    
    
    
    4,889Accumulated other nonowner changes in equity (12)
    
    
    (368
    )
    
    
    (368
    )TOTAL SHAREHOLDERS EQUITY
    
    
    6,329
    
    
    
    6,322TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    
    14,004
    
    
    
    14,027
 The notes to the financial statements are part of these financial statements. Certain figures for the prior year
have been reclassified in the financial statements to conform with the current years presentation. -5-




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IMPERIAL OIL LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)   1. Basis of financial statement preparation These unaudited consolidated financial statements should be read in the context of the consolidated
financial statements and notes thereto filed with the Securities and Exchange Commission in the
companys 2004 Annual Report on Form 10-K. In the opinion of the management, the information
furnished herein reflects all known accruals and adjustments necessary for a fair presentation of
the financial position of the company as at March 31, 2005, and December 31, 2004, and the results
of operations and changes in cash flows for the three months ending March 31, 2005, and 2004. All
such adjustments are of a normal recurring nature. The companys exploration and production
activities are accounted for under the successful effort method. The results for the three months ending March 31, 2005, 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. 2. Accounting for purchases and sales of inventory with the same counterparty At its November 2004 meeting, the Emerging Issues Task Force (EITF) began discussion of Issue No.
04-13, Accounting for Purchases and Sales of Inventory with the Same Counterparty. This issue
addresses the question of when it is appropriate to measure purchases and sales of inventory at
fair value and record them in cost of sales and revenues and when they should be recorded as
exchanges measured at the book value of the item sold. The EITF did not reach consensus on this
issue, but requested the FASB staff to further explore the alternative views. The issue is expected
to be addressed at a future EITF meeting. The company records certain crude oil, natural gas, petroleum product and chemical purchases and
sales of inventory entered into contemporaneously with the same counterparty as cost of sales and
revenues, measured at fair value as agreed upon by a willing buyer and a willing seller. These
transactions occur under contractual arrangements that establish the agreement terms either
jointly, in a single contract, or separately, in individual contracts. This accounting treatment is
consistent with long-term, predominant industry practice based on the companys knowledge of the
industry (although the company understands that some companies in the oil and gas industry may be
accounting for these transactions differently as nonmonetary exchanges). Should the EITF reach a
consensus on the issue requiring these transactions to be recorded as exchanges measured at book
value, the companys reported amounts in operating revenues and purchases of crude oil and
products on the consolidated statement of income would be lower by associated amounts with no
impact on net income. All operating segments would be impacted by this change, but the largest
effects are in the petroleum products segment. In its 2004 Form 10-K, the company disclosed that it would provide estimates of these amounts in
the second quarter of 2005 at the completion of a special effort to accumulate the information.
This special effort was needed because it has not been necessary to identify these monetary
transactions separately from the other monetary purchases and monetary sales. This effort has been
completed and the purchase/sale amounts included in revenue for 2004, 2003 and 2002 are shown below
along with total operating revenues to provide context. millions of dollars
    
    2004
    
    
    2003
    
    
    2002Operating revenues
    
    
    22,408
    
    
    
    19,094
    
    
    
    16,890Amounts included in operating revenues for purchase/sale contracts
with the same counterparty (a)
    
    
    3,584
    
    
    
    2,851
    
    
    
    2,431Percent of operating revenues
    
    
    16
    %
    
    
    15
    %
    
    
    14
    %
   (a)

Associated costs are in purchases of crude oil and products The companys net income would not be impacted if the EITF reached a consensus on use of an
alternative accounting approach and the company was required to reduce operating revenues and
purchases of crude oil and products by the above amounts. -6-




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IMPERIAL OIL LIMITED NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued...)
(unaudited)  3. Business segments Natural
    
    
    PetroleumThree months to March 31
    
    Resources
    
    
    Products
    
    
    Chemicalsmillions of dollars
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004REVENUESExternal sales (a)
    
    
    999
    
    
    
    890
    
    
    
    4,599
    
    
    
    3,923
    
    
    
    342
    
    
    
    243Intersegment sales (b)
    
    
    700
    
    
    
    639
    
    
    
    596
    
    
    
    369
    
    
    
    78
    
    
    
    65Investment and other income
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    8
    
    
    
    
    
    
    
    TOTAL REVENUES
    
    
    1,699
    
    
    
    1,529
    
    
    
    5,206
    
    
    
    4,300
    
    
    
    420
    
    
    
    308EXPENSESExploration (c)
    
    
    21
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchases (b)
    
    
    647
    
    
    
    478
    
    
    
    4,083
    
    
    
    3,206
    
    
    
    283
    
    
    
    222Production and manufacturing
    
    
    472
    
    
    
    381
    
    
    
    296
    
    
    
    258
    
    
    
    49
    
    
    
    44Selling and general
    
    
    20
    
    
    
    4
    
    
    
    294
    
    
    
    269
    
    
    
    32
    
    
    
    20Federal excise tax
    
    
    
    
    
    
    
    
    
    
    307
    
    
    
    304
    
    
    
    
    
    
    
    Depreciation and depletion
    
    
    176
    
    
    
    153
    
    
    
    59
    
    
    
    59
    
    
    
    3
    
    
    
    3Financing costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    TOTAL EXPENSES
    
    
    1,336
    
    
    
    1,032
    
    
    
    5,039
    
    
    
    4,096
    
    
    
    367
    
    
    
    289INCOME BEFORE INCOME TAXES
    
    
    363
    
    
    
    497
    
    
    
    167
    
    
    
    204
    
    
    
    53
    
    
    
    19INCOME TAXES
    
    
    121
    
    
    
    178
    
    
    
    55
    
    
    
    69
    
    
    
    19
    
    
    
    7NET INCOME
    
    
    242
    
    
    
    319
    
    
    
    112
    
    
    
    135
    
    
    
    34
    
    
    
    12Export sales to the United States
    
    
    337
    
    
    
    332
    
    
    
    166
    
    
    
    254
    
    
    
    198
    
    
    
    138Cash flows from (used in) operating activities
    
    
    17
    
    
    
    395
    
    
    
    (98
    )
    
    
    (4
    )
    
    
    25
    
    
    
    3CAPEX (c)
    
    
    243
    
    
    
    275
    
    
    
    70
    
    
    
    64
    
    
    
    3
    
    
    
    6Total assets as at March 31 (b)
    
    
    7,002
    
    
    
    6,559
    
    
    
    6,253
    
    
    
    5,783
    
    
    
    504
    
    
    
    486
 CorporateThree months to March 31
    
    and Other
    
    
    Consolidatedmillions of dollars
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004REVENUESExternal sales (a)
    
    
    
    
    
    
    
    
    
    
    5,940
    
    
    
    5,056Intersegment sales (b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Investment and other income
    
    
    7
    
    
    
    3
    
    
    
    18
    
    
    
    11TOTAL REVENUES
    
    
    7
    
    
    
    3
    
    
    
    5,958
    
    
    
    5,067EXPENSESExploration (c)
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    16Purchases (b)
    
    
    
    
    
    
    
    
    
    
    3,639
    
    
    
    2,833Production and manufacturing
    
    
    
    
    
    
    
    
    
    
    817
    
    
    
    683Selling and general
    
    
    
    
    
    
    
    
    
    
    346
    
    
    
    293Federal excise tax
    
    
    
    
    
    
    
    
    
    
    307
    
    
    
    304Depreciation and depletion
    
    
    
    
    
    
    1
    
    
    
    238
    
    
    
    216Financing costs
    
    
    2
    
    
    
    2
    
    
    
    2
    
    
    
    2TOTAL EXPENSES
    
    
    2
    
    
    
    3
    
    
    
    5,370
    
    
    
    4,347INCOME BEFORE INCOME TAXES
    
    
    5
    
    
    
    
    
    
    
    588
    
    
    
    720INCOME TAXES
    
    
    
    
    
    
    
    
    
    
    195
    
    
    
    254NET INCOME
    
    
    5
    
    
    
    
    
    
    
    393
    
    
    
    466Export sales to the United States
    
    
    
    
    
    
    
    
    
    
    701
    
    
    
    724Cash flows from (used in) operating activities
    
    
    (1
    )
    
    
    4
    
    
    
    (57
    )
    
    
    398CAPEX (c)
    
    
    9
    
    
    
    8
    
    
    
    325
    
    
    
    353Total assets as at March 31 (b)
    
    
    650
    
    
    
    368
    
    
    
    14,004
    
    
    
    12,826
 -7-




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IMPERIAL OIL LIMITED NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued...)
(unaudited)  3. Business segments(continued...)  (a)

Includes crude sales made by Products in order to optimize refining operations.(b)

Consolidated amounts exclude intersegment transactions, as follows: Three months2005
    
    
    2004Purchases
    
    
    1,374
    
    
    
    1,073Total intersegment sales
    
    
    1,374
    
    
    
    1,073Intersegment receivables and payables
    
    
    405
    
    
    
    370
  (c)

Capital and exploration expenditures (CAPEX) include exploration expenses, additions
to property, plant, equipment and intangibles and additions to capital leases. 4. Investment and other income Investment and other income includes gains and losses on asset sales as follows: Three monthsto March 31millions of dollars
    
    2005
    
    
    2004Proceeds from asset sales
    
    
    7
    
    
    
    13Book value of assets sold
    
    
    5
    
    
    
    12Gain/(loss) on asset sales, before tax
    
    
    2
    
    
    
    1Gain/(loss) on asset sales, after tax
    
    
    2
    
    
    
    1
 5. Employee retirement benefits The components of net benefit cost included in total expenses in the consolidated statement of
earnings are as follows: Three monthsto March 31millions of dollars
    
    2005
    
    
    2004Pension benefits:Current service cost
    
    
    22
    
    
    
    20Interest cost
    
    
    60
    
    
    
    59Expected return on plan assets
    
    
    (64
    )
    
    
    (56
    )Amortization of prior service cost
    
    
    6
    
    
    
    7Recognized actuarial loss
    
    
    21
    
    
    
    17Net benefit cost
    
    
    45
    
    
    
    47Other post-retirement benefits:Current service cost
    
    
    2
    
    
    
    2Interest cost
    
    
    6
    
    
    
    6Recognized actuarial loss
    
    
    2
    
    
    
    1Net benefit cost
    
    
    10
    
    
    
    9
 6. Headquarters relocation On September 29, 2004, the company announced its intention to relocate its head office from
Toronto, Ontario, to Calgary, Alberta. Completion of the move is expected by August 2005. Expenses in connection with the headquarters relocation activity are expected to total
approximately $85 million ($57 million, after tax) most of which are expected to be recognized in
the second and third quarter of 2005 in conjunction with employee relocations and compensation
payments for employees who choose not to move. -8-




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IMPERIAL OIL LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued...)
(unaudited)   7. Financing costs Three monthsto March 31millions of dollars
    
    2005
    
    
    2004Debt related interest
    
    
    11
    
    
    
    10Capitalized interest
    
    
    (9
    )
    
    
    (8
    )Net interest expense
    
    
    2
    
    
    
    2Other interest
    
    
    
    
    
    
    Total financing costs
    
    
    2
    
    
    
    2
 8. Long-term debt As at
    
    
    As atMar. 31
    
    
    Dec. 312005
    
    
    2004Issued
    
    Maturity date
    
    
    Interest rate
    
    
    millions of dollars2003
    
    $250 million due May 26, 2005 and $250 million due August 26, 2005
    
    Variable
    
    
    
    
    
    
    2003
    
    January 19, 2006
    
    Variable
    
    
    
    
    
    
    318Long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    318Capital leases
    
    
    
    
    
    
    
    
    
    
    48
    
    
    
    49Total long-term debt (a)
    
    
    
    
    
    
    
    
    
    
    48
    
    
    
    367
   (a)

These amounts exclude that portion of long-term debt totalling $1,313 million (December 31, 2004 -
$995 million), which matures within one year and is included in current liabilities. 9. Common shares As at
    
    
    As atMar. 31
    
    
    Dec. 31thousands of shares
    
    2005
    
    
    2004Authorized
    
    
    450,000
    
    
    
    450,000Common shares outstanding
    
    
    345,887
    
    
    
    349,320
 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 of 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 - 2003
    
    
    218.9
    
    
    
    5,9682004 - First quarter
    
    
    2.5
    
    
    
    147Full year
    
    
    13.6
    
    
    
    8722005 - First quarter
    
    
    3.7
    
    
    
    323Cumulative purchases to date
    
    
    236.2
    
    
    
    7,163
 Exxon Mobil Corporations participation in the above maintained its ownership interest in Imperial
at 69.6 percent. -9-




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IMPERIAL OIL LIMITED NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued...)
(unaudited)   9. Common shares(continued...) The following table provides the calculation of basic and diluted net income per share: Three monthsto March 312005
    
    
    2004Net income per common share  basicNet income (millions of dollars)
    
    
    393
    
    
    
    466Weighted average number of common shares outstanding (millions of shares)
    
    
    348.3
    
    
    
    361.7Net income per common share (dollars)
    
    
    1.13
    
    
    
    1.29Net income per common share  dilutedNet income (millions of dollars)
    
    
    393
    
    
    
    466Weighted average number of common shares outstanding (millions of shares)
    
    
    348.3
    
    
    
    361.7Effect of employee stock-based awards (millions of shares)
    
    
    1.2
    
    
    
    0.7Weighted average number of common shares
outstanding, assuming dilution (millions of shares)
    
    
    349.5
    
    
    
    362.4Net income per common share (dollars)
    
    
    1.12
    
    
    
    1.29
 If the provisions for expensing the value of employee stock options of Financial Accounting Standard
No. 123, Accounting for Stock-Based Compensation had been adopted prior to January 1, 2003, the
impact on compensation expense, net income and net income per share for the first quarter in 2004 would
have been negligible. All expenses for employee stock options would have been recognized in net income
as of December 31, 2004. 10. Other long-term obligations As at
    
    
    As atMar. 31
    
    
    Dec. 31millions of dollars
    
    2005
    
    
    2004Employee retirement benefits (a)
    
    
    755
    
    
    
    1,052Asset retirement obligations and other environmental liabilities (b)
    
    
    379
    
    
    
    380Other obligations
    
    
    107
    
    
    
    93Total other long-term obligations
    
    
    1,241
    
    
    
    1,525
   (a)

Total recorded employee retirement benefits obligations also include
$48 million in current liabilities (December 31, 2004  $48 million).(b)

Total asset retirement obligations and other environmental liabilities also
include $76 million in current liabilities (December 31, 2004  $76 million). 11. Earnings reinvested Three monthsto March 31millions of dollars
    
    2005
    
    
    2004Earnings reinvested at beginning of period
    
    
    4,889
    
    
    
    3,952Net income for the period
    
    
    393
    
    
    
    466Share purchases in excess of stated value
    
    
    (304
    )
    
    
    (134
    )Dividends
    
    
    (76
    )
    
    
    (80
    )Earnings reinvested at end of period
    
    
    4,902
    
    
    
    4,204
 -10-




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IMPERIAL OIL LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued...)
(unaudited)   12. Nonowner changes in shareholders equity Three monthsto March 31millions of dollars
    
    2005
    
    
    2004Net income
    
    
    393
    
    
    
    466Other nonowner changes in equity (a)
    
    
    
    
    
    
    Total nonowner changes in shareholders equity
    
    
    393
    
    
    
    466
   (a)

Minimum pension liability adjustment. -11-




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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 income for the first quarter of 2005 was $393 million or $1.12 a share on a
diluted basis, versus $466 million or $1.29 a share for the same period last year. Lower earnings were mainly due to the negative impact of about $130 million from lower volumes and
higher maintenance costs associated with a major coker turnaround at Syncrude. The companys
excellent 2004 operating performance continued into the first quarter of 2005 with strong
performances at Cold Lake, downstream and chemical facilities more than offsetting the natural
decline in conventional crude oil and natural gas operations. Strong light crude oil and natural gas prices and industry refining and petrochemical margins
totalling about $250 million were favourable compared to the first quarter of 2004, but their
positive impact on earnings were moderated by lower Cold Lake bitumen realizations of about $50
million and the impact of a higher Canadian dollar of about $80 million. The lower earnings were
also due to higher stock-related compensation expenses of about $80 million primarily as a result
of the significant increase in the companys share price. Recognizing stock-related compensation
expenses in earnings, on the basis of market prices of the companys shares, has been a
long-standing, transparent accounting practice of the company. Total revenues were $5,958 million in the first quarter versus $5,067 million in the corresponding
period last year. Natural resources
During the first quarter of 2005, net income from natural resources was $242 million compared with
$319 million in the same period last year. Earnings decreased due to lower production and higher
maintenance costs at Syncrude, lower Cold Lake bitumen realizations, lower conventional crude oil
and natural gas liquids (NGLs) volumes and the negative impact of a higher Canadian dollar
totalling $270 million. These factors were partly offset by higher realizations for light crude oil
and natural gas, and higher Cold Lake bitumen volumes totalling $220 million. Increased
stock-related compensation expenses also contributed to the decline. While U.S. dollar Brent crude oil prices averaged about 50 percent higher in the first quarter, the
companys Canadian dollar realizations for conventional crude oil at $58.28 a barrel, compared with
$42.70 a barrel in the same period last year, were 36 percent higher mainly because of a stronger
Canadian dollar. Average realizations for Cold Lake bitumen in the first quarter of 2005 were about
25 percent lower than those of the same period in 2004, reflecting a significant widening of price
spread between light crude oil and Cold Lake bitumen. The companys realizations for natural gas
were slightly higher, averaging $7.02 a thousand cubic feet in the first quarter of 2005, compared
with $6.58 during the same period last year. In the first quarter, total gross production of crude oil and natural gas liquids (NGLs) was 260
thousand barrels a day versus 263 thousand barrels in the same period last year. Gross production of Cold Lake bitumen was higher, averaging 152 thousand barrels a day during the
first quarter of 2005 versus 121 thousand barrels in the first quarter of 2004, due to the cyclic
nature of production at Cold Lake. -12-




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IMPERIAL OIL LIMITED  Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations. (continued .....) Gross production from the companys share of Syncrude decreased to 39 thousand barrels a day from
63 thousand barrels in the first quarter of 2004. Advancing the originally planned second-quarter
coker turnaround into the first quarter and higher unplanned maintenance to other processing units
were the main reasons for lower production volumes. The turnaround was completed in early April and
all processing units returned to normal operation. During the first three months this year, gross production of conventional crude oil averaged 40
thousand barrels a day versus 44 thousand barrels a day in the first quarter of 2004. Natural
reservoir decline in the Western Canadian Basin was the main reason for the reduced production. Gross production of NGLs available for sale decreased to 29 thousand barrels a day in the first
quarter of 2005 from 35 thousand barrels last year, mainly due to declining NGL content of Wizard
Lake gas production. For the first quarter, gross production of natural gas averaged 585 million cubic feet a day,
essentially flat compared to last year. Effective April 1, 2005, the company and an affiliate of Exxon Mobil Corporation in Canada have
agreed to combine their respective Western Canada production organizations into one single
organization. Under the consolidation, Imperial will operate all Western Canada properties. There
are no asset ownership changes. The consolidation is expected to result in efficiencies from a
streamlined organization. On April 28, 2005, the company, on behalf of the Mackenzie Gas Project coventurers, announced a
decision to halt the project execution activities due to insufficient progress on key areas
critical to the project  the finalization of benefits and access agreements and the establishment
of a clear regulatory process, including timeliness. However, the project proponents are continuing
all work associated with advancing the regulatory review process, which is currently focused on
providing regulators with the information they require. Petroleum products
The net income from petroleum products was $112 million in the first quarter of 2005, compared with
$135 million during the same period a year ago. Lower earnings were mainly due to the unfavourable
impact of a higher Canadian dollar, higher stock-related compensation expenses, partly offset by
stronger industry refining margins. Operating performance in the companys refining businesses remained strong through the first
quarter of 2005. Refinery utilization was 96 percent and total refinery throughput was more than 76
million litres a day. Chemicals
Net income in the first quarter of 2005 from chemical operations was $34 million, compared with $12
million during the same period last year. Earnings increased because of higher margins and volumes
for polyethylene and benzene as a result of increased industry demand. Corporate and other
Net income from corporate and other operations was positive $5 million in the first quarter of
2005, compared with nil in the same period last year. Earnings increased mainly due to interest
income on a higher average cash balance. -13-




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IMPERIAL OIL LIMITED  Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations. (continued .....) LIQUIDITY AND CAPITAL RESOURCES Cash flow from operating activities was negative $57 million during the first quarter of 2005,
compared with $398 million in the same period last year. The decrease in cash inflow was mainly due
to the timing of scheduled income tax payments, additional funding contribution to the employee
pension plan and lower net income. During the first quarter of 2005, capital and exploration expenditures were $325 million, compared
with $353 million during the corresponding period a year ago. For the resources segment, capital
and exploration expenditures were used mainly at Syncrude to maintain and expand production
capacity. Capital expenditures for the products segment were used on the project to reduce sulphur
content in diesel fuels. During the first quarter, the company continued its share-purchase program and bought 3.7 million
shares for $323 million under a normal course issuer bid that began on June 23, 2004, which has an
allowable maximum purchase of 17.9 million shares. The maximum number of shares that may yet be
purchased under the current program is about six million. Total cash dividends of $77 million were paid in the first quarter of 2005, down from $80 million
paid in the same period last year as a result of the companys share-purchase program. Per-share
dividends paid in the first quarter were $0.22, unchanged from the same quarter last year. The above factors led to a decrease in the companys balance of cash and marketable securities to
$537 million at March 31, 2005, from $1,279 million at the end of 2004. -14-




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IMPERIAL OIL LIMITED  Item 3.

Quantitative and Qualitative Disclosures about Market Risk. Information about market risks for the three months ended March 31, 2005 does not differ materially
from that discussed on page 26 in the companys annual report on Form 10-Kfor the year ended
December 31, 2004, except for the following sensitivity: Earnings sensitivity (a)millions of dollars after taxEight cents decrease (increase) in the value of the Canadian dollar versus the U.S. dollar
    
    + (-) 400
 The sensitivity of net income to changes in the Canadian dollar versus the U.S. dollar increased
from 2004 year-end by about $18 million (after tax) for each one-cent difference. This is primarily
due to the increase in crude oil prices and industry refining margins. (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 first quarter 2005. The sensitivity
calculation shows the impact on annual net income 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. -15-




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IMPERIAL OIL LIMITED PART II  OTHER INFORMATION  Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds. During the period January 1, 2005 to March 31, 2005, the company issued 254,400 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, in sales of those common shares outside
the U.S.A. which were not registered under the Securities Actin reliance on Regulation S
thereunder. Issuer Purchases of Equity Securities (1) (d) Maximum(c) Total
    
    
    Number (orNumber
    
    
    Approximateof Shares
    
    
    Dollar Value)(or Units)
    
    
    of SharesPurchased
    
    
    (or Units)(a) Total
    
    
    
    
    
    
    as Part of
    
    
    that may yetNumber
    
    
    (b) Average
    
    
    Publicly
    
    
    be Purchasedof Shares
    
    
    Price Paid
    
    
    Announced
    
    
    under the(or Units)
    
    
    per Share
    
    
    Plans or
    
    
    Plans orPeriod
    
    Purchased
    
    
    (or Unit)
    
    
    Programs
    
    
    ProgramsJanuary 2005
(January 1 - January 31)
    
    
    77,315
    
    
    $
    73.64
    
    
    
    77,315
    
    
    
    9,560,880February 2005
(February 1 - February 28)
    
    
    1,571,807
    
    
    $
    84.06
    
    
    
    1,571,807
    
    
    
    7,962,114March 2005
(March 1 - March 31)
    
    
    2,067,198
    
    
    $
    89.72
    
    
    
    2,067,198
    
    
    
    5,869,362
  (1)
    
    The purchases were pursuant to a 12 month normal course share purchase program
that was renewed on June 23, 2004 under which the company may purchase up to
17,864,398 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, 2005. -16-




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IMPERIAL OIL LIMITED  Item 4.

Submission of Matters to a Vote of Security Holders. At the annual meeting of shareholders on April 21, 2005, all of the managements nominee
directors were elected to hold office until the close of the next annual meeting. The votes for the
directors were: B.J. Fischer 306,821,599 shares for and 288,434 shares withheld, T.J. Hearn
306,809,615 shares for and 300,418 shares withheld, J.M. Mintz 306,824,990 shares for and 285,043
shares withheld, R. Phillips 306,874,883 shares for and 235,150 shares withheld, J.F. Shepard
306,875,050 shares for and 234,983 shares withheld, P.A. Smith 306,820,315 shares for and 289,718
shares withheld, S.D. Whittaker 306,860,504 shares for and 249,529 shares withheld, J.M. Yeager
306,805,978 shares for and 304,055 shares withheld, and V.L. Young 306,873,377 shares for and
236,656 shares withheld. At the same annual meeting of shareholders, PricewaterhouseCoopers LLP were reappointed as the
auditors by a vote of 306,761,075 shares for and 314,985 shares withheld from the reappointment of
the auditors. There were two shareholders proposals voted on at the annual meeting of shareholders. A shareholders proposal that the companys board of directors prepare a report to shareholders by
October 2005 (at reasonable cost and omitting proprietary information) verified by an independent
third party with professional competency in this area, on potential risks and liabilities to the
company arising from the range of climate changes and their effects (as reported by the IPCC), and
an assessment of the strategies and initiatives that may be undertaken by the company to address
those risks and liabilities, was defeated by a vote of 299,799,809 shares against and 2,809,745
shares for. A shareholders proposal that the companys board of directors prepare a report by September 2005
(at reasonable cost and omitting proprietary information) to describe how the company could promote
and participate in the growing market in wind, solar, and other renewable sources of energy,
particularly within Canada, was defeated by a vote of 300,943,049 shares against and 1,663,246
shares for.  Item 6.

Exhibits. 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). -17-




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IMPERIAL OIL LIMITED 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: May 6, 2005
    /s/   Paul A. Smith(Signature)Paul A. Smith
Controller and Senior Vice-President,
Finance and Administration
(Principal Accounting Officer)Date: May 6, 2005
    /s/   Marilyn Henderson(Signature)Marilyn Henderson
Assistant Secretary -18-