Despite these market-beating returns, Imperial Oil is offering shareholders a dividend yield of 2.1% in January 2026. So let’s see if the blue-chip energy stocks can continue to generate outsized returns over the next twelve months.
Are Imperial Oil shares still a good buy?
Imperial Oil is a Canadian integrated energy company operating in three segments.
- Upstream explores and produces crude oil, natural gas, synthetic crude oil and bitumen.
- Downstream transports, refines and sells petroleum products under the Esso and Mobil brands through extensive distribution networks. Chemical production of solvents, plasticizers and polyethylene resins.
- The company is headquartered in Calgary and operates as a ExxonMobil subsidiary.
In the third quarter (Q3) of 2025, Imperial delivered another strong performance thanks to record crude oil production and robust cash generation. It also announced a significant restructuring program that will overhaul its workforce until 2028.
Imperial Oil reported operating cash flow of $1.8 billion. Notably, it returned a similar amount to shareholders through dividends and buybacks in the September quarter.
The standout was Kearl, which achieved the highest quarterly production ever with 316,000 barrels per day. In addition, Kearl’s unit cash costs fell to $15.13 per barrel, nearly $4 less than the previous quarter and more than $2 annually. Management attributes this performance to high ore quality, optimization efforts and improvements in reliability through upgraded equipment.
Cold Lake also showed steady improvement with production averaging 150,000 barrels per day. The recently completed Leming SAGD (Steam-Assisted Gravity Drainage) project completed steam circulation and is expecting first oil soon. Imperial is transforming Cold Lake through “advanced technologies” and aims to achieve more than 40% of production using these methods by 2030.
The company is also continuing its EBRT (enhanced bitumen recovery) pilot in Aspen, expected to start in early 2027, with the potential to support up to 150,000 barrels per day at each of its three major assets.
The downstream activities achieved a refinery utilization rate of 98%, despite the planned turnaround activities in Sarnia. Imperial Oil has successfully started up its Strathcona renewable diesel plant, allowing it to replace more expensive imported products with cheaper, internally produced products.
The restructuring announcement includes centralizing business and technical activities in global business and technology centers. This takes advantage of Imperial Oil’s relationship with ExxonMobil.
Imperial expects to reduce its field workforce by the end of 2027, followed by further consolidation at its operating sites in 2028. The changes should deliver $150 million in annual cost savings by 2028, with greater benefits expected in the long term.
The restructuring resulted in two one-time after-tax charges totaling $555 million, including employee severance payments and a non-cash impairment charge resulting from the sale of the Calgary campus.
Imperial signed a sale-leaseback agreement to retain office space through early 2028 as the transition unfolds. Management emphasized that the company’s governance, strategy and growth plans remain unchanged despite the organizational transformation.
What is Imperial Oil’s price target?
Analysts who follow the TSX stock predict that adjusted earnings per share will rise from $7.97 in 2025 to $11 in 2029. Today, IMO stock trades at an earnings multiple of 20.4 times, which is higher than the five-year average of 10.5 times.
If the TSX stock is priced at 16 times earnings, it could gain 27% over the next three years from current levels. If we adjust the dividends, the cumulative return could be closer to 35%.
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