On Tuesday morning Imperial Oil Limited (TSX:IMO)(NYSE:IMO) reported results for the fourth quarter of 2015. Below we take a look at the numbers, what they mean for Imperial, and what they mean for the oil sector.

The numbers

Expectations were not high for Imperial in this oil-price environment. Analysts on average were expecting fourth-quarter earnings per share of $0.25, down from $0.79 one year earlier. But Imperial wasn’t even able to make this number, posting EPS of $0.12 for the quarter.

Granted, there were also some bright spots. Imperial was able to reduced costs by 25% (compared with 2014) in the second half of the year. The Kearl expansion project continues to perform well, and the downstream business has helped to stabilize earnings.

Despite the earnings miss, Imperial is doing very well. The company not only made a profit in the fourth quarter, but its balance sheet remains in great shape too with net debt equal to less than 25% of the company’s market value.

The implications for Imperial

The past 12 months have certainly not been pleasant for Imperial, but the company performed very well operationally and has emerged as one of the strongest players in Canada’s energy patch. Critically, the company did not make any big acquisitions, despite the lure of seemingly cheap assets (such as Canadian Oil Sands Ltd.).

Consequently, the company is poised to not only survive the oil slump, but also to take out some of its weaker competitors. So you should expect at least some small transactions this year from Imperial.

The implications for the sector

Although Imperial reported positive earnings per share, the company did lose $289 million from its upstream division in the fourth quarter. And over the whole year, Imperial’s upstream operations lost a total of $704 million. In a way, this could be viewed as a positive for the energy sector, since it hints that today’s oil price is unsustainable.

That said, Imperial also tallied fourth-quarter production of 400,000 barrels of oil equivalent per day, an increase of 27% year over year. Of course, the main reason for this was the aforementioned Kearl expansion. And this offers yet another reminder that even though oil prices remain severely depressed, producers aren’t turning off the taps. This is something to think about before you invest in any energy stocks.

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Fool contributor Benjamin Sinclair has no position in any stocks mentioned.