Valued at a market cap of almost $70 billion, Imperial Oil (TSX:IMO) is among the largest oil and gas companies in North America. In the last 10 years, Imperial Oil stock has returned 237% to shareholders. After adjusting for dividends, cumulative returns are closer to 328%. In this period, the TSX index is up “just” 254%.
Despite these market-beating returns, Imperial Oil offers shareholders a dividend yield of 2.1% in January 2026. So, let’s see if the blue-chip energy stock can continue to deliver outsized returns over the next 12 months.
Is Imperial Oil stock still a good buy?
Imperial Oil is a Canadian integrated energy company operating across three segments.
- Upstream explores and produces crude oil, natural gas, synthetic crude, and bitumen.
- Downstream transports, refines, and markets petroleum products under Esso and Mobil brands through extensive distribution networks. Chemical manufactures solvents, plasticizers, and polyethylene resins.
- The company is headquartered in Calgary and operates as an Exxon Mobil subsidiary.
In the third quarter (Q3) of 2025, Imperial delivered another strong performance driven by record crude production and robust cash generation. It also announced a significant restructuring program that will reshape its workforce through 2028.
Imperial Oil reported $1.8 billion in operating cash flow. Notably, it returned a similar amount to shareholders via dividends and buybacks in the September quarter.
The standout performer was Kearl, which achieved its highest quarterly production ever at 316,000 barrels per day. Moreover, unit cash costs at Kearl dropped to $15.13 per barrel, down nearly $4 from the previous quarter and over $2 year over year. Management attributes this performance to high ore quality, optimization efforts, and reliability improvements from 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 finished steam circulation and expects first oil shortly. Imperial is transforming Cold Lake through “advantaged technologies” and targets over 40% of production from these methods by 2030.
The company is also advancing its EBRT (enhanced bitumen recovery) pilot at Aspen, scheduled to start in early 2027, with the potential to support up to 150,000 barrels per day at each of the three major assets.
Downstream operations achieved 98% refinery utilization despite planned turnaround activity at Sarnia. Imperial Oil successfully started up its Strathcona renewable diesel facility, enabling it to replace more expensive imported products with lower-cost internally produced products.
The restructuring announcement involves centralizing corporate and technical activities in global business and technology centers. This leverages Imperial Oil’s relationship with ExxonMobil.
Imperial expects to reduce its above-field workforce by the end of 2027, followed by further consolidation at operating sites in 2028. The changes should deliver $150 million in annual cost savings by 2028, with larger benefits expected in the long term.
The restructuring triggered two one-time after-tax charges totaling $555 million, including employee severance costs and a noncash impairment from the sale of the Calgary campus.
Imperial signed a sale-leaseback arrangement to maintain 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 the Imperial Oil stock price target?
Analysts tracking the TSX stock forecast adjusted earnings per share to increase from $7.97 in 2025 to $11 in 2029. Today, IMO stock trades at a forward earnings multiple of 20.4 times, which is higher than its five-year average of 10.5 times.
If the TSX stock is priced at 16 times earnings, it could gain 27% from current levels over the next three years. If we adjust for dividends, cumulative returns could be closer to 35%.
