IMPERIAL OIL LTDIMO

IMPERIAL OIL LTD Leases Disclosure

10-KFiled Feb 18, 20263 min read
Leases
The company generally purchases the property, plant and equipment used in operations, but there are situations where assets are leased, primarily storage tanks, rail cars, marine vessels, and transportation and other facilities. Right of use assets and lease liabilities are established on the balance sheet for leases with an expected term greater than one year, by discounting the amounts fixed in the lease agreement for the duration of the lease which is reasonably certain, considering the probability of exercising any early termination and extension options. The portion of the fixed payment related to service costs for tankers and finance leases is excluded from the calculation of right of use assets and lease liabilities. Usually, assets are leased only for a portion of their useful lives and are accounted for as operating leases. In limited situations, assets are leased for nearly all of their useful lives and are accounted for as finance leases. In general, leases are capitalized using the company’s incremental borrowing rate.
Variable payments under these lease agreements are not significant. Residual value guarantees, restrictions, or covenants related to leases, and transactions with related parties are also not significant. The company’s activities as a lessor are not material.
The table below summarizes the total lease cost incurred:

 202520242023
millions of Canadian dollarsOperating leasesFinance
 leases		Operating leasesFinance
 leases		Operating leasesFinance
 leases
Operating lease cost105 111 114 
Short-term and other (net of sublease rental income)108 50 30 
 
Amortization of right of use assets16 16 19 
Interest on lease liabilities27 28 29 
Total lease cost213 43 161 44 144 48 
The following table summarizes the amounts related to operating leases and finance leases recorded on the Consolidated balance sheet, weighted-average remaining lease term and weighted-average discount rates applied at December 31:

 20252024
millions of Canadian dollarsOperating
 leases		Finance
 leases		Operating
 leases		Finance
 leases
Right of use assets    
Included in Other assets, including intangibles - net285 240 
Included in Property, plant and equipment, less582 579 
accumulated depreciation and depletion    
Total right of use assets285 582 240 579 
 
Lease liability due within one year    
Included in Accounts payable and accrued liabilities87 — 100 — 
Included in Notes and loans payable19 18 
Long-term lease liability    
Included in Other long-term obligations149 — 144 — 
Included in Long-term debt531 545 
Total lease liability236 550 244 563 
 
Weighted-average remaining lease term (years)
535535
Weighted-average discount rate (percent)
3.25.84.14.8

The maturity analysis of the company’s lease liabilities as at December 31 are summarized below:

 2025
millions of Canadian dollarsOperating
 leases 		Finance
 leases
Maturity analysis of lease liabilities 
202693 49 
202744 48 
202839 47 
202931 45 
203016 44 
2031 and beyond
29 862 
Total lease payments252 1,095 
 
Discount to present value(16)(545)
Total lease liability236 550 
In addition to the operating lease liabilities in the table immediately above, at December 31, 2025, there were no additional undiscounted commitments for leases not yet commenced (2024 - $56 million).
There are no estimated cash payments for operating and finance leases not yet commenced in 2026 and 2027.
The table below summarizes the cash paid for amounts included in the measurement of lease liabilities and the right of use assets obtained in exchange for new lease liabilities:

 202520242023
millions of Canadian dollarsOperating
 leases		Finance
 leases		Operating
 leases		Finance
 leases		Operating
 leases		Finance
 leases
Cash paid for amounts included in the measurement of lease liabilities      
Cash flows from operating activities121 — 118 — 56 — 
Cash flows from financing activities 18  22  22 
 
Non-cash right of use assets recorded for lease liabilities      
In exchange for lease liabilities during the year107 17 152 — 61 — 

Historical Timeline

Fiscal YearFiled
2025Feb 18, 2026Showing above
2024Feb 19, 2025
2023Feb 28, 2024
2022Feb 22, 2023
2020Feb 24, 2021
2019Feb 26, 2020
2018Feb 27, 2019
2017Mar 1, 2018
2016Feb 23, 2017
2015Feb 24, 2016

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

Other Available Disclosures

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