FORM 10-K IMPERIAL OIL LIMITED

Crude oil and natural gas liquids
Conventional Cold Lake Total Natural Gas
(millions of barrels)
(billions of
cubic feet)
Beginning of year 2002.......................................................... 165 807 972 1,414
Revisions of previous estimates and improved recovery............. 3 33 36 (26)
(Sale)/purchase of reserves in place........................................ – – – 2
Discoveries and extensions.................................................... – – – 3
Production........................................................................... (22) (39) (61) (169)
End of year 2002.................................................................. 146 801 947 1,224
Revisions of previous estimates and improved recovery............. 1 5 6 (40)
(Sale)/purchase of reserves in place........................................ – – – –
Discoveries and extensions.................................................... – – – 6
Production........................................................................... (21) (43) (64) (167)
End of year 2003.................................................................. 126 763 889 1,023
Performance related revisions and improved recovery................ 6 (20) (14) 57
(Sale)/purchase of reserves in place........................................ – – – (13)
Discoveries and extensions.................................................... – – – 3
Production........................................................................... (22) (41) (63) (190)
Total before year end price/cost revisions................................ 110 702 812 880
Year end price/cost revisions................................................. 5 (470) (465) (89)
End of year 2004.................................................................. 115 232 347 791
(1) Net reserves are the Company's share of reserves after deducting the shares of mineral owners or governments or
both. All reported reserves are located in Canada. Reserves of natural gas are calculated at a pressure of 14.73
pounds per square inch at 60°F.
The above information describes changes during the years and balances of proved oil and gas reserves
at year end 2002, 2003 and 2004.
The definitions used for oil and gas reserves are in accordance with the U.S. Securities and Exchange
Commission’s (SEC) Rule 4-10 (a) of Regulation S-X, paragraphs (2), (3) and (4).
Crude oil and natural gas reserve estimates are based on geological and engineering data, which have
demonstrated with reasonable certainty that these reserves are recoverable in future years from known
reservoirs under existing economic and operating conditions; i.e., prices and costs as of the date the
estimate is made. Reserves of crude oil at Cold Lake are those estimated to be recoverable from the
Leming plant and commercial stages 1 through 13.
In compliance with SEC regulatory guidance, the Company has reported 2004 reserves on the basis
of the day of December 31, 2004 prices and costs (“year end prices”). Resultant changes in Cold Lake
bitumen and the associated natural gas reserves from the year end 2003 reserve estimates, which were
based on long term projections of oil and gas prices consistent with those used in the Company’s
investment decision-making process, are shown in the line titled “Year end price/cost revisions.” The
requirement to use year end prices for reserves estimation introduces single day price focus and volatility
in the valuation of reserves to be produced over the next 20 to 30 years. The Company believes that this
approach is inconsistent with the long term nature of the natural resources business. The use of prices from
a single date is not relevant to the investment decisions made by the Company and annual variations in
reserves based on such year end prices are not of consequence in how the business is managed.
The impact of year end prices on reserve estimation is most clearly shown at Cold Lake where proved
bitumen and associated natural gas reserves were reduced by about 485 million oil equivalent barrels as
a result of using December 31, 2004 prices, which were unusually low. Prices quickly rebounded from
December 31, and through January 2005 returned to levels that have restored the reserves to the proved
category.
Performance related revisions can include upward or downward changes in previously estimated
volumes of proved reserves for existing fields due to the evaluation or revaluation of (1) already available
geologic, reservoir or production data, or (2) new geologic or reservoir data. Performance related revisions
can also include changes associated with the performance of improved recovery projects and significant
changes in either development strategy or production equipment/facility capacity. During the past five years,
performance related revisions averaged an upward adjustment of 16 million oil equivalent barrels per year.
Net proved reserves are determined by deducting the estimated future share of mineral owners or governments
or both. For conventional crude oil (excluding enhanced oil recovery projects) and natural gas, net
proved reserves are based on estimated future royalty rates representative of those existing as of the date the
estimate is made. Actual future royalty rates may vary with production and price. For enhanced oil recovery
projects and Cold Lake, net proved reserves are based on the Company’s best estimate of average royalty
rates over the life of each project. Actual future royalty rates may vary with production, price and costs.
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