UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

For the quarterly period ended March 31, 2004

OR

Commission file number 0-12014

IMPERIAL OIL LIMITED

Registrant’s telephone number, including area code: 1-800-567-3776

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [ü] NO [  ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES [ü] NO [  ]

The number of common shares outstanding, as of March 31, 2004, was 360,296,690.

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IMPERIAL OIL LIMITED

INDEX

In this report all dollar amounts are expressed in Canadian dollars. This report should be read in
conjunction with the company’s Annual Report on Form 10-K for the year ended December 31, 2003.

Statements in this report regarding future events or conditions are forward-looking statements.
Actual results could differ materially due to the impact of market conditions, changes in law or
governmental policy, changes in operating conditions and costs, changes in project schedules,
operating performance, demand for oil and gas, commercial negotiations or other technical and
economic factors.

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IMPERIAL OIL LIMITED

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

CONSOLIDATED STATEMENT OF EARNINGS

CONSOLIDATED STATEMENT OF RETAINED EARNINGS

The notes to the financial statements are part of these financial statements. Certain figures for the prior year have been reclassified in the financial statements to conform with the current year’s presentation.

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IMPERIAL OIL LIMITED

CONSOLIDATED STATEMENT OF CASH FLOWS

The notes to the financial statements are part of these financial statements. Certain figures for the prior year have been reclassified in the financial statements to conform with the current year’s presentation.

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IMPERIAL OIL LIMITED

CONSOLIDATED BALANCE SHEET

The notes to the financial statements are part of these financial statements. Certain figures for the prior year have been reclassified in the financial statements to conform with the current year’s presentation.

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IMPERIAL OIL LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

In the opinion of the management, the accompanying unaudited consolidated financial statements reflect all known accruals and adjustments necessary for a fair presentation of the financial position of the company as at March 31, 2004, and December 31, 2003, and the results of operations and changes in cash flows for the three months ending March 31, 2004, and 2003. All such adjustments are of a normal recurring nature.

The results for the three months ending March 31, 2004, are not necessarily indicative of the operations to be expected for the full year.

All figures are in millions of Canadian dollars unless otherwise stated.

1. Adjustments under United States GAAP

The financial statements of the company have been prepared in accordance with generally accepted accounting principles (GAAP) in Canada. These principles conform in all material respects to those in the United States except for the following:

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IMPERIAL OIL LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued .....)
(unaudited)

1. Adjustments under United States GAAP (continued .....)

The adjustments, on the previous page, under United States GAAP result in changes to the Consolidated Balance Sheet of the company as follows:

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IMPERIAL OIL LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued .....)
(unaudited)

1. Adjustments under United States GAAP (continued .....)

(a) Earnings per share

(b) Impact of accounting principles
An explanation of these items is found on pages 17 to 21 of the company’s annual report on Form 10-K for the year ended December 31, 2003.

(c) The company makes limited use of derivatives. There were no significant derivatives outstanding at January 1 or March 31, 2004, nor were any significant derivatives undertaken during the first three months of 2004.

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IMPERIAL OIL LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued .....)
(unaudited)

2. Business segments

(a)		Includes crude sales made by Products in order to optimize refining operations.
(b)		Consolidated amounts exclude intersegment transactions, as follows:

(c)

Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant, equipment and intangibles and additions to capital leases.

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IMPERIAL OIL LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued .....)
(unaudited)

3.

Reporting of fuel consumed in operations

Beginning in 2004, fuel consumed in operations, previously included in purchases of crude oil and products, are reclassified as operating expenses in the consolidated statement of earnings. Prior period amounts have been reclassified for comparative purposes. This reclassification has no impact on total expenses and net earnings or on the cash flow profile of the company.

4.

Employee retirement benefits

The components of net benefit cost included in total expenses in the consolidated statement of earnings are as follows:

5.

Incentive compensation programs

The company accounts for its incentive compensation programs, except for the incentive stock option plan issued prior to January 1, 2003, by using the fair-value-based method. Under this method, compensation expense related to the units of these programs is recorded in the consolidated statement of earnings over the vesting period. The company accounts for its incentive stock option plan by using the intrinsic-value-based method and does not recognize compensation expense on the issuance of stock options because the exercise price is equal to the market value at the date of grant. If the fair-value-based method of accounting had been adopted to account for the incentive stock option plan, the impact on net earnings and earnings per share would have been negligible.

The company purchased shares on the market to fully offset the dilutive effects from the exercise of incentive stock options. The company does not plan to issue stock options in the future.

6.

Financing costs

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IMPERIAL OIL LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued .....)
(unaudited)

7.

Common shares

In 1995 through 2002, the company purchased shares under eight 12-month normal course share purchase programs, as well as an auction tender. On June 23, 2003, another 12-month normal course program was implemented with an allowable purchase up to 18.6 million shares (five percent of the total on June 19, 2003), less any shares purchased by the employee savings plan and company pension fund. The results of these activities are as shown below:

Exxon Mobil Corporation’s participation in the above maintained its ownership interest in Imperial at 69.6 percent.

The excess of the purchase cost over the stated value of shares purchased has been recorded as a distribution of retained earnings.

The following table provides the calculation of basic and diluted earnings per share:

8.

Investment in oil, gas and mineral leases

The company’s net investment in oil, gas and mineral leases reported in property, plant and equipment as of March 31, 2004 was $868 million, and as of December 31, 2003 was $935 million.

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IMPERIAL OIL LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued .....)
(unaudited)

9.

Long-term debt

10.

Other long-term obligations

(a) Total asset retirement obligations and other environmental liabilities also include $70 million in current liabilities ($69 million at December 31, 2003).

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IMPERIAL OIL LIMITED

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

OPERATING RESULTS

The company’s net earnings for the first quarter of 2004 were $509 million or $1.40 a share on a diluted basis, versus $538 million or $1.42 a share for the same period last year. Earnings in the first quarter of 2004 were positively impacted by higher volumes of crude oil and natural gas, lower effective tax rates in the resources segment and stronger manufacturing margins for petroleum and chemical products. These increases were more than offset by the negative earnings effects of a higher Canadian dollar of about $100 million, and the absence of foreign exchange gains of about $50 million on U.S.-dollar denominated debt reported in the first quarter of 2003. The company replaced all its U.S.-dollar denominated debt with Canadian-dollar denominated debt during 2003.

Total revenues were $5,067 million in the first quarter versus $5,478 million in the corresponding period last year.

Natural resources

During the first quarter of 2004, net earnings from natural resources were $366 million, the second highest quarterly earnings on record, compared with $339 million in the same period last year. Earnings increased because of higher production from the company’s interest in Syncrude, higher natural gas volumes and lower royalties, partly offset by lower realizations for crude oil and natural gas mainly due to the negative effects of a higher Canadian dollar. Lower effective tax rates from substantively enacted Alberta tax laws also contributed about $45 million to earnings, which was partly offset by the absence of a favourable tax settlement of about $20 million in the first quarter of 2003.

While U.S. dollar world oil prices averaged slightly higher in the first quarter, the company’s Canadian dollar realizations for conventional crude oil at $42.70 a barrel, compared with $47.86 a barrel in the same period last year, were lower due to the stronger Canadian dollar. Average realizations for Cold Lake bitumen in the first quarter of 2004 were about 15 percent lower than the prior year’s prices. The company’s realization for natural gas was also lower, averaging $6.58 a thousand cubic feet in the first quarter of 2004, compared with $8.12 a thousand cubic feet during the same period last year.

In the first quarter, total gross production of crude oil and natural gas liquids (NGLs) increased to 263 thousand barrels a day from 241 thousand barrels a day in the same period last year. Net production was 236 thousand barrels a day, up from 210 thousand barrels a day in the first quarter of 2003.

Gross production of Cold Lake bitumen was 121 thousand barrels a day during the first quarter of 2004, compared with 120 thousand barrels a day in the first quarter of 2003. Net production increased to 112 thousand barrels a day from 106 thousand barrels a day during the same period a year ago. The higher net bitumen production was a result of lower royalties from lower bitumen prices.

The company’s share of Syncrude’s gross production increased to 63 thousand barrels a day from 47 thousand barrels a day in the first quarter of 2004. Net production was 62 thousand barrels a day, up from 47 thousand barrels a day during the same period last year. Higher volume was attributable to reduced maintenance activities.

During the first three months this year, gross production of conventional crude oil averaged 44 thousand barrels a day versus 47 thousand barrels a day in the first quarter of 2003. Net production decreased slightly to 34 thousand barrels a day from 36 thousand barrels a day during the same period last year. Natural reservoir decline in the Western Canadian Basin was the main reason for the reduced production.

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IMPERIAL OIL LIMITED

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued .....)

Gross production of NGLs available for sale increased to 35 thousand barrels a day in the first quarter of 2004 from 27 thousand barrels a day last year. Net production was 28 thousand barrels a day in the first quarter, up from 21 thousand barrels a day in the first three months of 2003.

Gross production of natural gas during the first quarter of 2004 increased to 581 million cubic feet a day from 487 million cubic feet a day in the first quarter last year. Net production increased to 522 million cubic feet a day from 429 million cubic feet a day during the same period in 2003. The increased natural gas and NGLs volumes were mainly due to higher production from the new facilities at Wizard Lake in Alberta, which were completed in the third quarter of 2003.

In February this year, the company, on behalf of the Mackenzie Gas Project participants, resumed geotechnical fieldwork. The program consists primarily of soil analysis and geotechnical surveys needed to help determine the optimal location of the Mackenzie Valley pipeline, including associated facilities, and support the development of regulatory applications and preliminary engineering for the proposed project.

In March this year, the company, along with the other owners of Syncrude Canada Ltd., was advised of a revised cost and schedule outlook for the Stage 3 expansion of the Syncrude oil-sands mining operation, located near Fort McMurray, Alberta. Total project costs for the Stage 3 expansion are now estimated to be about $7.8 billion, compared with the previous estimate conducted in 2002 which suggested a total cost of $5.7 billion. Start-up of the upgrader expansion, the main component of the project, is now targeted to occur in mid-2006, later than the planned mid-2005 date.

The Government of Alberta approved the company’s proposed expansion at Cold Lake in March this year. The proposed expansion includes the development of phases 14 - 16 which could produce up to 30 thousand barrels a day of additional bitumen and an extension of phases 9 and 10 to maintain production from these two phases. Specific development decisions will be made based on the results of further engineering assessments, ongoing market analysis and business conditions.

The winter drilling program to delineate bitumen for the proposed Kearl oil-sands project was concluded in March. Since the start of drilling in December 2003, 191 corehole wells have been completed. The information from these wells, along with future corehole drilling, will be utilized in support of a possible regulatory filing for the project in 2005.

Petroleum products

The net earnings from petroleum products were $135 million in the first quarter of 2004, compared with $139 million during the same period a year ago. Earnings were essentially flat, reflecting strong refining margins from improved refinery utilization offset by the unfavourable impact of a higher Canadian dollar and weak retail margins.

In March this year, the new 95-megawatt cogeneration facility was completed at the company’s Sarnia, Ontario manufacturing plant, ahead of schedule and under budget. Safety performance was excellent during construction of the project. The cogeneration facility will improve energy efficiency and reduce emissions at the company’s Sarnia-based petroleum product and chemical operations.

Chemicals

Net earnings in the first quarter of 2004 from chemical operations were $12 million, compared with $6 million during the same period last year. Earnings increased mainly because of higher margins for polyethylene as a result of lower feedstock costs and higher realizations, partly offset by lower sales volume and a higher Canadian dollar.

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IMPERIAL OIL LIMITED

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued .....)

Corporate and other

Net earnings from corporate and other operations were negative $4 million in the first quarter of 2004, compared with positive $54 million in the same period last year. Earnings decreased mainly due to the absence of favourable foreign-exchange effects on U.S.-dollar denominated debt. The company replaced all its U.S.-dollar denominated debt with Canadian-dollar denominated debt in 2003.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow from operating activities was $390 million during the first quarter of 2004, compared with $700 million in the same period last year. The decrease in cash inflow was mainly due to seasonal inventory builds and the timing of scheduled income tax payments.

During the first quarter of 2004, total investing activities used $306 million of cash, compared with $340 million used in the same quarter last year. Capital and exploration expenditures were $345 million in the first quarter, compared with $355 million during the corresponding period in 2003. For the resources segment, additional capital and exploration expenditures were used mainly at Syncrude to maintain and expand production capacity. Capital expenditures for the products segment were lower on completion of the project to reduce sulphur content in gasoline.

During the first quarter, the company continued its share repurchase program and bought 2.5 million shares for $147 million under a normal course issuer bid that began on June 23, 2003, which has an allowable maximum purchase of 18.6 million shares. The maximum number of shares that may yet be purchased under the current program is about six million.

Total cash dividends of $80 million were paid in the first quarter of 2004, compared with $79 million paid in the same period last year. Dividends paid in the first quarter were $0.22 a share versus $0.21 a share in the same quarter last year.

The above factors led to a decrease in the company’s balance of cash and marketable securities to $311 million at March 31, 2004, from $448 million at the end of 2003.

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IMPERIAL OIL LIMITED

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Information about market risks for the three months ended March 31, 2004 does not differ materially from that discussed in Item 7A on page 29 in the company’s annual report on Form 10-K for the year ended December 31, 2003, except for the following sensitivity:

The sensitivity to changes in crude oil prices increased from 2003 year-end by about $10 million (after tax) for each one U.S.-dollar difference due primarily to lower royalties at Syncrude brought about by the capital investment level.

(a) The amount quoted to illustrate the impact of the sensitivity represents a change of about 10 percent in the value of the commodity at the end of the first quarter 2004. The sensitivity calculation shows the impact on annual earnings that results from a change in one factor, after tax and royalties and holding all other factors constant. While the sensitivity is applicable under current conditions, it may not apply proportionately to larger fluctuations.

Item 4. Controls and Procedures.

The company’s principal executive officer and principal financial officer have evaluated the company’s disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, these officers have concluded that, as of the end of the period covered by this quarterly report, the company’s disclosure controls and procedures are effective for the purpose of ensuring that information required to be disclosed by the company in the reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There has not been any change in the company’s internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.

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IMPERIAL OIL LIMITED

PART II - OTHER INFORMATION

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities.

During the period January 1, 2004 to March 31, 2004, the company issued 119,200 common shares for $46.50 per share as a result of the exercise of stock options by the holders of the stock options. The sales of 115,700 of those common shares were outside the U.S.A. and were not registered under the Securities Act in reliance on Regulation S thereunder.

Issuer Purchases of Equity Securities (1)

(1) On June 19, 2003, the company announced by press release that it had received final approval from the Toronto Stock Exchange for a new normal course issuer bid to continue its share repurchase program. The new program enables the company to repurchase up to a maximum of 18,632,218 common shares, including common shares purchased for the company’s employee savings plan and employee retirement plan, during the period June 23, 2003 to June 22, 2004. If not previously terminated, the program will end on June 22, 2004.

Item 4. Submission of Matters to a Vote of Security Holders.

At the annual meeting of shareholders on April 21, 2004, all of the management’s nominee directors were re-elected to hold office until the close of the next annual meeting. The votes for the directors were: P. Des Marais II 316,151,543 shares for and 209,875 shares withheld, B.J. Fischer 316,120,820 shares for and 240,598 shares withheld, T.J. Hearn 316,126,168 shares for and 235,250 shares withheld, R. Phillips 316,185,998 shares for and 175,420 shares withheld, J.F. Shepard 316,185,569 shares for and 175,849 shares withheld, P.A. Smith 316,111,763 shares for and 249,655 shares withheld, S.D. Whittaker 316,169,282 shares for and 192,136 shares withheld, K.C. Williams 316,109,095 shares for and 252,323 shares withheld, and V.L. Young 316,195,331 shares for and 166,087 shares withheld.

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IMPERIAL OIL LIMITED

PART II - OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders. (continued .....)

At the same annual meeting of shareholders, PricewaterhouseCoopers LLP were reappointed as the auditors by a vote of 314,811,785 shares for and 1,506,119 shares were withheld from the reappointment of the auditors.

There were four shareholders’ proposals voted on at the annual meeting of shareholders.

A shareholder’s proposal that a by-law be enacted to prevent the chief executive officer from being a director of another unrelated public company was defeated by a vote of 309,939,262 shares against and 1,584,743 shares for.

A shareholder’s proposal that a by-law be enacted to require the company’s senior executives and any other person deemed to be an insider to give public notice of 10 calendar days of any transactions on the company’s shares, including the exercise of stock options, was defeated by a vote of 310,098,505 shares against and 1,432,651 shares for.

A shareholder’s proposal that the company’s board prepare a report by September 2004 (at reasonable cost and omitting proprietary information) to describe how the company has evaluated market opportunities in wind, solar, and other renewable sources of energy was defeated by a vote of 300,473,206 shares against and 11,018,398 shares for.

A shareholder’s proposal that the company annually issue a report to shareholders that has been verified by credible third party auditors on: specific emission reduction initiatives undertaken by the company to address risks and liabilities arising from climate change, including targets and actual emissions, was defeated by a vote of 298,774,639 shares against and 12,712,457 shares for.

Item 6. Exhibits and Reports on Form 8-K

(a) Certifications by each of the principal executive officer and principal financial officer of the company pursuant to Rule 13a-14(a) are Exhibits (31.1) and (31.2).

Certifications by each of the chief executive officer and the chief financial officer of the company pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350 are Exhibits (32.1) and (32.2).

(b) Reports on Form 8-K.

Except for reports on Form 8-K dated January 30, 2004 and March 5, 2004, no other reports on Form 8-K have been filed during the quarter for which this report is filed.

By the report on Form 8-K dated January 30, 2004, the company submitted to the Securities and Exchange Commission a press release which disclosed financial information relating to the company’s financial condition and results of operations for the fiscal quarter ended December 31, 2003.

By the report on Form 8-K dated March 5, 2004, the company submitted to the Securities and Exchange Commission a press release dated March 4, 2004, which disclosed information relating to Syncrude.

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IMPERIAL OIL LIMITED

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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IMPERIAL OIL LIMITED

INDEX TO EXHIBITS