CALGARY - Imperial Oil Ltd. has posted a 26 per cent increase in fourth-quarter profits thanks to higher oil prices and record output at its Cold Lake oilsands project.

The Calgary-based oil and gas giant (TSX:IMO) said Tuesday its earnings for the final quarter of 2011 were $1 billion, up from $799 million in the same period a year earlier on strong production and higher prices.

That amounted to $1.18 per share, up from 94 cents per share in the same period a year before. Quarterly revenue was $8.12 billion, up from $6.94 billion.

Analysts polled by Thomson Reuters were on average expecting Imperial to earn 91 cents per share during the quarter and post revenues of about $8.6 billion.

"Strong operating performance in Imperial's business segments allowed us to capture higher crude oil realizations in the upstream and improved margins in the downstream petroleum product markets," president and CEO Bruce March said in a statement.

"Another record quarterly production at Cold Lake highlighted our consistent focus on operations excellence and production reliability. The same focus in all areas of our business is fundamental to sustaining operating performance while advancing our company growth plans."

Imperial also said quarterly dividend will rise one cent to 12 cents per share beginning with the first quarter 2012 payout.

It said higher oil prices added $275 million to its bottom line during the quarter, and record Cold Lake production contributed about $70 million.

Cold Lake, where steam is used to soften the thick bitumen so it can flow to the surface, reached record annual and quarterly production rates of 160,000 and 162,000 barrels per day, respectively. Imperial said the increase was due mainly to contributions from new wells steamed in 2010 and 2011.

Overall production in the fourth quarter averaged 291,000 barrels a day, down slightly from 302,000 barrels in the same period of 2010.

Imperial, majority-owned by Houston-based energy heavyweight ExxonMobil Corp. (NYSE:XOM), said full-year profits came in at $3.37 billion, or $3.95 per share, up 53 per cent from $2.21 billion, or $2.59 per share, in 2010.

Annual revenues for 2011 were $30.71 billion, up from $25.09 billion in 2010.

Imperial said its massive Kearl oilsands mine is about 87 per cent complete. The first 110,000-barrel-per day phase of that project is set to come on stream around the end of this year.

Last May, it said the price tag for the first phase is expected to be $10.9 billion, a substantial increase from its earlier estimate of $8 billion.

Despite problems Imperial has encountered transporting enormous loads of equipment from South Korea to northern Alberta via the United States, the company said the project remains on schedule.

"In response to delays in obtaining transportation permits, significant proactive efforts have been taken to successfully advance module movement to the Kearl site," Imperial said.

"Modules have been reduced in size and permits for additional U.S. interstate highway routes have been received. Reassembly and integration into the plant facilities continues."

Last month, Imperial's board of directors approved an $8.9-billion expansion that will begin producing 110,000 barrels per day by late 2015.

When Imperial announced in 2009 that it would build the Kearl mine, it expected three phases of roughly the same size. Later, it decided to instead build the mine in two phases, with smaller projects along the way to boost output in increments.

Elsewhere in the oilsands, Imperial holds a 25 per cent interest in the Syncrude mine, the world's largest oilsands project.

The Syncrude partners had aimed for raw bitumen output to hit 600,000 barrels per day by the end of the decade, but the partners have since pushed back that target. They say improving reliability of existing operations should take precedent over expanding capacity for the next several years.

Imperial Oil also runs a chain of Esso-branded fuel stations across the country, as well as refineries in Alberta and Ontario.

Shares in the company were up 45 cents to $47.31 in early trading on the Toronto Stock Exchange.

Imperial's parent company, ExxonMobil, also reported its fourth-quarter results on Tuesday. It booked net income of $9.4 billion, or $1.97 per share, in the fourth quarter, matching Wall Street expectations. It made $9.25 billion, or $1.85 per share, a year earlier.

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