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Cision Canada
31-07-2025
- Business
- Cision Canada
MEG Energy Reports Second Quarter 2025 Results Including Successful Completion of Major Turnaround and Wildfire Response; Announces 10% Increase to Quarterly Dividend to $0.11 per share
CALGARY, AB, July 31, 2025 /CNW/ - MEG Energy Corp. (TSX: MEG) ("MEG" or the "Corporation") reported its second quarter 2025 operational and financial results. 1 View PDF "We safely and successfully completed the largest planned turnaround in MEG's history in the second quarter, while prioritizing the safety of our workforce and communities during challenging wildfire conditions," said Darlene Gates, President and Chief Executive Officer of MEG. "We made meaningful progress advancing the Facility Expansion Project, including achieving key milestones during the turnaround, which will further unlock significant value from our world-class Christina Lake resource. The 10% dividend increase reflects our continued confidence in the strength of our strategy, and our commitment to delivering sustainable shareholder returns." Key highlights: Excellent Safety Performance: Zero serious incidents, recordable injuries, or reportable spills during turnaround as site population doubled; total recordable incident rate reduced to 0.25 year-to-date and zero serious process safety events. Safe Wildfire Response: Safely evacuated over 850 workers while maintaining stable off-power grid operations following the May 29 Caribou Lake wildfire and third-party infrastructure damage; successful re-mobilization through June including power restored. Dividend Increase: On July 31, 2025, the Board of Directors approved a 10% increase in the quarterly cash dividend to $0.11 per share payable on October 15, 2025, to shareholders of record on September 12, 2025. Phase 2B Turnaround Completed on Time and Budget: Delivered MEG's largest planned turnaround on time and budget; positioned for extended four year turnaround cycles. Facility Expansion Project ("FEP") on track: Expansion remains on track for completion in 2027, with over 150 key FEP tie-ins completed during turnaround to minimize future production interruptions; 5th once-through steam generator delivered and all major equipment purchased. Financial Performance: Generated adjusted funds flow ("AFF") of $125 million ($0.49 per share). Production of 63,502 bbls/d at a 2.38 steam-oil ratio: Reflects planned turnaround and wildfire delays; achieved pre-turnaround rates within two weeks of restart despite a twelve day delay. July production averaged approximately 109,000 barrels per day and the newest pad of 16 well pairs is on steam ahead of schedule with first oil expected in the third quarter of 2025. Capital Expenditures on Plan: Delivered $200 million of planned capital expenditures, including investments in the turnaround, FEP, and advancing pad development to areas of improved resource quality. Shareholder Returns: Returned $35 million to shareholders by: repurchasing and cancelling 0.4 million shares for $9 million; and paying a quarterly cash dividend of $26 million ($0.10 per share) on April 15, 2025. Guidance: The Corporation's 2025 operating and capital guidance remains unchanged. _____________________________ 1 All financial figures are in Canadian dollars ($ or C$) and all references to barrels are per barrel of bitumen unless otherwise noted. The Corporation's Non-GAAP and Other Financial Measures are detailed in the Advisory section of this news release. They include: cash operating netback, bitumen realization net of transportation and storage expense, operating expenses net of power revenue, energy operating costs net of power revenue, non-energy operating costs, energy operating costs, adjusted funds flow and free cash flow. The following table summarizes selected operational and financial information of the Corporation for the periods noted. All dollar amounts are stated in Canadian dollars ($ or C$) unless otherwise noted and all per barrel financial results are based on bitumen sales volumes: Six months ended June 30 2025 2024 ($millions, except as indicated) 2025 2024 Q2 Q1 Q4 Q3 Q2 Q1 Operational results: Bitumen production - bbls/d 83,253 102,309 63,502 103,224 100,139 103,298 100,531 104,088 Per share, diluted 0.06 0.07 0.02 0.04 0.03 0.04 0.03 0.03 Steam-oil ratio 2.31 2.40 2.38 2.28 2.40 2.36 2.44 2.37 Bitumen sales - bbls/d 86,356 99,337 70,760 102,126 100,821 105,255 93,140 105,534 Business environment: WTI - US$/bbl 67.58 78.77 63.74 71.42 70.27 75.09 80.57 76.96 Differential - WTI:WCS - Edmonton - US$/bbl (11.47) (16.46) (10.27) (12.67) (12.56) (13.55) (13.61) (19.31) AWB - Edmonton - US$/bbl 55.24 60.98 52.70 57.77 56.82 60.62 65.99 55.96 C$ equivalent of 1 US$ – average 1.4093 1.3586 1.3840 1.4350 1.3991 1.3636 1.3684 1.3488 Financial results: Bitumen realization after net transportation and storage expense (1) - $/bbl 58.04 66.55 46.72 65.98 62.62 65.61 73.84 60.10 Non-energy operating costs (2) - $/bbl 6.80 5.39 8.16 5.84 5.61 5.18 5.63 5.18 Energy operating costs net of power revenue (1) - $/bbl 2.33 1.10 2.72 2.06 0.90 0.64 0.99 1.19 Operating expenses net of power revenue (1) - $/bbl 9.13 6.49 10.88 7.90 6.51 5.82 6.62 6.37 Cash operating netback (1) - $/bbl 37.64 43.34 25.29 46.30 41.09 41.35 47.14 39.99 Royalties 176 290 68 108 132 169 162 128 Adjusted funds flow (3) 505 683 125 380 340 362 354 329 Per share, diluted 1.97 2.49 0.49 1.47 1.29 1.34 1.30 1.19 Capital expenditures 357 235 200 157 172 141 123 112 Free cash flow (3) 148 448 (75) 223 168 221 231 217 Per share, diluted 0.57 1.64 (0.30) 0.86 0.64 0.82 0.85 0.78 Weighted average common shares outstanding - diluted 257 274 255 258 263 269 272 276 Debt repayments - US$ — 158 — — — 100 53 105 Share repurchases - C$ 168 195 9 159 151 108 68 127 Dividends paid - C$ 52 — 26 26 27 — — — Revenues 1,919 2,737 757 1,162 1,147 1,265 1,373 1,364 Net earnings 278 234 67 211 106 167 136 98 Per share, diluted 1.08 0.86 0.26 0.82 0.40 0.62 0.50 0.36 Financial Results Adjusted funds flow ("AFF") in the three and six months ended June 30, 2025 was $125 million and $505 million, respectively, compared to $354 million and $683 million in the same periods of 2024. This was primarily driven by lower average WTI benchmark prices and reduced blend sales volumes partially offset by narrower WTI:AWB differentials and lower royalties. On a diluted per-share basis, AFF was $0.49 and $1.97 for the three and six months ended June 30, 2025, respectively, compared to $1.30 and $2.49 in the same periods of 2024. This primarily reflects the combined impacts of decreased AFF partially offset by share repurchases. The Corporation returned $35 million to shareholders during the second quarter of 2025 through the repurchase and cancellation of 0.4 million shares for $9 million and a dividend payment of $26 million. Second quarter net earnings were $67 million in 2025, compared to $136 million in 2024, driven by reduced AFF partially offset by lower depletion and depreciation and deferred income tax expense and an unrealized foreign exchange gain. Year-to-date net earnings were $278 million and $234 million in 2025 and 2024, respectively, whereby lower AFF was more than offset by lower depletion and depreciation and deferred income tax expense and an unrealized foreign exchange gain. Operational Results Bitumen production averaged 63,502 barrels per day, at a 2.38 steam-oil ratio ("SOR"), during the second quarter of 2025 and 83,253 barrels per day, at a 2.31 SOR, during the first half of 2025. This compares to 100,531 barrels per day, at a 2.44 SOR, and 102,309 barrels per day, at a 2.40 SOR, in the same periods of 2024. Production in the first half of 2025 was primarily impacted by planned turnaround activities. In addition, wildfire damage to third-party power line infrastructure delayed the scheduled post-turnaround production ramp-up. The lower SOR reflects improved reservoir quality and optimized design of recent wells partially offset by the impact of the planned turnaround. Non-energy operating costs were $53 million and $106 million, respectively, in the three and six months ended June 30, 2025 compared to $48 million and $98 million in the same periods of 2024, primarily reflecting higher planned maintenance and unexpected wildfire costs. Lower 2025 bitumen sales volumes also contributed to a per barrel increase. Capital expenditures were $200 million and $357 million in the three and six months ended June 30, 2025, respectively, compared to $123 million and $235 million in the same periods of 2024, primarily reflecting planned turnaround activities and FEP investments. Capital Allocation Strategy The Corporation is committed to returning 100% of free cash flow to shareholders through a combination of share repurchases and payment of quarterly base dividends while maintaining balance sheet quality and managing working capital requirements. During the first half of 2025, the Corporation repurchased and cancelled 7.1 million shares under its normal course issuer bid ("NCIB") program at a weighted-average price of $23.66 per share, totaling $168 million. As a result of the Strathcona Resources Ltd. ("Strathcona") unsolicited offer, and in accordance with applicable securities laws, the Corporation has paused all share repurchases under its NCIB program. On July 31, 2025, the Corporation's Board of Directors approved a 10% increase in the quarterly cash dividend to $0.11 per share, reflecting the Corporation's commitment to consistent and long-term dividend growth. This dividend will be paid on October 15, 2025 to shareholders of record on September 12, 2025. Outlook The Corporation's 2025 operating and capital guidance released on November 25, 2024 remains unchanged. Take-Over Offer On May 30, 2025, an unsolicited take-over offer was made by Strathcona to acquire all MEG's issued and outstanding shares. The Corporation's Board of Directors has unanimously recommended that shareholders reject the offer by taking no action and not tendering their shares. A Directors' Circular, filed on June 16, 2025, provides information for MEG shareholders about MEG's prospects and the Board's analysis, deliberations and recommendations at and on Additional information can be found in the Investor Presentation, which is available at Strategic Review With a focus on value maximization for Shareholders, the Board has authorized a strategic review of alternatives with the potential to surface an offer superior to MEG's compelling standalone plan. BMO Capital Markets, the Board's financial advisor, has begun an outreach to potential parties to solicit interest in an alternative transaction. Adjusted Funds Flow Sensitivity MEG's production is composed entirely of crude oil, and AFF is highly correlated with crude oil benchmark prices and light-heavy oil differentials. The following table provides an annual sensitivity estimate to the most significant market variables. Variable Range 2025 AFF Sensitivity (1)(2) - C$ WCS Differential (US$/bbl) +/- US$1.00/bbl +/- C$46mm WTI (US$/bbl) +/- US$1.00/bbl +/- C$32mm Bitumen Production (bbls/d) +/- 1,000 bbls/d +/- C$16mm Condensate (US$/bbl) +/- US$1.00/bbl +/- C$14mm Exchange Rate (C$/US$) +/- $0.01 +/- C$10mm Non-Energy Opex (C$/bbl) +/- C$0.25/bbl +/- C$6mm AECO Gas (3) (C$/GJ) +/- C$0.50/GJ +/- C$5mm (1) Each sensitivity is independent of changes to other variables. (2) Assumes mid-point of 2025 production guidance, US$70.00/bbl WTI, ~US$13.00/bbl Edmonton/PADD II WTI:WCS discount, C$1.35/US$ F/X rate, condensate purchased at 100% of WTI, and one bbl of bitumen per 1.42 bbls of blend sales (1.42 blend ratio). (3) Assumes 1.3 GJ/bbl of bitumen, 64% of 150 MW of power generation sold externally and a 25.0 heat rate (every $0.50/GJ change in AECO natural gas price changes the power price by C$12.50/MWh). Conference Call MEG's management will hold a conference to review MEG's second quarter 2025 results on August 1, 2025, at 6:30 a.m. Mountain Time (8:30 a.m. Eastern Time). To participate, please dial the North American toll-free number 1-800-715-9871, or the international call number 1-647-932-3411. A recording of the call will be available by 12:00 p.m. Mountain Time (2:00 p.m. Eastern Time) on the same day at Basis of Presentation MEG prepares its financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") and presents financial results in Canadian dollars ($ or C$), which is the Corporation's functional currency. Non-GAAP and Other Financial Measures Certain financial measures in this news release are non-GAAP financial measures or ratios, supplementary financial measures and capital management measures. These measures are not defined by IFRS and, therefore, may not be comparable to similar measures provided by other companies. These non-GAAP and other financial measures should not be considered in isolation or as an alternative for measures of performance prepared in accordance with IFRS. Adjusted Funds Flow and Free Cash Flow AFF and FCF are capital management measures defined in the Corporation's consolidated financial statements and are presented to assist management and investors in analyzing operating performance and cash flow generating ability. Net cash provided by (used in) operating activities is an IFRS measure in the Corporation's consolidated statement of cash flow. AFF is calculated as net cash provided by (used in) operating activities before the net change in non-cash working capital items and excludes items not considered part of ordinary continuing operating results. By excluding non-recurring adjustments, the AFF measure provides a meaningful metric for management and investors by establishing a clear link between the Corporation's cash flows and cash operating netback. FCF is calculated as adjusted funds flow less capital expenditures. FCF is presented to assist management and investors in analyzing performance by the Corporation as a measure of financial liquidity and the capacity of the business to return capital to shareholders. The following table reconciles Net cash provided by (used in) operating activities to AFF and FCF: Cash Operating Netback Cash operating netback is a non-GAAP financial measure, or ratio when expressed on a per barrel basis. Its terms are not defined by IFRS and, therefore, may not be comparable to similar measures provided by other companies. This non-GAAP financial measure should not be considered in isolation or as an alternative for measures of performance prepared in accordance with IFRS. Cash operating netback is a financial measure widely used in the oil and gas industry as a supplemental measure of a company's efficiency and its ability to generate cash flow for debt repayment, dividends, capital expenditures, or other uses. The per barrel calculation of cash operating netback is based on bitumen sales volumes. Revenues is an IFRS measure in the Corporation's consolidated statement of earnings and comprehensive income which is the most directly comparable primary financial statement measure to cash operating netback. A reconciliation from revenues to cash operating netback has been provided below: Blend Sales and Bitumen Realization Blend sales and bitumen realization are non-GAAP financial measures, or ratios when expressed on a per barrel basis, and are used as measures of the Corporation's marketing strategy by isolating petroleum revenue and costs associated with its produced and purchased products and excludes royalties. Their terms are not defined by IFRS and, therefore, may not be comparable to similar measures provided by other companies. These non-GAAP financial measures should not be considered in isolation or as an alternative for measures of performance prepared in accordance with IFRS. Blend sales per barrel is based on blend sales volumes and bitumen realization per barrel is based on bitumen sales volumes. Revenues is an IFRS measure in the Corporation's consolidated statement of earnings and comprehensive income, which is the most directly comparable primary financial statement measure to blend sales and bitumen realization. A reconciliation from revenues to blend sales and bitumen realization has been provided below: Net Transportation and Storage Expense Net transportation and storage expense is a non-GAAP financial measure, or ratio when expressed on a per barrel basis. Its terms are not defined by IFRS and therefore may not be comparable to similar measures provided by other companies. This non-GAAP financial measure should not be considered in isolation or as an alternative for measures of performance prepared in accordance with IFRS. Per barrel amounts are based on bitumen sales volumes. It is used as a measure of the Corporation's marketing strategy by focusing on maximizing the realized AWB sales price after transportation and storage expense by utilizing its network of pipeline and storage facilities to optimize market access. Transportation and storage expense is an IFRS measure in the Corporation's consolidated statements of earnings and comprehensive income. Power and transportation revenue is an IFRS measure in the Corporation's consolidated statement of earnings and comprehensive income, which is the most directly comparable primary financial statement measure to transportation revenue. A reconciliation from power and transportation revenue to transportation revenue has been provided below. Bitumen Realization after Net Transportation and Storage Expense Bitumen realization after net transportation and storage expense is a non-GAAP financial measure, or ratio when expressed on a per barrel basis. Its terms are not defined by IFRS and therefore may not be comparable to similar measures provided by other companies. This non-GAAP financial measure should not be considered in isolation or as an alternative for measures of performance prepared in accordance with IFRS. Per barrel amounts are based on bitumen sales volumes. It is used as a measure of the Corporation's marketing strategy by focusing on maximizing the realized AWB sales price after net transportation and storage expense by utilizing its network of pipeline and storage facilities to optimize market access. Three months ended June 30 Six months ended June 30 2025 2024 2025 2024 ($millions, except as indicated) $/bbl $/bbl $/bbl $/bbl Bitumen realization (1) $ 459 $ 71.21 $ 772 $ 91.11 $ 1,230 $ 78.71 $ 1,478 $ 81.80 Net transportation and storage expense (1) (158) (24.49) (147) (17.27) (323) (20.67) (276) (15.25) Bitumen realization after net transportation and storage expense $ 301 $ 46.72 $ 625 $ 73.84 $ 907 $ 58.04 $ 1,202 $ 66.55 (1) Non-GAAP financial measure as defined in this section. Operating Expenses net of Power Revenue and Energy Operating Costs net of Power Revenue Operating expenses net of power revenue and energy operating costs net of power revenue are both non-GAAP financial measures, or ratios when expressed on a per barrel basis. Their terms are not defined by IFRS and, therefore, may not be comparable to similar measures provided by other companies. These non-GAAP financial measures should not be considered in isolation or as an alternative for measures of performance prepared in accordance with IFRS. Per barrel amounts are based on bitumen sales volumes. Operating expenses net of power revenue is used as a measure of the Corporation's cost to operate its facilities at the Christina Lake project after factoring in the benefits from selling excess power to offset energy costs. Energy operating costs net of power revenue is used to measure the performance of the Corporation's cogeneration facilities to offset energy operating costs. Non-energy operating costs and energy operating costs are supplementary financial measures as they represent portions of operating expenses. Non-energy operating costs comprise production-related operating activities and energy operating costs reflect the cost of natural gas used as fuel to generate steam and power. Per barrel amounts are based on bitumen sales volumes. Operating expenses is an IFRS measure in the Corporation's consolidated statement of earnings and comprehensive income. Power and transportation revenue is an IFRS measure in the Corporation's consolidated statement of earnings and comprehensive income which is the most directly comparable primary financial statement measure to power revenue. A reconciliation from power and transportation revenue to power revenue has been provided below. Forward-Looking Information Certain statements contained in this news release may constitute forward-looking statements within the meaning of applicable Canadian securities laws. These statements relate to future events or MEG's future performance. All statements other than statements of historical fact may be forward-looking statements. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe", "plan", "intend", "target", "potential" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are often, but not always, identified by such words. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. In particular, and without limiting the foregoing, this press release contains forward looking statements with respect to: the Corporation's 2025 operating and capital guidance, including its expectations regarding 2025 annual average production, capital expenditures and non-energy operating costs; the Corporation's belief that the FEP remains on track for completion in 2027; the Corporation's intent to return 100% of free cash flow to shareholders through a combination of share repurchases and payment of a quarterly base dividend, subject to approval of the Board of Directors; the strategic review process; and the Corporation's funds flow sensitivity estimates. Forward-looking information contained in this press release is based on management's expectations and assumptions regarding, among other things: future crude oil, bitumen blend, natural gas, electricity, condensate and other diluent prices, differentials, the reaction of heavy oil differentials in response to increased Canadian pipeline capacity; foreign exchange rates and interest rates; the recoverability of MEG's reserves and contingent resources; MEG's ability to produce and market production of bitumen blend successfully to customers; future growth, results of operations and production levels; future capital and other expenditures; revenues, expenses and cash flow; operating costs; reliability; continued liquidity and runway to sustain operations through a prolonged market downturn; MEG's ability to reduce or increase production to desired levels, including without negative impacts to its assets; anticipated reductions in operating costs as a result of optimization and scalability of certain operations; anticipated sources of funding for operations and capital investments; plans for and results of drilling activity; the regulatory framework governing royalties, land use, taxes and environmental matters, including federal and provincial climate change policies, in which MEG conducts and will conduct its business; and business prospects and opportunities. By its nature, such forward-looking information involves significant known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks and uncertainties include, but are not limited to, risks and uncertainties related to: the oil and gas industry, for example, the securing of adequate access to markets and transportation infrastructure (including pipelines and rail) and the commitments therein; the availability of capacity on the electricity transmission grid; the uncertainty of reserve and resource estimates; the uncertainty of estimates and projections relating to production, costs and revenues; support for protectionism and rising anti-globalization sentiment in the United States and other countries; enacted and proposed export and import restrictions, including but not limited to tariffs, export taxes or curtailment on exports; health, safety and environmental risks, including public health crises and any related actions taken by governments and businesses; legislative and regulatory changes to, amongst other things, tax, land use, royalty and environmental laws and production curtailment; the cost of compliance with current and future environmental laws, including climate change laws; risks relating to increased activism and public opposition to fossil fuels and oil sands; the inability to access government support to industry to assist in the achievement of ESG goals; risks relating to shareholder activism; assumptions regarding and the volatility of commodity prices, interest rates and foreign exchange rates; commodity price, interest rate and foreign exchange rate swap contracts and/or derivative financial instruments that MEG may enter into from time to time to manage its risk related to such prices and rates; timing of completion, commissioning, and start-up, of MEG's turnarounds; the operational risks and delays in the development, exploration, production, and the capacities and performance associated with MEG's projects; MEG's ability to reduce or increase production to desired levels, including without negative impacts to its assets; MEG's ability to finance capital expenditures; MEG's ability to maintain sufficient liquidity to sustain operations through a prolonged market downturn; changes in credit ratings applicable to MEG or any of its securities; actions taken by OPEC+ in relation to supply management; the impact of the Russian invasion of Ukraine and associated sanctions on commodity prices; the availability and cost of labour and goods and services required in the Corporation's operations, including inflationary pressures; supply chain issues including transportation delays; the cost and availability of equipment necessary to our operations; and changes in general economic, market and business conditions. Although MEG believes that the assumptions used in such forward-looking information are reasonable, there can be no assurance that such assumptions will be correct. Accordingly, readers are cautioned that the actual results achieved may vary from the forward-looking information provided herein and that the variations may be material. Readers are also cautioned that the foregoing list of assumptions, risks and factors is not exhaustive. Further information regarding the assumptions and risks inherent in the making of forward-looking statements can be found in MEG's most recently filed Annual Information Form ("AIF"), along with MEG's other public disclosure documents. Copies of the AIF and MEG's other public disclosure documents are available through the Company's website at and through the SEDAR+ website at The forward-looking information included in this news release is expressly qualified in its entirety by the foregoing cautionary statements. Unless otherwise stated, the forward-looking information included in this news release is made as of the date of this news release and MEG assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances, except as required by law. This news release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about MEG's prospective results of operations including, without limitation, the Corporation's AFF based on certain market variables, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth above. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on FOFI. MEG's actual results, performance or achievement could differ materially from those expressed in, or implied by, these FOFI, or if any of them do so, what benefits MEG will derive therefrom. MEG has included the FOFI in order to provide readers with a more complete perspective on MEG's future operations, and the factors that could affect such operations, and such information may not be appropriate for other purposes. MEG disclaims any intention or obligation to update or revise any FOFI statements, whether as a result of new information, future events or otherwise, except as required by law. About MEG MEG is the leading pure-play in situ thermal oil producer in Canada. Our purpose is to meet the growing demand for energy, produced safely and reliably, while generating long-term value for all our stakeholders. MEG produces, transports and sells our oil (AWB) to customers throughout North America and internationally. Our common shares are listed on the Toronto Stock Exchange under the symbol "MEG" (TSX: MEG). For further information, please contact: Investor Relations T 403.767.0515 E [email protected] Media Relations T 403.775.1131 E [email protected] SOURCE MEG Energy Corp.
Cision Canada
16-06-2025
- Business
- Cision Canada
MEG Energy's Board Recommends Shareholders Reject the Strathcona Offer and NOT TENDER Their Shares
Offer's share consideration exposes shareholders to a company with inferior assets Selling by WEF and its investors to provide liquidity will put downward pressure on the share price MEG is a uniquely attractive investment opportunity that warrants a premium valuation MEG has initiated a strategic review of alternatives with the potential to surface an offer superior to the Company's compelling standalone plan CALGARY, AB, June 16, 2025 /CNW/ - MEG Energy Corp. (TSX: MEG) ("MEG", or the "Company") announced today that its Board of Directors (the "Board") has determined that Strathcona Resources Ltd.'s ("Strathcona") unsolicited bid to acquire all of the issued and outstanding MEG shares is inadequate, opportunistic, and NOT in the best interests of MEG or its shareholders. View PDF On May 30, 2025, Strathcona made a formal offer to acquire all of the issued and outstanding MEG shares it does not already own for a combination of 0.62 of a Strathcona share and $4.10 in cash per MEG share (the "Offer"). The Offer remains open until September 15, 2025. MEG's Board formed a Special Committee to conduct a thorough evaluation of the Offer with the assistance of financial and legal advisors. Following this review and on the recommendation of the Special Committee, the Board has concluded that the consideration to be received by shareholders under the Offer is inadequate, from a financial point of view, to shareholders, is not in the best interests of the Company or its shareholders, and unanimously recommends that shareholders REJECT the Offer by taking no action and NOT TENDER their shares. "Strathcona's Offer is inadequate by all reasonable measures and is not the right path forward for MEG shareholders," said James McFarland, Chairman of the Board. "A combination with Strathcona would expose shareholders to inferior assets and significant capital markets risks, including a $6 billion overhang resulting from Waterous Energy Fund's ("WEF") 51% ownership in the combined company, which would allow WEF investors to realize liquidity over time." The Board today filed its Directors' Circular, which provides information for shareholders about MEG's prospects and the Board's analysis, deliberations and recommendations. The Directors' Circular is available at and on SEDAR+ at Additional information can be found in the Investor Presentation, which is also available at "MEG has driven substantial transformation over the last few years," said Darlene Gates, MEG's Chief Executive Officer. "With a stronger balance sheet and low-risk growth from our accretive Facility Expansion Project, we are delivering sustainable shareholder returns. Our growing free cash flow supports a robust return of capital program, while our multi-year investment plan provides access to high quality resource and reduces per-barrel costs and sustaining capital." In its Directors' Circular, the Board details the reasons for its recommendations, including: The Offer's share consideration exposes shareholders to a company with inferior assets. MEG's asset portfolio is located in the heart of the Athabasca oil sands region, anchored by Christina Lake, a best-in-class SAGD project with top quartile asset characteristics and approximately five billion barrels of discovered bitumen initially-in-place ("DBIIP") supporting decades of low-risk, attractive growth. Together with undeveloped resource at Surmont, May River and Kirby, MEG has approximately 11 billion barrels of DBIIP. By contrast, Strathcona's assets are scattered, lack scale, and are located in less prolific areas with uncompetitive asset characteristics relative to MEG's Christina Lake. Selling by WEF and its investors to provide liquidity will put downward pressure on the share price. WEF's concentrated 51% ownership position introduces substantial and prolonged overhang risk, making the combined company a vehicle for WEF and its LP investors to sell their material ownership over time. Strathcona does not have sufficient trading liquidity for WEF and its LP investors to sell their interest in the market. If Strathcona combines with MEG, WEF will have more liquidity to attempt to sell its $6 billion stake. This selling pressure, or even the perceived risk of such selling pressure, will place immediate and significant downward burden on the share price of the combined company for a prolonged period of time. The Offer is inadequate. The Offer lacks a real premium. Its advertised premium was opportunistically calculated as the best and highest implied premium based on Strathcona's relatively thin trading. Since the announcement of the Offer, MEG shares have consistently traded above the implied value of the Offer, indicating that the market believes it significantly undervalues MEG's shares. In reality, the Offer of 0.62 of a Strathcona share and $4.10 in cash per MEG share does not represent a premium, but a significant discount when measured over periods other than the single day on which Strathcona calculated the advertised premium. Other paths to superior value maximization. MEG is a uniquely attractive investment opportunity: a pure play oil sands producer with best-in-class assets, an innovative team, and attractive growth opportunities. MEG warrants a premium valuation, which the Offer fails to deliver. MEG's Board has authorized the Company to initiate a strategic review of alternatives with the potential to surface an offer superior to the Company's compelling standalone plan. As noted in the Directors' Circular, the Board also considered the following: The standalone plan offers low-risk, visible brownfield growth and free cash flow generation; MEG delivered outsized returns since its rejection of the previous unsolicited offer in 2018; Shareholders have publicly expressed concerns about the value of the Offer; and All research analysts covering MEG have price targets exceeding the value of the Offer. The Board has received a written opinion from MEG's financial advisor, BMO Capital Markets stating that as of June 12, 2025, and based upon and subject to the assumptions, limitations and qualifications contained therein, the consideration offered to MEG shareholders (other than Strathcona and its affiliates) pursuant to the Offer is inadequate from a financial point of view to such shareholders. The Special Committee has received a written opinion from its financial advisor, RBC Capital Markets, to the effect that, as of June 12, 2025, and based upon and subject to the assumptions, limitations and qualifications contained therein and such other matters as RBC Capital Markets considered relevant, the consideration under the Offer is inadequate, from a financial point of view, to the shareholders (other than Strathcona and its affiliates). For the reasons outlined above, and on the recommendation of the Special Committee, the Board has unanimously concluded that the Offer is not in the best interests of MEG or its shareholders. MEG has a robust go-forward business plan that the Board believes will generate significant free cash flow and shareholder value, underpinned by MEG's high quality SAGD assets with decades of growth potential. With a focus on value maximization for MEG shareholders, the Board of Directors has authorized the Special Committee to initiate a strategic review of alternatives with the potential to surface an offer superior to the Company's compelling standalone plan. MEG, through its financial advisor, BMO Capital Markets, has begun an outreach to potential parties to explore and solicit potential interest in an alternative value maximizing transaction for shareholders. NO ACTION is required to reject the Offer. If you have already tendered your shares to the Offer, you can withdraw your shares by contacting your broker or Sodali & Co, the information agent retained by MEG, by toll-free phone call in North America to 1-888-999-2785, or to 1-289-695-3075 for banks, brokers, and callers outside North America or by e-mail at [email protected]. Advisors BMO Capital Markets and Burnet, Duckworth & Palmer LLP are acting as financial advisor and legal advisor, respectively, to the Company and RBC Capital Markets and Norton Rose Fulbright Canada LLP are acting as financial advisor and legal counsel, respectively, to MEG's Special Committee. Forward-Looking Information Certain statements contained in this news release may constitute forward-looking statements within the meaning of applicable Canadian securities laws. These statements relate to future events or MEG's future performance. All statements other than statements of historical fact may be forward-looking statements. The use of any of the words "estimate", "will", "would", "project", "believe", "initiate", "plan", "target", "potential", "growth", "prolonged" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are often, but not always, identified by such words. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. In particular, and without limiting the foregoing, this news release contains forward looking statements with respect to: the belief that a combination with Strathcona would expose shareholders to inferior assets and significant capital markets risks; the risk that Strathcona shareholders would use the combined company's liquidity to sell their shares and the potential for substantial and prolonged overhang risk; the anticipated benefits and results of MEG's multi-year investment plan; expectations in relation to WEF's ownership and the resulting overhang in the combined entity; the anticipated results of WEF using the additional liquidity of the combined entity to sell its $6 billion stake and the results thereof on the share price; the Board's belief that MEG's robust go-forward business plan will general significant free cash flow and shareholder value; the anticipated growth potential of MEG's high quality SAGD assets; the expectations with respect to the strategic review of alternatives, including the anticipated process and expected results therefrom; the price targets from research analysts covering MEG; and other similar statements. Forward-looking information contained in this news release is based on management's expectations and assumptions regarding, among other things: Strathcona and WEF's intentions if the Offer is accepted; future dispositions of Strathcona's assets; future crude oil, bitumen blend, natural gas, electricity, condensate and other diluent prices; that tariffs currently in effect will remain the same; MEG's ability to obtain qualified staff and equipment in a timely and cost-efficient manner; foreign exchange rates and interest rates; the applicability of technologies for the recovery and production of MEG's reserves and contingent resources; the recoverability of MEG's reserves and contingent resources; MEG's ability to produce and market production of bitumen blend successfully to customers; MEG's ability to maintain its dividend and capital programs; MEG's future production levels and steam-to-oil ratios; future capital and other expenditures; MEG's operating costs; anticipated sources of funding for operations and capital investments; the regulatory framework governing royalties, land use, taxes and environmental matters, including federal and provincial climate change policies, in which MEG conducts and will conduct its business; MEG's future debt levels; geological and engineering estimates in respect of MEG's reserves and contingent resources; the geography of the areas in which MEG is conducting exploration and development activities; the impact of increasing competition on MEG; MEG's ability to obtain financing on acceptable terms; and business prospects and opportunities. By its nature, such forward-looking information involves significant known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated. Factors that could cause actual results to vary from forward-looking information or may affect the operations, performance, development and results of MEG's businesses include: the risk that the Offer may be varied, accelerated or terminated in certain circumstances; risks relating to the outcome of the Offer, including the risks associated with WEF's ownership; the risk that the conditions to the Offer may not be satisfied, or to the extent permitted, waived; the risk that no compelling or superior proposals will emerge from MEG's process to explore strategic alternatives; the risk that future opportunities to receive full and fair value and future upside of MEG's shares may not be realized; the risk that operating results will differ from what is currently anticipated; MEG's status and stage of development; the concentration of MEG's production in a single project; the majority of MEG's total reserves and contingent resources are non-producing and/or undeveloped; the uncertainty of reserve and resource estimates; long-term reliance on third parties; the effect or outcome of litigation; the effect of any diluent supply constraints and increases in the cost thereof; the potential delays of and costs of overruns on projects and future expansions of MEG's assets; operational hazards; competition for, among other things, capital, the acquisition of reserves and resources, pipeline capacity and skilled personnel; risks inherent in the bitumen recovery process; changes to royalty regimes; the failure of MEG to meet specific requirements in respect of its oil sands leases; claims made by Indigenous peoples; unforeseen title defects and changes to the mineral tenure framework; risks arising from future acquisition activities; sufficiency of funds; fluctuations in market prices for crude oil, natural gas, electricity and bitumen blend; future sources of insurance for MEG's property and operations; public health crises, similar to the COVID-19 pandemic, including weakness and volatility of crude oil and other petroleum products prices from decreased global demand resulting from public health crises; risk of war (including the conflicts between Russia and Ukraine and Israel, Hamas and Iran); general economic, market and business conditions; volatility of commodity inputs; variations in foreign exchange rates and interest rates; hedging strategies; national or global financial crisis; environmental risks and hazards, including natural hazards such as regional wildfires, and the cost of compliance with environmental legislation and regulations, including greenhouse gas regulations, potential climate change legislation and potential land use regulations; enacted and proposed export and import restrictions, including but not limited to tariffs, export taxes or curtailment on exports; failure to accurately estimate abandonment and reclamation costs; the need to obtain regulatory approvals and maintain compliance with regulatory requirements; the extent of, and cost of compliance with, laws and regulations and the effect of changes in such laws and regulations from time to time including changes which could restrict MEG's ability to access foreign capital; failure to obtain or retain key personnel; potential conflicts of interest; changes to tax laws (including without limitation, a potential United States border adjustment tax) and government incentive programs; the potential for management estimates and assumptions to be inaccurate; risks associated with establishing and maintaining systems of internal controls; risks associated with the tariffs imposed on the import and export of commodities and the possibility that such tariffs may change; political risks and terrorist attacks; risks associated with downgrades in the credit ratings for MEG's securities; cybersecurity errors, omissions or failures; restrictions contained in MEG's credit facilities, other agreements relating to indebtedness and any future indebtedness; any requirement to incur additional indebtedness; MEG defaulting on its obligations under its indebtedness; and the inability of MEG to generate cash to service its indebtedness. Although MEG believes that the assumptions used in such forward-looking statements and information are reasonable, there can be no assurance that such assumptions will be correct. Accordingly, readers are cautioned that the actual results achieved may vary from the forward-looking information provided herein and that the variations may be material. Readers are also cautioned that the foregoing list of assumptions, risks and factors is not exhaustive. Further information regarding the assumptions and risks inherent in the making of forward-looking statements and in respect of the Offer can be found under the heading " Cautionary Statement on Forward-Looking Statements" in the Directors' Circular, along with MEG's other public disclosure documents which are available through the Company's website at and through the SEDAR+ website at The forward-looking information included in this news release is expressly qualified in its entirety by the foregoing cautionary statements. Unless otherwise stated, the forward-looking information included in this news release is made as of the date of this news release and MEG assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances, except as required by law. Advisory Regarding Oil and Gas Information The information concerning MEG's DBIIP estimates in this news release was derived from: (1) a report of GLJ dated effective as of December 31, 2024 assessing and evaluating the proved and probable reserves and certain contingent resources of MEG's Christina Lake property, which has been prepared in accordance with National Instrument 51-101 and in accordance with the procedures and standards contained in the Canadian Oil and Gas Evaluation Handbook (the " Reserves and Contingent Resources Report"); and (2) a report of GLJ dated effective as of May 31, 2025 assessing and evaluating the discovered bitumen initially in place of MEG's Surmont, May River, Thornbury and Kirby assets (the " DBIIP Report"), which has been prepared in accordance with the procedures and standards contained in the Canadian Oil and Gas Evaluation Handbook. Such DBIIP estimates described in this news release are estimates only and the actual quantities of recoverable bitumen and other product types may be greater or less than those estimated. There are significant differences in the criteria associated with the classification of reserves and contingent resources. Contingent resource estimates involve additional risk, specifically the risk of not achieving commerciality, not applicable to reserves estimates. There is no certainty that it will be commercially viable to produce any portion of the resources. The estimates of reserves and resources from individual properties may not reflect the same confidence level as estimates of reserves and resources for all properties, due to the effects of aggregation. Further information regarding the estimates and classification of MEG's reserves and resources is contained within MEG's public disclosure documents on file with Canadian securities regulatory authorities, and in particular, within MEG's annual information form dated February 27, 2025 for the year ended December 31, 2024 available through the SEDAR+ website at With respect to MEG's oil sands assets, DBIIP is equivalent to discovered petroleum initially-in-place, which is defined in the Canadian Oil and Gas Evaluation Handbook as the quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of discovered petroleum initially-in-place includes production, reserves and contingent resources; the remainder is unrecoverable. Bitumen in place should not be confused with bitumen "reserves" that are the technically and economically recoverable portion of it. There is no certainty that it will be commercially viable to produce any portion of the resources described by the estimated DBIIP. The DBIIP estimates have not been risked for the chances of development. There are no recovery projects defined for the volumes of DBIIP. Given the insufficient data to determine an expected recovery factor, a contingent or prospective resource or reserve amount cannot be estimated. The key variables relevant to the DBIIP evaluation are porosity, reservoir thickness, pressure, water saturation and gas composition which have increasing uncertainty with distance from existing wells. There are numerous uncertainties inherent in estimating DBIIP, including the accuracy of each input underlying the DBIIP calculations and the reliability of the data used to estimate the DBIIP. The accuracy of the DBIIP estimates is, in part, a function of the quality and quantity of available data and of engineering and geological interpretation and judgment. The availability of additional data and analysis would necessitate revisions. Such revisions may be material. DBIIP is the most specific assignable category for the resources in MEG's Surmont, Thornbury, May River and Kirby projects as these growth properties are not in MEG's short-term development strategy and MEG has not commissioned a current independent qualified reserves evaluator to support any more specific assignable categories. This news release discloses DBIIP of approximately 5 bn bbl for MEG's Christina Lake project. More specifically, the DBIIP estimate for MEG's Christina Lake project is 5,306.8 MMbbl, which is comprised of: proved plus probable bitumen reserves of 1,938.9 MMbbl on a MEG gross basis, risked best estimate contingent resources (with a project maturity sub-class development pending) of 912.4 MMbbl on a MEG gross basis, 2,057.5 MMbbl of unrecoverable portions of DBIIP (which includes 47.3 MMbbl of unrisked best estimate contingent resources) and 398.0 MMbbl of cumulative production, all as per the Reserves and Contingent Resources Report. Abbreviations MMbbl million barrels of oil bn bbl billions of barrels of oil For media inquiries, please contact: Jim Campbell Vice President, Communications and External Relations T 403.775.1117 SOURCE MEG Energy Corp.
