MEG Energy Corp T.MEG

Chistina Lake: Now In POST PAYOUT Royalty Status

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Second quarter 2023 highlights include:

• Bitumen production of 85,974 barrels per day ("bbls/d") at a 2.25 steam-oil ratio ("SOR") reflecting the impact of the major planned turnaround in the quarter;
• Funds flow from operating activities ("FFO") and adjusted funds flow ("AFF") of $278 million, or $0.96 per share;
• Free cash flow ("FCF") of $129 million, after $149 million of capital expenditures, including $66 million directed towards completion of the major planned turnaround;
• Debt repayment of US$40 million (approximately $54 million) during the second quarter of 2023 and US$126 million (approximately $171 million) year-to-date. Net debt declined to US$994 million (approximately $1.3 billion) at the end of the second quarter of 2023;
• MEG returned $66 million to shareholders through the buyback and cancellation of 3.1 million shares at a weighted average price of $21.51 per share. Year-to-date buybacks totaled 8.0 million shares, returning $169 million to shareholders;
• Operating expenses net of power revenue of $6.63 per barrel. Power revenue offset 75% of energy operating costs, resulting in energy operating costs net of power revenue of $0.97 per barrel and non-energy operating costs of $5.66 per barrel, all reflecting lower production in the quarter due to the major planned turnaround;
• The Christina Lake operation reached post-payout status under the Oil Sands Royalty Regulation resulting in an increase to the effective royalty rate as expected; and
• On April 14, 2023, S&P Global Ratings raised the Corporation's long-term issuer credit rating to BB- with a stable outlook from B+ and affirmed the issue-level rating on the Corporation's senior unsecured notes at BB-. On May 24, 2023, Moody's Investors Service raised the Corporation's long-term issuer credit rating to Ba3 with a stable outlook from B1 and raised the issue-level rating on the Corporation's senior unsecured notes to B1 from B2.

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The Corporation's Christina Lake operation reached post-payout status under the Oil Sands Royalty Regulation during the second quarter of 2023 resulting in an increase in the effective royalty rate as expected. The impact of this higher post-payout rate was offset by lower gross revenue relative to the second quarter of 2022 and, as a result, the total royalty burden was consistent across both

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Q2/2023 royalty payments: -  $ 58 million - $ 7.69 per BITUMEN barrel at BOP SALE of 83,531 bbls/d Q2/2023: Bitumen realization after net transportation and storage expense: $ 438 million Royalty: $ 58 million EFFECTIVE ROYALTY RATE: 13.2% Q2/2022: Bitumen realization after net transportation and storage expense: $ 687 million Royalty: $ 58 million EFFECTIVE ROYALTY RATE: 8.5