RE:MEG uncertainty - real of imagined1-MEG has been under some selling pressure of late even as oil prices have been climbing, why?
I think the main reason why MEG is not responding to higher oil prices is mostly due to their higher leverage and as the markets witness more and more USA based shale companies going into protection then they associate MEG's higher leverage with bankruptcy protection situations occuring almost daily down south.
well, yes MEG's higher leverage is a concern but they are in no way to be compared with USA oil shale companies who need to spend big capital drilling more wells just to keep produciton flat.
MEG has reduce maintenance capital in 2016 to under 150 million if memeory serves me and that capex will maintain current produciton levels of 82,000- 83,000 bpd for all of 2016.
MEG has estimated that based on current strip pricing and this was 1 month ago, that will not need to dip into their lines of credit to fund capex in 2016.
additionally, with the sale of MEG's 50% interest in Access pipeline for an estimated 1.5 billion, thei will reduce the leverage and strengthen their balancve sheet.
so bottom-line, don't compare MEG to bankrupt shale oil companeis in USA that need a constantly borrow money to spend on drilling to keep production flat.
they are different animals, and any uncertainty about sustainability should be discarded.
GLTA