Stockwatch Today Oil sands producer MEG Energy Corp. (MEG) added 96 cents to $20.42 on 9.95 million shares, as it cheered "record" first quarter financials and trumpeted a net profit of $362-million. Production of 101,100 barrels a day was in line with analysts' predictions, while cash flow of $1.87 a share was ahead of analysts' predictions of $1.81 a share. "The first quarter was a record quarter for MEG from both an operational and financial perspective," cheered president and chief executive officer Derek Evans. He added that MEG is just about ready to "initiate share buybacks ... in the second quarter."
Investors were pleased. Although the buyback is no surprise -- MEG received TSX approval to launch one in March -- the company has been waiting to get started until its net debt reaches $1.7-billion (U.S.). As of March 31, net debt was $1.72-billion (U.S.), hence Mr. Evans's enthusiasm. He added that MEG's next target is $1.2-billion (U.S.), which he is aiming to reach next quarter, at which point he will "increase the percentage of free cash flow allocated to share buybacks." Next year, he hopes to hit $600-million (U.S.) in net debt and then ensure that "100 per cent of free cash flow will be returned to shareholders." Optimists took this as a clue that MEG might eventually add a dividend on top of the buybacks.