MEG Energy Corp T.MEG

Alternate Symbol(s): MEGEF

Energy Oil & Gas E&P

MEG Energy Corp. is a Canada-based energy company focused on in-situ thermal oil production in the southern Athabasca oil region of Alberta, Canada. The Company is engaged in the development of enhanced oil recovery projects that utilize steam-assisted gravity drainage extraction methods to improve the economic recovery of oil. It transports and sells thermal oil (AWB) to customers throughout North America and internationally. The Company owns a 100% interest in over 410 square miles of mineral leases in the southern Athabasca oil region of Alberta, Canada and is primarily engaged in sustainable in situ thermal oil production at its Christina Lake Project. Christina Lake Project is a multi-phased project, located 150 kilometers south of Fort McMurray in northeast Alberta. It comprised of approximately 200 square kilometers of leases.

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MEG Energy Corp

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Post by retiredcfon Oct 30, 2024 9:32am

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Post# 36288463

RBC

October 29, 2024

MEG Energy Corp.
3Q Preview—100% Payout is Now!

TSX: MEG | CAD 25.08 | Outperform | Price Target CAD 35.00

Sentiment: Neutral

MEG Energy will report its third-quarter results after market close on Tuesday, November 5. We look forward to a financial/ operational update following the achievement of its US$600 million net debt target announced on October 1, which saw an increase in shareholder returns to 100% of free cash flow.

MEG is our favorite intermediate producer and is on our Global Energy Best Ideas List.

Conference Call

• Time: 8:30 am ET, Wednesday, November 6 • Dial in: 888-510-2154

3Q Preview

RBC vs. Consensus (Analyst Survey): RBC sits above Street Consensus on FFO/share (high-end of range) while in-line on production and capital spending.

Noteworthy Factors

• Our third-quarter outlook for MEG incorporates bitumen production of 103,100 bbl/d, up 3% sequentially amid light turnaround activity. We suspect MEG drew bitumen inventories of roughly 1,000-2,000 bbl/d in the third quarter, which should equate to sales exceeding production.

Our estimates include bitumen realizations of approximately $83/bbl in the third-quarter.
We peg MEG’s net debt (company definition) at $754 million (US$552 million before FX translation impacts) as of September

30, below the company’s US$600 million net debt target which the company announced it had achieved on October 1. As such, MEG is now distributing 100% of free cash flow to shareholders through share repurchases and its base dividend.
We peg MEG’s third-quarter all-in operating costs at $6.14/bbl (excluding estimated power sales of $13 million), with a royalty rate of 24% (on estimated net revenue).
We forecast MEG’s capital spending at $150 million in the third-quarter amid common share repurchases of circa $108 million.
All said, we peg MEG’s third-quarter FFO/share at $1.39 ($372 million).