With almost $75 million in share buybacks in October, heavy oil producer MEG Energy (MEG) was eighth on our
preliminary October Top 100 Issuers with Buybacks list, published on Monday. When MEG announced Q3 results on November 5th, it reported debt of approximately $646 million as of September 30th which met its debt reduction target. Given the achievement, MEG expects to apply all of its free cash flow to expanded buybacks and its newly inaugurated base quarterly dividend of $0.10 per share. According to our September Top 100 Issuers with Buybacks list, MEG spent almost $53 million buying back shares that month.
MEG generated Q3 funds flow from operating activities of $362 million, down from $492 million in Q3 2023 as bitumen prices fell. Free cash flow fell to $221 million from $409 million in Q3 2023. Q3 production averaged 103,298 bbls/d, off slightly from 103,726 bbls/d in the comparable period. Production was up from the 2022 average production of about 95,000 bbls/d which we referenced the last time we featured MEG on January 23, 2023. At the time, insiders were buying as short sellers bet against the stock. Since the report, insiders have come out on top with MEG advancing 26.9%, outpacing the S&P/TSX Capped Energy Index, up 10.0%. Although shorts are still betting against the stock with just over 4.2 million shares shorted as of October 31st, that is down from almost 8.2 million shares shorted as of mid-January 2023. Nevertheless, the position is big enough to generate an INK potential short-squeeze setup signal. Meanwhile, insiders have been buying again. Generally, we would view insider buying, issuer buybacks, and a meaningful short interest position as a bullish combination.