MEG Energy Corp T.MEG

RBC

[retiredcf]

November 5, 2024

MEG Energy Corp.
3Q First Glance—Straight Down the Fairway

TSX: MEG | CAD 26.49 | Outperform | Price Target CAD 35.00

Sentiment: Neutral

MEG Energy reported solid third-quarter results punctuated by in-line adjusted FFO per share of $1.34, in-line production of 103,300 bbl/d, and 7% lower capital spending vis-a-vis Street consensus.

MEG is now distributing 100% of free cash flow to shareholders through share buybacks and its base dividend following the achievement of its US$600 million net debt target on October 1.

Conference Call

• Time: 8:30 a.m. ET on Wednesday, November 6 • Dial in: 888-510-2154

Key Points

• Third-quarter production of 103,300 bbl/d was in line with our estimate of 103,100 bbl/d amid largely in-line realizations (net of diluent, before transportation & storage expenses) of $83.26/bbl (vs. RBCe $82.67/bbl).

• MEG’s capital spending in the quarter of $141 million was 6% below our outlook of $150 million.

• MEG’s net debt stood at about $646 million (US$478 million) as of September 30, reflective of a working capital tailwind of about $105 million.

• Non-energy operating expenses came in at $5.18/bbl, largely in line with our estimate of $5.25/bbl.

• MEG reported bitumen sales volumes of 105,300 bbl/d that were 2% higher than its production. This is in line with our expectation that the company had drawn bitumen inventories in the quarter.

• The company began steaming a second new well pad in late September, which is expected to come on-stream in December.

• MEG reported $10 million in power revenues, lower than our estimate of $13 million. Power revenues offset 62% of MEG’s energy operating costs in the third quarter.

  2024 Guidance

  • There are no changes to MEG’s 2024 guidance, which points toward midpoint bitumen production of 105,000 bbl/d amid a $550 million capital program.