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MEG Energy announces 2023 Capital Investment Plan and Operational Guidance

Press Release

CALGARY, ABNov. 28, 2022 – MEG Energy Corp. (TSX: MEG) (“MEG” or the “Corporation”) today announced its 2023 capital investment plan and operational guidance. Highlights include:

  • Annual production guidance of 100,000 to 105,000 bbls/d including a planned Q2 turnaround which will impact full year production by approximately 6,000 bbls/d;
  • Capital investments of $450 million;
  • Non-energy operating costs and general & administrative (“G&A”) expense guidance of $4.75 to $5.05/bbl and $1.70 to $1.90/bbl, respectively;
  • Effective Crown Royalty payments increasing to 20-25% of realized plant gate bitumen revenue as our Christina Lake project achieves royalty payout;
  • Free cash flow to be split equally between debt reduction and share buybacks as MEG executes its financial strategy and advances toward its US$600 million net debt target; and
  • Continued emphasis on operations excellence and safety leadership development

2023 Guidance

MEG’s production estimate represents an 8% increase from the top end of our revised 2022 production guidance.   Record production of 102,000 bbls/d in the third quarter of 2022 and greater than 110,000 bbls/d in October were achieved, and the 2023 estimate reflects sustained field and plant reliability throughout the year.  The annual production estimate also incorporates a second quarter turnaround in our Phase 1 & 2 facilities, which will impact the full year by approximately 6,000 bbls/d, as well as other maintenance activities.

MEG has capacity to ship 100,000 bbls/d of AWB blend sales, on a pre-apportionment basis, to the U.S. Gulf Coast market via its committed capacity on the Flanagan South and Seaway Pipeline systems (“FSP”).  In addition, 20,000 bbls/d of capacity is contracted on the TMX pipeline system to the Canadian west coast.  TMX is scheduled to come into service in the fourth quarter of 2023, which will further broaden MEG’s market access and position the company to optimize realized prices.

MEG’s improved balance sheet and strong operating performance, together with the current oil price environment, provide a solid foundation to fund the 2023 capital program.  As a result, no WTI or WTI:WCS differential hedges have been entered for 2023.

2023 Guidance (1)

Capital investment

$450 million

Production (average)

100,000 – 105,000 bbls/d

Non-energy operating costs

$4.75 – $5.05 per bbl

G&A expense

$1.70 – $1.90 per bbl

(1)2023 guidance includes the impact of the scheduled second quarter turnaround which is expected to impact annual production by approximately 6,000 bbls/d.

2023 Capital Investment Summary


2023 Guidance

Well Pads & Redevelopment

$235 million

Facility & Field Infrastructure

$140 million


$55 million

Corporate, Other

$20 million


$450 million

MEG is focused on the delivery of safe and reliable operations from our Christina Lake asset.  We will continue to invest in our safety development program, for both employees and contractors, and to advance operational excellence.

The corporation’s continued focus on operational excellence is driving increased production at industry leading steam oil ratios (“SOR”) with reduced green-house gas (“GHG”) intensity.  This is being accomplished with enhanced completion designs, optimized inter-well spacing, short-cycle high return redevelopment projects and steam allocation techniques that are lowering field SOR ratios and associated GHG intensity.

Approximately 52%, or $235 million, of the program is allocated towards new well pads, gathering systems, and redevelopment drilling which will generate short-cycle production, improve resource recovery and reduce capital intensity.

An additional $140 million is directed toward facility and field infrastructure.  Investments in areas, such as high-pressure steam deployment, gas and water processing, reliability improvements, well work, and sulphur recovery will enhance facility utilization.

Turnaround activities, planned for the second quarter of 2023, comprise $55 million.

Budgeted 2023 capital costs reflect an estimated 7% year-over-year impact from inflationary and supply chain pressures.

Adjusted Funds Flow (“AFF”) Sensitivity

MEG’s production is entirely comprised of crude oil and AFF is highly correlated with crude oil benchmark prices.  The following table provides an annual sensitivity estimate to the most significant market variables.

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