Follow Us! Like Our Page!

MEG Energy announces first quarter 2024 financial and operating results

Press Release

All financial figures are in Canadian dollars ($ or C$) and all references to barrels are per barrel of bitumen unless otherwise noted. The Corporation’s Non-GAAP and Other Financial Measures are detailed in the Advisory section of this news release. They include: cash operating netback, bitumen realization net of transportation and storage expense, operating expenses net of power revenue, energy operating costs net of power revenue, non-energy operating costs, energy operating costs, adjusted funds flow, free cash flow and net debt.

CALGARY, AB, May 6, 2024 – MEG Energy Corp. (TSX: MEG) (“MEG” or the “Corporation”) reported its first quarter 2024 operational and financial results.

“MEG’s strong safety, operating, and financial performance in the first quarter of 2024 demonstrate the team’s focus on operations excellence,” said Darlene Gates, Chief Executive Officer. “Bitumen production averaged approximately 104,000 barrels per day during the quarter, and $217 million of free cash flow supported the repurchase of 4.7 million shares and $142 million of debt redemption. We expect that additional Canadian pipeline capacity from the imminent start up of TMX will narrow heavy oil differentials, reduce differential volatility and improve netbacks on all of MEG’s production.”

First quarter 2024 highlights include:

  • Funds flow from operating activities (“FFO”) and adjusted funds flow (“AFF”) of $329 million, or $1.19 per share;
  • Free cash flow (“FCF”) of $217 million, after funding $112 million of capital expenditures;
  • Redemption of US$105 million (approximately $142 million) of senior notes;
  • Shareholder capital returns totaling $127 million through the repurchase and cancellation of 4.7 million shares at a weighted average price of $26.94 per share;
  • Net debt of US$687 million (approximately $930 million) as at March 31, 2024;
  • Average bitumen production of 104,088 barrels per day (“bbls/d”) at a 2.37 steam-oil ratio (“SOR”);
  • Bitumen realization after transportation and storage expense of $60.10 per barrel, with the WTI:WCS differential averaging US$19.31 per barrel;
  • Operating expenses net of power revenue of $6.37 per barrel. Power revenue offset 68% of energy operating costs, resulting in energy operating costs net of power revenue of $1.19 per barrel and non-energy operating costs of $5.18 per barrel; and
  • The Corporation’s 2024 operating and capital guidance remains unchanged.

2024

2023

2022

($millions, except as indicated)

Q1

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Operational results:

Bitumen production – bbls/d

104,088

109,112

103,726

85,974

106,840

110,805

101,983

67,256

Steam-oil ratio

2.37

2.28

2.28

2.25

2.25

2.22

2.39

2.46

Bitumen sales – bbls/d

105,534

112,634

101,625

83,531

106,480

113,582

95,759

73,091

Benchmark pricing:

WTI – US$/bbl

76.96

78.32

82.26

73.78

76.13

82.65

91.55

108.41

Differential – WTI:AWB – Edmonton – US$/bbl

(21.00)

(23.79)

(14.38)

(17.37)

(27.63)

(29.14)

(22.80)

(14.25)

AWB – Edmonton – US$/bbl

55.96

54.53

67.88

56.41

48.50

53.51

68.75

94.16

Differential – WTI:AWB – USGC – US$/bbl

(8.16)

(7.43)

(4.94)

(7.62)

(14.87)

(16.35)

(10.15)

(6.15)

AWB – USGC – US$/bbl

68.80

70.89

77.32

66.16

61.26

66.30

81.40

102.26

Financial results:

Bitumen realization after net transportation and

    storage expense(1) – $/bbl

60.10

63.52

84.75

57.64

43.40

54.75

74.75

103.29

Non-energy operating costs(2) – $/bbl

5.18

4.64

5.15

5.66

4.77

4.34

4.49

5.65

Energy operating costs net of power revenue(1) – $/bbl  

1.19

1.46

(0.04)

0.97

1.36

1.49

0.96

7.32

Operating expenses net of power revenue(1) – $/bbl

6.37

6.10

5.11

6.63

6.13

5.83

5.45

12.97

Cash operating netback(1) – $/bbl

39.99

38.65

58.64

42.38

34.32

43.89

62.63

81.75

General & administrative expense –

     $/bbl of bitumen production volumes

2.18

1.89

1.73

1.85

1.94

1.62

1.72

2.37

Funds flow from operating activities

329

358

492

278

348

383

501

412

     Per share, diluted

1.19

1.27

1.71

0.96

1.19

1.28

1.63

1.31

Adjusted funds flow(3)

329

358

492

278

274

401

496

478

Per share, diluted(3)

1.19

1.27

1.71

0.96

0.94

1.34

1.61

1.52

Capital expenditures

112

104

83

149

113

106

78

104

Free cash flow(3)

217

254

409

129

161

295

418

374

Debt repayments – US$

105

128

68

40

86

150

262

379

Share repurchases – C$

127

219

58

66

103

196

92

94

Revenues

1,364

1,444

1,438

1,291

1,480

1,445

1,571

1,571

Net earnings (loss)

98

103

249

136

81

159

156

225

Per share, diluted

0.36

0.37

0.86

0.47

0.28

0.53

0.51

0.72

Long-term debt, including current portion

1,015

1,124

1,323

1,382

1,466

1,581

1,803

2,026

Net debt(3) – US$

687

730

885

994

1,020

1,026

1,193

1,384

(1)Non-GAAP financial measure –  please refer to the Advisory section of this news release. 

(2)Supplementary financial measure – please refer to the Advisory section of this news release.

(3)Capital management measure – please refer to the Advisory section of this news release.

Financial Results

AFF increased to $329 million, or $1.19 per share, in the first quarter of 2024 from $274 million, or $0.94 per share, in the comparable 2023 period driven mainly by a higher cash operating netback and a lower interest expense. Cash operating netback rose $5.67 per barrel in the first quarter of 2024, mainly reflecting a higher bitumen realization after net transportation and storage expense partially offset by higher royalties.

Bitumen realization after net transportation and storage expense rose to $60.10 per barrel in the first quarter of 2024, from $43.40 per barrel in the same period of 2023, primarily driven by narrower WTI:AWB differentials, at both Edmonton and the U.S. Gulf Coast (“USGC”), which increased the blend sales price and lowered diluent expense.

Higher apportionment levels in the first quarter of 2024 reduced sales volumes in the more favorable USGC market. The Corporation sold 48% and 56% of blend sales volumes in the USGC during the first quarters of 2024 and 2023, respectively, with average heavy oil apportionment on the Enbridge mainline system rising to 28% in the first quarter of 2024 from 12% in the comparative 2023 period.

FCF increased to $217 million in first quarter of 2024, from $161 million in the comparable 2023 quarter, primarily reflecting higher AFF.

Capital expenditures of $112 million during the first quarter of 2024 were in line with the same period of 2023 with spending primarily focused on sustaining and maintenance activities in both periods.

Net earnings increased to $98 million in the first quarter of 2024 from $81 million in the same period of 2023 mainly driven by higher AFF partially offset by an unrealized foreign exchange loss on long-term debt, higher depletion and depreciation and increased deferred tax expense.

Operating Results

Bitumen production in the first quarter of 2024 declined 3% to 104,088 bbls/d at a 2.37 SOR from 106,840 bbls/d at a 2.25 SOR in the comparable 2023 period reflecting cold weather impacts, facility maintenance activities and timing of new well start-ups.

Non‐energy operating costs averaged $5.18 per barrel of bitumen sales in the first quarter of 2024 representing a 9% increase from the same quarter of 2023 primarily reflecting planned labour cost increases and higher well workover activity.

Energy operating costs net of power revenue decreased to $1.19 per barrel in the first quarter of 2024 from $1.36 per barrel in the comparable 2023 period primarily reflecting a weaker AECO natural gas price partially offset by a decline in the realized power price. Revenue from the sale of excess power generated by the Corporation’s cogeneration facilities offset 68% and 76% of energy operating costs in the first quarters of 2024 and 2023, respectively.

Debt Redemption and Share Repurchases

The $217 million of first quarter 2024 FCF, plus available cash, was used to redeem debt and return capital to shareholders. The Corporation redeemed US$105 million (approximately $142 million) of outstanding 7.125% senior unsecured notes at a redemption price of 101.8% and returned $127 million to MEG shareholders through the repurchase and cancellation of 4.7 million shares at a weighted average price of $26.94 per share.

Read More:

IBF4

Loading

NationTalk Partners & Sponsors Learn More