CALGARY,
AB, Oct. 1, 2024 /CNW/ - MEG Energy Corp.
("MEG" or the "Corporation" (TSX: MEG)) is pleased to announce that
it has achieved its US$600 million
debt target and will now be transitioning to a 100% return of free
cash flow to shareholders.
"This achievement marks a significant milestone in our
multi-year capital allocation strategy, positioning us to
substantially increase returns to our shareholders," said
Darlene Gates, President and CEO of
MEG Energy. "With the recent repayment of our 2027 7.125% senior
unsecured notes, we have achieved our long stated US$600 million debt target. I am excited to share
that starting October 2024, we will
increase capital returns to shareholders to 100% of free cash
flow through expanded share buybacks and the introduction of a
quarterly base dividend."
Darlene added, "This milestone was enabled by our team's ongoing
focus on safe, reliable, and predictable performance, ensuring we
deliver on our commitments to shareholders. Our long reserve life,
low decline and low-cost business is now backed by a strong balance
sheet, which will allow for sustainable shareholder returns through
the commodity cycle."
Key financial highlights and achievements:
- On September 24, 2024, the
Corporation fully repurchased the remaining balance of its
US$1.2 billion 2027 7.125% senior
unsecured notes, concluding a multi-year deleveraging
strategy;
- Beginning in October 2024,
capital returns to shareholders will increase to 100% of free cash
flow, allocated between share buybacks and a base dividend;
- As previously announced, the Corporation's first quarterly
dividend of $0.10 per share will be
paid on October 15, 2024, to
shareholders of record as of the close of business on September 17, 2024.
The Corporation's balance sheet strength and liquidity profile
support enhanced distributions to shareholders with a continued
emphasis on share repurchases.
ADVISORY
Basis of Presentation
MEG prepares its financial statements in accordance with
International Financial Reporting Standards as issued by the
International Accounting Standards Board ("IFRS Accounting
Standards") and presents financial results in Canadian dollars ($
or C$), which is the Corporation's functional currency.
Non-GAAP and Other Financial Measures
Certain financial measures in this news release are non-GAAP
financial measures or ratios, supplementary financial measures and
capital management measures. These measures are not defined by IFRS
Accounting Standards and, therefore, may not be comparable to
similar measures provided by other companies. These non-GAAP and
other financial measures should not be considered in isolation or
as an alternative for measures of performance prepared in
accordance with IFRS.
For further details, please refer to Section 13 of the
Corporation's MD&A for the quarter ended June 30, 2024 which is available on the
Corporation's website at www.megenergy.com and is also available on
the SEDAR website at www.sedarplus.ca.
Forward-Looking Information
Certain statements contained in this news release may constitute
forward-looking statements within the meaning of applicable
Canadian securities laws. These statements relate to future events
or MEG's future performance. All statements other than statements
of historical fact may be forward-looking statements. The use of
any of the words "anticipate", "continue", "estimate", "expect",
"may", "will", "project", "should", "believe", "plan", "intend",
"target", "potential" and similar expressions are intended to
identify forward-looking statements.
Forward-looking statements are often, but not always, identified
by such words. These statements involve known and unknown risks,
uncertainties and other factors that may cause actual results or
events to differ materially from those anticipated in such
forward-looking statements. In particular, and without limiting the
foregoing, this press release contains forward looking statements
with respect to the Corporation's expectation of returning 100% of
free cash flow to shareholders from this point forward, allocated
between share buybacks and a base dividend, and the Corporation's
intention to pay a cash dividend each quarter subject to Board of
Directors approval.
Forward-looking information contained in this press release is
based on management's expectations and assumptions regarding, among
other things: future crude oil, bitumen blend, natural gas,
electricity, condensate and other diluent prices, differentials,
the reaction of heavy oil differentials in response to increased
Canadian pipeline capacity; the level of apportionment on the
Enbridge Mainline system, foreign exchange rates and interest
rates; the recoverability of MEG's reserves and contingent
resources; MEG's ability to produce and market production of
bitumen blend successfully to customers; future growth, results of
operations and production levels; future capital and other
expenditures; revenues, expenses and cash flow; operating costs;
reliability; continued liquidity and runway to sustain operations
through a prolonged market downturn; MEG's ability to reduce or
increase production to desired levels, including without negative
impacts to its assets; anticipated reductions in operating costs as
a result of optimization and scalability of certain operations;
anticipated sources of funding for operations and capital
investments; plans for and results of drilling activity; the
regulatory framework governing royalties, land use, taxes and
environmental matters, including federal and provincial
climate change policies, in which MEG conducts and will conduct its
business; and business prospects and opportunities. By its nature,
such forward-looking information involves significant known and
unknown risks and uncertainties, which could cause actual results
to differ materially from those anticipated.
These risks and uncertainties include, but are not limited to,
risks and uncertainties related to: the oil and gas industry, for
example, the securing of adequate access to markets and
transportation infrastructure (including pipelines and rail) and
the commitments therein; the availability of capacity on the
electricity transmission grid; the uncertainty of reserve and
resource estimates; the uncertainty of estimates and projections
relating to production, costs and revenues; health, safety and
environmental risks, including public health crises and any related
actions taken by governments and businesses; legislative and
regulatory changes to, amongst other things, tax, land use, royalty
and environmental laws and production curtailment; the cost of
compliance with current and future environmental laws, including
climate change laws; risks relating to increased activism and
public opposition to fossil fuels and oil sands; the inability to
access government support to industry to assist in the achievement
of ESG goals; assumptions regarding and the volatility of commodity
prices, interest rates and foreign exchange rates; commodity price,
interest rate and foreign exchange rate swap contracts and/or
derivative financial instruments that MEG may enter into from time
to time to manage its risk related to such prices and rates; timing
of completion, commissioning, and start-up, of MEG's turnarounds;
the operational risks and delays in the development, exploration,
production, and the capacities and performance associated with
MEG's projects; MEG's ability to reduce or increase production to
desired levels, including without negative impacts to its assets;
MEG's ability to finance capital expenditures; MEG's ability to
maintain sufficient liquidity to sustain operations through a
prolonged market downturn; changes in credit ratings applicable to
MEG or any of its securities; actions taken by OPEC+ in relation to
supply management; the impact of the Russian invasion of
Ukraine and associated sanctions
on commodity prices; the availability and cost of labour and goods
and services required in the Corporation's operations, including
inflationary pressures; supply chain issues including
transportation delays; the cost and availability of equipment
necessary to our operations; and changes in general economic,
market and business conditions.
Although MEG believes that the assumptions used in such
forward-looking information are reasonable, there can be no
assurance that such assumptions will be correct. Accordingly,
readers are cautioned that the actual results achieved may vary
from the forward-looking information provided herein and that the
variations may be material. Readers are also cautioned that the
foregoing list of assumptions, risks and factors is not
exhaustive.
Further information regarding the assumptions and risks inherent
in the making of forward-looking statements can be found in MEG's
most recently filed Annual Information Form ("AIF"), along with
MEG's other public disclosure documents. Copies of the AIF and
MEG's other public disclosure documents are available through the
Company's website at www.megenergy.com/investors and through the
SEDAR+ website at www.sedarplus.ca.
The forward-looking information included in this news release is
expressly qualified in its entirety by the foregoing cautionary
statements. Unless otherwise stated, the forward-looking
information included in this news release is made as of the date of
this news release and MEG assumes no obligation to update or revise
any forward-looking information to reflect new events or
circumstances, except as required by law.
This news release contains future-oriented financial outlook
information (collectively, "FOFI") about MEG's prospective cash
flows, all of which are subject to the same assumptions, risk
factors, limitations, and qualifications as set forth above.
Readers are cautioned that the assumptions used in the preparation
of such information, although considered reasonable at the time of
preparation, may prove to be imprecise and, as such, undue reliance
should not be placed on FOFI. MEG's actual results, performance or
achievement could differ materially from those expressed in, or
implied by, these FOFI, or if any of them do so, what benefits MEG
will derive therefrom. MEG has included the FOFI in order to
provide readers with a more complete perspective on MEG's future
operations, and the factors that could affect such operations, and
such information may not be appropriate for other purposes. MEG
disclaims any intention or obligation to update or revise any FOFI
statements, whether as a result of new information, future events
or otherwise, except as required by law.
About MEG
MEG is an energy company focused on in situ thermal oil
production in the southern Athabasca oil region of Alberta, Canada. MEG is actively developing
innovative enhanced oil recovery projects that utilize
steam-assisted gravity drainage extraction methods to improve the
economic recovery of oil. MEG transports and sells thermal oil
(AWB) to customers throughout North
America and internationally. MEG is a member of the Pathways
Alliance, a group of Canada's
largest oil sands producers. MEG's common shares are listed on the
Toronto Stock Exchange under the symbol "MEG" (TSX: MEG). Learn
more at www.megenergy.com.
For further information, please contact:
Investor Relations
T 403.767.0515
E invest@megenergy.com
Media Relations
T 403.775.1131
E media@megenergy.com
SOURCE MEG Energy Corp.