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, blend sales, bitumen
realization, transportation and storage expense net of
transportation revenue, operating expenses net of power revenue,
non-energy operating costs, energy operating costs, adjusted funds
flow, free cash flow and net debt.
|
CALGARY, AB, March 3, 2022 /CNW/ - MEG Energy Corp. (TSX: MEG)
("MEG" or the "Corporation") reported its full year 2021
operational and financial results.
MEG continues to proactively respond to the safety challenges
associated with COVID-19 and remains committed to ensuring the
health and safety of all its personnel and the safe and reliable
operation of the Christina Lake
facility.
"As we exit 2021, MEG is very well positioned from an
operational and financial perspective to continue to deliver on its
deleveraging and shareholder return strategy" said Derek Evans, President and Chief Executive
Officer. "We expect to be in a position to initiate our share
buyback program in the second quarter of 2022 which, combined with
our ongoing debt reduction program, should drive continued
shareholder value through 2022 and beyond."
Highlights include:
- Adjusted funds flow of $799
million ($2.57 per share) and
funds flow from operating activities of $753
million;
- Record bitumen production volumes for the fourth quarter and
full year 2021 of 100,698 barrels per day (bbls/d) and 93,733
bbls/d, respectively;
- Operating expenses net of power revenue of $6.60 per barrel, including record low non–energy
operating costs of $4.24 per barrel.
Power revenue offset energy operating costs by 52%, resulting in
energy operating costs net of power revenue of $2.36 per barrel;
- Total capital expenditures of $331
million in 2021, approximately 2% lower than budget, was
primarily directed towards sustaining and maintenance activities,
resulting in $468 million of free
cash flow in 2021;
- Completed or announced the repayment of US$325 million (approximately $415 million) of outstanding indebtedness during
2021;
- Subsequent to year end, MEG issued a notice to redeem the
remaining US$171 million
(approximately $215 million) of MEG's
6.50% senior secured second lien notes due January 2025. The redemption is expected to be
completed on or about April 4, 2022;
and
- Also subsequent to year end, MEG's Board of Directors approved
the filing of an application with the Toronto Stock Exchange
("TSX") for a normal course issuer bid ("NCIB") which once approved
would allow MEG to buy back up to 10% of its public float, as
defined by the TSX, over a one-year period.
Blend Sales Pricing
MEG realized an average AWB blend sales price of US$57.59 per barrel during 2021 compared to
US$28.07 per barrel in 2020. The
increase in average AWB blend sales price year over year was
primarily a result of the average WTI price increasing by
US$28.51 per barrel. MEG sold 42% of
its sales volumes at the premium-priced U.S. Gulf Coast ("USGC") in
2021 compared to 40% in 2020.
Transportation and storage expense net of transportation revenue
averaged US$6.10 per barrel of AWB
blend sales in 2021 compared to US$6.74 per barrel of AWB blend sales in 2020.
The decrease was primarily due to the elimination of rail
transportation in 2021 compared to 2020.
Operational Performance
Bitumen production averaged 93,733 bbls/d at a steam-oil ratio
("SOR") of 2.43 in 2021, compared to 82,441 bbls/d at a SOR of 2.32
in 2020. Increased steam utilization, improved field reliability,
completed and ongoing well optimization and recompletion work all
contributed to strong field-wide production performance in 2021.
This compares to reduced bitumen production in 2020 due to the
major planned turnaround at the Phase 1 and 2 facilities, which
began in June 2020 and was completed
mid-August 2020, as well as voluntary
price-related production curtailments in April and May 2020.
Non–energy operating costs averaged $4.24 per barrel of bitumen sales in 2021
compared to $4.38 per barrel in 2020.
Non-energy operating costs per barrel decreased slightly due to
fixed costs being spread over increased sales volumes. Energy
operating costs, net of power revenue, averaged $2.36 per barrel in 2021 compared to $1.80 per barrel in 2020. This increase year over
year resulted from stronger natural gas prices and increased
internal power consumption as production increased, partially
offset by the strengthening of the Alberta power market. Power revenue, which
includes the impact of physical risk management contracts on power
sales, offset energy operating costs by 52% during 2021 compared to
45% in 2020.
General & administrative expense ("G&A") was relatively
consistent year over year with $56
million, or $1.65 per barrel
of production, in 2021 compared to $49
million, or $1.62 per barrel
of production, in 2020.
Funds Flow from Operating Activities, Adjusted Funds Flow and
Net Earnings (Loss)
The Corporation's cash operating netback averaged $33.37 per barrel in 2021 compared to
$19.22 per barrel in 2020. This
increase in cash operating netback was primarily driven by the
increase in average bitumen realization due to the higher WTI
price, partially offset by realized commodity price risk management
losses in 2021 compared to realized commodity price risk management
gains in 2020. The increased cash operating netback was the main
driver for the increase in the Corporation's funds flow from
operating activities and adjusted funds flow from $239 million and $275
million, respectively, in 2020 to $753 million and $799
million, respectively, in 2021.
The Corporation recognized net earnings of $283 million in 2021 compared to a net loss of
$357 million in 2020. This increase
in net earnings was primarily due to stronger global crude oil
prices partially offset by a commodity price risk management loss.
The net loss recognized during 2020 was impacted by the recognition
of a $366 million exploration
expense.
Capital Expenditures
Capital expenditures in 2021 totaled $331
million compared to $149
million in 2020. While capital invested in the year was
primarily directed towards sustaining and maintenance activities,
approximately 20% of total capital expenditures was directed toward
incremental well capital necessary to allow the Corporation to
fully utilize the Christina Lake
central plant facility's oil processing capacity of approximately
100,000 bbls/d, prior to any impact from scheduled maintenance
activity or outages. As previously disclosed, the total investment
for this optimization initiative is approximately $125 million with approximately $50 million remaining to be invested in the first
half of 2022.
Debt Repayment
MEG announced today that the Corporation has issued a notice to
redeem the remaining US$171 million
(approximately $215 million) of MEG's
outstanding 6.50% senior secured second lien notes due January 2025 at a redemption price of 101.625%,
plus accrued and unpaid interest to, but not including, the
redemption date. The redemption is expected to be completed on or
about April 4, 2022. Inclusive of the
redemption, MEG will have redeemed in full the original
US$750 million aggregate principal
amount of the second lien notes.
Debt reduction over the last four years now totals approximately
US$2 billion. Continued debt
reduction remains a core focus of the Corporation.
Ongoing Debt Repayment and Intention to Initiate Capital
Return to Shareholders
As MEG expects to soon reach its previously announced near-term
net debt target of US$1.7 billion,
MEG's Board of Directors approved today the filing of an
application with the TSX for a NCIB which, once approved by the
TSX, will allow MEG to initiate a share buyback program to buy back
over the next twelve months up to 10% of the Corporation's public
float, as defined by the TSX, up to a maximum of approximately 27.2
million common shares of MEG.
As previously announced, MEG intends to allocate approximately
25% of free cash flow generated to share buybacks with the
remaining free cash flow applied to ongoing debt reduction until
the Corporation's net debt balance reaches US$1.2 billion. In the current commodity price
environment, MEG expects to reach this US$1.2 billion net debt target in the third
quarter of 2022.
Once the US$1.2 billion net debt
target is reached the Corporation intends to increase the
percentage of free cash flow allocated to share buybacks to
approximately 50% with the remainder applied to further debt
reduction.
Sustainability
In 2021, the Corporation advanced its Environmental, Social and
Governance ("ESG") objectives with the establishment of a mid-term
target of 30% reduction in bitumen greenhouse gas ("GHG") emissions
(scope 1 and scope 2) from 2013 levels by 2030. This target
is in addition to the Corporation's previously established
long-term target of reaching net zero GHG emissions (scope 1 and
scope 2) by 2050. Also in 2021, the Corporation, along with
four oil sands operators who collectively operate 90% of
Canada's oil sands production,
formed the Oil Sands Pathways to Net Zero Alliance with the
objective of working with the Federal and Alberta governments to achieve net zero GHG
emissions from oil sands operations by 2050. This Alliance has
grown to six companies operating approximately 95% of Canada's oil sands production and is focused
on building a major CO2 capture and storage trunkline, connecting
oil sands facilities in the Fort
McMurray, Christina Lake
and Cold Lake regions of
Alberta, to a CO2 sequestration
hub near Cold Lake. This enabling
infrastructure is a key element to achieving net zero GHG emissions
by 2050.
The Corporation published its second ESG report in 2021 in an
effort to provide consistent, relevant information that is useful
to Shareholders and other Stakeholders to provide greater
transparency on ESG and climate-related risks. The report is
aligned with guidance from the Sustainability Accounting Standards
Board and the recommendations of the Task Force on Climate-related
Financial Disclosure. The ESG report also references the
Global Reporting Initiative ("GRI") and the United Nations
Sustainable Development Goals.
The Corporation continues to advance ESG and progress on
priority topics: Climate Change and GHG Emissions, Water and
Wastewater Management, Health and Safety, and Indigenous Relations,
led by a strong governance model, safe and reliable operations and
a dedicated team as reflected across ESG metrics.
Conference Call
A conference call will be held to review MEG's full year 2021
operating and financial results at 6:30 a.m.
Mountain Time (8:30 a.m. Eastern
Time) on Friday March
4th, 2022. To participate, please dial the North
American toll-free number 1-888-390-0546, or the international call
number 1-416-764-8688.
A recording of the call will be available by 12 noon Mountain Time (2 p.m.
Eastern Time) on the same day at
www.megenergy.com/investors/presentations-and-events.
Operational and Financial Highlights
|
|
|
|
Three months ended
December 31
|
Year ended December
31
|
($millions, except
as indicated)
|
2021
|
2020
|
2021
|
2020
|
Bitumen production -
bbls/d
|
100,698
|
91,030
|
93,733
|
82,441
|
|
|
|
|
|
Steam-oil
ratio
|
2.42
|
2.31
|
2.43
|
2.32
|
|
|
|
|
|
Bitumen sales -
bbls/d
|
98,894
|
95,731
|
92,138
|
82,722
|
|
|
|
|
|
Bitumen
realization(1)- $/bbl
|
71.06
|
38.64
|
62.47
|
27.23
|
|
|
|
|
|
Operating expenses net
of power revenue - $/bbl
|
8.2
|
6.98
|
6.6
|
6.18
|
|
|
|
|
|
Non-energy operating
costs(2)- $/bbl
|
4.56
|
4.7
|
4.24
|
4.38
|
|
|
|
|
|
Cash operating
netback(1)- $/bbl
|
37.87
|
18.66
|
33.37
|
19.22
|
|
|
|
|
|
General &
administrative expense -
|
1.58
|
1.65
|
1.65
|
1.62
|
$/bbl of bitumen production
volumes
|
|
|
|
|
|
Funds flow from
operating activities
|
260
|
81
|
753
|
239
|
Adjusted funds
flow(3)
|
266
|
84
|
799
|
275
|
Per share,
diluted
|
0.85
|
0.27
|
2.57
|
0.9
|
|
|
|
|
|
Revenue
|
1,307
|
786
|
4,321
|
2,292
|
|
|
|
|
|
Net earnings
(loss)
|
177
|
16
|
283
|
(357)
|
Per share,
diluted
|
0.57
|
0.05
|
0.91
|
(1.18)
|
|
|
|
|
|
Capital
expenditures
|
106
|
40
|
331
|
149
|
|
|
|
|
|
Net debt -
C$(3)
|
2,401
|
2,798
|
2,401
|
2,798
|
Net debt -
US$(3)
|
1,897
|
2,194
|
1,897
|
2,194
|
(1)
|
Non-GAAP financial
measure - please refer to the Advisory section of this news
release.
|
(2)
|
Supplementary
financial measure - please refer to the Advisory section of this
news release.
|
(3)
|
Capital management
measure - please refer to the Advisory section of this news
release.
|
ADVISORY
Basis of Presentation
MEG prepares its financial statements in accordance with
International Financial Reporting Standards ("IFRS") and presents
financial results in Canadian dollars ($ or C$), which is the
Corporation's functional currency.
Non-GAAP and Other Financial Measures
Certain financial measures in this news release are non-GAAP
financial measures or ratios, supplementary financial measures and
capital management measures. These measures are not defined by IFRS
and, therefore, may not be comparable to similar measures provided
by other companies. These non-GAAP and other financial measures
should not be considered in isolation or as an alternative for
measures of performance prepared in accordance with IFRS.
Adjusted Funds Flow and Free Cash Flow
Adjusted funds flow and free cash flow are capital management
measures and are defined in the Corporation's annual financial
statements. Adjusted funds flow and free cash flow are presented to
assist management and investors in analyzing operating
performance and cash flow generating ability. Funds flow from
operating activities is an IFRS measure in the Corporation's
consolidated statement of cash flow. Adjusted funds flow is
calculated as funds flow from operating activities excluding items
not considered part of ordinary continuing operating results. By
excluding changes in non-recurring adjustments from cash flows, the
adjusted funds flow measure provides a meaningful metric for
management and investors by establishing a clear link between the
Corporation's cash flows and the cash operating netback. Free cash
flow is presented to assist management and investors in analyzing
performance by the Corporation as a measure of financial liquidity
and the capacity of the business to repay debt. Free cash flow is
calculated as adjusted funds flow less capital expenditures.
The following table reconciles funds flow from operating
activities to adjusted funds flow to free cash flow:
|
|
|
|
Three months
ended
December 31
|
Year ended
December 31
|
($millions)
|
2021
|
2020
|
2021
|
2020
|
Net cash provided by
(used in) operating activities
|
$
|
242
|
$
|
115
|
$
|
690
|
$
|
302
|
Net change in non-cash
operating working capital items
|
18
|
(34)
|
63
|
(63)
|
Funds flow from
operating activities
|
260
|
81
|
753
|
239
|
Adjustments:
|
|
|
|
|
Payments on onerous
contract
|
6
|
—
|
25
|
—
|
Settlement
expense(1)
|
—
|
—
|
21
|
—
|
Contract
cancellation
|
—
|
—
|
—
|
33
|
Net change in other
liabilities(2)
|
—
|
3
|
—
|
3
|
Adjusted funds
flow
|
266
|
84
|
799
|
275
|
Capital
expenditures
|
(106)
|
(38)
|
(331)
|
(149)
|
Free cash
flow
|
$
|
160
|
$
|
46
|
$
|
468
|
$
|
126
|
(1)
|
During 2021, the
Corporation reached an agreement to settle the litigation matter
commenced in 2014 relating to legacy issues involving a unit train
transloading facility in Alberta. Under the agreement, the
Corporation paid the sum of $21 million in full and final
settlement of the claim and the claim has been
discontinued.
|
(2)
|
Includes the change
in liability associated with the termination of a long-term
transportation contract that was previously
expensed.
|
Net Debt
Net debt is a capital management measure and is defined in the
Corporation's annual financial statements. Net debt is an important
measure used by management to analyze leverage and liquidity. Net
debt is calculated as long-term debt plus current portion of
long-term debt less cash and cash equivalents.
The following table reconciles the Corporation's current and
long-term debt to net debt:
Cash Operating Netback
As at December
31
|
2021
|
2020
|
Long-term
debt
|
$
|
2,477
|
$
|
2,912
|
Current portion of
long-term debt
|
285
|
—
|
Cash and cash
equivalents
|
(361)
|
(114)
|
Net debt -
C$
|
$
|
2,401
|
$
|
2,798
|
Net debt -
US$
|
$
|
1,897
|
$
|
2,194
|
Cash operating netback is a non-GAAP financial measure, or ratio
when expressed on a per barrel basis. Its terms are not defined by
IFRS and, therefore, may not be comparable to similar measures
provided by other companies. This non-GAAP financial measure should
not be considered in isolation or as an alternative for measures of
performance prepared in accordance with IFRS.
Cash operating netback is a financial measure widely used in the
oil and gas industry as a supplemental measure of a company's
efficiency and its ability to generate cash flow for debt
repayment, capital expenditures, or other uses. The per barrel
calculation of cash operating netback is based on bitumen sales
volume.
Total revenues, is an IFRS measure in the Corporation's
consolidated statement of earnings (loss) and comprehensive income
(loss), which is the most directly comparable primary financial
statement measure to cash operating netback. A reconciliation from
total revenues to cash operating netback has been provided
below:
|
Three months ended
December 31
|
Year ended December
31
|
($millions, except
as indicated)
|
2021
|
2020
|
2021
|
2020
|
Total
revenues
|
$
|
1,307
|
$
|
786
|
$
|
4,321
|
$
|
2,292
|
Diluent &
transportation expense
|
(532)
|
(362)
|
(1,748)
|
(1,210)
|
Purchased
product
|
(241)
|
(197)
|
(828)
|
(613)
|
Operating
expenses
|
(98)
|
(74)
|
(309)
|
(232)
|
Curtailment
|
—
|
—
|
—
|
2
|
Cash operating netback
before realized
commodity risk
management
|
436
|
153
|
1,436
|
239
|
Realized gain (loss) on
commodity risk management
|
(91)
|
11
|
(314)
|
343
|
Cash operating
netback
|
$
|
345
|
$
|
164
|
$
|
1,122
|
$
|
582
|
Blend Sales and Bitumen Realization
Blend sales and bitumen realization are non-GAAP financial
measures, or ratios when expressed on a per barrel basis, and are
used as a measure of the Corporation's marketing strategy by
isolating petroleum revenue and costs associated with its produced
and purchased products and excludes royalties. Their terms are not
defined by IFRS and, therefore, may not be comparable to similar
measures provided by other companies. These non-GAAP financial
measures should not be considered in isolation or as an alternative
for measures of performance prepared in accordance with IFRS. Blend
sales per barrel are based on blend sales volumes and bitumen
realization per barrel is based on bitumen sales volumes.
Petroleum revenue, net of royalties, is an IFRS measure in the
Corporation's consolidated statement of earnings (loss) and
comprehensive income (loss), which is the most directly comparable
primary financial statement measure to blend sales and bitumen
realization. A reconciliation from petroleum revenue, net of
royalties to blend sales and bitumen realization has been provided
below:
|
Three months ended
December 31
|
Year ended December
31
|
|
2021
|
2020
|
2021
|
2020
|
($millions, except
as indicated)
|
|
$/bbl
|
|
$/bbl
|
|
$/bbl
|
|
$/bbl
|
Petroleum revenue, net
of royalties
|
$
|
1,280
|
|
$
|
770
|
|
$
|
4,222
|
|
$
|
2,235
|
|
Royalties
|
32
|
|
2
|
|
76
|
|
9
|
|
Petroleum
revenue
|
1,312
|
|
772
|
|
4,298
|
|
2,244
|
|
Purchased
product
|
(241)
|
|
(197)
|
|
(828)
|
|
(613)
|
|
Blend sales
|
1,071
|
$
|
82.43
|
575
|
$
|
45.75
|
3,470
|
$
|
72.20
|
1,631
|
$
|
37.65
|
Diluent
expense
|
(425)
|
(11.37)
|
(235)
|
(7.11)
|
(1,369)
|
(9.73)
|
(807)
|
(10.42)
|
Bitumen
realization
|
$
|
646
|
$
|
71.06
|
$
|
340
|
$
|
38.64
|
$
|
2,101
|
$
|
62.47
|
$
|
824
|
$
|
27.23
|
Transportation and Storage Expense net of Transportation
Revenue
Transportation and storage expense net of transportation revenue
is a non-GAAP financial measure, or ratio when expressed on a per
barrel basis. Its terms are not defined by IFRS and, therefore, may
not be comparable to similar measures provided by other companies.
This non-GAAP financial measure should not be considered in
isolation or as an alternative for measures of performance prepared
in accordance with IFRS. Per barrel amounts are based on bitumen
sales volumes.
It is used as a measure of the Corporation's marketing strategy
by focusing on maximizing the realized AWB sales price after
transportation and storage expense by utilizing its network of
pipeline and storage facilities to optimize market access. Per
barrel amounts are based on bitumen sales volumes.
Diluent and transportation expense, is an IFRS measure in the
Corporation's consolidated statement of earnings (loss) and
comprehensive income (loss), which is the most directly comparable
primary financial statement measure to transportation and storage
expense. A reconciliation from diluent and transportation expense
to transportation and storage expense has been provided below.
Other revenue, is an IFRS measure in the Corporation's
consolidated statement of earnings (loss) and comprehensive income
(loss), which is the most directly comparable primary financial
statement measure to transportation revenue. A reconciliation from
other revenue to transportation revenue has been provided
below.
|
Three months ended
December 31
|
Year ended December
31
|
|
2021
|
2020
|
2021
|
2020
|
($millions, except
as indicated)
|
|
$/bbl
|
|
$/bbl
|
|
$/bbl
|
|
$/bbl
|
Diluent and
transportation expense
|
$
|
(532)
|
|
$
|
(362)
|
|
$
|
(1,748)
|
|
$
|
(1,210)
|
|
Less diluent
expense
|
425
|
|
235
|
|
1,369
|
|
807
|
|
Transportation and
storage expense
|
$
|
(107)
|
$
|
(11.77)
|
$
|
(127)
|
$
|
(14.46)
|
$
|
(379)
|
$
(11.28)
|
|
$
|
(403)
|
$
|
(13.32)
|
|
|
|
|
|
|
|
|
|
Other
revenue
|
$
|
27
|
|
$
|
16
|
|
$
|
99
|
|
$
|
57
|
|
Less power
revenue
|
(23)
|
|
(13)
|
|
(87)
|
|
(45)
|
|
Transportation
revenue
|
$
|
4
|
$
|
0.38
|
$
|
3
|
$
|
0.35
|
$
|
12
|
$
0.35
|
|
$
|
12
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
Transportation and
storage expense net of
transportation
revenue
|
$
|
(103)
|
$
|
(11.39)
|
$
|
(124)
|
$
|
(14.11)
|
$
|
(367)
|
$
(10.93)
|
|
$
|
(391)
|
$
|
(12.92)
|
Operating Expenses net of Power Revenue
Operating expenses net of power revenue is a non-GAAP financial
measure, or ratio when expressed on a per barrel basis. Its terms
are not defined by IFRS and, therefore, may not be comparable to
similar measures provided by other companies. This non-GAAP
financial measure should not be considered in isolation or as an
alternative for measures of performance prepared in accordance with
IFRS. Per barrel amounts are based on bitumen sales volumes.
It is used as a measure of the Corporation's cost to operate its
facilities at the Christina Lake
project after factoring in the benefits from selling excess power
to offset energy costs.
Non-energy operating costs and energy operating costs are
supplementary financial measures as they represent portions of
operating expenses. Non-energy operating costs relate to
production-related operating activities and energy operating costs
reflect the cost of natural gas used as fuel to generate steam and
power. Per barrel amounts are based on bitumen sales volumes.
Operating expenses is an IFRS measure in the Corporation's
consolidated statement of earnings (loss) and comprehensive income
(loss). Other revenue, is an IFRS measure in the Corporation's
consolidated statement of earnings (loss) and comprehensive income
(loss), which is the most directly comparable primary financial
statement measure to power revenue. A reconciliation from other
revenue to power revenue has been provided below.
|
Three months ended
December 31
|
Year ended December
31
|
|
2021
|
2020
|
2021
|
2020
|
($millions, except
as indicated)
|
|
$/bbl
|
|
$/bbl
|
|
$/bbl
|
|
$/bbl
|
Non-energy operating
costs
|
$
|
(42)
|
$
|
(4.56)
|
$
|
(33)
|
$
|
(4.70)
|
$
|
(143)
|
$
|
(4.24)
|
$
|
(133)
|
$
|
(4.38)
|
Energy operating
costs
|
(56)
|
(6.22)
|
(41)
|
(3.73)
|
(166)
|
(4.94)
|
(99)
|
(3.29)
|
Operating
expenses
|
$
|
(98)
|
$
|
(10.78)
|
$
|
(74)
|
$
|
(8.43)
|
$
|
(309)
|
$
|
(9.18)
|
$
|
(232)
|
$
|
(7.67)
|
|
|
|
|
|
|
|
|
|
Other
revenue
|
$
|
27
|
|
$
|
16
|
|
$
|
99
|
|
$
|
57
|
|
Less transportation
revenue
|
(4)
|
|
(3)
|
|
(12)
|
|
(12)
|
|
Power
revenue
|
$
|
23
|
$
|
2.58
|
$
|
13
|
$
|
1.45
|
$
|
87
|
$
|
2.58
|
$
|
45
|
$
|
1.49
|
|
|
|
|
|
|
|
|
|
Operating expenses net
of power revenue
|
$
|
(75)
|
$
|
(8.20)
|
$
|
(61)
|
$
|
(6.98)
|
$
|
(222)
|
$
|
(6.60)
|
$
|
(187)
|
$
|
(6.18)
|
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 commitment to ensuring the
health and safety of its personnel and safe and reliable operations
of the Christina Lake facility;
the ability of the Corporation to deliver on its deleveraging and
shareholder return strategy; the Corporation's expectation of
initiating its share buyback program in the second quarter of 2022;
the Corporation's continued focus on debt reduction; statements
regarding incremental well capital required to allow the
Corporation to fully utilize the Christina Lake central plant facility's oil
processing capacity of approximately 100,000 bbls/d, including the
Corporation's expectation that the remaining $50 million of optimization capital will be
invested in the first half of 2022; statements with respect to the
issuance of a notice for redemption of the remaining balance of the
Corporation's Second Lien Notes and the timing and successful
completion of the redemption of the remaining balance of the Second
Lien Notes; the Corporation's expectation of reaching its near-term
debt target of US$1.7 billion in the
second quarter of 2022 and thereafter allocating 25% of free cash
flow to share buybacks with the remaining cash flow applied to
ongoing debt reduction; the Corporation's expectation of reaching
its debt-target of US$1.2 billion in
the third quarter of 2022 and thereafter allocating 50% of free
cash flow to share buybacks while continuing to strengthen its
balance sheet; and statements relating to the Corporation's 2030
and 2050 climate-related goals, its participation in the Oil Sands
Pathways to Net Zero Alliance and its intention to continue advance
ESG and progress on its priority topics.
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 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 the timing and
level of government production curtailment and federal and
provincial climate change policies, in which MEG conducts and will
conduct its business; the availability of government support to
industry to assist in the achievement of net zero GHG emissions by
2050; the impact of MEG's response to the COVID-19 global pandemic;
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, such as the
COVID-19 pandemic, 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 net zero GHG emissions by
2050; 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 sustaining 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; MEG's response to the
COVID-19 global pandemic; the severity and duration of the COVID-19
pandemic; the potential for a temporary suspension of operations
impacted by an outbreak of COVID-19; actions taken by OPEC+ in
relation to supply management; 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.sedar.com.
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.
About MEG
MEG is an energy company focused on sustainable 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
responsible economic recovery of oil as well as lower carbon
emissions. MEG transports and sells thermal oil (AWB) to customers
throughout North America and
internationally. MEG's common shares are listed on the Toronto
Stock Exchange under the symbol "MEG" (TSX: MEG).
Learn more at: www.megenergy.com
SOURCE MEG Energy Corp.