MEG says 2024 production to come in at low end of forecast due to wildfires

CALGARY – Oilsands producer MEG Energy Corp. expects its full-year 2024 production to come in towards the lower end of its forecast range, in part due to the wildfires that forced a temporary evacuation of its Christina Lake site in July.
MEG was one of several oilsands companies with operations in close proximity to the out-of-control wildfires that burned across northern Alberta over the summer.
MEG’s Christina Lake production site is located about 150 kilometres south of Fort McMurray in northeast Alberta.
In a conference call Wednesday to discuss the company’s third-quarter financial results, CEO Darlene Gates said MEG produced 103,298 barrels per day of bitumen in its third quarter, comparable with the 103,726 barrels per day it produced in the same quarter last year.
But the wildfires forced the company to temporarily evacuate all non-essential personnel from the site, and also forced a one-month delay in the drilling and completion of a new well pad.
Gates added that the company’s production was also impacted by severe cold weather at the start of the year.
“We remain focused on delivering on our 2024 commitments and while guidance remains unchanged, production is trending to the low end of the range due to the cold weather and wildfire impacts earlier this year,” she said.
MEG’s previously announced annual production forecast for the year was between 102,000 and 108,000 barrels per day.
MEG earned $167 million in its third quarter, down from $249 million during the same quarter last year, in large part due to lower West Texas Intermediate benchmark oil prices.
But Gates said the company has been benefiting from a narrowed price discount on a barrel of western Canadian heavy crude compared to WTI. The Trans Mountain pipeline expansion, which began operations in May of this year, has brought additional export capacity for Canadian oil exporters to the market, reducing the price differential Canadian producers have historically had to absorb due in part to limited pipeline space.
Gates said as of this month, the Western Canada Select differential is about US$12 per barrel, which she said is an improvement of nearly US$9 per barrel from what it was last year at this time.
“To date, we are pleased with (Trans Mountain’s) performance and its fundamental improvement to Canadian heavy oil pricing,” she said.
MEG’s revenues for the quarter were $1.27 billion, down from $1.44 billion during the third quarter of 2023.
Diluted earnings per share were 62 cents, down from 86 cents a year earlier.
MEG said it reduced its net debt to US$478 million by the end of September, down from US$634 million during the prior quarter.
Gates said moving forward, all the company’s free cash flow will be returned to shareholders through expanded share buybacks and a quarterly base dividend.
This report by The Canadian Press was first published Nov. 6, 2024.
Companies in this story: (TSX:MEG)