MEG Energy Corp.

MEG reported second-quarter adjusted funds flow of $125 million, or $0.49 per share. Bitumen production averaged 63,500 barrels per day, with an average steam-to-oil ratio of 2.38, and operating costs net of power revenue were $10.88 per barrel, including nonenergy operating costs of $8.16 per barrel. The company said the turnaround reduced volumes by approximately 32,000 barrels per day, with wildfires contributing an additional 12,000 barrels per day. Capital expenditures in Q2 were $200 million, versus $123 million in Q2 2024. In the first half, MEG generated $148 million of free cash flow and returned $220 million to shareholders. Management said July production averaged about 109,000 barrels per day, expects over $375 million of free cash flow in the second half at current strip pricing, and remains on track to generate over $500 million of free cash flow in 2025. Full-year 2025 operating and capital guidance was left unchanged.

Darlene Gates emphasized execution, safety, and resilience, repeatedly pointing to the successful completion of the company’s largest planned turnaround and the ability to operate through wildfire disruption. She said the facility expansion is firmly on track, with key milestones including the steam generator, module deliveries later this year, and first steam generation next year, all supporting 25,000 barrels per day of added capacity by mid-2027. Her tone was confident and defensive of the stand-alone plan, while also acknowledging the ongoing strategic review and saying the Board will update shareholders by mid-September.

Ryan Kubik said second-quarter adjusted funds flow was $125 million, or $0.49 per share, pressured by lower bitumen realizations and reduced sales volumes from the turnaround and wildfire delays. He highlighted a WCS differential of USD 10.27 per barrel and WTI averaging below USD 65 per barrel, and noted operating costs net of power revenue of $10.88 per barrel, including nonenergy operating costs of $8.16 per barrel. He also said sustaining capital is expected to stay around $450 million, buybacks are temporarily paused because of the unsolicited offer process, and the company plans to resume repurchases when able.

Analysts focused on the facility expansion and the strategic review. On the project, management said all key long-lead items have been purchased, the critical path is now field construction and module assembly, and the project is about 15% completed. On the strategic review, Darlene Gates repeated that the Board will provide an update by mid-September and would not comment further on the process during the call.