MEG Energy Announces 2025 Capital and Operational Guidance; Christina Lake Facility Expansion Project Approval

All financial figures are in Canadian dollars ($ or C$) and all references to barrels are per barrel of bitumen sales unless otherwise noted.

CALGARY, AB, Nov. 25, 2024 – MEG Energy Corp. (TSX: MEG) (“MEG” or the “Corporation”) today announced its 2025 capital investment plan and operational guidance.

“We are excited to share our 2025 capital investment plans, which represent the foundation of a disciplined multi-year strategy to build value at Christina Lake,” said Darlene Gates, President and Chief Executive Officer. “MEG’s Board of Directors has approved our Facility Expansion Project to increase production capacity by 25,000 barrels per day.  Thanks to the quality of the resource and the expertise of our people, we are confident in our ability to execute this expansion within our operating cash flow while continuing to return significant capital to investors through a sustainable dividend and share repurchases.”

Highlights include:

• Approval of a multi-year Facility Expansion Project to raise Christina Lake production capacity by 25,000 bbls/day to 135,000 bbls/day in 2027; details will be outlined in MEG’s November 26, 2024 Business Update (event details at end of this Press Release);
• Annual production guidance of 95,000 to 105,000 bbls/d, which reflects a scheduled Q2 turnaround that will impact annual production by up to 8,000 bbls/d;
• Production expected to be achieved at an annualized steam oil ratio (“SOR”) of approximately 2.26;
• Capital expenditures of $635 million, including $70 million for Turnaround and $130 million for the Facility Expansion Project;
• Non-energy operating cost guidance of $5.30 to $5.80/bbl; and
• 100% of free cash flow distributed to shareholders through a sustainable dividend and share buybacks.

2025 Guidance

MEG is focused on executing safe and reliable operations at our Christina Lake asset.  Our employees and contractors are fully committed to a strong performance culture underpinned by our comprehensive Operations Excellence Management System that drives reliable production and top tier SOR performance.

The 2025 annual production guidance includes major turnaround activities in Q2, with a full-year production impact of up to 8,000 bbls/d. Production reflects the startup of two new well pads in 2025, with the first on-stream in Q3 and the second in Q4, supporting the building of annualized capacity for future production.

On November 25, 2024, MEG’s Board of Directors approved the final investment decision to proceed with a multi-year Facility Expansion Project to add 25,000 bbls/d of new productive capacity to our existing facility, with an estimated cost of $440 million over the next three years.  This project and the additional well capital to fill the expanded plant will be delivered at a highly economic capital efficiency under $25,000 per flowing barrel.  Further details on this value enhancing project will be provided at MEG’s Business Update on November 26, 2024.  The Business Update presentation is available on MEG’s website.

Sustaining capital in 2025 reflects planned turnaround activity, increased pad drilling, and investment in field infrastructure to advance production from well delineated, high-quality, undeveloped areas of our asset.  In addition, MEG will take the opportunity provided by the turnaround to add tie-ins for various aspects of the Facility Expansion Project, in advance of extending to 4-year turnaround cycles.

Following a disciplined multi-year de-leveraging program, MEG’s strong balance sheet and robust operating performance provide a solid foundation to advance the Facility Expansion Project and fund the 2025 capital program. MEG retains the flexibility to adjust capital expenditures in response to changing market conditions, such as declining oil prices, widening differentials and inflationary cost pressures.

2025 Capital Investment Summary

MEG’s total 2025 capital program is expected to be $635 million, with $130 million allocated to the Facility Expansion Project, $70 million to Turnaround, and the remaining $435 million to Well Pads & Infrastructure and Other.  Turnaround activity reflects ten-year regulatory requirements and facilitates the safe and efficient completion of Facility Expansion Project tie-ins.  With the conclusion of the 2025 turnaround, MEG will be in a position to implement four-year turnaround cycles, compared with its historical practice of three-year cycles, on each Phase of its operation.  Well Pads provides access to well delineated, high-quality resources and builds field capacity in advance of Facility Expansion Project requirements. Investment in facility & field Infrastructure targets sub-surface production optimization, gas and water processing, and reliability improvements, including the completion of a new skim tank.

Non-Energy Operating Costs Per Barrel

MEG continues to deliver industry leading operating cost performance, with 2025 non-energy operating costs of $5.30–$5.80/bbl.

Adjusted Funds Flow Sensitivity

MEG’s production consists entirely of crude oil and Adjusted Funds Flow (AFF) is highly correlated with crude oil benchmark prices. The following table provides an annual sensitivity estimate to the most significant market variables.

MEG has capacity to ship 100,000 bbls/d of Access Western Blend (AWB) sales, on a pre-apportionment basis, to the U.S. Gulf Coast market via its committed capacity on the Flanagan South and Seaway Pipeline systems. In addition, MEG has 20,000 bbls/d of contracted capacity on the TMX pipeline system to the Canadian West Coast. Over 80% of MEG’s blend sales have tidewater access, positioning the company with broader market reach, improved realized prices, and reduced WCS differential volatility.

At September 30, 2024, MEG had approximately $3.9 billion of available Canadian tax pools, including $2.5 billion of non-capital losses which are immediately deductible. Those tax pools are estimated to shelter cash taxes until 2027 under a US $70/bbl WTI oil price assumption.

Capital Allocation Strategy

MEG will return 100% of free cash flow to shareholders in 2025, reinforcing our long-term commitment to shareholder capital returns. Since January 1, 2022, the Corporation has repurchased and cancelled 54.8 million shares, reducing the outstanding share count by approximately 17.9% from year end 2021 and returning $1,239 million to shareholders.

Pathways Alliance

MEG, along with its Pathways Alliance peers, continues to progress pre-work on this foundational carbon capture and storage project, which will transport CO2 via pipeline from multiple oil sands facilities to be stored permanently underground in the Cold Lake region of Alberta. Pathways Alliance continues to work collaboratively with both the federal and Alberta Governments on the necessary policy and co-financing frameworks required to move the project forward.

Non-GAAP Measures and Other Financial Measures

Certain financial measures in this news release including non-energy operating costs (in total, and per bbl), free cash flow, net debt and adjusted funds flow are non-GAAP financial measures or ratios, supplementary financial measures or ratios 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.

For further details, please refer to Section 12 of the Corporation’s MD&A for the quarter ended September 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.

2025 Capital and Operating Budget and Business Update Webcast

Tuesday, November 26, 2024 8:30am ET / 6:30am MT

Webcast Link: https://app.webinar.net/O0zQdogdK42

Q&A Dial-in Numbers: Toll Free: 1-888-510-2154

International: 1-437-900-0527

Business Update Presentation: A copy of the presentation deck is available on our website at https://www.megenergy.com/investors/presentations-events/

Replay: For those unable to join the webcast, an archived version will be available within 24 hours at https://www.megenergy.com/investors/presentations-events/

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).

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

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