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RISER Pushing Record Production for MEG

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MEG Energy Corp. has reported first quarter 2015 operational and financial results.

Highlights:

• Record quarterly production of 82,398 barrels per day (bpd), an increase of 41% over first quarter 2014 production volumes, driven by the Christina Lake Phase 2B project and continuing implementation of MEG's RISER initiative

• Net operating costs of $10.49 per barrel, 23% lower than first quarter 2014 costs and 13% below full-year 2014 costs of $12.06 per barrel

• Continuing strong financial liquidity, exiting the quarter with $471 million of cash and an undrawn US$2.5 billion credit facility

Bill McCaffrey, President and Chief Executive Officer said: "The quarter demonstrated continued strong operating results from our Christina Lake assets. It also emphasized the value of being a low-cost producer and the importance of maintaining that focus through the price cycles."

MEG reported cash flow used in operations of $29.5 million for the first quarter of 2015, compared to cash flow from operations of $157.0 million for the same period in 2014. Cash flow from operations decreased primarily due to a decline in benchmark WTI pricing in the quarter and, in January, both a widening of the light-heavy differential as well as increased cost of diluent, reflecting the drawdown of higher priced inventory. As a result, bitumen realizations decreased 59% from the first quarter of 2014.

"Our cash flow in the first quarter was impacted by certain transitional costs and pricing dynamics that we do not see continuing into the second quarter," said McCaffrey. 

With the benefits from MEG's RISER initiative and strong and reliable production from Christina Lake Phase 2B, MEG reached a production record of 82,398 bpd in the first quarter of 2015, an increase of 41% over first quarter 2014 volumes of 58,643 bpd. MEG is targeting average production of 78,000 to 82,000 barrels per day in 2015 at an average non-energy operating cost of $8 to $10 per barrel, which includes the impact of two turnarounds planned in the second quarter of 2015.

"The ongoing application of the RISER initiative is showing strong results, with reservoir performance meeting or exceeding expectations," said McCaffrey. "To date we have tested the Phase 2B oil processing facility at 160% of its design capacity, and we are identifying low-cost options to significantly increase production beyond current levels."

Net operating costs in the first quarter of 2015 averaged $10.49 per barrel compared to $13.63 per barrel in the first quarter of 2014. The decrease is primarily due to lower energy and non-energy operating costs per barrel, partially offset by a decrease in the average power sales price from MEG's cogeneration facilities.