|By Marketwired .||
|July 30, 2014 05:00 AM EDT||
CALGARY, ALBERTA -- (Marketwired) -- 07/30/14 -- MEG Energy Corp. (TSX: MEG) today reported second quarter 2014 operational and financial results. Highlights include:
-- Record cash flow from operations of $261.7 million; -- Record quarterly production of 68,984 barrels per day (bpd), nearly 18 per cent higher than the first quarter and 115 per cent higher than the second quarter of 2013, all while factoring in the impact of planned maintenance on Phases 1 and 2; -- Christina Lake Phase 2B reaching design capacity seven months after first oil production; -- 2014 production guidance increased eight per cent to 65,000 to 70,000 bpd, reflecting strong operational performance; -- Completion of the Phase 1 and 2 plant turnaround, with inspections and maintenance confirming assets are in good operating condition.
"Exceptional operating performance and higher realized pricing drove record cash flow in the quarter," said Bill McCaffrey, MEG President and Chief Executive Officer. "This step change in our cash flow represents the beginning of a new chapter for MEG. Internal cash flow is now poised to be the major contributor to our future capital funding plans, with this past quarter being an important milestone."
Cash flow from operations in the second quarter of 2014 reached a record $261.7 million ($1.16 per share, diluted) compared to $79.2 million ($0.35 per share, diluted) for the same period of 2013. The increase in cash flow from operations was primarily due to higher production volumes and increased netbacks per barrel.
MEG's production during the second quarter of 2014 increased nearly 115 per cent to 68,984 bpd compared to second quarter 2013 production of 32,144 bpd. For the first six months of 2014, production approximately doubled to 63,842 bpd compared to 32,337 bpd in the first half of 2013. Quarterly and year-to-date production volumes in both comparative periods were impacted by planned maintenance.
"Phase 2B reached planned production volumes seven months after first oil, just prior to the Phase 1 and 2 plant turnaround," said McCaffrey. "We are looking to a strong second half and have raised our production guidance to 65,000 to 70,000 barrels per day for the year."
Second quarter 2014 non-energy operating costs were $9.64 per barrel, down from $10.00 per barrel in the second quarter of 2013, including costs for planned maintenance. Net operating costs were $14.49 per barrel for the second quarter of 2014 compared to $8.85 per barrel in the second quarter of 2013. This reflects lower non-energy operating costs offset by increased natural gas costs and lower electricity sales revenues from the company's cogeneration facilities. MEG's steam-oil ratio declined to 2.4 in the second quarter of 2014 from 2.5 in the first quarter, reflecting the performance of RISER in Phases 1 and 2 as well as the ramp-up of Phase 2B.
Average bitumen price realizations increased approximately 17% in the second quarter of 2014 compared to the previous quarter and were approximately 35% higher than price realizations in the second quarter of 2013. Continued logistics enhancements, including increased crude-by-rail transportation, pipelines connecting the U.S. mid-continent to the U.S. Gulf Coast and refinery modifications in the U.S. Midwest contributed to improved pricing. The anticipated completion of the Flanagan-Seaway pipeline system in the second half of 2014 is expected to further enhance transportation logistics and pricing.
Operating earnings, which are adjusted for items that are not indicative of operating performance, were $111.1 million ($0.49 per share, diluted) in the second quarter of 2014 compared to $13.6 million ($0.06 per share, diluted) in the same period of 2013, reflecting the same factors that impacted cash flow from operations.
Net income was $249.0 million ($1.11 per share, diluted) in the second quarter of 2014, compared to a net loss of $62.3 million ($0.28 per share, diluted) in the second quarter of 2013.
Operational and Financial Highlights
The following table summarizes selected operational and financial information for the three and six months ended June 30. Dollar values are in Canadian dollars unless otherwise noted.
============================================================================ Three months ended Six months ended June 30 June 30 ---------------------------------------------------------------------------- 2014 2013 2014 2013 ---------------------------------------------------------------------------- Bitumen production - bbls/d 68,984 32,144 63,842 32,337 Bitumen sales - bbls/d 70,849 32,175 64,504 32,284 Steam to oil ratio (SOR) 2.4 2.3 2.4 2.4 West Texas Intermediate (WTI) 102.99 94.22 100.84 94.30 US$/bbl West Texas Intermediate (WTI) C$/bbl 112.31 96.42 110.62 95.82 Differential - WTI vs AWB - % 24.1% 27.1% 26.3% 34.7% Bitumen realization - $/bbl 72.75 53.98 68.06 42.04 Net operating costs(1) - $/bbl 14.49 8.85 14.11 9.65 Non-energy operating costs - $/bbl 9.64 10.00 9.38 9.41 Cash operating netback(2) - $/bbl 51.45 41.93 47.89 29.94 Total cash capital investment(3) - 320,826 653,827 663,829 1,322,759 $000 Net income (loss)(4) - $000 248,954 (62,312) 145,513 (133,606) Per share, diluted 1.11 (0.28) 0.65 (0.60) Operating earnings (loss)(5) - $000 111,139 13,612 151,798 (23,100) Per share, diluted(5) 0.49 0.06 0.68 (0.10) Cash flow from operations(5) - $000 261,713 79,184 418,700 86,255 Per share, diluted(5) 1.16 0.35 1.86 0.39 Cash, cash equivalents and short- term investments - $000 839,870 1,203,457 839,870 1,203,457 Long-term debt - $000 4,016,257 2,923,382 4,016,257 2,923,382 ============================================================================
(1) Net operating costs include energy and non-energy operating costs, reduced by power sales. Please refer to Cash Operating Netbacks discussed further under the heading "RESULTS OF OPERATIONS" in the Company's second quarter MD&A.
(2) Cash operating netbacks are calculated by deducting the related diluent, transportation, field operating costs and royalties from proprietary sales volumes and power revenues, on a per barrel basis. Please refer to note 3 of the Cash Operating Netbacks table within "RESULTS OF OPERATIONS" in the Company's second quarter MD&A.
(3) Includes capitalized interest of $22.1 million and $41.6 million for the three and six months ended June 30, 2014, respectively ($18.2 million and $31.8 million respectively, for the three months and six months ended June 30, 2013).
(4) Includes a foreign exchange gain of $144.1 million on conversion of the U.S. dollar denominated debt for the three months ended June 30, 2014. Includes a foreign exchange loss of $15.4 million on conversion of the U.S. dollar denominated debt for the six months ended June 30, 2014. Includes foreign exchange losses on conversion of U.S. dollar denominated debt of $100.9 million and $150.1 million, respectively, for the three and six months ended June 30, 2013.
(5) Please refer to Non-IFRS Financial measures below.
A conference call will be held to review MEG's second quarter results at 7:30 a.m. Mountain Time (9:30 a.m. Eastern Time) on July 30, 2014. The U.S./Canada toll-free conference call number is 1 866-223-7781. The international/local conference call number is 416-340-2216.
This document may contain forward-looking information including but not limited to: expectations of future production, revenues, expenses, cash flow, operating costs, SORs, pricing differentials, reliability, profitability and capital investments; estimates of reserves and resources; the anticipated reductions in operating costs as a result of optimization and scalability of certain operations; the anticipated capital requirements, timing for receipt of regulatory approvals, development plans, timing for completion, commissioning and start-up, capacities and performance of the Access Pipeline expansion, the RISER initiative, the Stonefell Terminal, third party barging and rail facilities, the future phases and expansions of the Christina Lake Project, the Surmont Project and potential projects on the Growth Properties; and the anticipated sources of funding for operations and capital investments. Such forward-looking information is based on management's expectations and assumptions regarding future growth, results of operations, production, future capital and other expenditures (including the amount, nature and sources of funding thereof), plans for and results of drilling activity, environmental matters, 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 include, but are not limited to: risks associated with the oil and gas industry (e.g. operational risks and delays in the development, exploration or production associated with MEG's projects; the securing of adequate supplies and access to markets and transportation infrastructure; the availability of capacity on the electrical 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; risks of legislative and regulatory changes to, amongst other things, tax, land use, royalty and environmental laws), assumptions regarding and the volatility of commodity prices and foreign exchange rates; and risks and uncertainties associated with securing and maintaining the necessary regulatory approvals and financing to proceed with the continued expansion of the Christina Lake Project and the development of the Corporation's other projects and facilities. 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.
The forward-looking information included in this document is expressly qualified in its entirety by the foregoing cautionary statements. Unless otherwise stated, the forward-looking information included in this document is made as of the date of this document and the Corporation assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances, except as required by law. For more information regarding forward-looking information see "Notice Regarding Forward Looking Information", "Regulatory Matters" and "Risk Factors" within MEG's Annual Information Form dated March 5, 2014 (the "AIF") along with MEG's other public disclosure documents. Copies of the AIF and MEG's other public disclosure documents are available through the SEDAR website (www.sedar.com) or by contacting MEG's investor relations department.
Non-IFRS Financial Measures
This document includes references to financial measures commonly used in the crude oil and natural gas industry, such as operating earnings, cash flow from operations and cash operating netback. These financial measures are not defined by IFRS as issued by the International Accounting Standards Board and therefore are referred to as non-IFRS measures. The non-IFRS measures used by MEG may not be comparable to similar measures presented by other companies. MEG uses these non-IFRS measures to help evaluate its performance. Management considers operating earnings and cash operating netback to be important measures as they indicate profitability relative to current commodity prices. Management uses cash flow from operations to measure MEG's ability to generate funds to finance capital expenditures and repay debt. These non-IFRS measures should not be considered as an alternative to or more meaningful than net income (loss) or net cash provided by (used in) operating activities, as determined in accordance with IFRS, as an indication of MEG's performance. The non-IFRS operating earnings and cash operating netback measures are reconciled to net income (loss), while cash flow from operations is reconciled to net cash provided by (used in) operating activities, as determined in accordance with IFRS, under the heading "Non-IFRS Measurements" in MEG's Management's Discussion and Analysis pertaining to the second quarter of 2014.
MEG Energy Corp. is focused on sustainable in situ oil sands development and production in the southern Athabasca oil sands region of Alberta, Canada. MEG is actively developing enhanced oil recovery projects that utilize SAGD extraction methods. MEG's common shares are listed on the Toronto Stock Exchange under the symbol "MEG."
WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web communications world. The 6th WebRTC Summit continues our tradition of delivering the latest and greatest presentations within the world of WebRTC. Topics include voice calling, video chat, P2P file sharing, and use cases that have already leveraged the power and convenience of WebRTC.
Feb. 26, 2017 04:15 PM EST Reads: 1,629
SYS-CON Events announced today that CA Technologies has been named “Platinum Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY, and the 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CA Technologies helps customers succeed in a future where every business – from apparel to energy – is being rewritten by software. From ...
Feb. 26, 2017 03:45 PM EST Reads: 2,645
With 10 simultaneous tracks, keynotes, general sessions and targeted breakout classes, Cloud Expo and @ThingsExpo are two of the most important technology events of the year. Since its launch over eight years ago, Cloud Expo and @ThingsExpo have presented a rock star faculty as well as showcased hundreds of sponsors and exhibitors! In this blog post, I provide 7 tips on how, as part of our world-class faculty, you can deliver one of the most popular sessions at our events. But before reading the...
Feb. 26, 2017 03:30 PM EST Reads: 8,879
"Storage is growing. All of IDC's estimates say that unstructured data is now 80% of the world's data. We provide storage systems that can actually deal with that scale of data - software-defined storage systems," stated Paul Turner, Chief Product and Marketing Officer at Cloudian, in this SYS-CON.tv interview at 17th Cloud Expo, held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA.
Feb. 26, 2017 02:30 PM EST Reads: 7,077
The best way to leverage your Cloud Expo presence as a sponsor and exhibitor is to plan your news announcements around our events. The press covering Cloud Expo and @ThingsExpo will have access to these releases and will amplify your news announcements. More than two dozen Cloud companies either set deals at our shows or have announced their mergers and acquisitions at Cloud Expo. Product announcements during our show provide your company with the most reach through our targeted audiences.
Feb. 26, 2017 02:30 PM EST Reads: 2,430
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
Feb. 26, 2017 01:30 PM EST Reads: 2,342
Bert Loomis was a visionary. This general session will highlight how Bert Loomis and people like him inspire us to build great things with small inventions. In their general session at 19th Cloud Expo, Harold Hannon, Architect at IBM Bluemix, and Michael O'Neill, Strategic Business Development at Nvidia, discussed the accelerating pace of AI development and how IBM Cloud and NVIDIA are partnering to bring AI capabilities to "every day," on-demand. They also reviewed two "free infrastructure" pr...
Feb. 26, 2017 01:15 PM EST Reads: 1,826
Cloud Expo, Inc. has announced today that Aruna Ravichandran, vice president of DevOps Product and Solutions Marketing at CA Technologies, has been named co-conference chair of DevOps at Cloud Expo 2017. The @DevOpsSummit at Cloud Expo New York will take place on June 6-8, 2017, at the Javits Center in New York City, New York, and @DevOpsSummit at Cloud Expo Silicon Valley will take place Oct. 31-Nov. 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Feb. 26, 2017 01:15 PM EST Reads: 2,189
Have you ever noticed how some IT people seem to lead successful, rewarding, and satisfying lives and careers, while others struggle? IT author and speaker Don Crawley uncovered the five principles that successful IT people use to build satisfying lives and careers and he shares them in this fast-paced, thought-provoking webinar. You'll learn the importance of striking a balance with technical skills and people skills, challenge your pre-existing ideas about IT customer service, and gain new in...
Feb. 26, 2017 01:00 PM EST Reads: 3,014
In his general session at 18th Cloud Expo, Lee Atchison, Principal Cloud Architect and Advocate at New Relic, discussed cloud as a ‘better data center’ and how it adds new capacity (faster) and improves application availability (redundancy). The cloud is a ‘Dynamic Tool for Dynamic Apps’ and resource allocation is an integral part of your application architecture, so use only the resources you need and allocate /de-allocate resources on the fly.
Feb. 26, 2017 01:00 PM EST Reads: 1,805
SYS-CON Events announced today that Hitrons Solutions will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Hitrons Solutions Inc. is distributor in the North American market for unique products and services of small and medium-size businesses, including cloud services and solutions, SEO marketing platforms, and mobile applications.
Feb. 26, 2017 12:45 PM EST Reads: 582
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, demonstrated how to move beyond today's coding paradigm and shared the must-have mindsets for removing complexity from the develop...
Feb. 26, 2017 12:45 PM EST Reads: 6,413
@DevOpsSummit at Cloud taking place June 6-8, 2017, at Javits Center, New York City, is co-located with the 20th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long developm...
Feb. 26, 2017 12:30 PM EST Reads: 2,011
For basic one-to-one voice or video calling solutions, WebRTC has proven to be a very powerful technology. Although WebRTC’s core functionality is to provide secure, real-time p2p media streaming, leveraging native platform features and server-side components brings up new communication capabilities for web and native mobile applications, allowing for advanced multi-user use cases such as video broadcasting, conferencing, and media recording.
Feb. 26, 2017 11:30 AM EST Reads: 6,677
Almost two-thirds of companies either have or soon will have IoT as the backbone of their business. Though, IoT is far more complex than most firms expected with a majority of IoT projects having failed. How can you not get trapped in the pitfalls? In his session at @ThingsExpo, Tony Shan, Chief IoTologist at Wipro, will introduce a holistic method of IoTification, which is the process of IoTifying the existing technology portfolios and business models to adopt and leverage IoT. He will delve in...
Feb. 26, 2017 11:00 AM EST Reads: 2,767