MEG Energy reports first quarter 2013 results - record production sets stage for transformational year

MEG Energy reports first quarter 2013 results - record production sets stage 
for transformational year 
CALGARY, April 24, 2013 /CNW/ - MEG Energy Corp. ("MEG") today reported first 
quarter 2013 operational and financial results. Highlights include: 


    --  Record quarterly production volumes of 32,531 barrels per day
        as MEG drives toward a 2013 exit production rate 30% to 50%
        higher than 2012 average volumes and a nearly 180% increase
        over 2012 averages by early 2015;
    --  Low net operating costs of $10.44 per barrel, which mitigated
        the challenging price environment through January and February
        - prices began to improve in March and continued to strengthen
        in April;
    --  New eMSAGP wells demonstrating initial results consistent with
        the industry-leading steam-oil ratio performance of MEG's pilot
        wells using the technology;
    --  Ongoing progress on the Christina Lake Phase 2B project, which
        remains on schedule for initial steaming in the third quarter
        and full plant operations targeted to ramp up in the fourth
        quarter;
    --  Receipt in the first quarter of dedicated barges to move crude
        oil around mid-continent pipeline congestion to reach higher
        priced markets - initial deliveries by barge commenced in
        April.

"Although we faced challenging market conditions in the first two months of 
the quarter, MEG's operational results were outstanding, with record quarterly 
production," said Bill McCaffrey, MEG President and Chief Executive Officer. 
"The stage is set for what we see as a truly transformational year as we 
continue our efforts to drive higher production volumes through the RISER 
initiative and our target to more than double production capacity with the 
start-up of Phase 2B later in the year."

Production in the first quarter of 2013 averaged 32,531 barrels per day (bpd), 
compared to 28,446 bpd for the same period in 2012. The 14% increase is the 
result of expanded steam generation capacity and enhanced reservoir efficiency 
measures that have allowed additional wells to be placed into production.

Wider deployment of MEG's proprietary reservoir technology began in the first 
quarter, with three additional wells adapted to enhanced modified steam and 
gas push technology (eMSAGP) in March and plans to initiate eMSAGP at an 
additional six wells in the second quarter. MEG's pilot eMSAGP well pattern 
has demonstrated steam-oil ratios at an industry-leading 1.3, with production 
volumes remaining steady. New wells utilizing the technology are exhibiting 
similar initial performance profiles, driving expectations of further 
efficiencies and incremental production increases.

Net operating costs for the first quarter of 2013 were $10.44 per barrel, 
compared to $7.95 per barrel for the first three months of 2012. The increase 
was primarily due to higher natural gas energy prices and higher operational 
costs associated with MEG's growth strategy and planned near-term production 
increases. Net operating costs were partially offset by electricity sales 
revenue from the company's cogeneration facilities.

"Top-quartile operating cost efficiency, increasing production, and our moves 
to bypass areas of pipeline congestion that have been restricting access to 
higher priced markets are all coming together. We expect to deliver 
significantly stronger cash flows as we advance these initiatives in 2013," 
said McCaffrey.

Cash flow from operations was $7.1 million ($0.03 per share, diluted) for the 
first quarter of 2013, compared to $72.0 million ($0.36 per share, diluted) 
for the first quarter of 2012. The decrease in cash flow from operations was 
primarily due to lower price realizations, particularly in the first two 
months of the quarter, partially offset by higher production volumes.

MEG recognized a net loss for the first quarter of 2013 of $71.3 million 
compared to net income of $53.4 million for the first quarter of 2012. The net 
loss is primarily due to unrealized foreign exchange impacts on the 
translation of the company's U.S. dollar denominated debt, cash and cash 
equivalents, as the Canadian dollar decreased in value relative to the U.S. 
dollar. The recorded net loss in the first quarter was also impacted by the 
same factors affecting cash flow from operations.

First quarter operating earnings, which are adjusted to exclude unrealized 
items, were recorded as a loss of $36.7 million ($0.16 per share, diluted) 
compared to operating earnings of $23.5 million ($0.12 per share, diluted) for 
the same period in 2012.

Capital and growth strategy

MEG's management believes the company has the financial resources in place, 
including working capital of $1.3 billion and an additional undrawn US$1.0 
billion revolving credit facility, to execute its plan to increase production 
to 80,000 bpd by early 2015.

The corporation's remaining budgeted 2013 capital investment totals 
approximately $1.3 billion, including approximately $135 million deferred from 
previously planned 2012 investments and will be directed towards:
    --  The RISER initiative, which is focused on increasing production
        and throughput capacity in the near-term from existing
        facilities;
    --  Drilling and completion of an inventory of stand-by wells to
        take advantage of freed-up steam from the implementation of
        eMSAGP;
    --  Completion of Christina Lake Phase 2B;
    --  Engineering, long lead items and site preparation for Phase 3A;
        and
    --  Infrastructure investments to expand the jointly-owned Access
        Pipeline and complete the 900,000 barrel Stonefell Terminal in
        mid-2013, effectively placing MEG's production at the Edmonton
        transportation hub and providing flexible market transportation
        options.

"Investments in new reservoir technologies and plant debottlenecking are 
already showing results - and that's a trend that we expect to continue 
through the year," said McCaffrey. "We are also beginning to see the results 
of our marketing initiative, with our first barge shipments aimed at bypassing 
market congestion already underway. Building on that initiative, we are 
planning to roll out significant rail transportation volumes in the second 
half of the year. As we continue through 2013, we expect to deliver increasing 
volumes to higher-priced markets. The first quarter has set the stage."

Operational and financial highlights

The following table summarizes selected operational and financial information 
of the corporation for the three months ended March 31:
                                                  
                                            2013                2012

Bitumen production - bpd                  32,531              28,446

Steam to oil ratio                           2.5                 2.5
                                                                    

West Texas Intermediate (WTI) US$/bbl      94.37              102.92

Differential - WTI/Blend %                 41.9%               31.2%
                                                                    

Bitumen realization - $/bbl                30.04               50.15
                                                                    

Net operating costs((1) )- $/bbl           10.44                7.95
                                                                    

Cash operating netback((2)) - $/bbl        17.90               39.20
                                                                    

Capital cash investment - $000           668,932             364,862
                                                                    

Net income (loss) - $000                (71,294)              53,369

  Per share, diluted                      (0.32)                0.27

Operating earnings (loss) - $000((3))   (36,712)              23,529

  Per share, diluted((3))                 (0.16)                0.12

Cash flow from operations - $000((3))      7,071              71,991

  Per share, diluted((3))                   0.03                0.36
                                                                    

Cash and short-term investments - $000 1,803,338           1,402,390

Long-term debt - $000                  2,823,207           1,718,474
                                                                    
                                                  

((1) )Net operating costs include energy and non-energy operating
costs, reduced by power sales.

((2) )Cash operating netbacks are calculated by deducting the
related diluent, transportation, field
operating costs and royalties from production and power revenues, on
a per barrel basis.

((3) )Please refer to Non-IFRS Financial Measures below.

A full version of the First Quarter 2013 Report to Shareholders, including 
unaudited financial statements, is available in the Investors section of 
www.megenergy.com and at www.sedar.com.

A conference call will be held to review the first quarter results and discuss 
MEG's strategyat 7:30 a.m. Mountain Time (9:30 a.m. Eastern Time) on 
Wednesday, April 24, 2013. The U.S./Canada toll-free conference call number is 
1 888-231-8191.

Forward-Looking Information

This document may contain forward-looking information including but not 
limited to: expectations of future production, revenues, cash flow, pricing 
differentials and capital investments; estimates of reserves and resources; 
the anticipated capital requirements, development plans, timing for 
completion, capacities and performance of the RISER initiative, the Stonefell 
Terminal, third party barging and rail facilities and the future phases and 
expansions of the Christina Lake project; and the anticipated sources and 
sufficiency of funding for MEG's future growth. 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", "Risk Factors" and "Regulatory Matters" within 
MEG's Annual Information Form dated February 27, 2013 (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 (loss), 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 (loss) and cash operating 
netback 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 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 (loss) 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 first quarter 
of 2013.

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."







Investors Helen Kelly Director, Investor Relations (403) 767-6206 
helen.kelly@megenergy.com

Media Brad Bellows Director, External Communications (403) 212-8705 
brad.bellows@megenergy.com

SOURCE: MEG Energy Corp.

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CO: MEG Energy Corp.
ST: Alberta
NI: OIL ERN CONF 

-0- Apr/24/2013 09:00 GMT


 
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