MEG Energy reports record quarterly production and cash flow

 Production increase reflects continuing success in the ramp-up of Phase 2B and  the RISER initiative  CALGARY, April 30, 2014 /CNW/ - MEG Energy Corp. today reported first quarter  2014 operational and financial results. Highlights include:            --  Record cash flow from operations of $157.0 million;         --  Record quarterly production of 58,643 barrels per day (bpd), an             increase of 80% over first quarter 2013 production volumes             driven by the continuing ramp-up of production at Christina             Lake Phase 2B and MEG's RISER initiative;         --  Quarterly exit rate production for the month of March was over             60,600 bpd, supporting targeted annual average production of             60,000 to 65,000 bpd in 2014 and 80,000 bpd by 2015; and         --  First quarter non-energy operating costs of $9.05 per barrel,             in line with annual guidance of an average of $8 to $10 per             barrel.  "The first quarter has set the stage for a very solid year," said Bill  McCaffrey, MEG President and Chief Executive Officer. "The implementation of  RISER at Phase 1 and 2 has already exceeded our initial expectations. With  this strong performance, combined with the steady production ramp-up we are  seeing at Phase 2B, we believe we are well on track to achieve our 2014  average production target of 60,000 to 65,000 barrels per day, as well as our  80,000 barrels per day target by 2015."  With the benefits of its RISER initiative at its Phase 1 and 2 assets and the  ramp-up of production from Phase 2B, MEG reached a production record of 58,643  bpd in the first quarter of 2014, an increase of 80% over first quarter 2013  volumes of 32,531 bpd.  "The ramp-up of Phase 2B to its initial design capacity of 35,000 barrels per  day is going very well," said McCaffrey. "We are now in the early planning  stages for a RISER initiative on Phase 2B, which will be the next phase of  production growth for the company".  RISER 2B will employ the same proven and proprietary technologies which drove  increased production and resource recovery at Phase 1 and 2, but this time  with a major brownfield expansion of the Phase 2B plant.  RISER 2B is  anticipated to add significant production above initial design capacity at  lower capital and operating costs than a typical greenfield development.  Cash flow from operations reached a record $157.0 million ($0.70 per share,  diluted) for the first quarter of 2014, compared to $7.1 million ($0.03 per  share, diluted) for the same period of 2013. The increase in cash flow from  operations was primarily due to higher sales volumes and increased price  realizations per barrel.  First quarter 2014 net operating costs were $13.63 per barrel, compared to  $10.44 per barrel in the first quarter of 2013. The increase was primarily due  to higher natural gas energy prices. Net operating costs were partially offset  by electricity sales revenue from MEG's cogeneration facilities. Non-energy  costs were slightly higher at $9.05 per barrel in the first quarter of 2014,  compared to $8.81 in the first quarter of 2013, primarily due to the ramp-up  of Phase 2B.  Operating earnings, which are adjusted to exclude unrealized items such as  foreign exchange conversion, were $40.7 million in the first quarter of 2014,  compared to a loss of $36.7 million in the same period of 2013. Increased  operating earnings were primarily driven by higher sales volumes and increased  price realizations per barrel.  MEG recognized a net loss of $103.4 million for the first quarter of 2014  compared to a net loss of $71.3 million for same period in 2013. The loss in  the first quarter of 2014 was primarily due to the $159.5 million impact of  the conversion of the company's U.S. dollar denominated debt as a result of  the strengthening of the U.S. dollar against the Canadian dollar.  Average bitumen price realizations increased more than 60% in the first  quarter of 2014 compared to the previous quarter and were more than double the  price realizations in the first quarter of 2013. Continued logistics  enhancements, including recent additions of crude-by-rail facilities,  pipelines connecting the U.S. mid-continent to the U.S. Gulf Coast and  refinery modifications in the U.S. Midwest contributed to improved pricing.  The expected completion of the Flanagan-Seaway pipeline system in the second  half of 2014 will further enhance transportation logistics and is expected to  assist in alleviating ongoing pipeline congestion.  "The combination of increasing production volumes, low and stable operating  costs and our efforts to increase the market price we realize on every barrel  is anticipated to further strengthen our cash flow profile," said McCaffrey.  Operational and Financial Highlights  The following table summarizes selected operational and financial information  for the three months ended March 31. Dollar values are in Canadian dollars  unless otherwise noted.                                                                                                                2014        2013     Bitumen production - bpd                     58,643      32,531     Bitumen sales - bpd                          58,089      32,393     Steam-oil ratio (SOR)                           2.5         2.5                                                                         West Texas Intermediate (WTI) US$/bbl         98.68       94.37     West Texas Intermediate (WTI) C$/bbl         108.89       95.21     Differential - Blend vs WTI - %               29.3%       41.9%                                                                         Bitumen realization - $/bbl                   62.28       30.04                                                                         Net operating costs(1) - $/bbl                13.63       10.44                                                                         Non-energy operating costs - $/bbl             9.05        8.81                                                                         Cash operating netback(2) - $/bbl             43.51       17.90                                                                         Total cash capital investment(3) - $000     343,003     668,932                                                                         Net income (loss)(4) - $000               (103,441)    (71,294)       Per share, diluted                         (0.46)      (0.32)     Operating earnings (loss)(5) - $000          40,659    (36,712)       Per share, diluted(5)                        0.18      (0.16)     Cash flow from operations(5) - $000         156,987       7,071     Per share, diluted(5)                          0.70        0.03                                                                         Cash, cash equivalents and short-term       890,335   1,803,338     investments - $000     Long-term debt - $000                     4,162,209   2,823,207               (1) Net operating costs include energy and non-energy operating costs,         reduced by power sales.         Cash operating netbacks are calculated by deducting the related     (2) diluent, transportation, field operating costs and royalties from         proprietary sales volumes and power revenues, on a per barrel         basis.         Includes capitalized interest of $19.5 million for the three months     (3) ended March 31, 2014 ($13.6 million for three months ended March         31, 2013).         Includes a foreign exchange loss of $159.5 million on conversion of     (4) the U.S. dollar denominated debt for the three months ended March         31, 2014 ($49.3 million for the three months ended March 31, 2013).     (5) Please refer to Non-IFRS Financial Measures below.            A full version of MEG's First Quarter 2014 Report to Shareholders, including  unaudited financial statements, is available at www.megenergy.com/investors  and at www.sedar.com.  A conference call will be held to review MEG's first quarter results at 7:30  a.m. Mountain Time (9:30 a.m. Eastern Time) on Wednesday, April 30. The  U.S./Canada toll-free conference call number is 1 888-231-8191. The  international/local conference call number is 647-427-7450.  Forward-Looking Information  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 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 first quarter of 2014.  MEG Energy Corp. is focused on sustainable in situoil 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."    SOURCE  MEG Energy Corp.  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  To view this news release in HTML formatting, please use the following URL:  http://www.newswire.ca/en/releases/archive/April2014/30/c5778.html  CO: MEG Energy Corp. ST: Alberta NI: OIL ERN CONF  
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