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  
-0- Apr/30/2014 09:00 GMT
 
 
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