- MEG Energy (OTCPK:MEGEF +5.9%) is on the move after swinging to a Q2 profit and raising its full-year production guidance.
- The company earned C$68M in net profits in Q2, compared with a loss of $9M in the prior-year quarter, on revenues of C$1.01B, nearly double C$533M in revenues a year ago; MEG was expected to earn C$0.12/share on $846M of revenues.
- Q2 production rose 21% Y/Y to 91.8K bbl/day, prompting MEG to raise guidance for full-year bitumen production to 91K-93K bbl/day from 86K-90K bbl/day forecast in December.
- MEG says the strong quarter also gives it confidence to bring its Christina Lake facility in Alberta back to full capacity and to restart debt reduction.
- The company says it redeemed $125M of debt and expects to apply all free cash flow generated in this year's H2 to debt reduction.
- MEG says Christina Lake work will require $125M of funds, less than the $150M previously estimated, citing field-wide production outperformances from increased steam utilization, improved field reliability and ongoing well optimization and recompletion work.
- Analysts are too bullish on MEG, which "may stagnate a bit at this level through the second half," Fluidsdoc writes in an analysis posted on Seeking Alpha.