An oil worker holds raw sand bitumen near Fort McMurray.Jeff McIntosh/The Canadian Press
Shares in oil sands producer MEG Energy Corp. rose by as much as 3.9 per cent on Friday after it announced lower capital spending and a continued focus on debt retirement in 2020.
Analysts applauded the Calgary-based company’s plan to spend $250-million next year – about $20-million less than some expected – with production that is still forecast to meet expectations at between 94,000 and 97,000 barrels of bitumen a day.
MEG says about $210-million of the budget is considered sustaining and maintenance capital.
It plans to spend $20-million to complete a processing facility expansion to provide more steam generation, water handling and oil-treating capacity at its northeastern Alberta works which use steam to produce bitumen from wells.
The remaining $20-million is mainly for needed field infrastructure and regulatory and corporate capital costs.
MEG says after reducing its debt by $500-million this year, it will continue to allocate all excess free cash flow to further reductions. Net debt is expected to fall to just less than $3-billion by the end of 2019.
MEG shares rose as high as $5.85, up 22 cents, on the Toronto Stock Exchange. A year ago, they were trading at $8.55.
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