Bloomberg News

MEG Energy Reserves Rise, Plans for 10-Fold Capacity Boost

February 02, 2012

(updates share price in fourth paragraph.)

Feb. 2 (Bloomberg) -- MEG Energy Corp., the Canadian oil- sands producer part-owned by China’s Cnooc Ltd., increased its proved crude reserves 17 percent last year as it targets a 10- fold increase in capacity.

Reserves expanded to 708 million barrels from 606 million in 2010, the Calgary-based company said in a statement today. MEG Energy, which produced an average of 26,605 barrels a day last year, plans to increase spending by 52 percent this year as part of a goal to boost its capacity to produce bitumen from Alberta’s oil sands to 260,000 barrels a day by 2020.

MEG Energy plans to spend C$1.37 billion ($1.37 billion) this year, from C$900 million in 2011, as it increases capacity at its Christina Lake project and develops new resources at Surmont. The company estimates as much as 2.06 billion barrels of proved and probable reserves in its lease holdings.

The shares rose 4.1 percent to C$46.50 at the close in Toronto, the biggest gain since Nov. 28. MEG Energy has gained 31 percent since it began trading in 2010.

Fourth-quarter net income rose to C$91.1 million, or 46 cents a share, from C$61.3 million, or 31 cents, a year earlier, the company reported today. MEG Energy was expected to earn 22 cents a share, the average of 12 analysts’ estimates compiled by Bloomberg.

Cnooc purchased a 16.69 percent stake in MEG Energy in 2005 for C$150 million. The Beijing-based company is the second- largest shareholder in MEG Energy, behind Warburg Pincus LLC, according to data compiled by Bloomberg.

--Editors: Tina Davis, Jasmina Kelemen

To contact the reporter on this story: Jeremy van Loon in Calgary at jvanloon@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net


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