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MEG Energy (TSE:MEG)
TSX:MEG
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MEG Energy
(TSX:MEG)
72Outperform
Positive Factors
Asset Quality
MEG Energy Corp remains one of the top picks due to its top-tier in-situ asset and capitally efficient growth trajectory, which could translate into one of the strongest delivered yields within its peer group.
Financial Performance
MEG Energy generated $168 million of free cash flow, returning all of it to shareholders through its base dividend and share repurchases.
Negative Factors
Operating Costs
Higher-than-expected operating costs were offset by stronger bitumen realizations.
MEG Energy (MEG) vs. S&P 500 (SPY)
Market Cap
$5.87B
Dividend Yield0.93%
Average Volume (3M)3.20M
Price to Earnings (P/E)12.0
Beta (1Y)1.09
Revenue Growth-8.92%
EPS Growth-5.46%
CountryCA
Employees451
SectorEnergy
Sector Strength73
IndustryFossil Fuels
Share Statistics
EPS (TTM)1.89
Shares Outstanding256,800,000
10 Day Avg. Volume5,205,704
30 Day Avg. Volume3,198,972
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.09
Price to Cash Flow (P/CF)4.90
P/FCF Ratio10.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$30.25Price Target Upside32.25% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering8
MEG Energy Business Overview & Revenue Model
Company DescriptionMEG Energy Corp. is a Canadian energy company focused on sustainable in situ oil sands development and production in Alberta, Canada. The company primarily operates in the oil and gas sector, utilizing advanced steam-assisted gravity drainage (SAGD) technology to extract bitumen, a heavy form of crude oil, from the oil sands. MEG Energy is committed to responsible resource development and reducing its environmental footprint, with a core focus on efficient oil production, energy conservation, and greenhouse gas emissions reduction.
How the Company Makes MoneyMEG Energy makes money primarily through the production and sale of bitumen extracted from its oil sands operations. The company generates revenue by selling its produced bitumen to refineries and other markets, both domestically and internationally. The price of bitumen is influenced by global oil prices, which in turn affects MEG's revenue. MEG Energy also invests in infrastructure, such as pipelines and storage facilities, to optimize its supply chain and access to markets, thereby enhancing its profitability. Additionally, the company may engage in hedging activities to manage price volatility and secure more predictable cash flows.
MEG Energy Financial Statement Overview
Summary
MEG Energy presents a stable financial position with strong equity and reduced leverage. Revenue growth and robust margins demonstrate operational efficiency, though net profit margin dipped slightly. The cash flow statement highlights healthy cash generation, albeit with a reduction in free cash flow. Overall, the company shows a solid financial footing with room for improvement in profitability and cash flow optimization.Income Statement
MEG Energy's revenue has shown growth with a 1.54% increase from 2023 to 2024. The gross profit margin stands at 32.90% in 2024, reflecting effective cost management. However, the net profit margin slightly decreased to 8.83% from 10.06% in 2023. The absence of EBIT in 2024 is a concern, but the EBITDA margin remains strong at 24.39%. Overall, the income statement indicates stable profitability with some areas for improvement.75
Positive
Balance Sheet
The company maintains a strong equity position with an equity ratio of 67.51% in 2024, providing financial stability. The debt-to-equity ratio improved to 0.24, indicating reduced leverage. ROE slightly decreased to 11.13% from 12.57% in 2023, showing a slight decline in shareholder returns. Overall, the balance sheet reflects a strong capital structure with reduced leverage risk.80
Positive
Cash Flow
Free cash flow decreased by 12.00% from 2023 to 2024, signaling a reduction in cash available after capital expenditures. The operating cash flow to net income ratio is robust at 2.64, indicating strong operational cash generation. The free cash flow to net income ratio remains healthy at 1.56. While cash flow generation is strong, the decline in free cash flow warrants attention.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 5.74B | 5.65B | 6.34B | 4.40B | 2.30B | Gross Profit |
| 1.89B | 1.51B | 2.63B | 1.29B | 61.00M | EBIT |
| 0.00 | 917.00M | 1.57B | 898.00M | -602.00M | EBITDA |
| 1.40B | 1.46B | 1.92B | 1.07B | 210.00M | Net Income Common Stockholders |
| 507.00M | 569.00M | 902.00M | 283.00M | -357.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 156.00M | 160.00M | 192.00M | 361.00M | 114.00M | Total Assets |
| 6.74B | 6.90B | 7.03B | 7.59B | 7.22B | Total Debt |
| 1.10B | 1.38B | 1.82B | 3.03B | 3.20B | Net Debt |
| 949.00M | 1.22B | 1.63B | 2.67B | 3.08B | Total Liabilities |
| 2.19B | 2.37B | 2.65B | 3.79B | 3.72B | Stockholders Equity |
| 4.55B | 4.53B | 4.38B | 3.81B | 3.51B |
| Cash Flow | Free Cash Flow | |||
| 792.00M | 900.00M | 1.51B | 359.00M | 153.00M | Operating Cash Flow |
| 1.34B | 1.35B | 1.89B | 690.00M | 302.00M | Investing Cash Flow |
| -501.00M | -478.00M | -354.00M | -281.00M | -189.00M | Financing Cash Flow |
| -860.00M | -896.00M | -1.73B | -165.00M | -216.00M |
MEG Energy Technical Analysis
Neutral
22.87
Price Trends
23.38
Negative
24.15
Negative
25.66
Negative
Market Momentum
-0.35
Negative
50.87
Neutral
87.25
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:MEG, the sentiment is Neutral. The current price of 22.87 is above the 20-day moving average (MA) of 22.68, below the 50-day MA of 23.38, and below the 200-day MA of 25.66, indicating a neutral trend. The MACD of -0.35 indicates Negative momentum. The RSI at 50.87 is Neutral, neither overbought nor oversold. The STOCH value of 87.25 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:MEG.
MEG Energy Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $48.76B | 11.07 | 21.08% | 2.53% | 1.08% | 6.38% | |
73 Outperform | $63.13B | 10.91 | 13.82% | 4.51% | 3.25% | -25.69% | |
72 Outperform | $5.87B | 12.00 | 11.22% | 0.93% | -8.92% | -5.46% | |
71 Outperform | $86.94B | 14.24 | 15.47% | 5.50% | -1.01% | 9.31% | |
68 Neutral | $2.27B | 9.64 | 5.99% | 3.39% | 22.71% | ― | |
67 Neutral | $32.88B | 10.91 | 10.88% | 3.97% | 3.97% | -22.22% | |
57 Neutral | $8.36B | 5.49 | -6.03% | 7.47% | 0.03% | -68.64% |
* Energy Sector Average
Performance Comparison
TSE:MEG
MEG Energy
22.87
-5.92
-20.56%
TSE:BTE
Baytex Energy
2.93
-1.29
-30.50%
TSE:CNQ
Canadian Natural
41.40
-5.02
-10.81%
TSE:CVE
Cenovus Energy
18.70
-4.67
-19.99%
TSE:IMO
Imperial Oil
95.79
8.82
10.14%
TSE:SU
Suncor Energy
51.03
5.73
12.64%
MEG Energy Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: -0.35% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Positive
MEG Energy had a strong year marked by record production, significant shareholder returns, and effective cost management. However, there are challenges related to increased project costs and potential tariff impacts. Overall, the positive achievements outweigh the challenges, reflecting confidence in future performance.Highlights
Record Production Achieved
MEG Energy achieved its fourth straight year of record production, surpassing 102,000 barrels per day with a steam-to-oil ratio of 2.39.
Strong Financial Performance
Generated approximately $1.4 billion in adjusted funds flow and $837 million of free cash flow, enabling the company to meet its U.S. $600 million net debt target.
Return of Capital to Shareholders
Instituted a quarterly dividend of $0.10 per share and repurchased 17 million shares, returning over $1.3 billion to shareholders over the last three years.
Improved Bitumen Realizations
Benefited from improved heavy oil fundamentals with WTI to AWB differentials narrowing to approximately $16 per barrel, a $5 improvement over 2023.
Cost Management Success
Operating expenses net of power revenue were top quartile at $6.32 per barrel, including non-energy operating costs of $5.39 per barrel.
Lowlights
Increased Project Costs
Facility expansion project costs increased to $470 million, with an adjustment for FX or other factors contributing to the increase.
Steam-to-Oil Ratio Increase
The overall steam-to-oil ratio ticked up slightly in 2024 relative to 2023, though expected to improve with new resource development.
Potential Impact of Tariffs
Concerns over potential tariffs affecting exports, although the company believes more than half of their sales may be non-tariffed.
Company Guidance
During MEG Energy's 2024 Q4 and full-year results conference call, the company provided several key metrics and guidance for the upcoming year. MEG Energy reported generating approximately $1.4 billion in adjusted funds flow and $837 million in free cash flow for 2024. The company achieved its net debt target of U.S. $600 million and announced a quarterly dividend of $0.10 per share, having returned over $1.3 billion to shareholders in the last three years through share repurchases and dividends. Record production was noted at over 102,000 barrels per day with a steam-to-oil ratio of 2.39. Improved bitumen realizations were attributed to strategic access to tidewater markets. For 2025, MEG expects production between 95,000 to 105,000 barrels per day, non-energy operating costs of $5.30 to $5.80 per barrel, and capital expenditures of $635 million. The company also anticipates generating $1.25 billion in adjusted funds flow with $615 million available for shareholder returns, potentially allowing for the repurchase of approximately 7% of outstanding shares. MEG highlighted its strategic focus on operational excellence, market access, and shareholder returns amid evolving market conditions.MEG Energy Corporate Events
Business Operations and StrategyFinancial Disclosures
MEG Energy Achieves Record Production and Announces Expansion Plans
Positive
Feb 27, 2025
MEG Energy reported strong financial and operational results for 2024, achieving record bitumen production and significant debt reduction. The company has initiated a program to return 100% of its free cash flow to shareholders and made a positive investment decision on a facility expansion project expected to increase production capacity significantly by 2027.
Business Operations and StrategyFinancial Disclosures
MEG Energy Releases 2024 Annual Results
Neutral
Feb 13, 2025
MEG Energy announced its 2024 annual financial results and scheduled a conference call to discuss the outcomes. The announcement is significant as it provides stakeholders with insights into the company’s financial health and operational strategies, impacting its market positioning and investor confidence.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.