MEG Energy

MEG Energy Corp.
Public
Traded as TSX: MEG
Industry Oil and gas industry
Founded 1999 by William J McCaffery as McCaffery Energy Group Inc
Headquarters Calgary, Alberta, Canada
Key people
 William J. McCaffrey chair, pres, ceo
Dale Hohm cfo
Jamey Fitzgibbon vp spec. proj
Products Petroleum
Electricity
Revenue Increase$1050.504 million (2012)[1]
C$52.569 million (2012)[1]Decrease18%
Total assets C$8018.679 million (2012)[1]Increase29%
Total equity $4870.534 million 2012Increase22%
Number of employees
 485 (June 2013)
Website www.megenergy.com

MEG Energy is a pure play Canadian oil sands producer engaged in exploration in Northern Alberta. All of its oil reserves are more than 1,000 feet (300 m) below the surface and so they depend on steam-assisted gravity drainage and associated technology to produce (heavy bitumen must first be brought to the surface). The company's main thermal project is Christina Lake. 85-megawatt cogeneration plants are used to produce the steam used in SAGD which is required to bring bitumen to the surface. The excess heat and electricity produced at its plants is then sold to Alberta's power grid. Its proven reserves have been independently pegged at 1.7 billion barrels (270×10^6 m3) and probable reserves (also called recoverable resource) 3.7 billion barrels (590×10^6 m3) (by engineering firm GLJ Petroleum Consultants Ltd ); That's significant considering only 300 billion barrels (48×10^9 m3) of the 1.6 trillion barrels (250×10^9 m3) of bitumen in Alberta is considered recoverable under current technology.[2] The value of those reserves is over $19.8 billion.[3] CNOOC has a minority 16.69% interest in MEG Energy.[4]

Within nine months of going public it reached large cap company status after a small cap ipo. As recently as 2007 it was a junior oil company.[5]

History

MEG Energy was founded in 1999 as McCaffrey Energy Group Inc by CEO and President Bill McCaffrey, Director and Corporate Secretary David Wizinsky and former Director Steve Turner. It went public with an IPO of $660 million in August 2010.[4] At the time it was considered a $9.7 billion equity cap company.[6] The Christina Lake project first received approval from the government in 2008, it was one of six oil megaprojects in Canada that year.

April 14, 2005 - CNOOC Ltd, China's 3rd biggest oil and natural gas company purchased a 16.69% interest in MEG Energy for $C150 million (13.6 million common shares).[2]

Production

In 2012 bitumen production averaged 28,773 bpd, +2,168 bpd versus the previous year.[1] By the second quarter of 2013 average production had reached 32,144 bpd, +1,715 bdp. Also up is the realized oil price per barrel: $53.98 vs $45.59.

Christina Lake

MEG's interest in Christina Lake includes 80 blocks/sections. It is a three phase project that was operating at 12.4% (26,000 bbls/d) of total expected production capacity at the end of 2010. Since 2009 the first two phases were producing, albeit at a low level because construction of phase 2B (design capacity 40% larger than phase 1 and 2A combined) didn't begin until 2011. When combined with phase three, total production will exceed 200,000 barrels per day (32,000 m3/d) with 2020 production estimated at 260,000 bbls/d.[7] Cenovus Energy and ConocoPhillips also produce at Christina Lake; they jointly own an operation that produced 15,000 to 16,000 barrels per day (2,400 to 2,500 m3/d) in 2010. The pipeline system used to carry bitumen out and diluent in is the 343-kilometre (213 mi) Access Pipeline which MEG co owns with Devon ARL Corp.[8]

Phase 3 - the most important part of the project is currently awaiting regulatory approval (May 2011). Estimated production is 150,000 barrels per day (24,000 m3/d).

The company operates the Christina Lake Aerodrome.[9]

Surmont

The company's leases cover over 20,000 acres (8,100 ha) of land. The leases give MEG access to over 650 million barrels (103×10^6 m3) of contingent resources. Production isn't expected to begin until 2018.[4]

Initial production process

Initially two horizontally parallel wells are created. Oil is directed to the lowest well after injecting steam into the one above it in order to heat the area so that the liquid in the area flows downwards (allows for the separation of oil from sand). The steam used comes from MEG's cogeneration plants.

References

  1. 1 2 3 4 "2012 Annual Report" (PDF). 2013-01-31.
  2. 1 2 "http://english.peopledaily.com.cn/200504/14/eng20050414_180996.html". 2005-04-14. External link in |title= (help)
  3. ↑ Willis, Andrew (2010-06-14). "MEG Energy launches massive IPO". The Globe and Mail. Toronto.
  4. 1 2 3 "MEG Energy doubling size of oilsands project". 2010-08-10.
  5. ↑ "Plantsuccess 2008 Canada". 2008.
  6. ↑ "Oil sands company MEG plants $500 million senior notes offering". 2010-03-09.
  7. ↑ "Oilsands company MEG Energy to spend $1.37 billion in 2012". 2011-12-06.
  8. ↑ "MEG Energy Christina Lake Phase 3" (PDF). September 2007.
  9. ↑ Canada Flight Supplement. Effective 0901Z 15 September 2016 to 0901Z 10 November 2016
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