MEG Energy posted a profit of $131-million, or 58 cents per share, for the three months ended March 31 compared with a loss of $508-million, or $2.27 per share, a year earlier.SERGEI KARPUKHIN/Reuters
MEG Energy Corp. is selling shares and refinancing its hefty debt load as the oil sands producer restarts a major growth project.
Calgary-based MEG late on Wednesday unveiled a 2017 budget of $590-million, up from $125-million it spent last year.
About half of the planned spending is directed at its steam-driven Christina Lake project, where the company aims to boost production by 20,000 barrels a day by 2019, a 25-per-cent increase from current levels.
The move comes as oil prices have climbed above $50 (U.S.) a barrel, prompting some oil sands producers to loosen the purse strings after more than two years of deep cutbacks to cope with weak cash flow.
MEG said it would fund the $400-million (Canadian) expansion partly through the sale of $357-million in subscription receipts, with the shares priced at $7.75 each. The bought deal is co-led by BMO Capital Markets, Barclays PLC and RBC Capital Markets. MEG shares closed at $8.42 on the Toronto Stock Exchange on Wednesday.
MEG, which has struggled with a high debt as oil prices collapsed, said it had extended by two years the maturity date on commitments under a reduced credit facility of $1.4-billion (U.S.).
The company also said a $1.2-billion term loan will be refinanced with an extended maturity. Another $750-million in debt due in 2021 is to be refinanced and extended with new second-lien indebtedness, it said.
The financial moves are expected to close by mid-February.
Meanwhile, the company said total production for 2017 is expected to average between 80,000 to 82,000 barrels per day. That compares to a range of 81,500 and 82,500 barrels in the fourth quarter.