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Quietly last week MEG Energy got a load of new money to play around with by refinancing existing debt and issuing new 10-year notes. Now the question is, what will the company do with it?

The sum is impressive. MEG has $1.8-billion in cash, an undrawn $500-million credit facility and an estimated cash flow of $500-million in 2011 and 2012, according to RBC analyst Mark Friesen.

Phase 2B of the Christina Lake project is expected to cost $1.4-billion to bring on stream, so that presumably leaves $1.4-billion of funds readily available. Mr. Friesen noted that possible ways of putting them to use include faster exploration and drilling on growth properties, acquisitions (corporate or land) and joint venture opportunities.

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However, before speculation runs too wild, Mr. Friesen does note that the company simply could be taking advantage of favourable debt markets. And for the record, the company said its new debt was to be used for general corporate purposes.

The speculation around MEG comes after the company announced very strong results last quarter. Fourth-quarter production surpassed benchmark expectations and MEG's steam-to-oil ratio, at 2.3 times, is very low for the industry.

Because performance has been so solid, last week's debt offering was upsized from $500-million (U.S.) to $750-million.

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