Page 9 - NorthAmOil Week 09 2023

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MEG likely to exceed 2023 production targets

CANADA MEG Energy will likely exceed its 2023 annual MEG maintained non-energy operating
average production target on the back of a strong costs of CAD4.73 ($3.47) per barrel in 2022,
performance and high efficiency levels, the com- despite unprecedented levels of inflationary
pany’s chief operating officer, Darlene Gates, has pressure on labour, chemicals and materials
said. costs, she added.
In the first quarter, the company expects oil In the current year, the target for non-energy
sands production to reach 107,000 barrels per operating costs is CAD4.75-5.05 ($3.49-3.71)
day, already surpassing its 2023 average target of per barrel, Gates said.
102,500 bpd, Gates said in late February on the MEG is the operator of the Christina Lake oil
company’s earnings call. sands facility in the southern Athabasca region
The first-quarter result will come on the heels in northern Alberta. The company has proven
of MEG reporting record output of 110,085 bpd and probable (2P) reserves of 2bn barrels and MEG is the
in the fourth quarter of 2022, compared with regulatory approvals in place to produce about
100,698 bpd in the same quarter the prior year, 210,000 bpd from the asset, according to infor- operator of the
Gates said. mation on its website.
In the current year, the company has set The company is planning a turnaround at the Christina Lake
a capital expenditure budget of CAD450mn project in the second quarter and around 6,000
($330mn), compared with capex of CAD375mn bpd of annual output for 2023 will be affected by oil sands facility
($275mn) in 2022, she said. the planned work, Gates said. in the southern
Operationally, the company’s fourth-quarter MEG’s bitumen price realisation after
output entailed a steam-oil ratio (SOR) of 2.22, net transportation and storage expenses was Athabasca region.
compared with a 2.42 SOR in the same quarter CAD76.66 ($56.25) per barrel in 2022 compared
of 2021, MEG’s CEO, Derek Evans, said on the with CAD51.54 ($37.83) per barrel during 2021,
same call. the company said.
SOR is the volume of steam required in the MEG’s US Gulf Coast sales volumes rose to
steam-assisted gravity drainage (SAGD) process 66% in 2022 from 42% in 2021, reflecting incre-
to produce a barrel of raw bitumen, with a direct mental flows out of the Edmonton area follow-
impact on the project’s operating cost. A lower ing completion of Enbridge’s Line 3 replacement
SOR indicates higher efficiency and lower cost. project.
“This milestone is made possible by high field The company’s total production in 2022
and plant reliability, implementation of our opti- averaged 95,338 bpd, while its fourth-quarter
mised well design and the execution of short-cy- bitumen sales volumes stood at 113,582 bpd,
cle and high-return drilling programmes,” Gates compared with 98,894 bpd in the same quarter
said. of 2021.™

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