CALGARY, AB--(Marketwired - February 04, 2016) -  MEG Energy Corp. (TSX: MEG) today reported fourth quarter and full-year 2015 operating and financial results. Highlights include:

• Record quarterly production volumes of 83,514 barrels per day (bpd) contributing to record annual production of 80,025 bpd, a 12% increase year-over-year, while the 2015 capital budget was significantly reduced;

• Record-low net and non-energy operating costs for both the fourth quarter and the full year of 2015;

• Year-end cash and cash equivalents of $408 million and an undrawn credit facility of US$2.5 billion;

• An approximately 50% reduction in planned 2016 capital spending to $170 million from previous guidance of $328 million, while still maintaining production guidance for the full year.

MEG's fourth quarter 2015 production was a record 83,514 bpd, compared to 80,349 bpd for the fourth quarter of 2014. Full-year 2015 production increased 12% from 2014 totals, meeting targets and reflecting the ongoing efficiency gains associated with MEG's proprietary eMSAGP reservoir technology.

MEG established record-low net and non-energy operating costs for both the fourth quarter and the full year of 2015. Net operating costs were recorded at $8.52 per barrel in the fourth quarter of 2015 with net annual operating costs of $9.39 per barrel. At $5.66 per barrel, fourth quarter non-energy operating costs supported record-low annual non-energy operating costs of $6.54 per barrel, well below the company's 2015 revised guidance. Lower operating costs on both a quarterly and annual basis are reflective of higher production volumes and efficiency gains, as well as lower input prices for natural gas.

"Our operating performance throughout 2015 met or exceeded our targets," said Bill McCaffrey, President and Chief Executive Officer. "Our low cost structure is enabling MEG to weather the low commodity price environment seen over the past year."

MEG recorded cash flow used in operations of $44 million for the fourth quarter of 2015 compared to cash flow from operations of $134 million for the same period in 2014. Cash flow from operations decreased primarily due to lower price realizations and higher transportation and interest costs, partially offset by higher sales volumes and lower royalty expenses. Full year 2015 cash flow from operations remained positive at $49 million.

The company recorded a fourth quarter 2015 operating loss of $140 million compared to operating earnings of $8 million for the same period in 2014. The difference in operating earnings reflects the same factors impacting cash flow, as well as an increase in depletion and depreciation expense.

Capital investment and financial liquidity

MEG's capital investment in 2015 totalled $257 million, which was 23% below the capital budget after adjusting for capitalized turnaround costs. This reduced spending was a result of ongoing gains in capital efficiency.

In December 2015, MEG announced a 2016 annual capital program of $328 million. This has been revised downward by approximately 50% to $170 million. The reduction was achieved through the deferral of some previously planned growth capital spending, as well as efficiency enhancements to reservoir performance that has resulted in higher well productivity. Productivity improvements have enabled MEG to reduce planned 2016 sustaining and maintenance requirements to below $5 per barrel from previous estimates of $7 to $8 per barrel.

The reduction in 2016 capital spending is not expected to impact MEG's production guidance of 80,000 to 83,000 bpd and non-energy operating costs of $6.75 to $7.75 per barrel, although the company maintains the flexibility to temporarily defer production if warranted by market conditions.

The monetization of MEG's 50% holding in the Access Pipeline continues to be a key priority. The company is working diligently to complete this process, while ensuring the transaction is in the long-term interest of MEG's shareholders.

"MEG entered 2016 with more than $400 million in cash and an undrawn US$2.5 billion credit facility," said McCaffrey. "With significant liquidity and low operating costs, we are well positioned to reduce the impact of the current low-price environment."

Operational and Financial Highlights

The following table summarizes selected operational and financial information for the periods noted. Dollar values are in $Cdn millions unless otherwise noted.

ADVISORY

Basis of Presentation

MEG prepares its financial statements in accordance with International Financial Reporting Standards ("IFRS") and presents financial results in Canadian dollars ($ or C$), which is the corporation's functional currency.

Non-GAAP Financial Measures

This document includes references to financial measures commonly used in the crude oil and natural gas industry, such as cash flow from (used in) operations and operating earnings (loss). These financial measures are not defined by IFRS as issued by the International Accounting Standards Board and therefore are referred to as non-GAAP measures. The non-GAAP measures used by MEG may not be comparable to similar measures presented by other companies. MEG uses these non-GAAP measures to help evaluate its performance. These non-GAAP measures should not be considered as an alternative to or more meaningful than net cash provided by (used in) operating activities or net earnings (loss), as determined in accordance with IFRS, as an indication of MEG's performance.

Cash Flow from (Used In) Operations

Cash flow from (used in) operations is a non-GAAP measure utilized by the Corporation to analyze operating performance and liquidity. Cash flow from (used in) operations excludes the net change in non-cash operating working capital, contract cancellation expense, payments on onerous contracts and decommissioning expenditures while the IFRS measurement "Net cash provided by (used in) operating activities" includes these items. Cash flow from (used in) operations is reconciled to Net cash provided by (used in) operating activities in the table below.

Operating Earnings (Loss)

Operating earnings (loss) is a non-GAAP measure which the Corporation uses as a performance measure to provide comparability of financial performance between periods by excluding non-operating items. Operating earnings (loss) is defined as net earnings (loss) as reported, excluding gains (losses) on disposition of assets, unrealized foreign exchange gains and losses, unrealized gains and losses on derivative financial liabilities, unrealized fair value gains and losses on other assets, onerous contracts, contract cancellation expense and the respective deferred tax impact of these adjustments. Operating earnings (loss) is reconciled to "Net earnings (loss)", the nearest IFRS measure, in the table below.

A full version of MEG's Fourth Quarter 2015 Report to Shareholders, including unaudited financial statements, is available at www.megenergy.com/investors and at www.sedar.com.

A conference call will be held to review MEG's fourth quarter results at 9:00 a.m. Mountain Time (11:00 a.m. Eastern Time) on Thursday, February 4. The U.S./Canada toll-free conference call number is 1 800-396-7098. The international/local conference call number is 416-340-8527.

Forward-Looking Information

This document may contain forward-looking information including but not limited to: expectations of future production, revenues, expenses, cash flow, operating costs, steam-oil ratios, pricing differentials, reliability, profitability and capital investments; estimates of reserves and resources; the anticipated reductions in operating costs as a result of optimization and scalability of certain operations; and the anticipated sources of funding for operations and capital investments. Such forward-looking information is based on management's expectations and assumptions regarding future growth, results of operations, production, future capital and other expenditures, plans for and results of drilling activity, environmental matters, business prospects and opportunities.

By its nature, such forward-looking information involves significant known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks include, but are not limited to: risks associated with the oil and gas industry, for example, the securing of adequate supplies and access to markets and transportation infrastructure; the availability of capacity on the electricity transmission grid; the uncertainty of reserve and resource estimates; the uncertainty of estimates and projections relating to production, costs and revenues; health, safety and environmental risks; risks of legislative and regulatory changes to, amongst other things, tax, land use, royalty and environmental laws; assumptions regarding and the volatility of commodity prices and foreign exchange rates; risks and uncertainties associated with securing and maintaining the necessary regulatory approvals and financing to proceed with MEG's future phases and the expansion and/or operation of MEG's projects; risks and uncertainties related to the timing of completion, commissioning, and start-up, of MEG's future phases, expansions and projects; and the operational risks and delays in the development, exploration, production, and capacities and performance associated with MEG's projects.

Although MEG believes that the assumptions used in such forward-looking information are reasonable, there can be no assurance that such assumptions will be correct. Accordingly, readers are cautioned that the actual results achieved may vary from the forward-looking information provided herein and that the variations may be material. Readers are also cautioned that the foregoing list of assumptions, risks and factors is not exhaustive.

Further information regarding the assumptions and risks inherent in the making of forward-looking statements can be found in MEG's most recently filed annual information form ("AIF"), along with MEG's other public disclosure documents. Copies of the AIF and MEG's other public disclosure documents are available through the SEDAR website which is available at www.sedar.com.

The forward-looking information included in this document is expressly qualified in its entirety by the foregoing cautionary statements. Unless otherwise stated, the forward-looking information included in this document is made as of the date of this document and MEG assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances, except as required by law. 

MEG Energy Corp. is focused on sustainable in situ oil sands development and production in the southern Athabasca oil sands region of Alberta, Canada. MEG is actively developing enhanced oil recovery projects that utilize SAGD extraction methods. MEG's common shares are listed on the Toronto Stock Exchange under the symbol "MEG."