CALGARY, Alberta (Reuters) - Canadian oil sands producer MEG Energy’s (MEG.TO) 2017 capital budget will be nearly four times higher than last year’s spending, the company said in a statement on Wednesday that also outlined plans to refinance its debt.
Calgary-based MEG plans to spend C$590 million ($447.85 million) this year, up from C$125 million in 2016 when the company deferred some production growth projects because of low crude oil prices.
A number of Canadian oil and gas producers have laid out plans to spend more in 2017 as global crude prices stabilize above $50 a barrel.
MEG said it will grow production by 20,000 barrels per day in 2017, a roughly 25 percent increase on current output, through implementing enhanced thermal technology at its Christina Lake oil sands project in northern Alberta.
Chief Executive Bill McCaffrey said the technology, which involves adding gas to steam injected underground to liquefy and extract tarry oil sands bitumen, will increase production volumes and improve economic returns.
“When fully implemented, this growth is anticipated to bring MEG’s total production to approximately 100,000 bpd, significantly improving the sustainability of the business by driving cash costs down by as much as C$4-5 per barrel,” McCaffrey added.
MEG also unveiled a refinancing plan, in which the company will extend maturity dates on its revolving credit facility and a $1.2 billion term loan, refinance $750 million of unsecured notes, and raise C$357 million of equity through bought deal financing.
Reporting by Nia Williams; Editing by Bernard Orr