MEG Energy posts operating loss, deepens capital spending cuts

Wed Oct 28, 2015 11:33am EDT
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By Nia Williams

CALGARY, Alberta (Reuters) - Canadian oil sands producer MEG Energy Corp reported a quarterly loss but lower operating costs on Wednesday and announced a deeper cut to its 2015 capital spending budget, sending its shares almost 13 percent higher.

The company reduced its 2015 capital program for a second time to C$280 million ($212.49 million) from C$305 million. It originally had planned spending of C$1.2 billion this year.

Calgary-based MEG also said it had laid off 30 percent of its workforce over the past year and is prioritizing efforts to sell part or all of its 50 percent share in Alberta's Access Pipeline system to help repay debt.

The 345-kilometer (214-mile) Access system includes a 400,000-barrel-per-day pipeline carrying diluted bitumen to Edmonton and a 90,000-bpd line taking diluent from Edmonton to MEG's Christina Lake operations.

The other half of the system is owned by Devon NEC Corp, a division of U.S.-based Devon Energy Corp.

MEG Chief Executive Bill McCaffrey declined to give an estimate on when the stake in the pipeline would be sold, but said the company was "very, very active" on it.

"It's definitely the primary focus of the corporation right now," McCaffrey said in an earnings call.

MEG said average realized bitumen prices fell 52.3 percent to C$31.03 per barrel in the third quarter from a year earlier.   Continued...