UPDATE 1-MEG Energy posts bigger loss, but production sets record

Thu Feb 6, 2014 11:37am EST
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(Adds details on production, Stonefell terminal, analyst quote)

CALGARY, Alberta Feb 6 (Reuters) - Canadian oil sands producer MEG Energy Corp on Thursday reported record bitumen production for the fourth quarter, overshadowing a bigger net loss caused by the weakening of its national currency.

The company, whose shares rose more than 5 percent, said its net loss widened to C$148.2 million, or 67 Canadian cents per share, from C$18.7 million, or 9 Canadian cents, a year earlier.

MEG said it had taken a foreign exchange loss on the conversion of its U.S. dollar-denominated debt as the Canadian dollar weakened.

Analysts said MEG's 2014 outlook was solid, with production growing rapidly after a faster-than-expected ramp-up of Phase 2B of its Christina Lake project.

Despite the disappointing results, "we believe that the company is well positioned for 2014," said BMO Capital Markets analyst Randy Ollenberger. "The company also began rail loadings in December and should see improved netbacks in 2014 as a result."

MEG's newly built 900,000-barrel-per-day Stonefell storage terminal is connected by pipeline to Canexus Corp's Bruderheim unit train terminal.

Bitumen production rose 31 percent to an average 42,251 bpd in the fourth quarter, and the company is targeting production of 80,000 bpd by 2015.

MEG, whose key operations are in the southern Athabasca oil sands region of Alberta, said it had ended 2013 with net debt of C$2.90 billion.   Continued...