Mr. Derek Evans reports

MEG ENERGY ANNOUNCES SECOND QUARTER 2023 FINANCIAL AND OPERATING RESULTS

MEG Energy Corp. has released its second quarter 2023 operational and financial results.

"I want to congratulate and thank the MEG team on the execution of a safe and successful second quarter turnaround despite the challenging labour market and ongoing supply chain constraints," said Derek Evans, president and chief executive officer. "Our Christina Lake operation is well positioned to deliver even higher second half free cash flow and build on the $126-million (U.S.) of debt reduction and $169-million of share buybacks achieved in the first half of the year."

Second quarter 2023 highlights include:

• Bitumen production of 85,974 barrels per day at a 2.25 steam to oil ratio (SOR), reflecting the impact of the major planned turnaround in the quarter;
• Funds flow from operating activities (FFO) and adjusted funds flow (AFF) of $278-million, or 96 cents per share;
• Free cash flow (FCF) of $129-million, after $149-million of capital expenditures, including $66-million directed toward completion of the major planned turnaround;
• Debt repayment of $40-million (U.S.) (approximately $54-million) during the second quarter of 2023 and $126-million (U.S.) (approximately $171-million) year to date; net debt declined to $994-million (U.S.) (approximately $1.3-billion) at the end of the second quarter of 2023;
• MEG Energy returned $66-million to shareholders through the buyback and cancellation of 3.1 million shares at a weighted-average price of $21.51 per share; year-to-date buybacks totalled 8.0 million shares, returning $169-million to shareholders;
• Operating expenses net of power revenue of $6.63 per barrel; power revenue offset 75 per cent of energy operating costs, resulting in energy operating costs net of power revenue of 97 cents per barrel and non-energy operating costs of $5.66 per barrel, all reflecting lower production in the quarter due to the major planned turnaround;
• The Christina Lake operation reached postpayout status under the oil sands royalty regulation resulting in an increase to the effective royalty rate as expected;
• On April 14, 2023, S&P Global Ratings raised the corporation's long-term issuer credit rating to BB minus with a stable outlook from B plus and affirmed the issue-level rating on the corporation's senior unsecured notes at BB minus; on May 24, 2023, Moody's Investors Service raised the corporation's long-term issuer credit rating to Ba3 with a stable outlook from B1 and raised the issue-level rating on the corporation's senior unsecured notes to B1 from B2.

Outlook

Bitumen production in the second half of the year is forecast at approximately 105,000 bbl/d moving annual bitumen production toward the low end of the guidance range and non-energy operating costs and general and administrative expense toward the high end of their respective ranges. The 2023 guidance remains unchanged.

The corporation has capacity to ship 100,000 bbl/d of AWB blend sales, on a preapportionment basis, to the USGC market through its committed FSP capacity. In addition, 20,000 bbl/d of capacity is contracted on the TMX pipeline system to Canada's west coast. TMX is scheduled to come into service in early 2024, which will further broaden MEG Energy's market access.

                 SUMMARY OF 2023 GUIDANCE                                        

Capital expenditures                       $450-million            
Bitumen production -- annual average (1)   100,000-105,000 bbl/d
Non-energy operating costs                 $4.75-$5.05 per bbl   
G&A expense                                $1.70-$1.90 per bbl   

(1) Two thousand twenty-three guidance includes the bitumen 
production impact of the second quarter turnaround, which 
impacted annual average bitumen production by approximately 
6,000 barrels per day.

Conference call

A conference call will be held to review MEG Energy's second quarter 2023 operating and financial results at 6:30 a.m. Mountain Time (8:30 a.m. Eastern Time) on July 28, 2023. To participate, please dial the North American toll-free number 1-888-390-0546 or the international call number 1-416-764-8688.

A recording of the call will be available by 12 p.m. Mountain Time (2 p.m. Eastern Time) on the same day at the MEG Energy website.

About MEG Energy Corp.

MEG Energy is an energy company focused on sustainable in situ thermal oil production in the southern Athabasca oil region of Alberta, Canada. MEG Energy is actively developing innovative enhanced oil recovery projects that utilize steam-assisted gravity drainage extraction methods to improve the responsible economic recovery of oil, as well as lower carbon emissions. MEG Energy transports and sells thermal oil (AWB) to customers throughout North America and internationally. MEG Energy is a member of the Pathways Alliance, a group of Canada's largest oil sands producers working together to address climate change and achieve the goal of net-zero emissions by 2050. MEG Energy's common shares are listed on the Toronto Stock Exchange under the symbol MEG.

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