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MEG PROVIDES ADDITIONAL INFORMATION RELATED TO THE IMPROVED CENOVUS TRANSACTION

MEG Energy Corp. is providing additional disclosure regarding the previously announced asset transaction between Strathcona Resources Ltd. and Cenovus Energy Inc. as initially disclosed in its press release of Oct. 27, 2025.

As previously announced, MEG entered into a second amending agreement with Cenovus to amend the arrangement agreement between MEG and Cenovus dated Aug. 21, 2025, as amended on Oct. 7, 2025, to increase the consideration payable to holders of common shares of MEG to $30 per MEG share based on Cenovus's closing share price on Oct. 24, 2025. Concurrent with the execution of the second amending agreement, Cenovus entered into an agreement with Strathcona, pursuant to which Strathcona, holding 36.1 million MEG shares, representing 14.2 per cent of the outstanding MEG shares, agreed to vote all of such MEG shares for the acquisition of MEG by Cenovus. Concurrent with and as a condition of entering into the SCR support agreement, Cenovus entered into an agreement with Strathcona to sell certain assets, including the Vawn thermal heavy oil asset in Saskatchewan and certain undeveloped lands in western Saskatchewan and Alberta, for aggregate consideration of $150-million.

This press release provides additional information regarding the SCR support agreement, the CVE divestiture and MEG's consideration of it as part of its evaluation of the improved consideration.

MEG special committee and board process

During the morning of Sunday, Oct. 26, 2025, the president and chief executive officer of MEG was presented with the terms of the proposed second amending agreement and concurrently informed by Cenovus of an agreement in principle between Cenovus and Strathcona in respect of the commercial terms of the SCR support agreement and the divestiture agreement. A meeting of the special committee of the MEG board of directors and a meeting of the MEG board were called for the evening of Sunday, Oct. 26, 2025, to consider the proposed increase in the purchase price from Cenovus and related agreements between Cenovus and Strathcona.

The primary consideration before the special committee on the evening of Sunday, Oct. 26, 2025, was whether or not to approve the second amending agreement to reflect the increased purchase price offered by Cenovus of 50 cents per MEG share. In considering the second amending agreement, the special committee was advised that the improved consideration was contingent on Cenovus and Strathcona entering into the SCR support agreement and the divestiture agreement.

In determining whether to recommend approval of the second amending agreement to the MEG board, the special committee considered the advice of its financial and legal advisers and available information about the divested assets, including their location relative to Strathcona's existing assets, available production history and the relative size of the assets, which produced an average of approximately 5,000 barrels of oil equivalent per day to date in 2025, in the context of the size of Cenovus, where Cenovus generated production of approximately 832,000 barrels of oil equivalent per day in the third quarter of 2025 and had a market capitalization in excess of $40-billion as of Oct. 24, 2025.

Pursuant to the terms of the divestiture agreement, the divested assets are being sold to Strathcona for aggregate consideration of $150-million, composed of $75-million in cash paid on closing and up to $75-million in contingent consideration dependent on future commodity prices.

As MEG was not a party to either of the SCR support agreement and the divestiture agreement and was not involved in any negotiations related to those agreements, the information that it had was necessarily limited to the foregoing material terms. While MEG received copies of the SCR support agreement and the divestiture agreement, they were presented to MEG in near final form, and MEG did not comment on the agreements.

BMO Capital Markets and RBC Capital Markets, the financial advisers to the MEG board and the special committee, respectively, provided financial advice to the special committee in respect of the materiality of the divested assets to Cenovus and the impact of the CVE divestiture on the consideration to be received by MEG shareholders at closing of the Cenovus transaction. Based on the information available to it, each financial adviser advised the MEG board and special committee that the divested assets were immaterial to Cenovus (and by implication to a combined Cenovus and MEG) and that the CVE divestiture would not materially impact the consideration to be received by MEG shareholders under the Cenovus transaction.

After considering advice from its external financial and legal advisers, the special committee determined to recommend that the MEG board approve the entering into of the second amending agreement. The MEG board, informed in part by the recommendation of the special committee and after considering advice from the external financial and legal advisers, determined that the entering into of the second amending agreement was in the best interests of MEG, and unanimously approved the second amending agreement and the transactions contemplated thereby.

In considering the approval of the second amending agreement, although MEG is of the view that the Cenovus transaction is not subject to the requirements of Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions), the MEG board has as a matter of fairness determined that the Cenovus transaction should be considered a business combination for purposes of MI 61-101 and thereby subject to a minority approval vote (as defined below) in addition to the approval of the Cenovus transaction by at least 66-2/3rds per cent of the MEG shareholders represented in person or by proxy at the special meeting of the MEG shareholders to approve the Cenovus transaction.

MI 61-101 requires that, in addition to any other required securityholder approval, a business combination must be subject to minority approval (as defined in MI 61-101), which is a simple majority of the votes cast thereon by MEG shareholders present in person or represented by proxy at the meeting, after excluding the votes cast by those persons whose votes are required to be excluded in accordance with MI 61-101. Pursuant to MI 61-101, MEG shares held by a MEG shareholder who is a related party may, in certain circumstances, including where such party receives a collateral benefit, be excluded from voting in the minority approval vote. Strathcona is a related party of MEG pursuant to MI 61-101 by virtue of its ownership of greater than 10 per cent of the issued and outstanding MEG shares. As a result, the 36.1 million MEG shares held, directly or indirectly, by Strathcona, and its respective related parties or joint actors, will be excluded for the purpose of tabulating the minority approval vote.

Divested assets

Following the announcement of the second amending agreement, the SCR support agreement and the CVE divestiture, MEG has, with the co-operation of Cenovus, conducted a further review of the divested assets. Based upon information provided by Cenovus on Oct. 30, 2025, the Vawn thermal heavy oil asset in Saskatchewan and the 46 sections of undeveloped lands in western Saskatchewan and Alberta forming part of the divested assets had total proven reserves of 25.2 million barrels as at year-end 2024. MEG was informed that Cenovus agreed to a contingent payment because production from the divested assets had been inconsistent through the past year. The contingent consideration was set at $1.0-million for each dollar per barrel the Western Canada Select index averages above $70 per barrel in a given quarter, payable quarterly over the 14 quarters following closing, up to a maximum of $75-million. The subsequent information provided reaffirmed the special committee and the MEG board's previous understanding of the divested assets and did not alter the special committee and the MEG board's previous view that the CVE divestiture is immaterial to Cenovus and would not have a material impact on the consideration to be received by MEG shareholders pursuant to the Cenovus transaction.

Information circular

MEG filed an information circular on Sept. 12, 2025, as updated by MEG's press releases dated Oct. 10, 2025, Oct. 27, 2025, and Oct. 30, 2025, in accordance with the interim order of the Court of King's Bench of Alberta dated Sept. 9, 2025, which provides further details on the Cenovus transaction, election process and the meeting. In accordance with the terms of the interim order, this news release updates the information presented in the circular, as amended.

Copies of the circular, the letter of transmittal and election form, the first amending agreement, the second amending agreement and additional information on the meeting can be found at the MEG website.

Advisers

BMO Capital Markets and Burnet, Duckworth & Palmer LLP are acting as financial adviser and legal counsel, respectively, to the company. RBC Capital Markets and Norton Rose Fulbright Canada LLP are acting as financial adviser and legal counsel, respectively, to the special committee.

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