Blend sales and bitumen realization are non-GAAP financial measures, or ratios when expressed on a per barrel basis, and are used as a measure of the Corporation's marketing strategy by isolating petroleum revenue and costs associated with its produced and purchased products and excludes royalties. Their terms are not defined by IFRS and, therefore, may not be comparable to similar measures provided by other companies. These non-GAAP financial measures should not be considered in isolation or as an alternative for measures of performance prepared in accordance with IFRS. Blend sales per barrel is based on blend sales volumes and bitumen realization per barrel is based on bitumen sales volumes.

Revenues is an IFRS measure in the Corporation's consolidated statement of earnings and comprehensive income, which is the most directly comparable primary financial statement measure to blend sales and bitumen realization. A reconciliation from revenues to blend sales and bitumen realization has been provided below:

 
                 Three months ended September 30      Nine months ended September 30 
                 2024              2023               2024              2023 
($millions,               $/bbl             $/bbl              $/bbl             $/bbl 
except as 
indicated) 
Revenues         $ 1,265           $ 1,438            $ 4,002           $ 4,209 
Power and 
 transportation 
 revenue            (10)              (33)               (46)              (98) 
Royalties            169               181                459               270 
Petroleum 
 revenue           1,424             1,586              4,415             4,381 
Purchased 
 product           (214)             (279)              (859)           (1,066) 
Blend sales        1,210  $ 90.51    1,307  $ 101.53    3,556  $ 90.37    3,315  $ 88.18 
Diluent expense    (403)   (7.25)    (359)    (0.06)  (1,271)   (8.06)  (1,220)   (9.20) 
Bitumen 
 realization       $ 807  $ 83.26    $ 948  $ 101.47  $ 2,285  $ 82.31  $ 2,095  $ 78.98 
 

Net Transportation and Storage Expense

Net transportation and storage expense is a non-GAAP financial measure, or ratio when expressed on a per barrel basis. Its terms are not defined by IFRS and, therefore may not be comparable to similar measures provided by other companies. This non-GAAP financial measure should not be considered in isolation or as an alternative for measures of performance prepared in accordance with IFRS. Per barrel amounts are based on bitumen sales volumes.

It is used as a measure of the Corporation's marketing strategy by focusing on maximizing the realized AWB sales price after transportation and storage expense by utilizing its network of pipeline and storage facilities to optimize market access.

Transportation and storage expense is an IFRS measure in the Corporation's consolidated statements of earnings and comprehensive income.

Power and transportation revenue is an IFRS measure in the Corporation's consolidated statement of earnings and comprehensive income, which is the most directly comparable primary financial statement measure to transportation revenue. A reconciliation from power and transportation revenue to transportation revenue has been provided below.

 
                 Three months ended September 30        Nine months ended September 30 
                 2024               2023                2024               2023 
($millions,               $/bbl              $/bbl               $/bbl              $/bbl 
except as 
indicated) 
Transportation 
 and storage 
 expense         $ (171)  $(17.69)  $ (157)  $ (16.83)  $ (448)  $(16.15)  $ (452)  $ (17.04) 
Power and 
 transportation 
 revenue            $ 10               $ 33                $ 46               $ 98 
Less power 
 revenue            (10)               (32)                (45)               (95) 
Transportation 
 revenue            $ --    $ 0.04      $ 1     $ 0.11      $ 1    $ 0.06      $ 3     $ 0.10 
 
Net 
 transportation 
 and storage 
 expense         $ (171)  $(17.65)  $ (156)  $ (16.72)  $ (447)  $(16.09)  $ (449)  $ (16.94) 
 

Bitumen Realization after Net Transportation and Storage Expense

Bitumen realization after net transportation and storage expense is a non-GAAP financial measure, or ratio when expressed on a per barrel basis. Its terms are not defined by IFRS and, therefore may not be comparable to similar measures provided by other companies. This non-GAAP financial measure should not be considered in isolation or as an alternative for measures of performance prepared in accordance with IFRS. Per barrel amounts are based on bitumen sales volumes.

It is used as a measure of the Corporation's marketing strategy by focusing on maximizing the realized AWB sales price after net transportation and storage expense by utilizing its network of pipeline and storage facilities to optimize market access.

 
                    Three months ended September 30   Nine months ended September 30 
                    2024            2023              2024              2023 
($millions, except         $/bbl           $/bbl               $/bbl             $/bbl 
as indicated) 
Bitumen 
 realization(1)     $ 807  $ 83.26  $ 948   $ 101.47  $ 2,285  $ 82.31  $ 2,095  $ 78.98 
Net transportation 
 and storage 
 expense(1)         (171)  (17.65)  (156)    (16.72)    (447)  (16.09)    (449)  (16.94) 
Bitumen 
 realization after 
 net 
 transportationand 
 storage expense    $ 636  $ 65.61  $ 792    $ 84.75  $ 1,838  $ 66.22  $ 1,646  $ 62.04 
 
 
(1)  Non-GAAP financial measure as defined in this section. 
 

Operating Expenses net of Power Revenue and Energy Operating Costs net of Power Revenue

Operating expenses net of power revenue and Energy operating costs net of power revenue are both non-GAAP financial measures, or ratios when expressed on a per barrel basis. Their terms are not defined by IFRS and, therefore, may not be comparable to similar measures provided by other companies. These non-GAAP financial measures should not be considered in isolation or as an alternative for measures of performance prepared in accordance with IFRS. Per barrel amounts are based on bitumen sales volumes.

Operating expenses net of power revenue is used as a measure of the Corporation's cost to operate its facilities at the Christina Lake project after factoring in the benefits from selling excess power to offset energy costs.

Energy operating costs net of power revenue is used to measure the performance of the Corporation's cogeneration facilities to offset energy operating costs.

Non-energy operating costs and energy operating costs are supplementary financial measures as they represent portions of operating expenses. Non-energy operating costs comprise production-related operating activities and energy operating costs reflect the cost of natural gas used as fuel to generate steam and power. Per barrel amounts are based on bitumen sales volumes.

Operating expenses is an IFRS measure in the Corporation's consolidated statement of earnings and comprehensive income. Power and transportation revenue is an IFRS measure in the Corporation's consolidated statement of earnings and comprehensive income which is the most directly comparable primary financial statement measure to power revenue. A reconciliation from power and transportation revenue to power revenue has been provided below.

 
                 Three months ended September 30     Nine months ended September 30 
                 2024              2023              2024               2023 
($millions,              $/bbl             $/bbl              $/bbl              $/bbl 
except as 
indicated) 
Non-energy 
 operating 
 costs           $ (49)  $ (5.18)  $ (48)  $ (5.15)  $ (147)  $ (5.32)  $ (137)  $ (5.16) 
Energy 
 operating 
 costs             (17)    (1.70)    (32)    (3.42)     (71)    (2.54)    (115)    (4.34) 
Operating 
 expenses        $ (66)  $ (6.88)  $ (80)  $ (8.57)  $ (218)  $ (7.86)  $ (252)  $ (9.50) 
 
Power and 
 transportation 
 revenue           $ 10              $ 33               $ 46               $ 98 
Less 
 transportation 
 revenue             --               (1)                (1)                (3) 
Power revenue      $ 10    $ 1.06    $ 32    $ 3.46     $ 45    $ 1.60     $ 95    $ 3.59 
 
Operating 
 expenses net 
 of power 
 revenue         $ (56)  $ (5.82)  $ (48)  $ (5.11)  $ (173)  $ (6.26)  $ (157)  $ (5.91) 
 
Energy 
 operating 
 costs net of 
 power revenue    $ (7)  $ (0.64)    $ --    $ 0.04   $ (26)  $ (0.94)   $ (20)  $ (0.75) 
 

Forward-Looking Information

Certain statements contained in this news release may constitute forward-looking statements within the meaning of applicable Canadian securities laws. These statements relate to future events or MEG's future performance. All statements other than statements of historical fact may be forward-looking statements. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe", "plan", "intend", "target", "potential" and similar expressions are intended to identify forward-looking statements.

Forward-looking statements are often, but not always, identified by such words. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. In particular, and without limiting the foregoing, this press release contains forward looking statements with respect to: the Corporation's plans to return 100% of free cash flow to shareholders going forward through expanded share buybacks and a quarterly base dividend; the anticipated start date of production from the Corporation's second new well pad; and the Corporation's adjusted funds flow sensitivity estimates.

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November 05, 2024 17:01 ET (22:01 GMT)