Tudor, Pickering, Holt on Wednesday reiterated its buy rating on the shares of MEG Energy (MEG.TO) with a C$38.00 price target following third-quarter results from the oil-sands producer.

"Better-than-expected capex drove a beat on FCF, likely timing-related given the FY budget reiteration, with the shape of volumes over the short-term likely of greatest interest amidst a nice a quiet release. On the cash flow side, Q3'24 CFPS was in-line with expectations at C$1.34 vs. TPHe/Street (survey) C$1.34/C$1.34, supported by 103.3mbpd production which was also ~in-line with consensus, comparing to TPHe/Street 103.8/103.1. Net of C$141MM capex vs. TPHe/Street C$149/C$150MM, C$221MM FCF pre-WC topped TPHe/Street C$210MM/C$211MM, and supported C$108M of buybacks during the quarter, which along with the dividend reflected the 100% payout policy. No changes to prior FY'24 guidance on production or capex, which calls for the low end of the prior production range of 102-108mbpd vs. TPHe/Street 103.2/103.2 and C$550MM vs. consensus C$550MM, respectively. Street numbers are already there on implied Q4'24 production of ~105.4mbopd, with Q1'25 likely to be when production matches capacity as the second pad's wells start-up in December after beginning steam operations in September, with drilling on those wells impacted by wild fires from a timing standpoint (though existing production was unimpacted)," analyst Jeoffrey Lambujon noted.

(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)

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