Bitumen pipelineDAVID BOILY
Amidst the horror stories of massive initial stock offerings performing poorly or not getting across the finish line, MEG Energy Corp. proves they don't all have to be scary.
The oil producer's fourth-quarter results came out Thursday and the company is doing everything it said it would -- and then some. While MEG was profitable in 2009 when it was still private, much of its revenue came from royalties on other assets. Since it started its own production in December, 2009, revenues net of royalties have only grown.
That ramp-up is driving MEG to exceed its previously stated capacity of 25,000 barrels per day. (Fourth quarter production hit 27,400 bpd.) The company may have given a low estimate with hopes of beating it, but that's much better than over-promising to start and then falling far short.
The cost side is also promising, with operating expenses coming in just north of $14.22 per barrel, an extremely low value. MEG's steam-to-oil ratio was also strong, at only 2.3 times in the fourth quarter.
Now contrast all of that to Athabasca Oil Sands, which is still trading below its $18 IPO price. MEG's stock has gained 32 per cent since going public in August, 2010.
To maintain a sense of reality, though, UBS analyst Chad Friess pointed out MEG's resource estimate didn't grow as much as expected, which he assumed is because the company focused on production last quarter.
Tim Kiladze