MEG Energy buys crude quota from rivals to boost Q2 bitumen production
Alberta's oil quotas were imposed in January to draw down inventories after discounts on local oil prices rose due to pipeline export capacity not keeping up with increases in production
CALGARY – Oilsands producer MEG Energy Corp. says it bought unused production quota room from other producers to increase its bitumen output to near maximum capacity in the second quarter despite the ongoing Alberta government oil curtailment program.
The Calgary-based company says bitumen production from its steam-driven oilsands wells averaged 97,300 barrels per day in the three months ended June 30, compared with its capacity of about 100,000 bpd.
The output represents a 36% increase over 71,300 bpd in the same period in 2018, which was impacted by a large-scale maintenance shutdown, and was 12% higher than 87,100 bpd in the first quarter.
The company recorded a net loss of $64 million on revenue of $1.06 billion, compared with a loss of $179 million on revenue of $689 million in the second quarter of 2018.
Alberta’s oil quotas were imposed in January to draw down inventories after discounts on local oil prices rose due to pipeline export capacity not keeping up with increases in production.
MEG says lower discounts for Canadian crude and higher U.S. benchmark crude prices allowed it to realize blended bitumen sales prices of US$51.72 per barrel in the second quarter, compared to US$44.40 per barrel in the first quarter.
MEG says it has decided not to implement its previously announced discretionary capital budget addition of $75 million this year given ongoing curtailment, a lack of clarity on market access and its focus on debt repayment.