Strathcona Resources Ltd. Reports First Quarter 2025 Financial and Operating Results, Announces Quarterly Dividend and Investment in MEG Energy Corp.
Q1 2025 Highlights
- Production of 194,609 boe/d (70% oil and condensate, 76% liquids)(1)
- Operating Earnings of
$322.4 million ($1.51 / share) - Free Cash Flow of
$184.0 million ($0.86 / share)(2)
|
Three Months Ended |
||
($ millions, unless otherwise indicated) |
|
|
|
|
|
|
|
WTI (US$ / bbl) |
71.42 |
76.96 |
70.27 |
WCS Hardisty (C$ / bbl) |
84.30 |
77.77 |
80.75 |
AECO 5A (C$ / GJ) |
2.05 |
2.36 |
1.40 |
|
|
|
|
Bitumen (bbls/d) |
65,016 |
60,150 |
59,732 |
Heavy oil (bbls/d) |
50,488 |
51,835 |
50,997 |
Condensate and light oil (bbls/d) |
20,682 |
19,279 |
20,763 |
Total oil production (bbls/d) |
136,186 |
131,264 |
131,492 |
Other NGLs (bbls/d) |
11,837 |
11,738 |
12,980 |
Natural gas (mcf/d) |
279,517 |
252,720 |
256,386 |
Production (boe/d) |
194,609 |
185,122 |
187,203 |
Sales (boe/d) |
194,884 |
182,862 |
184,120 |
% Oil and condensate |
70 % |
71 % |
70 % |
% Liquids(1) |
76 % |
77 % |
77 % |
|
|
|
|
Oil and natural gas sales, net of blending costs and other |
1,133.7 |
1,004.3 |
1,024.6 |
Royalties |
138.2 |
126.2 |
208.5 |
Production and operating – Energy |
75.7 |
78.8 |
58.7 |
Production and operating – Non-energy |
155.5 |
135.4 |
138.5 |
Transportation and processing |
142.4 |
143.4 |
144.2 |
General and administrative |
24.7 |
22.0 |
28.4 |
Depletion, depreciation and amortization |
215.7 |
221.8 |
196.3 |
Interest and finance costs(3) |
59.1 |
67.7 |
60.0 |
Operating Earnings |
322.4 |
209.0 |
190.0 |
Other items(3) |
117.1 |
108.4 |
102.1 |
Income and comprehensive income |
205.3 |
100.6 |
87.9 |
|
|
|
|
Operating Earnings |
322.4 |
209.0 |
190.0 |
Non-cash items(3) |
236.4 |
244.1 |
217.3 |
(Loss) gain on risk management and foreign exchange |
(0.7) |
2.5 |
(1.8) |
Funds from Operations(2) |
558.1 |
455.6 |
405.5 |
Capital expenditures |
(350.6) |
(286.1) |
(392.5) |
Decommissioning costs |
(23.5) |
(11.6) |
(12.7) |
Free Cash Flow(2) |
184.0 |
157.9 |
0.3 |
|
|
|
|
Debt, net of cash and marketable securities (3) |
2,416.8 |
2,642.5 |
2,461.6 |
Common shares (millions) |
214.2 |
214.2 |
214.2 |
(1) |
See "Presentation of Oil and Gas Information" section of this press release. |
(2) |
A non-GAAP financial measure which does not have a standardized meaning under IFRS® Accounting Standards (the "Accounting Standards"); see "Specified Financial Measures" section of this press release. |
(3) |
See "Specified Financial Measures" section of this press release. |
|
Three Months Ended |
||
($/boe, unless otherwise indicated) |
|
|
|
|
|
|
|
Oil and natural gas sales, net of blending costs and other |
64.65 |
60.36 |
60.49 |
Royalties |
7.88 |
7.58 |
12.31 |
Production and operating – Energy |
4.32 |
4.74 |
3.46 |
Production and operating – Non-energy |
8.87 |
8.14 |
8.18 |
Transportation and processing |
8.12 |
8.62 |
8.51 |
General and administrative |
1.41 |
1.32 |
1.68 |
Depletion, depreciation and amortization |
12.30 |
13.33 |
11.59 |
Interest and finance costs |
3.37 |
4.07 |
3.54 |
Operating Earnings |
18.38 |
12.56 |
11.22 |
Effective royalty rate (%)(1) |
12.2 % |
12.6 % |
20.3 % |
(1) |
A non-GAAP financial measure which does not have a standardized meaning under the Accounting Standards; see "Specified Financial Measures" section of this press release. |
Quarter Review and Near-Term Priorities
Production of 195 Mboe / d was up 4% quarter-over-quarter, driven by record production at
In
In Lloydminster Thermal, activity is focused on the construction of the new Meota Central processing facility, which is currently 22% complete, on schedule and on budget. Meota Central is targeting first oil in the fourth quarter of 2026 and is expected to deliver a peak oil rate of approximately 13 Mbbls / d at a total installed cost of approximately
In the
Subsequent to quarter-end, Strathcona received approval for an expanded credit facility of approximately
Dividend Increase
Strathcona's board of directors has declared a quarterly dividend of
Payments to shareholders who are not residents of
Investment in
During the first and second quarters of 2025 Strathcona acquired 23.4 million shares in
Conference Call Details
Strathcona will host a conference call on
Date:
Time:
URL Entry: To join without operator assistance, register here: https://emportal.ink/4h9sGBh up to 15 minutes before the start time. Enter your name and phone number to receive an automated call-back.
Telephone Entry: Alternatively, you can join with operator assistance by dialing 1 (888) 510-2154 (North American Toll Free) and quote conference ID 05133
Webcast Link: https://app.webinar.net/bkQmeQKGzo1
For those unable to participate in the conference call at the scheduled time, a recording of the conference call will be available for seven days following the call and can be accessed by dialing 1 (888) 660-6345 and entering the conference number 05133.
About Strathcona
Strathcona is one of
For more information about Strathcona, visit www.strathconaresources.com.
SPECIFIED
Non-GAAP Financial Measures and Ratios
Non-GAAP financial measures and ratios are used internally by management to assess the performance of the Company. They also provide investors with meaningful metrics to assess the Company's performance compared to other companies in the same industry. However, the Company's use of these terms may not be comparable to similarly defined measures presented by other companies. Investors are cautioned that these measures should not be construed as an alternative to financial measures determined in accordance with GAAP and these measures should not be considered to be more meaningful than GAAP measures in evaluating the Company's performance.
The term "Oil and natural gas sales, net of blending" is calculated by deducting purchased product and blending costs from oil and natural gas sales and sales of purchased product. Management uses this metric to isolate the revenue associated with the Company's production after accounting for the unavoidable cost of blending.
Oil and natural gas sales, net of blending, is also reflected on a per boe basis calculated using sales volumes. Management also calculates "Bitumen blend per bbl" and "Heavy oil, blended and raw per bbl" by deducting the associated purchased product and blending cost from oil and natural gas sales and sales of purchased product and dividing by the respective sales volume. This ratio is useful to management when analyzing realized pricing against benchmark commodity prices.
The term "Effective royalty rate" is calculated by dividing royalties by oil and natural gas sales and sales of purchased product, net of blending costs and purchased product. This metric allows management to analyze the movement of royalty expenses in relation to realized and benchmark commodity prices.
"Funds from Operations" is used by management to analyze operating performance and provides an indication of the funds generated by Strathcona's principal business to either fund operating activities, re-invest to either maintain or grow the business or make debt repayments. Funds from Operations is derived from Operating Earnings and adjusted for depletion, depreciation and amortization, finance costs, (loss) gain on risk management contracts - realized and realized gain (loss) - foreign exchange.
"Free Cash Flow" indicates funds available for deleveraging, funding future growth, or shareholder returns. Free Cash Flow is derived from Operating Earnings and adjusted for DD&A, finance costs, (loss) gain on risk management contracts - realized and realized gain (loss) – foreign exchange, capital expenditures and decommissioning costs.
A quantitative reconciliation of Funds from Operations and Free Cash Flow to the most directly comparable GAAP financial measure, Operating Earnings, is set forth below.
|
Three Months Ended |
||
($ millions, unless otherwise indicated) |
|
|
|
|
|
|
|
Operating Earnings |
322.4 |
209.0 |
190.0 |
Depletion, depreciation and amortization |
215.7 |
221.8 |
196.3 |
Finance costs |
20.7 |
22.3 |
21.0 |
(Loss) gain on risk management contracts - realized |
(0.9) |
4.5 |
(5.4) |
Realized gain (loss) - foreign exchange |
0.2 |
(2.0) |
3.6 |
Funds from Operations |
558.1 |
455.6 |
405.5 |
Capital expenditures |
(350.6) |
(286.1) |
(392.5) |
Decommissioning costs |
(23.5) |
(11.6) |
(12.7) |
Free Cash Flow |
184.0 |
157.9 |
0.3 |
Supplementary Financial Measures
"Interest and finance costs" is an aggregation of interest and finance costs, as derived under IFRS Accounting Standards.
"Other items" is comprised of loss (gain) on risk management contracts, foreign exchange (gain) loss, transaction related costs, unrealized loss on Sable remediation fund, unrealized (gain) on marketable securities, and deferred tax expense, as derived under IFRS Accounting Standards.
|
Three Months Ended |
||
($ millions, unless otherwise indicated) |
|
|
|
|
|
|
|
Loss (gain) on risk management contracts |
78.0 |
39.7 |
(10.2) |
Foreign exchange (gain) loss |
(1.0) |
20.4 |
47.7 |
Transaction related costs |
0.6 |
0.1 |
0.3 |
Unrealized loss on Sable remediation fund |
— |
0.1 |
— |
Unrealized (gain) on marketable securities |
(22.7) |
— |
— |
Deferred tax expense |
62.2 |
48.1 |
64.3 |
Other items |
117.1 |
108.4 |
102.1 |
"Non-cash items" is comprised of depletion, depreciation and amortization, and finance costs, as derived under IFRS Accounting Standards.
"Debt, net of cash and marketable securities" is comprised of debt less cash and marketable securities, as derived under IFRS Accounting Standards"
Presentation of Oil and Gas Information
This press release contains various references to the abbreviation "boe" which means barrels of oil equivalent. All boe conversions in this press release are derived by converting gas to oil at the ratio of six thousand cubic feet ("mcf") of natural gas to one barrel ("bbl") of crude oil. Boe may be misleading, particularly if used in isolation. A boe conversion rate of 1 bbl : 6 mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio of oil compared to natural gas based on currently prevailing prices is significantly different than the energy equivalency ratio of 1 bbl : 6 mcf, utilizing a conversion ratio of 1 bbl : 6 mcf may be misleading as an indication of value.
References in this press release to initial production rates and other short-term production rates and test results are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long-term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating aggregate production for the Company or the assets for which such rates are provided. A pressure transient analysis or well-test interpretation has not been carried out in respect of all wells. Accordingly, the test results should be considered to be preliminary.
Forward-Looking Information
Certain statements contained in this press release constitute forward-looking information within the meaning of applicable securities laws. The forward-looking information in this press release is based on Strathcona's current internal expectations, estimates, projections, assumptions and beliefs. Such forward-looking information is not a guarantee of future performance and involves 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 information. Strathcona believes the material factors, expectations and assumptions reflected in the forward-looking information are reasonable as of the time of such information, but no assurance can be given that these factors, expectations and assumptions will prove to be correct, and such forward-looking information included in this press release should not be unduly relied upon.
The use of any of the words "expect", "target", "anticipate", "intend", "estimate", "objective", "ongoing", "may", "will", "project", "believe", "depends", "could" and similar expressions are intended to identify forward-looking information. In particular, but without limiting the generality of the foregoing, this press release contains forward-looking information pertaining to the following: Strathcona's business strategy and future plans; expected operating strategy; the construction of the new Meota Central processing facility, including budget, production and timing expectations; the expected sale of substantially all of Strathcona's
All forward-looking information reflects Strathcona's beliefs and assumptions based on information available at the time the applicable forward-looking information is disclosed and in light of Strathcona's current expectations with respect to such things as: the success of Strathcona's operations and growth and expansion projects; expectations regarding production growth, future well production rates and reserve volumes; expectations regarding Strathcona's capital program; the completion of transactions to dispose of substantially all of Strathcona's
The forward-looking information included in this press release is not a guarantee of future performance and involves 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 information, including, without limitation: changes in commodity prices; changes in the demand for or supply of Strathcona's products; the continued impact, or further deterioration in global economic and market conditions, including from inflation and/or certain geopolitical conflicts, such as the ongoing
Declaration of dividends is at the sole discretion of the board of directors of Strathcona and will continue to be evaluated on an ongoing basis. There are risks that may result in Strathcona changing, suspending or discontinuing its quarterly dividends, including changes to its free cash flow, operating results, capital requirements, financial position, debt levels, market conditions or corporate strategy and the need to comply with requirements under its credit agreement and applicable laws respecting the declaration and payment of dividends. There are no assurances as to the continuing declaration and payment of future dividends or the amount or timing of any such dividends.
This earnings release contains information that may constitute future-oriented financial information or financial outlook information (collectively, "FOFI") about Strathcona's prospective financial performance, financial position or cash flows, all of which is subject to the same assumptions, risk factors, limitations and qualifications as set forth above. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise or inaccurate and, as such, undue reliance should not be placed on FOFI. Strathcona's actual results, performance and achievements could differ materially from those expressed in, or implied by, FOFI. Strathcona has included FOFI in order to provide readers with a more complete perspective on Strathcona's future operations and management's current expectations relating to Strathcona's future performance. Readers are cautioned that such information may not be appropriate for other purposes.
The foregoing risks should not be construed as exhaustive. The forward-looking information contained in this press release speaks only as of the date of this press release and Strathcona does not assume any obligation to publicly update or revise such forward-looking information to reflect new events or circumstances, except as may be required pursuant to applicable laws. Any forward-looking information contained herein is expressly qualified by this cautionary statement.
Product Type Production Information
The Company's quarterly and annual average daily production volumes, and the references to "natural gas", "crude oil" and "condensate", reported in this press release consist of the following product types, as defined in NI 51-101 and using a conversion ratio of 6 mcf : 1 bbl where applicable:
|
Three Months Ended |
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|
|
|
|
|
|
|
|
Heavy crude oil (bbl/d) |
50,488 |
51,835 |
50,997 |
Light and medium crude oil (bbl/d) |
504 |
551 |
617 |
Total crude oil (bbl/d) |
50,992 |
52,386 |
51,614 |
Bitumen (bbl/d) |
65,016 |
60,150 |
59,732 |
NGLs (bbl/d) |
32,015 |
30,466 |
33,126 |
Total liquids (bbl/d) |
148,023 |
143,002 |
144,472 |
Conventional natural gas (mcf/d) |
279,517 |
252,720 |
256,386 |
`Total (boe/d) |
194,609 |
185,122 |
187,203 |
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