MEG Energy’s Upside Is Hampered by Its Extreme Uncertainty
After taking a fresh look at no-moat MEG Energy’s fourth-quarter results we are lowering our fair value estimate to CAD 6.50 from CAD 7 driven by our lower forecasts for the company’s near-term price realizations. The stock is trading at a 20% discount to our fair value estimate, but it remains in 3-star territory due to its extreme uncertainty. At this time, we recommend that investors remain on the sidelines.As a reminder, MEG reported fourth-quarter bitumen realizations of CAD 13.90 per barr...
MEG Energy is engaged in a steam assisted gravity drainage oil sands development at its 80 section Christina Lake Regional Project. As of Dec 31 2010, Co. had total proved bitumen reserves of 605.9 gross thousand barrels (470.5 net thousand barrels).
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