Morningstar | MEG Energy Pegs New CEO. See Updated Analyst Note from 10 Aug 2018
No-moat MEG Energy appointed its new president and CEO, Derek Evans. Evans has over 35 years of experience, including 15 years as CEO. Recently, he spent the past nine years as the CEO and director of Pengrowth Energy Corporation. Pengrowth has exposure to SAGD oil sands production with its Lindbergh oil sands project, which was delivered by Mr. Evans. We see this experience as a positive, but the project produces around 12,000 barrels of oil per day, which is a fraction of MEG’s 2018 exit production guidance. As such, we are in wait-in-see-mode on this hire.As a reminder, after 19 years as president and CEO, MEG Energy co-founder Bill McCaffrey retired on May 31. McCaffrey founded the company in 1999 and boasts 35 years of direct oil sands experience. Before founding MEG, he was responsible for the growth plans of Amoco Canada’s oil sands leases, and he led the team responsible for the initiation and development of one of the original in situ bitumen production sites to use horizontal wells and thermal technologies. Harvey Doerr, a current board member, acted as the interim CEO during the search for a permanent CEO.
We are maintaining our CAD 7 fair value estimate and no-moat rating. The stock is currently trading 12% above our fair value estimate. At this time, we recommend that investors remain on the sidelines.
For a detailed look into the Canadian crude and pipeline trends, please refer to our September Energy Observer, "Don't Overlook Oil Sands: Falling Costs and More Infrastructure Will Make Canadian Production Globally Competitive."
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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