Energy Prospectus

A value based approach to oil & gas investing. I am rejecting Strathcona’s offer for MEG but am considering an outright purchase of their stock based upon this intriguing address by Adam Waterous

https://youtu.be/3cLfePoDffc?si=9tXgvut8VuSbJrxZ

"CALGARY, AB, July 2, 2025 /CNW/ -
Strathcona Resources Ltd. ("Strathcona" or the "Company") (TSX: SCR) is pleased to confirm the closing of its previously announced Montney asset sales, for total value of approximately $2.86 billion including closing adjustments(1). The sale of its Groundbirch asset closed on June 1, 2025, and the sale of its Kakwa and Grande Prairie assets closed today.

Strathcona is now a pure-play heavy oil company producing approximately 120 Mbbls / d (100% oil) with a 50-year 2P reserves life index and plans to grow to 195 Mbbls / d by 2031. In addition, Strathcona currently has approximately $200 million in positive net cash and marketable securities(2) after deducting all debt, inclusive of approximately 4.6 million shares in Tourmaline Oil Corp. (TSX: TOU) and 23.4 million shares in MEG Energy Corp. (TSX: MEG) ("MEG").

MEG Strategic Alternatives Process Update
While Strathcona is pleased that the board of directors of MEG (the "MEG Board") has elected to pursue a strategic alternatives process, it is disappointed that in the nine weeks since Strathcona submitted its original written offer to the MEG Board on April 28, 2025, the MEG Board has declined to have any dialogue with Strathcona to learn more about its offer, Strathcona's business, or if an alternative structure could be agreed to.

The MEG Board's behavior does not match feedback Strathcona has received to date from MEG shareholders, who have indicated they would like to see the MEG Board engage with Strathcona to see if a win-win outcome can be reached for both Strathcona and MEG shareholders. Strathcona remains ready and willing to engage with the MEG Board, including as part of its strategic alternatives process. Alternatively, Strathcona remains committed to continuing its direct dialogue with MEG shareholders in advance of the September 15 tender deadline for its offer."

I like both MEG Energy (ranked 9th) and Strathcona (ranked 7th). I hope the acquisition/merger with MEG goes ahead but the MEG board seems to be very stubborn, so the chance that this will happen is reducing.

Strathcona is now afloat in cash and if the MEG deal fails, Strathcona may look at other targets.