BATON ROUGE, LOUISIANA (Steve Stewart, Energy Analytics Institute, 30.May.2025, Words: 616) — Strathcona Resources Ltd. formally commenced its offer to acquire all of the issued and outstanding common shares of MEG Energy Corp. not already owned by Strathcona or its affiliates for 0.62 of a common share of Strathcona and $4.10 in cash per common share of MEG.
“We firmly believe Strathcona represents compelling value at this price with a large margin of safety, and that we and the partners in our fund will do very well over the long run,” Strathcona executive chairman and CEO of WEF Adam Waterous said on 30 May 2025 in an official company statement.
The notice and advertisement of the offer has been placed for publishing in The Globe and Mail and Le Devoir. The offer and circular will be made available to all MEG shareholders in accordance with applicable securities laws. The offer is open for acceptance until 5pm (Mountain Time) on 15 Sep. 2025, Strathcona said.
Strathcona also announced the execution of an equity commitment letter with Waterous Energy Fund, the holder of 79.6% of the outstanding Strathcona shares, through certain limited partnerships comprising Waterous Energy Fund III, pursuant to which WEF III has committed to purchase an additional 21.4 million Strathcona shares through subscription receipts, conditional upon completion of the offer.
Pursuant to the terms of the equity commitment letter, the investment will be completed at a subscription price of $30.92 per subscription receipt, being equivalent to the price of the Strathcona shares on 15 May 2025 prior to Strathcona announcing its intention to make the offer, equating to an incremental investment by WEF in Strathcona of approximately $662mn. To Strathcona’s knowledge, this represents the largest investment at one time by a single shareholder, public or private, in the Canadian upstream oil and gas sector since 2014.
Strathcona assets prior to the deal
Montney: Northwest, AB and northeast BC
The Montney is a world class unconventional resource play developed using long reach horizontal wells with water-based fracture stimulation.
Strathcona’s Montney assets are positioned in some of the most active regions of the basin – the condensate-rich Kakwa and Grande Prairie areas, and the prolific dry-gas Groundbirch area.
Strathcona’s Montney assets provide both compelling standalone economics and a natural hedge against input costs for the company’s Cold Lake and Lloydminster businesses, according to the company.
Cold Lake: East-central AB
Strathcona is a major producer in the Cold Lake region of Alberta. Its operations include thermal oil producing assets at Lindbergh, Orion and Tucker, with production from best-in-class steam-assisted gravity drainage (SAGD) oil assets.
SAGD is a method that is widely used to extract bitumen from underground oil deposits. This method involves introducing steam into the subsurface oil sands deposit to heat the bitumen in the sand, allowing it to flow by gravity to horizontal wells placed at the base of the reservoir. Strathcona’s operations have minimal surface impacts as they do not use open pit mining techniques, according to the company.
Lloydminster: Southwest SK
Strathcona’s Lloydminster business is a combination of high growth thermal oil properties and low-decline enhanced oil recovery assets. Strathcona’s Lloydminster thermal properties rely on the same SAGD processes as its Cold Lake properties. Given the unique nature of the geology in Saskatchewan, the company’s Saskatchewan-based thermal operations are designed as small, modular facilities, creating opportunities for staged, low-cost growth without the need for major infrastructure further minimizing surface impact, according to Strathcona.
Strathcona’s Lloydminster conventional assets are characterized by multiple large oil-in-place reservoirs with existing and expanding enhanced oil recovery (EOR) opportunities primarily located in southwest Saskatchewan. EOR extraction requires injecting fluids into a hydrocarbon reservoir to tailor pressure, displace hydrocarbons to production wells, or alter reservoir fluids to improve hydrocarbon flow, according to Strathcona.
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By Steve Stewart reporting from Baton Rouge. © 2025 Energy Analytics Institute (EAI). All Rights Reserved.
