MEG Energy Board Unanimously Rejects Strathcona Takeover Bid, Citing Significant Undervaluation

Calgary, Alberta – The board of directors at MEG Energy Corp. has delivered a resounding rejection to Strathcona Resources Ltd.’s latest all-stock takeover offer, urging shareholders to stand firm and not tender their shares. In a powerful declaration, MEG's board unanimously concluded that Strathcona's unsolicited bid substantially undervalues the company and is not in the best interests of its shareholders.

This decisive stance comes after a thorough and independent review, which echoed sentiments from financial advisors RBC Capital Markets and BMO Capital Markets.

Their assessment highlights MEG's robust financial position, impressive operational performance, and compelling future prospects as a standalone entity – attributes they believe are completely overlooked by Strathcona's offer.

The core of MEG's argument rests on its remarkable journey of debt reduction and enhanced shareholder returns.

The company has aggressively paid down over $2.1 billion in debt since 2018, transforming its balance sheet and significantly increasing its financial flexibility. This strategic deleveraging has paved the way for more attractive shareholder distributions and a more secure financial footing.

Furthermore, MEG emphasizes its superior free cash flow generation and asset quality compared to Strathcona.

The board's analysis indicates that Strathcona's assets are of a lower quality, and the proposed all-stock transaction would effectively force MEG shareholders to subsidize Strathcona's higher-cost operations and less attractive growth profile. MEG's board also points out that Strathcona is a private entity controlled by ARC Financial Corp., with a limited public trading history, making it difficult to ascertain its true market value and creating an illiquid investment for MEG shareholders.

The board's sentiment is that Strathcona's offer is opportunistic, timed to take advantage of MEG's recent share price movements and understate its inherent value.

MEG has consistently demonstrated strong operational execution, achieving record production and exceeding financial targets. This strong performance, coupled with a clear path to further value creation, makes the current bid look like a blatant attempt to acquire MEG on the cheap.

Shareholders are being strongly advised to take no action regarding Strathcona's offer and to refrain from tendering any of their shares.

The MEG board believes that continuing to hold MEG shares will provide greater long-term value, allowing shareholders to fully benefit from the company's standalone strategy, which includes aggressive debt reduction, capital discipline, and a commitment to returning capital to shareholders.

This isn't Strathcona's first attempt to acquire MEG.

The latest all-stock offer follows a prior cash-and-stock bid in early 2024, which was also rejected. MEG Energy's board and management remain resolute in their commitment to maximizing shareholder value and are confident that their strategic plan as an independent company will deliver superior returns.