By Lauren Krugel
More than half of MEG Energy Corp.’s oil sales would be free from potential U.S. tariffs thanks to the diverse market access options it has lined up, a company executive says.
The Calgary-based oilsands producer has the ability to access global markets via Canada’s West Coast through the Trans Mountain pipeline, as well as via the U.S Gulf Coast.
Erik Alson, MEG’s senior vice-president of marketing, said exports to customers abroad via the Gulf of Mexico were at around 10 to 20 per cent during the fourth quarter.
“As we look ahead to the potential possibility of tariffs, certainly our diverse market access strategy, the assets that we have on the Gulf Coast position us well to be able to ramp up those exports very quickly,” Alson said on a conference call Friday to discuss MEG’s latest financial results.
U.S. President Donald Trump has threatened to slap Canada with a 10 per cent tariff on energy imports, with the latest deadline set for March 4.
If those levies come to pass, the price gap between West Texas Intermediate, the key U.S. light oil benchmark, and heavy oil produced in Western Canada may widen by $2 to $4 per barrel, said chief financial officer Ryan Kubik. But a weakening in the Canadian dollar would offset that, meaning the ultimate impact to MEG would be relatively low, he said.
Chief executive Darlene Gates told analysts there’s also minimal risk when it comes to sourcing supplies for an expansion to MEG’s Christina Lake oilsands project in northeastern Alberta. She said the company has been working with a number of Canadian suppliers, and that most fabrication is completed here.
She said the company benefited from stronger pricing during the fourth quarter, thanks largely to the startup last year of the Trans Mountain pipeline expansion to the B.C. Lower Mainland.
“Heavy oil fundamentals significantly improved through 2024 as the TMX pipeline provided unconstrained egress from the basin,” she said.
During the fourth quarter, there was a 43 per cent improvement in the discount Western Canadian Select heavy oil receives versus WTI, with the differential tightening to US$12.56 per barrel, from US$21.89 per barrel in the same period a year prior.
“The tighter heavy oil differentials and reduced volatility demonstrate the importance of delivering Canada’s energy to global markets and its fundamental benefit to Canadian heavy oil pricing,” said Gates.
“It also highlights why continued discussions surrounding diverse market access for Canadian oil and gas remains important.”
Late Thursday, MEG said it earned $106 million in its fourth quarter, up from $103 million a year earlier, with revenues totalling $1.15 billion, down from $1.44 billion during the same quarter of 2023.
Diluted earnings per share were 40 cents, up from 37 cents a year earlier.
Bitumen production averaged about 100,139 barrels per day during the period ended Dec. 31, and Gates said 2024 was MEG’s fourth straight year of record production.
This report by The Canadian Press was first published Feb. 28, 2025.
Companies in this story: (TSX: MEG)
The Canadian Press
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