MEG Energy
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Thread: MEG Energy

  1. #1
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    MEG Energy

    A friend of mine is HEAVILY invested in this company and I've been watching it for a while; apparently the rest of Canada has been too since it's often cited as the biggest loser or gainer of the day now for the last month (depending on if it's a good or bad day).

    I have very little ability to analyze stocks right now, other than comparing the P/E ratio of this small startup with the big boys.

    Can anyone tell me what they think of this company?

    One thing I'm wondering about in particular is why it's so expensive. It's PE is (according to Yahoo) about 50. Suncor is 11.8, Husky is 14.3, etc. It seems like there's a huge mismatch here - to the point that I realize they're not comparable.

    Is it that, as a small company poised for growth, people are paying a big premium in the hopes that their stock increases drastically? Or is it just ridiculously over priced right now?


  2. #2
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    It's pretty solid. They have a state of the art SAGD facility that is still under construction up at Christina Lake, just down the road from where Cenovus' equally great property is. The thing with the high PE is that they are still in construction phase and not producing much, but will in the next bit of time. A good future.

    PE is not a good way to compare/study energy stocks. Look at their operating cash flow as it is the best indicator.

  3. #3
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    Hi all,

    I'm considering adding MEG Energy to my RRSP (planning to hold for 5+ yrs). I'm curious what other forum members think of this stock. Here's what I'm thinking:

    PROs
    - They appear to be the most low cost in situ Canadian oil company I could find. They published a steam to oil ratio of 2.5, plus a pilot project showing a 1.3 SOR using a newer technology.
    - They have their own power generation facility providing power, and more importantly heat for steam generation which reduces their dependency on nat gas. I'm concerned about oil sands costs increasing once we start shipping nat gas to Asia (causing nat gas prices to increase) which I believe is going to hammer Canadian oil companies.
    - Solid growth plans...80000bpd by 2015 and it seems achievable.
    - Stock has been beaten up over the past 2 years and it seems like a good entry point.

    CONs
    - No dividend
    - High growth plans but not clear when these guys will be posting positive net income.

    I'm thinking this is a good long term buy and hold...but without the dividend I'm not sure if I want to buy just yet. Any thoughts?

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  5. #4
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    I've been on a bit of a buying spree today and picked up some MEG at 28.40...about $2 above their all time low, couldn't resist Just nibbling for now but will add more if oil prices continue to slide.

    I like the pure play in-situ concept and I like that they seem to have some of the best in-situ technology. Based on the latest investor presentation (http://www.megenergy.com/sites/defau...ber%202014.pdf) they have really been ramping up their eMSAGP technology and increased their production estimate for 2014 to 65000-75000 barrels per day.

    I think the stock will probably continue to get hammered if oil prices slide, but IMHO this is WAY undervalued right now due to the panic selling going on in the energy sector.

    Anyone else invested in these guys?

  6. #5
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    Quote Originally Posted by protomok View Post
    I've been on a bit of a buying spree today and picked up some MEG at 28.40...about $2 above their all time low, couldn't resist Just nibbling for now but will add more if oil prices continue to slide.

    I like the pure play in-situ concept and I like that they seem to have some of the best in-situ technology. Based on the latest investor presentation (http://www.megenergy.com/sites/defau...ber%202014.pdf) they have really been ramping up their eMSAGP technology and increased their production estimate for 2014 to 65000-75000 barrels per day.

    I think the stock will probably continue to get hammered if oil prices slide, but IMHO this is WAY undervalued right now due to the panic selling going on in the energy sector.

    Anyone else invested in these guys?

    Would be interesting to see where they will bottom. Currently they are going down. Do you think after 24th Dec they will go down more..
    Just wondering about your thoughts on it. Whats their all time low ?
    Last edited by gladaki; 2014-12-06 at 09:57 PM.

  7. #6
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    Hi Gladaki,

    I don't think anyone really knows where the bottom is...aside from maybe the Saudis
    I'm sticking with the long term strategy, and definitely considering buying more at these levels...would be nice to bring my avg purchase price down

    Frankly I think from a long term perspective MEG was undervalued at $28 and I think they are insanely undervalued at 17.61 today...IMHO MEG < $30 is a gift to long term investors. Not sure how much lower they'll get but I'm quite confident the company will weather the current storm. I estimate these guys are commercially viable with WTI being >= ~35-45 $/barrel...and I'm very skeptical that the Saudis will let oil drop much lower than it is now. The Saudis want to disrupt high cost producers...but not at the cost of a revolt from their citizens.

    Also, all of MEGs debt isn't due until 2020 or later, they don't have the burden of a dividend right now...I think they'll weather the storm just fine.

  8. #7
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    Quote Originally Posted by protomok View Post
    Hi Gladaki,

    I don't think anyone really knows where the bottom is...aside from maybe the Saudis
    I'm sticking with the long term strategy, and definitely considering buying more at these levels...would be nice to bring my avg purchase price down

    Frankly I think from a long term perspective MEG was undervalued at $28 and I think they are insanely undervalued at 17.61 today...IMHO MEG < $30 is a gift to long term investors. Not sure how much lower they'll get but I'm quite confident the company will weather the current storm. I estimate these guys are commercially viable with WTI being >= ~35-45 $/barrel...and I'm very skeptical that the Saudis will let oil drop much lower than it is now. The Saudis want to disrupt high cost producers...but not at the cost of a revolt from their citizens.

    Also, all of MEGs debt isn't due until 2020 or later, they don't have the burden of a dividend right now...I think they'll weather the storm just fine.
    Agree with you..MEG has lower BOE..I will get in it. Close to January when people will do their tax loss sell offs
    rest i am indexing eseries..

  9. #8
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    Yup, I think January would be a great entry point. I also do eSeries. Actually if it weren't for my eSeries index funds (particularly the US index TDB902) my 2014 returns would be brutal! Maybe one of these days I'll stop individual stock picks and index everything lol.

  10. #9
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    Quote Originally Posted by protomok View Post
    Yup, I think January would be a great entry point. I also do eSeries. Actually if it weren't for my eSeries index funds (particularly the US index TDB902) my 2014 returns would be brutal! Maybe one of these days I'll stop individual stock picks and index everything lol.
    MEG has good technology and SAGD has low cost of production. But their 22x debt as compare to cashflow is giving me shiver...

  11. #10
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    Anyone know what's going on with MEG today? The stock is up today ~17% but my TD Waterhouse interface is saying the stock was halted earlier today, then resumed trading. Maybe takeover rumours?


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