Strathcona Resources Ltd. Announces Intention to Commence Take-Over Bid to Acquire MEG Energy Corp.

Core Viewpoint - Strathcona Resources Ltd. intends to initiate a take-over bid for MEG Energy Corp., offering a combination of Strathcona shares and cash for MEG shares, representing a total consideration of $23.27 per MEG share, which includes a 9.3$4.10 in cash for each MEG share [1] - The total consideration reflects 82.4% in Strathcona shares and 17.6% in cash [1] - The offer will not be subject to any financing condition, with cash expected to be funded through a bridge financing commitment [2][17] Strategic Rationale - The merger aims to create Canada's fifth-largest oil producer and fourth-largest SAGD producer, combining two heavy oil "pure plays" with similar netbacks and reserve life indexes [8] - Strathcona anticipates significant accretion per share for both MEG and Strathcona shareholders across key metrics, including funds flow per share and production per share [8] - Identified annual synergy opportunities amount to $175 million, including$50 million in overhead reductions and $100 million in operating synergies [8] Shareholder Dynamics - Post-offer, Strathcona expects approximately 379 million shares outstanding, with ownership distribution of 56.5% for Strathcona shareholders, 37.8% for MEG shareholders, and 5.6% for Waterous Energy Fund III [3] - Waterous Energy Fund, holding 79.6% of Strathcona shares, plans to increase its investment through the purchase of an additional 21.4 million Strathcona shares [2][3] Background and Previous Proposals - Strathcona acquired approximately 23.4 million MEG shares, representing about 9.20% of MEG's outstanding shares as of May 5, 2025 [7] - A previous formal combination proposal was made to MEG's board on April 28, 2025, but was dismissed [9][10] Regulatory and Approval Process - The formal offer to purchase and take-over bid circular is expected to be filed within two weeks [11] - The offer will be open for acceptance for at least 105 days, subject to certain conditions [15][16] Financial Advisors - Scotiabank and TD Securities are acting as exclusive financial advisors to Strathcona [26]