Strathcona Resources Ltd. Terminates Take-Over Bid For MEG Energy Corp., Announces Shareholder Meeting To Approve Special Distribution, And Provides Corporate Update
Strathcona Resources Ltd. (“Strathcona“) today announced: (i) the termination of its take-over bid (the “Offer“) for MEG Energy Corp. (“MEG“), (ii) a meeting of shareholders to approve a special distribution of $10.00 / share, and (iii) a corporate update.
Termination of MEG Offer
As a result of the revised arrangement agreement between the MEG board of directors (the “MEG Board“) and Cenovus Energy Inc. (“Cenovus“), Strathcona believes the conditions to its Offer, or any reasonably improved offer, are no longer capable of being satisfied.
On the back of a failed shareholder vote, the MEG Board’s decision to waive Cenovus’ standstill and allow it to vote shares acquired after the record date in favour of its own transaction is without precedent in the Canadian public markets and the latest in a series of anti-competitive actions taken by the MEG Board. Strathcona has concluded that the MEG Board’s ability to continuously extend the Cenovus meeting date, and continuously allow Cenovus to purchase and vote additional shares, makes an improved offer for MEG impractical and not in the best interests of Strathcona shareholders.
While Strathcona is disappointed with this outcome, it is pleased that its actions, along with those of its fellow MEG shareholders, delivered something which the MEG Board could not, namely a more equitable transaction with Cenovus which allows MEG shareholders to participate more meaningfully in future upside. Strathcona would like to thank its shareholders for their support throughout the MEG process, as well as the many MEG shareholders it received support from and tendered their shares.
Strathcona has terminated the Offer effective immediately in accordance with the terms and conditions of the original offer and accompanying take-over bid circular of Strathcona dated May 30, 2025, as amended by the notice of variation, change and extension dated September 10, 2025. Accordingly, no MEG shares will be taken up under the Offer and the MEG shares that have been deposited under the Offer will be promptly returned to MEG shareholders.
Launch of Special Distribution
As previously disclosed, Strathcona intends to pay a special distribution of $10.00 per share (the “Special Distribution“) to all Strathcona common shareholders. The Special Distribution is expected to be completed as part of a statutory plan of arrangement (the “Plan of Arrangement“) that would entitle Strathcona shareholders to receive the Special Distribution as a dividend or, at their election, a return of capital. The Special Distribution will be paid in connection with the reorganization of Strathcona’s business into a pure-play heavy oil company and discontinuance of its Montney business segment, and derived from the cash proceeds received from the sale of such business segment.
Strathcona shareholders of record as of the close of business on October 17, 2025 will be asked to approve the Plan of Arrangement at a special meeting of shareholders expected to be held on Thursday, November 27, 2025, where it must be approved by at least two-thirds of the votes cast at the shareholder meeting. Certain limited partnerships managed by Waterous Energy Fund (“WEF“), which collectively own approximately 79.6% of the outstanding shares, have advised Strathcona that they intend to vote in favour of the Plan of Arrangement and, accordingly, it is expected that the Special Distribution will be approved. The transaction also requires the approval of the Alberta Court of King’s Bench. If shareholder and court approval are obtained, Strathcona currently expects to effect the Special Distribution in December 2025.
Full details of the Special Distribution and the Plan of Arrangement will be described in Strathcona’s management information circular and other related materials. Those documents are expected to be provided to shareholders, filed with the Canadian securities regulators on SEDAR+ under Strathcona’s profile at www.sedarplus.ca and posted on Strathcona’s website on or about November 6, 2025.
Corporate Update
Following the sale of MEG, Strathcona will be the only pure play oil company in North America producing more than 50 Mbbls/d without mines or refineries. An updated corporate presentation has been posted on Strathcona’s website, which provides further details on Strathcona’s go-forward strategy and long-range plan, which Strathcona shareholders are encouraged to review.
Strathcona remains committed to its previously disclosed long-range plan of organic growth from 120 Mbbls / d to 195 Mbbls / d by 2031 (a 10% CAGR), made possible by its long reserves life index (29 years proved, 49 years proved plus probable), high margin production, and deep inventory of low breakeven drilling locations. 100% of the planned growth is expected to come from Strathcona’s SAGD properties, with approximately 9 Mbbls / d coming from filling existing facility capacity and approximately 66 Mbbls / d from three brownfield SAGD projects. The majority of Strathcona’s incremental production growth will be sold in the U.S. Gulf Coast via Strathcona’s owned and operated Hamlin Rail Terminal and new long-haul pipeline capacity. As part of this long-range plan, Strathcona’s board of directors has approved a 2026 capital budget of $1.0B, with associated production guidance of 115 Mbbls / d to 125 Mbbls / d and exit production of approximately 130 Mbbls / d.
Upon completion of the Special Distribution, Strathcona expects to have approximately $2.0B in debt net of marketable securities, and more than $1.0B in available liquidity. Excess free cash flow, above Strathcona’s existing base dividend of $0.30 / share / quarter, will be allocated opportunistically between debt repayment, M&A and further shareholder returns.
WEF Share Pass-Through
Strathcona today also announced that WEF intends to complete an additional series of share pass-through transactions to its limited partners, in accordance with its previously stated intentions and in a similar manner as it did in January 2025. WEF expects to distribute up to approximately 13% of the outstanding shares of Strathcona to its limited partners in two stages, with approximately 5% expected to be distributed in November 2025 and up to an additional 8% in early 2026. Following completion of the share pass-through transactions, WEF’s ownership in Strathcona will decrease from 79.6% to approximately 66.6%. No member of the WEF general partner, or any WEF employee, receiving shares as part of the pass-through has plans to sell any shares following the distribution at this time.
About Strathcona
Strathcona is one of North America’s fastest growing pure play heavy oil producers with operations focused on thermal oil and enhanced oil recovery. Strathcona is built on an innovative approach to growth achieved through the consolidation and development of long-life assets. Strathcona’s common shares (symbol SCR) are listed on the Toronto Stock Exchange (TSX).
For more information about Strathcona, visit www.strathconaresources.com.
Source: Strathcona Resources Ltd