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MEGEF - MEG Energy: Attractive Free Cash Flow Yield But Debt Is Still Too High
Meg Energy Corp
The in situ thermal oil producer MEG Energy (OTCPK:MEGEF) reported a strong Q2. Free cash flow reached C$195 million while production grew by 12% compared to the previous quarter. The company benefited from favorable oil, condensate and gas prices. And the strategy of avoiding Canadian oil markets paid off.
The free cash flow was inflated by a lower-than-normalized sustaining capital program, though. Yet, even when taking into account my reduced free cash flow estimate, the free cash flow yield is attractive. But the high leverage is still risky.