The Canadian oil sands producer MEG Energy (OTCPK:MEGEF) is poised to generate significant free cash flow over the next several years given its low operating and sustaining costs. In addition, it contracted rail and pipeline capacity to export an increasing portion of its production to the U.S. and reduce its dependence on the volatile Canadian heavy oil prices.
Yet despite its promising future, the company announced refinancing a part of its debt due in 2023 and 2024 with high-yield notes due in 2027. This move, which seems premature, represents a costly solution that