MEG Energy initiates buyback with 3.4 million shares bought

Source: MEG Energy

MEG Energy Corp. started a share buyback by purchasing 3.4 million of its own securities.

The oilsands producer paid C$21.85 ($17.27) per share and made the transaction as a part of a 15 million share block trade, the company said in a statement Tuesday. It has 23.6 million shares remaining under the buyback plan, which expires on March 9. The sale was brokered by Bank of Montreal, according to a person with knowledge of the matter.

The share purchase may have been the opportunity for CNOOC Ltd. to follow through with plans to sell off Canadian oil and gas interests, according to MEG shareholder Eric Nuttall. The Ninepoint Partners senior portfolio manager is “99.99%” sure CNOOC sold its shares in the transaction, he said in a phone call. He was not involved in the block trade but said he was pleased to see MEG make a purchase. 

“I can’t tell you how encouraging it is to see companies buying back their own shares,” he said.

As oil prices rally, energy companies are using share buybacks to pass the extra cash on to investors. BP Plc expanded its buybacks earlier this month after strong profits from oil and gas trading.

MEG stock fell 2.6 per cent to close at C$22.07 in Toronto.

CNOOC may give up operations in the UK, Canada and the US amid concern the assets could be blacklisted, Reuters reported last month, citing people it didn’t identify. The Chinese company owns a 12 per cent stake in MEG in addition to stakes in oil sands production plants, according to its website. 

MEG declined to comment and CNOOC International didn’t respond to the questions about the Chinese company’s involvement in the transaction.

© 2022 Bloomberg L.P.

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