Strathcona ends MEG bid, plans $10/share payout

An anonymous director reports 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. has arranged: (i) the termination of its takeover 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 and Cenovus Energy Inc., 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's 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 takeover bid circular of Strathcona dated May 30, 2025, as amended by the notice of variation, change and extension dated Sept. 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 to all Strathcona common shareholders. The special distribution is expected to be completed as part of a statutory 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 Oct. 17, 2025, will be asked to approve the plan of arrangement at a special meeting of shareholders expected to be held on Thursday, Nov. 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 per cent 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 and posted on Strathcona's website on or about Nov. 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 Mbbl/d (million barrels per day) 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 Mbbl/d to 195 Mbbl/d by 2031 (a 10-per-cent CAGR (compound annual growth rate)), 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. One hundred per cent of the planned growth is expected to come from Strathcona's SAGD properties, with approximately nine Mbbl/d coming from filling existing facility capacity and approximately 66 Mbbl/d from three brownfield SAGD projects. The majority of Strathcona's incremental production growth will be sold in the United States 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 $1.0-billion, with associated production guidance of 115 Mbbl/d to 125 Mbbl/d and exit production of approximately 130 Mbbl/d. Upon completion of the special distribution, Strathcona expects to have approximately $2.0-billion in debt net of marketable securities and more than $1.0-billion in available liquidity. Excess free cash flow, above Strathcona's existing base dividend of 30 cents per share per quarter, will be allocated opportunistically between debt repayment, M&A (merger and acquisition), 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 per cent of the outstanding shares of Strathcona to its limited partners in two stages, with approximately 5 per cent expected to be distributed in November, 2025, and up to an additional 8 per cent in early 2026. Following completion of the share pass-through transactions, WEF's ownership in Strathcona will decrease from 79.6 per cent to approximately 66.6 per cent. 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 Resources Ltd. 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). We seek Safe Harbor.