Strathcona Resources Ltd. Announces Closing of Acquisition of Vawn Thermal Project and Undeveloped Thermal Lands and Provides Updated 2026 Guidance and Long-Range Plan

Executive Summary

• Strathcona Resources Ltd. completed the acquisition of the Vawn thermal project and adjacent undeveloped thermal lands, paying $75 M cash with up to $75 M contingent consideration tied to WCS price performance.
• The deal adds roughly 48 MMbbls of recoverable resource at Vawn and ~43 net sections of undeveloped land, increasing long‑term production capacity by ~35 Mbbl/d (≈100 Mbbl/d cumulative).
• Updated 2026 production guidance to 120–130 Mbbl/d (capital budget unchanged at C$1.0 bn) and raised the 5‑year plan outlook by 5 Mbbl/d per year, targeting 200 Mbbl/d by 2031 and up to 300 Mbbl/d by 2035.

Key Details

• Consideration:
• $75 M cash paid at closing.

• Contingent consideration up to $75 M payable quarterly over the next 14 quarters if Western Canada Select (WCS) index averages > C$70/bbl; $1 M per dollar per barrel above that threshold.

• Vawn Project Summary:

• Current production ~5 Mbbl/d (100% heavy oil); nameplate capacity ~10 Mbbl/d, peak ~12 Mbbl/d.
• Estimated remaining recoverable resource: 48 MMbbls (Lloydminster & Waseca formations) → ≈26‑year life at current rates.
• Q3‑2025 field netback: $43.87/bbl (vs. $43.62/bbl for existing Lloydminster thermal assets).

• Year‑end 2024 proved reserves: 25 MMbbls; before‑tax PV‑10 ≈ $511 M.

• Undeveloped Lands Acquired (≈43 net sections):

• Glenbogie: 16 net sections → total oil initially‑in‑place ~370 MMbbls; planned to develop to 35 Mbbl/d (≈20‑year life, 70% recovery).
• Plover Lake: 22 net sections → total oil initially‑in‑place ~500 MMbbls; existing plan 17 Mbbl/d by 2028 plus further expansions; acquisition adds ≈13 Mbbl/d (≈44 Mbbl/d cumulative) for >20‑year life.

• Lindbergh: 5 net sections – suited for multi‑lateral conventional development using existing Lindbergh facilities.

• Production & Capital Impact (Combined, excl. Vawn):

• Additional long‑term capacity ≈35 Mbbl/d → cumulative +100 Mbbl/d on top of prior plan.

• Expected capital efficiency < C$30,000 per additional barrel/day, consistent with existing Lloydminster expansion efficiencies.

• Updated Guidance & Plans:

• 2026 Production Guidance: 120–130 Mbbl/d (up from 115–125 Mbbl/d). Capital budget unchanged at C$1.0 bn; $20 M extra sustaining capex at Vawn offset elsewhere.
• 5‑Year Plan (2027‑2031): Production increased by 5 Mbbl/d each year, reaching 200 Mbbl/d midpoint in 2031; capital budget unchanged.

• Long‑Term Outlook: Target up to 300 Mbbl/d by 2035 (≈10% CAGR from 2026). All longer‑term projects (including Glenbogie, Plover Lake West, Taiga, Bellis) expected to be sanctioned/on‑stream by ~2035.

• Hedging Update:

• Re‑structured 50 Mbbl/d of 2026 WCS differential swaps: price reduced from US$14.40/bbl to US$12.00/bbl for an upfront cash payment of $60 M (PV of swap value difference).

• Hedged ~50% of 2026 natural‑gas purchases at average $2.73/GJ.

• Advisors: Mizuho Securities USA (financial advisor); Blake, Cassels & Graydon LLP (legal counsel).

Notable Quotes

(No direct quotes were provided in the release.)