Tudor, Pickering, Holt on Thursday maintained its buy rating on the shares of MEG Energy (MEG.TO) with a C$38.00 price target as it reviewed the oil-sands producer's spending plans.

"While our oil sands blurb earlier in the week focused on the CAD seniors, the brief reference to MEG's valuation drove some discussions with investors. There have been some questions regarding FY'25 capex potentially planned to exceed expectations, but we continue to anticipate prior commentary of C$550-650MM for moderate growth as the limit on near-term annual spend. And with capex even towards the high end of that range next year (TPHe C$640MM; Street in-line at C$635MM; TPHe 105mbopd production vs. Street 105), the moderate cash flow growth that this longer-cycle spend will provide in the out-years will continue to strengthen returns to shareholders. On our capex assumptions, even flowing through recently-depressed strip pricing keeps net debt below levels needed to keep shareholder returns at 100% of FCF. With the company trading at TPHe ~9% FY'25 FCF/EV vs. SMID-cap US oily upstream names at ~7%, MEG's yield fully going back to shareholders, and cash flow supported by decades of low-decline / high-reliability inventory, we remain constructive on the equity. Re-iterate Buy," analyst Jeoffrey Lambujon wrote.

(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)

Price: 25.43, Change: +0.34, Percent Change: +1.36