Strathcona Resources' Valuation: A $10 Dividend or MEG Energy's Fate?

Strathcona Resources Ltd. is a Canadian company with assets in the oil sands. The company has recently sold off assets, and its valuation has been discussed. In comparison to MEG Energy, Strathcona's dividend is $10. Cenovus Energy's performance may provide insight into the future of Strathcona's stock.

Strathcona Resources Ltd. (TSX:SCR:CA), a Canadian oil sands company, has been in the spotlight due to recent developments, including asset sales and a potential acquisition of MEG Energy Corp. (TSX:MEG:CA). The company's valuation has been a subject of interest, particularly in comparison to MEG Energy and Cenovus Energy (TSX:CVE).

Recent Financial Performance

Strathcona's Q2 2025 results showed production and adjusted funds from operations (FFO) in line with expectations, at $1.93 per share. However, the capital expenditure (capex) was significantly high at $378.4 million. The company's 2025 production guidance remains unchanged, with a mid-point of 152 – 158 Mboe/d. The Tucker asset, a major turnaround in Cold Lake, has shown strong performance, with production exceeding expectations due to innovative SAGD development [1].

Acquisition of MEG Energy

Strathcona's case for acquiring MEG Energy rests on the potential to increase its size and attractiveness to passive ETFs. However, MEG Energy has rejected the offer, citing various reasons, including the understatement of Strathcona's inventory [1]. Cenovus Energy has been mentioned as a potential white knight, but it remains to be seen if they will make a bid [1].

Cenovus Energy's Performance

Cenovus Energy has been actively investing in MEG Energy, with Tejara Capital Ltd. significantly increasing its stake in Cenovus by 201.4% during the first quarter of 2025. Cenovus recently reported a quarterly EPS of $0.33, surpassing analyst expectations by $0.19, despite a year-over-year revenue decline of 12.6% [2].

Future Outlook

Strathcona's stock price has been volatile, with a significant increase in the last six months. Cenovus Energy's recent performance may provide insight into the future of Strathcona's stock, as Cenovus is seen as a potential acquirer. However, Strathcona's stock is currently trading at a high valuation compared to its peers, with a free cash flow yield of under 3.5% [1].

Conclusion

Strathcona Resources Ltd. has shown strong financial performance in Q2 2025, with production and FFO in line with expectations. However, the company's valuation remains high, and its acquisition of MEG Energy is still uncertain. Cenovus Energy's recent performance and investment in MEG Energy may influence Strathcona's stock price in the future.

References:
[1] https://seekingalpha.com/article/4814872-strathcona-resources-meg-energy-or-10-dividend-cenovus-holds-answer
[2] https://www.marketbeat.com/instant-alerts/filing-cenovus-energy-inc-nysecve-shares-purchased-by-tejara-capital-ltd-2025-08-15/