Strathcona Resources (SCR) Q2 2024 earnings summary

Executive summary

• Q2 2024 production averaged 182,000 BOE/d, with 72% oil and condensate, and funds from operations of CAD 548M.

• Operating earnings reached $306.1 million ($1.43/share), and free cash flow was $247M ($1.15/share).

• Oil production held steady at 131,000 bbl/d, with oil sales rising to 135,000 bbl/d due to inventory drawdown and new Gulf Coast rail facility.

• Announced a quarterly dividend of CAD 0.25/share, payable September 27, 2024, and achieved a debt target of CAD 2.5B as of June 30.

• Entered a partnership with Canada Growth Fund for up to CAD 2B in carbon capture infrastructure, targeting FID in mid-2025.

Financial highlights

• Funds from operations reached CAD 548M (CAD 2.56/share) in Q2 2024.

• Oil and natural gas sales, net of blending and other income, were $1,184.8 million, up from $862.6 million year-over-year.

• Capital expenditures totaled CAD 297M, resulting in free cash flow of CAD 247M (CAD 1.15/share).

• Debt ended the quarter at $2.44 billion, below the $2.5 billion target.

• Operating return on equity for the first half of 2024 annualized at 25%.

Outlook and guidance

• Revised 2024 production guidance to 185,000–190,000 BOE/d, with oil weighting rising to 72% and liquids weighting to 79%.

• Capital budget guidance remains at CAD 1.3B.

• Natural gas guidance reduced by 15 MMcf/d due to third-party outages and deferred production.

• Board to consider future dividend increases based on oil production growth or breakeven reductions.

• Investor Day scheduled for November 14 to detail near- and long-term plans.