CALGARY, AB, May 6, 2026 /CNW/ - Strathcona Resources Ltd. ("Strathcona" or the "Company") (TSX: SCR) today reported its first quarter 2026 financial and operating results. The Board of Directors also declared a quarterly dividend of $0.30 per common share.
Q1 2026 Highlights
-- Production of 116,542 boe/d (99.7% liquids)
-- Operating Earnings of $194 million ($0.91 / share)(1)
-- Free Cash Flow of $47 million ($0.22 / share)(1)
Three Months Ended(2)
($ millions, unless March 31, 2026 March 31, 2025 December 31, 2025
otherwise indicated)
WTI (US$/bbl) 71.93 71.42 59.14
WCS Hardisty (C$/bbl) 79.23 84.30 66.89
AECO 5A (C$/gj) 1.90 2.05 2.11
Bitumen (bbls/d) 61,375 65,016 62,538
Heavy oil (bbls/d) 54,695 50,488 54,660
Condensate and light oil
(bbls/d) 78 20,682 65
Total oil production
(bbls/d) 116,148 136,186 117,263
Other NGLs (bbls/d) 15 11,837 26
Natural gas (mcf/d) 2,268 279,517 2,558
Production (boe/d) 116,542 194,609 117,715
Sales (boe/d) 118,155 194,884 116,355
% Liquids 99.7 % 76.1 % 99.7 %
Oil and natural gas sales,
net of blending and other
income(1) 824 1,133 710
Royalties 142 138 99
Production and operating --
Energy 77 76 65
Production and operating --
Non-energy 108 155 90
Transportation and
processing 94 142 95
General and administrative 28 25 24
Depletion, depreciation and
amortization 142 216 152
Interest and finance
costs(3) 39 59 39
Operating Earnings(1) 194 322 146
Other items(3) 155 116 245
Income (loss) and
comprehensive income
(loss) ncome 39 206 (99)
Operating Earnings(1) 194 322 146
Non-cash items(3) 153 237 167
Gain (loss) on risk
management and foreign
exchange
contracts -- realized,
operating 17 (1) (75)
Funds from Operations(1) 364 558 238
Capital expenditures (298) (350) (176)
Decommissioning costs (19) (23) (9)
Free Cash Flow(1) 47 185 53
Debt, net of cash,
marketable securities and
cross-currency
swap asset / liability(3) 2,082 2,416 2,100
Common shares (millions) 214 214 214
(1) A non-GAAP financial measure which does not have a
standardized meaning under IFRS$(R)$ Accounting Standards
(the "Accounting Standards"); see "Non-GAAP Measures
and Ratios" section of this press release.
(2) During the year ended December 31, 2025 the Company
entered into three separate asset purchase and sale
agreements to dispose of its Montney assets, which
has been presented in the Company's condensed consolidated
interim financial statements and management's discussion
and analysis for the three months ended March 31,
2026 and 2025 as discontinued operations. The financial
and operating results for these periods have been
presented throughout this press release based on the
aggregation of continuing and discontinued operations.
The aggregation of continuing and discontinued financial
results are non-GAAP measures and do not have a standardized
meaning under the Accounting Standards; see "Non-GAAP
Measures and Ratios" section of this press release.
(3) See "Supplementary Financial Measures" section of
this press release.
Three Months Ended(1)
($/boe, unless otherwise March 31, 2026 March 31, 2025 December 31, 2025
indicated)
Oil and natural gas sales,
net of blending costs and
other income(2) 77.48 64.65 66.38
Royalties 13.36 7.88 9.24
Production and operating --
Energy 7.19 4.32 6.23
Production and operating --
Non-energy 10.17 8.87 8.30
Transportation and
processing 8.82 8.12 8.80
General and administrative 2.65 1.41 2.23
Depletion, depreciation and
amortization 13.35 12.30 14.23
Interest and finance costs 3.70 3.37 3.58
Operating Earnings(2) 18.24 18.38 13.77
Effective royalty rate
(%)(2) 17.2 % 12.2 % 13.9 %
(1) During the year ended December 31, 2025 the Company
entered into three separate asset purchase and sale
agreements to dispose of its Montney assets, which
has been presented in the Company's condensed consolidated
interim financial statements and management's discussion
and analysis for the three months ended March 31,
2026 and 2025 as discontinued operations. The financial
and operating results for these periods have been
presented throughout this press release based on the
aggregation of continuing and discontinued operations.
The aggregation of continuing and discontinued financial
results are non-GAAP measures and do not have a standardized
meaning under the Accounting Standards; see "Non-GAAP
Measures and Ratios" section of this press release.
(2) A non-GAAP financial measure which does not have a
standardized meaning under the Accounting Standards;
see "Non-GAAP Measures and Ratios" section of this
press release.
Quarter Review and Near-Term Priorities
Production for the first quarter of 2026 of 117 Mboe / d (99.7% liquids) was in-line versus the fourth quarter of 2025. Operating earnings of $194 million ($0.91 / share) reflected a 33% increase versus the prior quarter, largely driven by higher oil prices. Free cash flow of $47 million ($0.22 / share) was roughly flat versus the prior quarter, with higher operating earnings being offset by increased capital expenditures under Strathcona's annual capital program, which is weighted to the first half of 2026.
In Cold Lake, production decreased approximately 2% quarter-over-quarter with strong initial performance from new C-East lower-drainage wells ("LDWs") at Tucker being offset by downtime at the Company's Lindbergh property. Downtime at Lindbergh was driven by the mechanical failure of Lindbergh's main fuel gas supply pipeline, which caused the curtailment of steam generation and non-condensable gas ("NCG") volumes during the quarter. The pipeline is in the process of being repaired and is expected to return to full capacity in the third quarter of 2026.
In Lloydminster Thermal, capital activity remains focused on the Company's $360 million Meota Central brownfield development project, which is now approximately 91% complete, on-time and on-budget. The Company expects to achieve first steam from Meota Central in the third quarter of 2026 and first oil early in the fourth quarter of 2026, ramping to an expected peak rate of approximately 13 Mbbls / d by mid-2027. Activity is also focused at Edam-Vawn, where the Company has begun steaming the 10-well VAF pad targeting the Waseca formation for the first time. The Company expects to complete the first 5 of 10 wells on the VAF pad in 2026, targeting a per well peak rate of approximately 750 bbls / d.
In Lloydminster Conventional, the Company completed its annual winter drilling program at Cactus Lake, Druid and Winter, drilling a total of 46 wells (including 4 multi-lateral horizontal wells). Early results from the program are in-line with expectations on both costs and volumes, with an additional 46 wells planned for later in 2026. Following underperformance at the Company's polymer floods in Cactus Lake and Bodo-Cosine in 2025, current production from each asset has since improved approximately 5% versus the end of 2025, as a result of successful flood conformance projects.
Outlook
Strathcona's 2026 production guidance of 120 to 130 Mbbls / d and capital budget of $1.0 billion is unchanged, as is its 2026 first half production guidance of 115 to 120 Mbbls / d and year end 2026 exit rate of approximately 135 Mbbls / d (reflecting an approximately 15% exit-to-exit growth rate).
At current strip prices(1) , Strathcona expects to generate approximately $1.0 billion of free cash flow in 2026. Free cash flow will initially be allocated to debt repayment, with share buybacks and M&A to be evaluated opportunistically throughout the year and additional dividends to be evaluated closer to year end.
______________________________ (1) Approximately C$95 / bbl for Western Canada Select and C$2.00 / Mcf for AECO for full-year 2026.
Quarterly Dividend
Strathcona's Board of Directors has declared a quarterly dividend of $0.30 per share to be paid on June 17, 2026 to shareholders of record on June 8, 2026. Payments to shareholders who are not residents of Canada will be net of any Canadian withholding taxes that may be applicable. Dividends paid by Strathcona are considered "eligible dividends" for Canadian tax purposes.
About Strathcona
Strathcona is one of North America's fastest growing pure play heavy oil producers with operations focused on thermal oil and enhanced oil recovery. Strathcona is built on an innovative approach to growth achieved through the consolidation and development of long-life assets. Strathcona's common shares (symbol SCR) are listed on the Toronto Stock Exchange (TSX).
For more information about Strathcona, visit www.strathconaresources.com.
Non-GAAP Measures and Ratios
The financial results for the three months ended March 31, 2026 and 2025, are presented below to reconcile continuing and discontinued operations to total results. Total results in a non-GAAP measure used by Management to assess the historical financial performance of the total business and is not intended to be indicative of future results.
Three Months Ended March 31, Three Months Ended March 31,
2026 2025(1)
($ millions, Continuing Discontinued Total Continuing Discontinued Total
unless otherwise
indicated)
Revenues and
other income
Oil and natural
gas sales 1,121 -- 1,121 1,176 283 1,459
Sale of
purchased
product 4 -- 4 7 -- 7
Royalties (142) -- (142) (112) (26) (138)
Oil and natural
gas revenues 983 -- 983 1,071 257 1,328
Loss on risk
management
contracts (71) -- (71) (78) -- (78)
Midstream
revenue 9 -- 9 -- -- --
Other income -- -- -- 1 -- 1
921 -- 921 994 257 1,251
Expenses
Purchased
product 4 -- 4 8 -- 8
Blending costs 306 -- 306 326 -- 326
Production and
operating 185 -- 185 182 49 231
Transportation
and processing 94 -- 94 88 54 142
General and
administrative 28 -- 28 19 6 25
Interest 28 -- 28 38 -- 38
Transaction
related costs -- -- -- 1 -- 1
Finance costs 11 -- 11 12 9 21
Depletion,
depreciation
and
amortization 142 -- 142 148 68 216
Foreign exchange
loss (gain) 4 -- 4 (1) -- (1)
Changes in
decommissioning
liabilities 13 -- 13 -- -- --
Loss on
contingent
consideration 42 -- 42 -- -- --
857 -- 857 821 186 1,007
Gain on
marketable
securities -- -- -- 23 -- 23
Income before
income taxes 64 -- 64 196 71 267
Income tax
expense 25 -- 25 43 18 61
Income and
comprehensive
income 39 -- 39 153 53 206
(1) Comparative period has been revised to reflect current
period presentation.
"Oil and natural gas sales, net of blending and other income" is calculated by deducting purchased product and blending costs from oil and natural gas sales, sales of purchased product, midstream revenue and other income. Management uses this metric to isolate all revenue after accounting for the unavoidable cost of blending. Oil and natural gas sales, net of blending and other income, is also reflected on a per boe basis calculated using sales volumes. This ratio is useful to management when analyzing realized pricing against benchmark commodity prices.
Three Months Ended
($ millions, unless March 31, 2026 March 31, 2025 (1) December 31, 2025
otherwise indicated)
Oil and natural gas
sales 1,121 1,459 937
Sales of purchased
products 4 7 14
Other income -- 1 2
Purchased product (4) (8) (15)
Blending costs (306) (326) (236)
Midstream revenue 9 -- 8
Oil and natural gas
sales, net of blending
and other
income 824 1,133 710
(1) Comparative period has been revised to reflect current
period presentation.
"Effective royalty rate" is calculated by dividing royalties by oil and natural gas sales and sale of purchased product, net of blending and purchased product. This metric allows management to analyze the movement of royalty expenses in relation to realized and benchmark commodity prices.
"Oil and natural gas sales, net of blending" is calculated by deducting purchased product and blending costs from oil and natural gas sales, sales of purchased product, and midstream revenue. Management uses this metric to isolate the revenue associated with the Company's production after accounting for the unavoidable cost of blending. Oil and natural gas sales, net of blending, is also reflected on a per boe basis calculated using sales volumes. This ratio is useful to management when analyzing realized pricing against benchmark commodity prices. A quantitative reconciliation of oil and natural gas sales, net of blending to the most directly comparable GAAP financial measure, Oil and natural gas sales, is presented below.
"Operating Earnings -- Discontinued" is considered a key financial metric for evaluating the profitability of Strathcona's discontinued operations. "Operating Earnings - Continuing" is a GAAP financial measure as it is used by the Chief Operating Decision Makers to evaluate profit or loss and is presented in the condensed consolidated interim financial statements for the three months ended March 31, 2026 and 2025. A quantitative reconciliation of Operating Earnings -- Discontinued to the most directly comparable GAAP financial measure, Oil and natural gas sales, is presented below.
Three Months Ended March 31, Three Months Ended March 31,
2026 2025(1)
($ millions, Continuing Discontinued Total Continuing Discontinued Total
unless
otherwise
indicated)
Revenues
Oil and natural
gas sales 1,121 -- 1,121 1,176 283 1,459
Sale of
purchased
product 4 -- 4 7 -- 7
Blending costs (306) -- (306) (326) -- (326)
Purchased
product (4) -- (4) (8) -- (8)
Midstream
revenue 9 -- 9 -- -- --
Oil and natural
gas sales, net
of blending 824 -- 824 849 283 1,132
Expenses
Royalties 142 -- 142 112 26 138
Production and
operating 185 -- 185 182 49 231
Transportation
and processing 94 -- 94 88 54 142
Field operating
income 403 -- 403 467 154 621
Depletion,
depreciation
and
amortization 142 -- 142 148 68 216
General and
administrative 28 -- 28 19 6 25
Finance costs 11 -- 11 12 9 21
Other income -- -- -- (1) -- (1)
Interest 28 -- 28 38 -- 38
Operating
Earnings 194 -- 194 251 71 322
(1) Comparative period has been revised to reflect current
period presentation.
"Funds from Operations" is used by management to analyze operating performance and provides an indication of the funds generated by Strathcona's principal business to either fund operating activities, re-invest to either maintain or grow the business or make debt repayments. Funds from Operations is derived from Operating Earnings and adjusted for depletion, depreciation and amortization ("DD&A"), finance costs, gains and losses on risk management contracts -- realized and gains and losses on foreign exchange - realized, operating.
"Free Cash Flow" indicates funds available for deleveraging, funding future growth, or shareholder returns. Free Cash Flow is derived from Operating Earnings and adjusted for DD&A, finance costs, gains and losses on risk management contracts -- realized and gains and losses on foreign exchange - realized, operating, capital expenditures and decommissioning costs.
Quantitative reconciliations of Funds from Operations and Free Cash Flow for both continuing and discontinued operations to the most directly comparable GAAP financial measure, Operating Earnings, are set forth below.
Three Months Ended
($ millions, unless March 31, 2026 March 31, 2025(1) December 31, 2025
otherwise indicated)
Operating Earnings -
Continuing 194 251 138
Depletion, depreciation
and amortization 142 148 152
Finance costs 11 12 15
Gain (loss) on risk
management contracts -
realized 16 (1) (75)
Foreign exchange gain - 1 -- --
realized, operating
Funds from Operations -
Continuing 364 410 230
Capital expenditures (298) (233) (188)
Decommissioning costs (19) (8) (9)
Free Cash Flow -
Continuing 47 169 33
(1) Comparative period has been revised to reflect
current period presentation.
Three Months Ended
($ millions, unless March 31, 2026 March 31, 2025(1) December 31, 2025
otherwise indicated)
Operating Earnings -
Discontinued -- 71 8
Depletion, depreciation -- 68 --
and amortization
Finance costs -- 9 --
Funds from Operations -
Discontinued -- 148 8
Capital expenditures -- (117) 12
Decommissioning costs -- (15) --
Free Cash Flow -
Discontinued -- 16 20
(1) Comparative period has been revised to reflect
current period presentation.
The following table reconciles Operating Earnings, Funds from Operations and Free Cash Flow for both continuing and discontinued operations:
Three Months Ended
($ millions, unless March 31, 2026 March 31, 2025(1) December 31, 2025
otherwise indicated)
Operating Earnings 194 322 146
Depletion, depreciation
and amortization 142 216 152
Finance costs 11 21 15
Gain (loss) on risk
management contracts -
realized 16 (1) (75)
Foreign exchange gain - 1 -- --
realized, operating
Funds from Operations 364 558 238
Capital expenditures (298) (350) (176)
Decommissioning costs (19) (23) (9)
Free Cash Flow 47 185 53
(1) Comparative period has been revised to reflect
current period presentation.
Supplementary Financial Measures
"Interest and finance costs" is an aggregation of interest and finance costs. Management uses this metric to obtain a fulsome understanding of all interest and accretion costs the Company is subject to.
"Other items" is an aggregation of risk management contracts, foreign exchange, transaction related costs, gain on marketable securities, loss on sale of assets, deferred tax expense (recovery), change in decommissioning liabilities, loss on contingent consideration and impairment from both continuing and discontinued operations. They are presented in such a manner to yield prominence to key financial metrics such as income and comprehensive income, Funds from Operations and Free Cash Flow.
Three Months Ended
($ millions, unless March 31, 2026 March 31, 2025 December 31, 2025
otherwise indicated)
Loss on risk management
contracts 71 78 1
Foreign exchange loss
(gain) 4 (1) (11)
Transaction related costs -- 1 33
Gain on marketable
securities -- (23) (102)
Loss on sale of assets -- -- 12
Deferred tax expense
(recovery) 25 61 (51)
Change in decommissioning
liabilities 13 -- (13)
Loss on contingent 42 -- --
consideration
Impairment -- -- 376
Other items 155 116 245
"Non-cash items" is an aggregation of depletion, depreciation and amortization, and finance costs.
"Debt, net of cash, marketable securities and cross-currency swap asset / liability" is comprised of debt less cash, marketable securities and cross-currency swap asset / liability, as derived under the Accounting Standards.
Presentation of Oil and Gas Information
This press release contains various references to the abbreviation "boe" which means barrels of oil equivalent. All boe conversions in this press release are derived by converting gas to oil at the ratio of six thousand cubic feet ("mcf") of natural gas to one barrel ("bbl") of crude oil. Boe may be misleading, particularly if used in isolation. A boe conversion rate of 1 bbl : 6 mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio of oil compared to natural gas based on currently prevailing prices is significantly different than the energy equivalency ratio of 1 bbl : 6 mcf, utilizing a conversion ratio of 1 bbl : 6 mcf may be misleading as an indication of value.
References in this press release to initial production rates and other short-term production rates, test results and peak rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long-term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating aggregate production for the Company or the assets for which such rates are provided. A pressure transient analysis or well-test interpretation has not been carried out in respect of all wells. Accordingly, the test results should be considered to be preliminary.
Product Type Production Information
National Instrument 51-101 -- Standards of Disclosure for Oil and Gas Activities includes condensate within the natural gas liquids product type. The Company has disclosed condensate as combined with light oil and separately from other natural gas liquids in this press release since the price of condensate as compared to other natural gas liquids is currently significantly higher and the Company believes that this presentation provides a more accurate description of its operations and results therefrom. References to "natural gas" in this press release refer to conventional natural gas. References to "liquids" in this press release refer to, collectively, bitumen, heavy oil, condensate and light oil (comprised of condensate and light oil) and other natural gas liquids (comprised of ethane, propane and butane only).
The Company's quarterly average daily production volumes for three months ended 2026 and 2025, and the references to "natural gas", "crude oil" and "condensate", reported in this press release consist of the following product types, as defined in NI 51-101 and using a conversion ratio of 6 mcf : 1 bbl where applicable:
Three Months Ended
March 31, 2026 March 31, 2025 December 31, 2025
Heavy crude oil (bbl/d) 54,695 50,488 54,660
Light and medium crude oil
(bbl/d) 69 504 61
Total crude oil (bbl/d) 54,764 50,992 54,721
Bitumen (bbl/d) 61,375 65,016 62,538
NGLs (bbl/d) 24 32,015 30
Total liquids (bbl/d) 116,163 148,023 117,289
Conventional natural gas
(mcf/d) 2,268 279,517 2,558
Total (boe/d) 116,542 194,609 117,715
Forward-Looking Information
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