Strathcona Resources Ltd. announced the divestiture of nearly all its Montney assets through three separate transactions totalling $2.84bn. The deal includes the sale of the Kakwa asset to ARC Resources Ltd. for $1.695bn, the Grande Prairie asset for $850mn, and the Groundbirch asset to Tourmaline Oil Corp. in exchange for $291.5mn in shares.
These assets accounted for approximately 12% of Strathcona’s 2024 operating earnings and 15% of its current before-tax proved PV-10 value. Combined production from the Montney assets reached 72,000 barrels of oil equivalent per day in 2024. Following the sale, Strathcona’s remaining output will be predominantly oil-based, with a proved and probable (2P) reserve life index estimated at 50 years.
Debt reduction and strategic repositioning
Proceeds from the sale, composed of cash and equity, will be used to repay $2.58bn in debt and $112.4mn in other obligations related to asset-backed financing. All lease liabilities linked to the Montney assets will be assumed by the buyers.
At the same time, Strathcona completed its acquisition of the Hardisty Rail Terminal (HRT) in Alberta for $45mn at the beginning of the second quarter. HRT is Canada’s largest crude-by-rail facility with a capacity of 262,000 barrels per day and an average throughput of 50,000 barrels per day year-to-date.
Strategic rail capacity and growth plan
Connected to a diluent recovery unit, HRT enhances netbacks on raw bitumen shipments by rail. Strathcona now operates about 80% of current crude-by-rail volumes in Western Canada via its Hardisty and Hamlin terminals. The company noted that HRT has previously reached 82% utilisation during periods of pipeline congestion.
Following the Montney asset sales, Strathcona expects oil production of 120,000 barrels per day in the second half of 2025, entirely composed of oil, including 95,000 barrels from thermal sites. Full-year 2025 production is projected between 150,000 and 160,000 barrels of oil equivalent per day, with capital expenditures adjusted to $1.2bn.
Long-term outlook without greenfield projects
Strathcona’s growth strategy relies solely on developing existing projects, particularly its thermal assets in Cold Lake and Lloydminster. It aims to reach 195,000 barrels per day by 2031, representing an 8% annual average growth rate over seven years, without incorporating any greenfield developments.
Average capital expenditure is expected to range between $0.9bn and $1.2bn from 2026 to 2029. The Lindbergh Phase 2 expansion has been deferred to 2027 in favour of short-term free cash flow generation, reflecting current oil market conditions.
