Strathcona Resources Ltd. Reports Year End 2024 Reserves, Fourth Quarter and Full Year 2024 Financial and Operating Results, and Announces Quarterly Dividend

CALGARY, AB, March 4, 2025

• Proved Developed Producing ("PDP"), Proved ("1P"), and Proved Plus Probable ("2P") reserves of 367 MMboe, 1,534 MMboe, and 2,655 MMboe, reflecting growth of 8%, 3%, and 2% respectively (10%, 4%, and 2% respectively for oil and condensate)⁽¹⁾ versus December 31, 2023
• PDP finding and development ("F&D") costs⁽²⁾, including changes in future development costs ("FDC"), of $13.49 per boe, equating to a 2024 PDP recycle ratio⁽²⁾ of 2.4x
• 165% organic 2P reserve replacement⁽²⁾; 39 Year 2P Reserve Life Index⁽²⁾
• Growth in PDP, 1P, and 2P before-tax PV-10 net of debt, including dividends⁽³⁾ of 29%, 5% and 5% per share

FY 2024 Highlights

• Production of 183,080 boe/d (71% oil and condensate, 78% liquids)⁽¹⁾
• Operating Earnings of $970.5 million ($4.53 / share)⁽²⁾
• Free Cash Flow of $606.1 million ($2.83 / share)⁽²⁾

Q4 2024 Highlights

• Production of 187,203 boe/d (70% oil and condensate, 77% liquids)⁽¹⁾
• Operating Earnings of $190.0 million ($0.89 / share)⁽²⁾
•  Free Cash Flow of $0.3 million⁽²⁾

Annual Letters to Strathcona Shareholders

A letter to shareholders providing an in-depth review of Strathcona's year-end 2024 reserves and a full year review of 2024 financial and operating performance can be found on Strathcona's website at strathconaresources.com/investors/reports.

Quarter Review and Near-Term Priorities

Strathcona's fourth quarter production of 187 Mboe per day was up 5% quarter-over-quarter, with 2024 full year production of 183 Mboe per day in-line with guidance. Full year capital expenditures of $1,296 million were slightly below Strathcona's capital budget of $1,300 million. Fourth quarter free cash flow was negatively impacted by a build into inventory of 3 Mbbls per day of heavy oil and the deferral of crown royalty deductions associated with capital spending at Cold Lake and Lloydminster. Corresponding recoveries are expected in 2025, with excess heavy oil inventory being sold in January and the delayed capital expenditure deductions reducing 2025 royalties.

In Cold Lake, activity was focused on the tie-in of 8 new lower drainage wells (LDWs) on the D-East pad and 8 new well pairs on the C-South pad in Tucker. Early performance from both pads has exceeded expectations, with Tucker achieving average production of more than 28 Mbbls per day at a steam-oil-ratio (SOR) of 3.7x in February. This represents a production increase of approximately 50% and an SOR reduction of approximately 30% versus 2022-2024 average levels, and an all-time monthly production record for the project. The success of the lower drainage wells at D-East, which included Strathcona's first multi-lateral LDW, built upon learnings from Strathcona's piloting of LDWs at Orion between 2021-2024 and is expected to unlock further LDW development across the Tucker project. The step-change improvement at Tucker is another example of the operational improvements Strathcona has realized since it acquired its three Cold Lake assets between 2020 and 2022, with combined production now up approximately 30% since each was acquired, to 66 Mbbls per day in February.  

In Lloydminster, production growth was driven by record production of over 6 Mbbls per day at Druid, up 35% quarter-over-quarter, partially offset by production downtime in Strathcona's Lloydminster thermal properties. Strathcona's 2024 Druid drilling program exceeded expectations, driven by strong performance from the Company's first multilateral well and first infill wells at 50 meter spacing. The validation of multilaterals and infills in turn translated into a greater than 36% increase in 2P reserves for year-end 2024 at Druid. Current activity in Lloydminster is focused on the tie-in of the Meota West 2 OTSG expansion exploiting the General Petroleum formation (targeting first oil in the second quarter of 2025), construction of the new Meota Central processing facility (targeting first oil in the fourth quarter of 2026), and the annual conventional drilling program.

In the Montney, the fourth quarter saw the return of previously shut-in volumes at Groundbirch following improved natural gas pricing, as well as record quarterly production of over 38 Mboe per day at Kakwa (approximately 57% liquids) driven by strong performance at the recently tied-in 3-24 pad. Strathcona also finished drilling the 5 well 5-21 pad at Kakwa, the Company's first with 2.5-mile laterals, which achieved approximately 9% per lateral meter savings versus the previous 2.0-mile design (DCE&T costs of approximately $3,965 / lateral meter vs. $4,350 / lateral meter). Current activity is focused on the 5-well 3-04 pad in Kakwa and 6-well 14-04 pad in Grand Prairie.

Subsequent to the quarter-end, Strathcona received approval for an expanded credit facility of approximately $2.75 billion (from $2.50 billion previously) through an amended and restated credit agreement which includes a new US$175 million term credit facility. The amended and restated credit agreement includes a $250 million accordion feature, allowing the credit facility to expand to $3.0 billion subject to certain conditions.

U.S. Tariffs

Strathcona is closely monitoring the implementation of U.S. tariffs and thus far expects the financial impact to be largely mitigated. Of the approximately 115 Mbbls per day of bitumen and heavy oil Strathcona produces, approximately 85 Mbbls per day ("Local Sales") is sold in Western Canada markets and approximately 30 Mbbls per day is sold in the United States Gulf Coast ("USGC Sales"). Tariffs will impact Strathcona's Local Sales to the extent they cause a widening in WTI-WCS Hardisty differentials, and in the fourth quarter of 2024 Strathcona hedged 45 Mbbls per day (approximately 53% of its Local Sales) at a US$12.94 / bbl differential for full-year 2025.

For Strathcona's USGC Sales, Strathcona will pay a tariff based on its landed price, net of transportation, in the USGC, estimated at approximately US$5 per barrel at current prices. However, Strathcona's USGC Sales are priced at a premium to the WCS Houston benchmark, and since potential tariffs were announced in November 2024 WTI-WCS Houston differentials have strengthened by approximately US$2.50 per barrel, implicitly reflecting the portion of the tariff born by the U.S. downstream buyer and negating approximately 50% of the tariff impact to Strathcona. In the first quarter of 2025, Strathcona hedged approximately 21 Mbbls per day (approximately 70% of USGC sales) at a WTI-WCS Houston differential of US$3.52 per barrel between April and September 2025.

Taken together, Strathcona's financial hedges, the strengthening of the WCS Houston benchmark, and the weaker Canadian dollar are expected to significantly insulate Strathcona from U.S. tariffs. Relative to Strathcona's November 2024 Investor Day (which included 2025 guidance based on US$70 per barrel WTI, US$13 per barrel WTI-WCS Hardisty differentials, US$5 per barrel WTI-WCS Houston differentials, and 1.38x CAD-USD), current pricing of approximately US$68 per barrel WTI, US$14.00 per barrel WTI-WCS Hardisty differentials, US$2.50 per barrel WTI-WCS Houston differentials, and 1.45x USD-CAD is estimated to translate to approximately the same all-in net realized price, after hedging and including tariff payments. To the extent WCS Hardisty differentials widened to US$15.50 per barrel (which in Strathcona's view would represent the maximum theoretical impact of tariffs), the net impact to Strathcona's realized price, after hedging and including tariff payments is expected to be approximately 1% (despite US$2 per barrel lower WTI).

Finally, Strathcona also produces approximately 20 Mbbls per day of condensate which is approximately 100% consumed internally for Strathcona's operations and therefore is not meaningfully exposed to the impact of tariffs on condensate prices. Any impact of tariffs on Strathcona's natural gas and natural gas liquids sales is expected to be minimal relative to Strathcona's total revenue.

Dividend Increase

Strathcona's board of directors has declared a quarterly dividend of $0.26 per common share to be paid on March 31, 2025 to shareholders of record on March 21, 2025. This reflects an increase of 4% versus the prior quarter, in-line with expected production growth. Future dividend increases will be considered based on further growth in production and/or reductions in full-cycle WTI breakeven prices. 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.

Outlook

Year to date 2025 production has averaged approximately 195 Mboe per day, meaningfully above expectations, and Strathcona will re-evaluate 2025 guidance of 185-195 Mboe per day mid-year.  Strathcona's 2025 capital budget of $1.35 billion is unchanged.

Conference Call Details

Strathcona will host a conference call on Wednesday March 5, 2025, starting at 9:00AM MT (11:00AM ET), to review the Company's year-end 2024 reserves and fourth quarter and year end 2024 financial and operating results.

Date: Wednesday, March 5, 2025

Time: 11:00AM ET (9:00AM MT) 

URL Entry: To join without operator assistance, register at https://emportal.ink/3VHJaZC up to 15 minutes before the start time. Enter your name and phone number to receive an automated call-back.  

Telephone Entry: Alternatively, you can join with operator assistance by dialing 1 (888) 510-2154 (North American Toll Free) and quote conference ID 73482

Webcast Link: https://app.webinar.net/y1JGnDLnaYD 

For those unable to participate in the conference call at the scheduled time, a recording of the conference call will be available for seven days following the call and can be accessed by dialing 1 (888) 660-6345 and entering the conference number 73482.

2024 Reserves Information

The tables below summarize Strathcona's 2024 year-end reserves which were prepared by McDaniel & Associates Consultants Ltd. ("McDaniel"). A complete filing of our oil and gas reserves and other oil and gas information presented in accordance with National Instrument  51-101 – Standards of Disclosure for Oil and Gas Activities ("NI 51-101") are included in Strathcona's Annual Information Form for the year ended December 31, 2024, which can be found at www.sedarplus.ca and www.strathconaresources.com .

Summary of Oil and Gas Reserves (Forecast Prices and Costs) as of December 31, 2024

Summary of Net Present Value of Future Net Revenue Attributable to Oil and Gas Reserves (Forecast Prices and Costs) as of December 31, 2024

Forecast Prices and Costs as of December 31, 2024

Reconciliation of Changes in Gross Reserves⁽¹⁾

Undiscounted Future Net Revenue by Reserves Category