consolidated balance sheet · cash and cash equivalents 17 $ 120 $ 206 trade receivables and other...

ConsolidatedBalanceSheet(Unaudited,expressedinmillionsofCanadiandollars)

Asat Note June30,2020 December31,2019AssetsCurrentassetsCashandcashequivalents 17 $ 120 $ 206Tradereceivablesandother 233 382Inventories 3 80 93Riskmanagement 19 90 —

523 681Non-currentassetsProperty,plantandequipment 4 6,078 6,206Explorationandevaluationassets 5 124 490Otherassets 6 214 227Riskmanagement 19 24 —Deferredincometaxasset 7 325 262

Totalassets $ 7,288 $ 7,866

LiabilitiesCurrentliabilitiesAccountspayableandaccruedliabilities $ 226 $ 379Interestpayable 83 74Currentportionofprovisionsandotherliabilities 9 31 28Riskmanagement 19 10 77

350 558Non-currentliabilitiesLong-termdebt 8 3,096 3,123Provisionsandotherliabilities 9 335 332Riskmanagement 19 — —

Totalliabilities 3,781 4,013Shareholders’equitySharecapital 10 5,460 5,443Contributedsurplus 173 182Deficit (2,165) (1,801)Accumulatedothercomprehensiveincome 39 29

Totalshareholders’equity 3,507 3,853Totalliabilitiesandshareholders’equity $ 7,288 $ 7,866

Commitmentsandcontingencies(Note21)

TheaccompanyingnotesareanintegralpartoftheseInterimConsolidatedFinancialStatements.

1

ConsolidatedStatementofEarnings(Loss)andComprehensiveIncome(Loss)(Unaudited,expressedinmillionsofCanadiandollars,exceptpershareamounts)

ThreemonthsendedJune30 SixmonthsendedJune30

Note 2020 2019 2020 2019

Revenues

Petroleumrevenue,netofroyalties 12 $ 299 $ 1,044 $ 941 $ 1,940

Otherrevenue 12 8 17 31 40

Totalrevenues 307 1,061 972 1,980

Expenses

Diluentandtransportation 13 205 421 585 813

Operatingexpenses 46 54 114 124

Inventoryimpairment(realized) 3 (29) — — —

Purchasedproduct 106 199 282 394

Third-partycurtailmentcredits — 8 (2) 8

Depletionanddepreciation 4,6 93 365 217 480

Explorationexpense 5 — 58 366 58

Generalandadministrative 9 16 25 34

Stock-basedcompensation 11 (8) 16 (22) 11

Netfinanceexpense 15 69 76 139 155

Otherexpenses 16 22 7 30 16

Gainonassetdispositions 6 — (2) (6) (14)

Commodityriskmanagement(gain)loss,net 19 52 (36) (482) 194

Foreignexchange(gain)loss,net 14 (116) (69) 154 (148)

Lossbeforeincometaxes (142) (52) (428) (145)

Incometaxexpense(recovery) (62) 12 (64) (34)

Netloss (80) (64) (364) (111)

Othercomprehensiveincome(loss),netoftax

Itemsthatmaybereclassifiedtoprofitorloss:

Foreigncurrencytranslationadjustment (8) (4) 10 (8)

Comprehensiveloss $ (88)$ (68)$ (354)$ (119)

Netlosspercommonshare

Basic 18 $ (0.26)$ (0.21)$ (1.21)$ (0.37)

Diluted 18 $ (0.26)$ (0.21)$ (1.21)$ (0.37)


2

ConsolidatedStatementofChangesinShareholders’Equity(Unaudited,expressedinmillionsofCanadiandollars)

ShareCapitalContributed

Surplus Deficit

AccumulatedOther

ComprehensiveIncome

TotalShareholders’

Equity

BalanceasatDecember31,2019 $ 5,443 $ 182 $ (1,801) $ 29 $ 3,853

Stock-basedcompensation — 8 — — 8

RSUsvestedandreleased 17 (17) — — —

Comprehensiveincome(loss) — — (364) 10 (354)

BalanceasatJune30,2020 $ 5,460 $ 173 $ (2,165) $ 39 $ 3,507

BalanceasatDecember31,2018 $ 5,427 $ 170 $ (1,751) $ 39 $ 3,885

IFRS16openingdeficitadjustment — — 12 — 12

Stock-basedcompensation — 17 — — 17

RSUsvestedandreleased 14 (14) — — —

Comprehensiveincome(loss) — — (111) (8) (119)

BalanceasatJune30,2019 $ 5,441 $ 173 $ (1,850) $ 31 $ 3,795


3

ConsolidatedStatementofCashFlow(Unaudited,expressedinmillionsofCanadiandollars)


Note 2020 2019 2020 2019

Cashprovidedby(usedin):

Operatingactivities

Netloss $ (80)$ (64)$ (364)$ (111)

Adjustmentsfor:

Deferredincometaxexpense(recovery) (61) 12 (63) (34)

Inventoryimpairment(realized) 3 (29) — — —

Depletionanddepreciation 4,6 93 365 217 480

Explorationexpense 5 — 58 366 58

Stock-basedcompensation 11 (17) 11 (13) 16

Unrealizednet(gain)lossonforeignexchange 14 (114) (67) 153 (145)Unrealizednet(gain)lossoncommodityriskmanagement 19 267 (87) (161) 122Amortizationofdebtdiscountanddebtissuecosts 2 3 4 9

Gainonassetdispositions 6 — (2) (6) (14)

Other 2 2 4 4

Decommissioningexpenditures 9 — — (2) —

Netchangeinotherliabilities 6 (4) 3 (7)Fundsflowfromoperatingactivities 69 227 138 378

Netchangeinnon-cashworkingcapitalitems 17 48 75 78 (145)

Netcashprovidedby(usedin)operatingactivities 117 302 216 233

Investingactivities

Capitalexpenditures 4 (20) (32) (74) (85)

Netproceedsondispositions 6 — 5 6 17

Netchangeinnon-cashworkingcapitalitems 17 (30) (14) (41) (57)

Netcashprovidedby(usedin)investingactivities (50) (41) (109) (125)

Financingactivities

Issueof7.125%seniorunsecurednotes 8 — — 1,581 —

Repaymentandredemptionoflong-termdebt 8 — (4) (1,723) (8)

Debtredemptionpremiumandrefinancingcosts 8 (1) — (49) —

Receiptsonleasedassets 17 1 — 1 —

Paymentsonleasedliabilities 17 (7) (5) (13) (9)

Netcashprovidedby(usedin)financingactivities (7) (9) (203) (17)

Effectofexchangeratechangesoncashandcashequivalentsheldinforeigncurrency (2) (7) 10 (10)

Changeincashandcashequivalents 58 245 (86) 81

Cashandcashequivalents,beginningofperiod 62 154 206 318

Cashandcashequivalents,endofperiod $ 120 $ 399 $ 120 $ 399


4

1. CORPORATEINFORMATION

MEGEnergyCorp.(the"Corporation")wasincorporatedundertheAlbertaBusinessCorporationsActonMarch9,1999.TheCorporation'ssharestradeontheTorontoStockExchangeunderthesymbol"MEG".TheCorporationownsa100%interestinover700squaremilesofmineralleasesinthesouthernAthabascaregionofAlbertaandisprimarilyengagedinsustainableinsituthermaloilproductionatitsChristinaLakeProject.

Thecorporateofficeislocatedat600–3rdAvenueSW,Calgary,Alberta,Canada.

2. BASISOFPRESENTATION

The unaudited interim consolidated financial statements (“interim consolidated financial statements”) werepreparedusingthesameaccountingpoliciesandmethodsasthoseusedintheCorporation’sauditedconsolidatedfinancialstatementsfortheyearendedDecember31,2019.TheinterimconsolidatedfinancialstatementsareincompliancewithInternationalAccountingStandard34,InterimFinancialReporting(“IAS34”).Accordingly,certaininformationandfootnotedisclosurenormallyincludedinannualfinancialstatementspreparedinaccordancewithInternational Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board("IASB"), has been omitted or condensed. The preparation of interim consolidated financial statements inaccordancewith IAS34requirestheuseofcertaincriticalaccountingestimates. Italsorequiresmanagementtoexercise judgment in applying the Corporation’s accounting policies. The areas involving a higher degree ofjudgmentor complexity,orareaswhereassumptionsandestimatesare significant to theconsolidated financialstatements,havebeen setout inNote4of theCorporation’s audited consolidated financial statements for theyear endedDecember 31, 2019. These interim consolidated financial statements should be read in conjunctionwiththeCorporation’sauditedconsolidatedfinancialstatementsfortheyearendedDecember31,2019.

InMarch 2020, theWorld HealthOrganization declared a global pandemic following the emergence and rapidspreadofanovelstrainofcoronavirus ("COVID-19"). Theoutbreakandsubsequentmeasures intendedto limitCOVID-19globallycontributedtosignificantdeclinesandvolatilityincapitalandfinancialmarkets,andadverselyimpactedglobalcommoditymarkets,mostnotablythedramaticdeclineinworldwidedemandforcrudeoil.Thereare no comparable recent events that provide guidance as to the long term effect that COVID-19 may have,includingglobaleffortstocontainthespreadandseverityofthevirus.

The full extent of the impact of COVID-19 on the Corporation’s operations and future financial performance iscurrentlyunknown.Thecontinuedimpactoncapitalandfinancialmarketsonamacro-scalepresentsuncertaintyandriskwithrespecttotheCorporation'sperformance,andestimatesandassumptionsusedinthepreparationofitsfinancialresults.

Additionalestimates,assumptionsand judgments inresponsetoCOVID-19havebeendisclosed inthese interimconsolidated financial statements regarding valuation assessments related to the Corporation's inventories,property, plant and equipment, exploration and evaluation assets, long-term pipeline linefill, decommissioningprovisionanddeferredincometaxasset.

These interim consolidated financial statements are presented in Canadian dollars ($ or C$), which is theCorporation’sfunctionalcurrencyandwereapprovedbytheCorporation’sAuditCommitteeonJuly27,2020.

3. INVENTORIES

Asat June30,2020 December31,2019

Bitumenblend $ 66 $ 73

Diluent 6 13

Materialandsupplies 8 7

$ 80 $ 93

NOTESTOTHEINTERIMCONSOLIDATEDFINANCIALSTATEMENTSAllamountsareexpressedinmillionsofCanadiandollarsunlessotherwisenoted.(Unaudited)

5

Inventoriesaremeasuredatthelowerofcostandnetrealizablevalue.Inlightofthesignificantandacutedeclinein commoditypricesassociatedwith theCOVID–19globalpandemic,non-cash inventory impairment chargesof$19million and$10million, respectively,were recordedatMarch31, 2020 related to theestimateddecline invalueoftheCorporation’sbitumenblendanddiluentvolumesheldininventoryattheendofthefirstquarter.Therelated inventories were sold during the three months ended June 30, 2020 and the resulting cash impactassociatedwiththeimpairmentchargeswasrealizedthroughvariousexpenses.NoinventoryimpairmentswererecognizedatJune30,2020.

4. PROPERTY,PLANTANDEQUIPMENT

CrudeoilTransportation

andstorageRight-of-use

assetsCorporate

assets TotalCostBalanceasatDecember31,2019 $ 9,077 $ 159 $ 263 $ 78 $ 9,577Additions 75 1 26 — 102Dispositions (2) (71) — — (73)Leasemodification — — (2) — (2)Changeindecommissioningliabilities (6) — — — (6)BalanceasatJune30,2020 $ 9,144 $ 89 $ 287 $ 78 $ 9,598

Accumulateddepletionanddepreciation

BalanceasatDecember31,2019 $ 3,199 $ 102 $ 25 $ 45 $ 3,371Depletionanddepreciation 202 — 12 3 217Dispositions (3) (70) — — (73)Leasemodification — — 5 — 5BalanceasatJune30,2020 $ 3,398 $ 32 $ 42 $ 48 $ 3,520

CarryingamountsBalanceasatDecember31,2019 $ 5,878 $ 57 $ 238 $ 33 $ 6,206BalanceasatJune30,2020 $ 5,746 $ 57 $ 245 $ 30 $ 6,078

Includedinthecostofproperty,plantandequipmentis$244millionofassetsunderconstructionasatJune30,2020(December31,2019–$229million).

Inlightofthesignificantdegradationandvolatilityinglobalcrudeoilprices,internationaloilsupplyanddemandimbalances, and the uncertainty surrounding the economic impact of COVID–19, a test for impairment wasperformed atMarch 31, 2020, and no impairment charges were required. The economic conditions that werepresent atMarch 31, 2020 that required a test for impairment have improved, and therefore no indicators ofimpairmentexistedatJune30,2020.

When completing the impairment test as at March 31, 2020, estimating the recoverable amount of theCorporation'sCGUinvolvedseveralassumptionsandestimateswhichweresubjecttoestimationuncertainty,aswell as a significant degree of judgment. Significant estimates involved in the calculation included pricingassumptions,productionandcostassumptionsand theappropriatediscount rate.TheCorporationengagesGLJPetroleumConsultantsLtd.("GLJ")toprepareanannualreservereport,whichcontainsthepricing,productionandcost assumptions that form the basis for determining the recoverable amount. The report is prepared as atDecember31,2019,andthereforeadjustmentsweremadetoreflecttheupdatedcommoditypricingatthetimeof impairment testing. Other adjustments to the report are made as necessary to reflect the change in theeconomicenvironment.Theappropriatediscountraterequiresasignificantamountofjudgment,andasensitivityanalysiswasperformedtoensurethata1-2%change inthediscountratedidnotaffecttheconclusionreachedthatnoimpairmentwasrequired.

6

5. EXPLORATIONANDEVALUATIONASSETS

Cost

BalanceasatDecember31,2019 $ 490

Additions —

Explorationexpense (366)

Dispositions —

BalanceasatJune30,2020 $ 124

The Corporation is focused on the development of its core asset Christina Lake as it continues tomanage thebusiness through an unpredictable global economic downturn arising from COVID-19. The Corporation hasdiscontinuedexplorationandevaluationactivitiesincertainnon-coregrowthproperties.Landleaseandevaluationcostsassociatedwiththeseassetsof$366millionwaschargedtoexplorationexpenseduringthefirstquarterof2020. The remaining assetswere allocated to the related CGU for impairment testing and no impairmentwasrequired.

6. OTHERASSETS


Non-currentpipelinelinefill(a) $ 181 $ 190

Financesubleasereceivables 17 18

Intangibleassets(b) 8 9

Deferredfinancingcosts 5 7

Prepaidtransportationcosts(c) 8 9

219 233

Lesscurrentportion (5) (6)

$ 214 $ 227

a. Non-current pipeline linefill on third-party owned pipelines is classified as a non-current asset as thesetransportationcontractsexpirebetweentheyears2025and2048.

In light of the significant and acute decline in commodity prices associated with the COVID–19 globalpandemic,long-termpipelinelinefillwastestedforimpairmentunderIAS2bycomparingthecarryingvaluetothenetrealizablevalue,andnoimpairmentwasrecordedduetothelong-termnatureofthetransportationcontracts. The uncertainty surrounding the duration and depth of unprecedented low commodity prices,combinedwithsignificantvolatilityincommoditypricesincreasestheestimationuncertaintyassociatedwiththenetrealizablevalueatJune30,2020,andactualresultscoulddifferfromtheestimates.

b. As at June 30, 2020, intangible assets consist of $8 million invested in software that is not an integralcomponentof therelatedcomputerhardware (December31,2019–$9million).Depreciationof$1millionwasrecognizedforthesixmonthsendedJune30,2020(December31,2019–$2million).Atthebeginningof2020,theCorporationsoldpatentsthatwererecordedatanominalamount,andrecognizedagainonassetdispositionof $6million.During the comparative sixmonthperiod in 2019, theCorporation sold internallygeneratedemissionperformancecreditsthatwererecordedatanominalamount,andrecognizedagainonassetdispositionsof$12million.

c. Prepaid transportation costs related to upgrading third-party transportation infrastructure have beencapitalizedandarebeingamortizedtotransportationexpenseoverthe30-yeartermoftheagreement.

7

7. DEFERREDINCOMETAXASSET

AsatJune30,2020,theCorporationrecognizedadeferredtaxassetof$325million(December31,2019-$262million).Thedeferredtaxasset isreviewedateachbalancesheetdatetoassesswhether it isprobablethattherelatedtaxbenefitwillberealized.AsatJune30,2020,theCorporationestimatesthatfuturetaxable incomeisexpectedtobesufficienttorealizethedeferredtaxasset.Theestimatesusedtodeterminefuturetaxableincomearesubjecttomeasurementuncertaintyandactualresultscoulddifferfromestimates.

8. LONG-TERMDEBT


SecondLien:

6.5%seniorsecuredsecondliennotes(June30,2020-US$496million;December31,2019-US$596million;due2025) $ 675 $ 773

Unsecured:

7.0%seniorunsecurednotes(June30,2020-US$600million;December31,2019-US$1billion;due2024) 817 1,297

7.125%seniorunsecurednotes(June30,2020-US$1.2billion;December31,2019-US$nil;due2027) 1,634 —

6.375%seniorunsecurednotes(June30,2020-US$nil;December31,2019-US$800million;due2023) — 1,037

3,126 3,107

Less:

Debtredemptionpremium — 29

Unamortizeddeferreddebtdiscountanddebtissuecosts (30) (13)

$ 3,096 $ 3,123

TheU.S.dollardenominateddebtwastranslatedintoCanadiandollarsattheperiodendexchangerateofUS$1=C$1.3616(December31,2019–US$1=C$1.2965).

During the first quarter of 2020, the Corporation successfully closed a private offering of $1.6 billion (US$1.2billion) in aggregate principal amount of 7.125% senior unsecured notes due February 2027. On February 18,2020,thenetproceedsoftheoffering,togetherwithcashonhand,wereusedto:

• Fully redeem $1 billion (US$800million) of the 6.375% senior unsecured notes due January 2023 at aredemptionpriceof101.063%;

• Partially redeem$530million (US$400million)of theUS$1.0billion7.00%seniorunsecurednotesdueMarch2024ataredemptionpriceof102.333%;and

• Payfeesandexpensesrelatedtotheoffering.

Concurrent with the private offering, on February 18, 2020, the Corporation redeemed $132 million (US$100million) in aggregate principal amount of its 6.5% senior secured second lien notes due January 2025 at aredemption price of 104.875%. Cash on hand was used to fund this senior secured second lien notes partialredemption.

The Corporation's total credit available under two facilities is $1.3 billion, comprised of $800million under therevolvingcreditfacilityand$500millionunderaletterofcreditfacility,guaranteedbyExportDevelopmentCanada("EDC"). Letters of credit under the EDC facility do not consume capacity of the revolving credit facility. TherevolvingcreditfacilityandtheEDCFacilitybothhaveamaturitydateofJuly30,2024.Thematuritydatesofthe

8

revolvingcreditfacilityandtheEDCFacilityincludeafeaturethatwouldcausethematuritydatestospringbackto91dayspriortothematuritydateofcertainmaterialdebtoftheCorporationifsuchdebthasnotbeenrepaidorrefinancedpriortosuchdate.

The revolving credit facilitydoesnot containa financialmaintenance covenantunless theCorporation isdrawnunder therevolvingcredit facility inexcessof$400million. If the facility isdrawn inexcessof$400million, theCorporation is required to maintain a first lien net debt to last twelve months earnings before interest, tax,depreciationandamortizationratioof3.50orless.Thefinancialmaintenancecovenant,iftriggered,willbetestedquarterly.Issuedlettersofcreditarenotincludedinthecalculationoftheratio.

Therevolvingcreditfacility,EDCfacilityandseniorsecuredsecondliennotesaresecuredbysubstantiallyalltheassetsoftheCorporation.

AsatJune30,2020,theCorporationhad$785millionofunutilizedcapacityunderthe$800millionrevolvingcreditfacilityandtheCorporationhad$63millionofunutilizedcapacityunderthe$500millionletterofcreditfacility.Aletterofcreditof$15millionwasissuedundertherevolvingcreditfacilityduringthesixmonthsendedJune30,2020.

9. PROVISIONSANDOTHERLIABILITIES


Leaseliabilities(a) $ 288 $ 281

Decommissioningprovision(b) 67 71

Otherliabilities 11 8

Provisionsandotherliabilities 366 360


Non-currentportion $ 335 $ 332

a. Leaseliabilities:


Balance,beginningofperiod $ 281 $ 131

IFRS16openingbalancesheetadjustment — 160

Additions 13 13

Modifications 2 (4)

Payments (21) (45)

Interestexpense 13 26

Balance,endofperiod 288 281



9

TheCorporation'sminimumleasepaymentsareasfollows:

Asat June30,2020

Withinoneyear $ 50

Laterthanoneyearbutnotlaterthanfiveyears 150

Laterthanfiveyears 513

Minimumleasepayments 713

Amountsrepresentingfinancecharges (425)

Netminimumleasepayments $ 288

TheCorporationhasshort-termleaseswithleasetermsoftwelvemonthsorlessaswellaslow-valueleases.As these lease costs are incurred they are recognized as either general and administrative expense oroperatingexpensedependingontheirnature.AsatJune30,2020,thepresentvalueofthesearrangementsis$3million(December31,2019-$2million),usingtheCorporation'sestimatedincrementalborrowingrate.

b. Decommissioningprovision:

The following table presents the decommissioning provision associated with the reclamation andabandonmentoftheCorporation’sproperty,plantandequipmentandexplorationandevaluationassets:


Balance,beginningofperiod $ 71 $ 65

Changesinestimatedlifeandestimatedfuturecashflows 3 (2)

Changesindiscountrates (9) 2

Liabilitiesincurredanddisposed,net — 1

Liabilitiessettled (2) (2)

Accretion 4 7

Balance,endofperiod 67 71



ThedecommissioningprovisionrepresentsthepresentvalueoftheestimatedfuturecostsforthereclamationandabandonmentoftheCorporation'sproperty,plantandequipmentandexplorationandevaluationassets.Thetotalundiscountedamountoftheestimatedfuturecashflowstosettlethedecommissioningobligationsis$810million(December31,2019–$827million).Duetothesignificantdeclineinglobalcrudeoilpricesandincreased levelsofmarketvolatility, theCorporation’sestimatedweightedaveragecredit-adjusted risk freerate increased 1.5%during the sixmonths ended June 30, 2020. As at June 30, 2020, the Corporation hasestimatedthenetpresentvalueofthedecommissioningobligationsusingaweightedaveragecredit-adjustedrisk-freerateof15.2%(December31,2019–13.7%)andaninflationrateof2.1%(December31,2019-2.1%).Thedecommissioningprovisionisestimatedtobesettledinperiodsuptotheyear2066(December31,2019-periodsuptotheyear2066).

10

10. SHARECAPITAL

TheCorporationisauthorizedtoissueanunlimitednumberofcommonshareswithoutnominalorparvalueandanunlimitednumberofpreferredshares.

Changesinissuedcommonsharesareasfollows:

SixmonthsendedJune30,2020

YearendedDecember31,2019

Numberofshares

(thousands) Amount

Numberofshares

(thousands) Amount

Balance,beginningofyear 299,508 $ 5,443 296,841 $ 5,427

Issueduponexerciseofstockoptions 39 — 266 2

IssueduponvestingandreleaseofRSUsandPSUs 3,098 17 2,401 14

Balance,endofperiod 302,645 $ 5,460 299,508 $ 5,443

11. STOCK-BASEDCOMPENSATION


2020 2019 2020 2019

Cash-settledexpense(recovery)(i) $ 9 $ 5 $ (9)$ (5)

Equity-settledexpense 2 11 7 16

Equitypriceriskmanagementgain(ii) (19) — (20) —

Stock-basedcompensation $ (8)$ 16 $ (22)$ 11

(i) Cash-settled RSUs and PSUs are accounted for as liability instruments and aremeasured at fair value based on themarket valueof theCorporation’s common sharesat eachperiodendand certain estimates includingaperformancemultiplierforPSUs.Fluctuationsinthefairvaluearerecognizedduringtheperiodinwhichtheyoccur.

(ii) RelatestofinancialderivativesenteredintotomanagetheCorporation'sexposuretocash-settledRSUsandPSUsvestingin2021,2022and2023grantedundertheCorporation'sstock-basedcompensationplans.Amountsareunrealizeduntilvestingoftherelatedunitsoccurs.Seenote19(d)forfurtherdetails.

A$9millioncash-settledrecoverywasrecognizedduringthesixmonthsendedJune30,2020duetothedecreaseintheCorporation'sshareprice,andassociateddecreaseinvalueofcash-settledRSUsPSUsandDSUscomparedtoDecember31,2019whichtranslatestoareducedliability(orrecovery)heldbytheCorporationatJune30,2020.AsatJune30,2020,theCorporationrecognizedaliabilityof$12millionrelatingtothefairvalueofcash-settledRSUs, PSUs and DSUs (December 31, 2019 – $25million). The current portion of $5million is includedwithinaccountspayableandaccruedliabilitiesand$7millionisincludedasanon-currentliabilitywithinprovisionsandotherliabilitiesbasedontheexpectedpayoutdatesoftheindividualawards.

11

12. REVENUES


2020 2019 2020 2019

Salesfrom:

Production $ 181 $ 863 $ 650 $ 1,559

Purchasedproduct(i) 118 199 297 402

Petroleumrevenue $ 299 $ 1,062 $ 947 $ 1,961

Royalties — (18) (6) (21)

Petroleumrevenue,netofroyalties $ 299 $ 1,044 $ 941 $ 1,940

Powerrevenue $ 6 $ 14 $ 26 $ 34

Transportationrevenue 2 3 5 6

Otherrevenue $ 8 $ 17 $ 31 $ 40

Totalrevenues $ 307 $ 1,061 $ 972 $ 1,980

(i) Theassociated third-partypurchasesare included in theconsolidatedstatementofearnings (loss)andcomprehensiveincome(loss)underthecaption“Purchasedproduct”.

a. Disaggregationofrevenuefromcontractswithcustomers

TheCorporationrecognizesrevenueupondeliveryofgoodsandservicesinthefollowinggeographicregions:

ThreemonthsendedJune30

2020 2019

PetroleumRevenue PetroleumRevenue

Proprietary Third-party Total Proprietary Third-party Total

Country:

Canada $ 84 $ 3 $ 87 $ 518 $ 25 $ 543

UnitedStates 97 115 212 345 174 519

$ 181 $ 118 $ 299 $ 863 $ 199 $ 1,062

SixmonthsendedJune30

2020 2019

PetroleumRevenue PetroleumRevenue

Proprietary Third-party Total Proprietary Third-party Total

Country:

Canada $ 392 $ 34 $ 426 $ 949 $ 170 $ 1,119

UnitedStates 258 263 521 610 232 842

$ 650 $ 297 $ 947 $ 1,559 $ 402 $ 1,961

Other revenue recognized during the three and sixmonths ended June 30, 2020 and 2019 is attributed toCanada.

12

b. Revenue-relatedassets

TheCorporationhasrecognizedthefollowingrevenue-relatedassetsintradereceivablesandother:


Petroleumrevenue $ 168 $ 122

Otherrevenue 1 4

Totalrevenue-relatedassets $ 169 $ 126

Revenue-relatedreceivablesaretypicallysettledwithin30days.AsatJune30,2020andDecember31,2019,therewasnomaterialexpectedcreditlossrequiredagainstrevenue-relatedreceivables.

13. DILUENTANDTRANSPORTATION


2020 2019 2020 2019

Diluentexpense $ 128 $ 325 $ 428 $ 622

Transportationandstorage 77 96 157 191

Diluentandtransportation $ 205 $ 421 $ 585 $ 813

14. FOREIGNEXCHANGE(GAIN)LOSS,NET


2020 2019 2020 2019

Unrealizedforeignexchange(gain)losson:

Long-termdebt $ (116)$ (74)$ 162 $ (154)

US$denominatedcashandcashequivalents 2 7 (9) 9

Unrealizednet(gain)lossonforeignexchange (114) (67) 153 (145)

Realized(gain)lossonforeignexchange (2) (2) 1 (3)

Foreignexchange(gain)loss,net $ (116)$ (69)$ 154 $ (148)

C$equivalentof1US$

Beginningofperiod 1.4120 1.3360 1.2965 1.3646

Endofperiod 1.3616 1.3091 1.3616 1.3091

15. NETFINANCEEXPENSE


2020 2019 2020 2019

Interestexpenseonlong-termdebt $ 60 $ 69 $ 124 $ 141

Interestexpenseonleaseliabilities 7 7 13 13

Interestincome — (2) (2) (3)

Netinterestexpense 67 74 135 151

Accretiononprovisions 2 1 4 4

Unrealizedlossonderivativefinancialliabilities — 1 — —

Netfinanceexpense $ 69 $ 76 $ 139 $ 155

13

16. OTHEREXPENSES


2020 2019 2020 2019

Contractcancellation(i) $ 20 — $ 26 —

Severanceandrestructuring 2 5 4 12

Researchanddevelopment — 2 — 4

Otherexpenses $ 22 $ 7 $ 30 $ 16(i) Costsincurredtomitigaterailsalescontractexposure.

17. SUPPLEMENTALCASHFLOWDISCLOSURES


2020 2019 2020 2019

Cashprovidedby(usedin):

Tradereceivablesandother $ (7)$ 49 $ 157 $ (184)

Inventories(a) (7) 8 27 (1)

Accountspayableandaccruedliabilities (21) (51) (156) (14)

Interestpayable 53 55 9 (3)

$ 18 $ 61 $ 37 $ (202)

Changesinnon-cashworkingcapitalrelatingto:

Operating $ 48 $ 75 $ 78 $ (145)

Investing (30) (14) (41) (57)

$ 18 $ 61 $ 37 $ (202)

Cashandcashequivalents:(b)

Cash $ 120 $ 138 $ 120 $ 138

Cashequivalents — 261 — 261

$ 120 $ 399 $ 120 $ 399

Cashinterestpaid — $ 5 $ 105 $ 122

a. Excludesanon-cash inventory impairmentof$29millionrecognizedasatMarch31,2020asaresultofthedifferencebetweencostandnetrealizablevalueresultingfromthesignificantdeclineincrudeoilpricesattheendofthefirstquarter.Asinventorysoldinthesubsequentmonth,theimpactwasrecognizedthroughfundsflowfromoperatingactivitiesformatchingpurposes.

b. AsatJune30,2020,$90millionoftheCorporation’stotalcashandcashequivalentsbalancewasheldinU.S.dollars(June30,2019–$328million).TheU.S.dollarcashandcashequivalentsbalancehasbeentranslatedintoCanadiandollarsattheperiodendexchangerateofUS$1=C$1.3616(June30,2019–US$1=C$1.3091).

14

Thefollowingtableprovidesareconciliationofassetsandliabilitiestocashflowsarisingfromfinancingactivities:

Financesubleasereceivables

Leaseliabilities

Long-termdebt

BalanceasatDecember31,2019 $ 18 $ 281 $ 3,123

Cashchanges:

Receiptsonleasedassets (1) — —

Paymentsonleasedliabilities — (13) —

Issueof7.125%seniorunsecurednotes — — 1,581

Repaymentandredemptionoflong-termdebt — — (1,723)

Debtredemptionpremiumandrefinancingcosts — — (49)

Non-cashchanges:

Leaseliabilitiessettled (8)

Leaseliabilitiesincurred — 13 —

Leaseliabilitiesmodified — 2 —

Interestexpenseonleaseliabilities — 13 —

Unrealized(gain)lossonforeignexchange — — 162

Amortizationofdeferreddebtdiscountanddebtissuecosts — — 2

BalanceasatJune30,2020 $ 17 $ 288 $ 3,096

(i)Financesubleasereceivables,Leaseliabilities&Long-termdebtallincludetheirrespectivecurrentportion.

18. NETLOSSPERCOMMONSHARE


2020 2019 2020 2019

Netloss $ (80)$ (64)$ (364)$ (111)Weightedaveragecommonsharesoutstanding

(millions)(a) 303 298 302 297Dilutiveeffectofstockoptions,RSUsandPSUs

(millions)(b) — — — —Weightedaveragecommonsharesoutstanding–

diluted(millions) 303 298 302 297

Netlosspershare,basic $ (0.26)$ (0.21)$ (1.21)$ (0.37)

Netlosspershare,diluted $ (0.26)$ (0.21)$ (1.21)$ (0.37)

a. Weightedaveragecommonsharesoutstanding for thethreemonthsendedJune30,2020 includes571,529PSUsvestedbutnotyetreleased(threemonthsendedJune30,2019-381,014PSUs).

b. ForthethreeandsixmonthsendedJune30,2020, theCorporation incurredanet lossandthereforetherewasnodilutiveeffectofstockoptions,RSUsandPSUs.IftheCorporationhadrecognizednetearningsforthethreeand sixmonthsended June30,2020, thedilutiveeffectof stockoptions,RSUsandPSUswouldhavebeen3.6millionweightedaveragecommonshares(threeandsixmonthsendedJune30,2019-2.8millionand3.1millionweightedaveragecommonshares,respectively).

19. FINANCIALINSTRUMENTSANDRISKMANAGEMENT

The financial instruments recognized on the consolidated balance sheet are comprised of cash and cashequivalents, trade receivables and other, risk management contracts, accounts payable and accrued liabilities,interestpayableandlong-termdebt.

15

a. Fairvalues:

The carrying values of cash and cash equivalents, trade receivables and other, riskmanagement contracts,accounts payable and accrued liabilities and interest payable included on the consolidated balance sheetapproximates the fair values of the respective assets and liabilities due to the short-term nature of thoseinstruments.

ThefollowingfairvaluesarebasedonLevel2inputstofairvaluemeasurement:

Asat June30,2020 December31,2019Carryingamount Fairvalue

Carryingamount Fairvalue

Recurringmeasurements:

Financialassets

Riskmanagementcontracts $ 114 $ 114 — —

Financialliabilities

Long-termdebt(Note8) $ 3,126 $ 2,716 $ 3,107 $ 3,160

Riskmanagementcontracts $ 10 $ 10 $ 77 $ 77

Theestimatedfairvalueoflong-termdebtisderivedusingquotedpricesinaninactivemarketfromathird-party independentbroker.ThefairvaluesweredeterminedbasedonestimatesasatJune30,2020andareexpectedtofluctuategiventhevolatilityinthedebtandcommoditypricemarkets.

The fair value of risk management contracts is derived using third-party valuation models which requireassumptions concerning the amount and timing of future cash flows and discount rates. Management'sassumptionsrelyonexternalobservablemarketdataincludingforwardpricesforcommodities,interestrateyieldcurvesandforeignexchangerates.Theobservableinputsmaybeadjustedusingcertainmethods,whichincludeextrapolationtotheendofthetermofthecontract.

b. Riskmanagement:

TheCorporation'sriskmanagementassetsandliabilitiesconsistofWTIandlight-heavydifferentialswaps,andifentered intooptions,pluscondensateswapsandequityswaps.Theuseof the financial riskmanagementcontracts isgovernedbyaRiskManagementCommittee that followsguidelinesand limitsapprovedby theBoardofDirectors.TheCorporationdoesnotusefinancialderivativesforspeculativepurposes.Financialriskmanagementcontractsaremeasuredatfairvalue,withgainsandlossesonre-measurementincludedintheconsolidatedstatementofearningsandcomprehensiveincomeintheperiodinwhichtheyarise.

TheCorporation’sfinancialriskmanagementcontractsaresubjecttomasteragreementsthatcreatealegallyenforceable right to offset, by counterparty, the related financial assets and financial liabilities on theCorporation’sbalancesheetinallcircumstances.

16

ThefollowingtableprovidesasummaryoftheCorporation’sunrealizedoffsettingfinancialriskmanagementpositions:


Asset Liability Net Asset Liability Net

Grossamount $ 157 $ (10)$ 147 $ — $ (77)$ (77)

Amountoffset (43) — (43) — — —

Netamount $ 114 $ (10)$ 104 $ — $ (77)$ (77)

Currentportion $ 90 $ (10)$ 80 $ — $ (77)$ (77)

Non-currentportion 24 — 24 — — —

Netamount $ 114 $ (10)$ 104 $ — $ (77)$ (77)

The following table provides a reconciliation of changes in the fair value of the Corporation’s financial riskmanagementassetsandliabilitiesfromJanuary1toJune30:

AsatJune30 2020 2019

Fairvalueofcontracts,beginningofyear $ (77)$ 93

Fairvalueofcontractsrealized 321 72

Changeinfairvalueofcontracts (140) (194)

Fairvalueofcontracts,endofperiod $ 104 $ (29)

c. Commodityriskmanagement:

TheCorporationhadthefollowingfinancialcommodityriskmanagementcontractsrelatingtocrudeoilsalesandcondensatepurchasesoutstandingasatJune30,2020:

AsatJune30,2020Volumes(bbls/d)(i) Term

AveragePrice(US$/bbl)(i)

CrudeOilSalesContracts

WTI(ii)FixedPrice 47,042 Jul1,2020-Dec31,2020 $47.70

WTI:WCS(iii)FixedDifferential 24,500 Jul1,2020-Dec31,2020 $(20.46)

WTI:WCS(USGC)FixedDifferential 1,000 Aug1,2020-Aug31,2020 $(3.95)

EnhancedFixedPricewithSoldPutOption

WTIFixedPrice/SoldPutOptionStrikePrice 20,685 Jul1,2020-Dec31,2020 $59.22/$52.00

CondensatePurchaseContracts

WTI:MontBelvieuFixedDifferential 7,250 Jul1,2020-Dec31,2020 $(7.63)

WTI:MontBelvieuFixedDifferential 10,950 Jan1,2021-Dec31,2021 $(10.37)

WTI:MontBelvieuFixedDifferential 200 Jan1,2022-Dec31,2022 $(11.30)

WTI:MontBelvieuFixed%ofWTI 7,750 Jul1,2020-Dec31,2020 93.1%

(i) Thevolumesandpricesintheabovetablerepresentaveragesforvariouscontractswithdifferingtermsandprices.The average price and percentages for the portfolio may not have the same payment profile as the individualcontractsandareprovidedforindicativepurposes.

(ii) WestTexasIntermediate(“WTI”)crudeoil(iii) WesternCanadianSelect(“WCS”)crudeoilblend

17

TheCorporationenteredintothefollowingfinancialcommodityriskmanagementcontractsrelatingtocrudeoilsalesandcondensatepurchasessubsequenttoJune30,2020.Asaresult,thesecontractsarenotreflectedintheCorporation’sConsolidatedFinancialStatements:

SubsequenttoJune30,2020Volumes(bbls/d)(i) Term

AveragePrices(US$/bbl)(i)

CrudeOilSales(Purchase)Contracts

WTIFixedPrice 25,250 Aug1,2020-Aug31,2020 $40.57

WTIFixedPrice 6,370 Oct1,2020-Dec31,2020 $41.45

(i) Thevolumesandpricesintheabovetablesrepresentaveragesforvariouscontractswithdifferingtermsandprices.The average price and percentages for the portfolio may not have the same payment profile as the individualcontractsandareprovidedforindicativepurposes.

Thefollowingtablesummarizesthefinancialcommodityriskmanagementgainsandlosses:


2020 2019 2020 2019

Realizedloss(gain)oncommodityriskmanagement $ (215)$ 51 $ (321)$ 72

Unrealizedloss(gain)oncommodityriskmanagement 267 (87) (161) 122

Commodityriskmanagement(gain)loss,net $ 52 $ (36)$ (482)$ 194

Thefollowingtablesummarizesthesensitivityoftheearnings(loss)beforeincometaximpactoffluctuatingcommoditypricesontheCorporation’sopenfinancialcommodityriskmanagementpositionsinplaceasatJune30,2020:

Commodity SensitivityRange Increase Decrease

Crudeoilcommodityprice ±US$5.00perbblappliedtoWTIcontracts $ (63)$ 60

Crudeoildifferentialprice(i) ±US$5.00perbblappliedtoWTI:WCSdifferentialcontracts $ 31 $ (31)

(i) AstheWCSdifferentialisexpressedasadiscounttoWTI,anincreaseinthedifferentialresultsinalowerWCSpriceandadecreaseinthedifferentialresultsinahigherWCSprice.

d. Equitypriceriskmanagement:

TheCorporationentersintofinancialequitypriceriskmanagementcontractstoincreasethepredictabilityoftheCorporation'scashflowbymanagingsharepricevolatility.EquitypriceriskistheriskthatchangesintheCorporation’s own share price impact earnings and cash flows. Earnings and funds flow from operatingactivitiesare impactedwhenoutstandingcash-settledRSUsandPSUs, issuedundertheCorporation'sstock-based compensation plans, are revalued each period based on the Corporation’s share price. Net cashprovided by (used in) operating activities is impacted when these stock-based compensation units areultimately settled.TheCorporationenters into theseequityprice riskmanagementcontracts tomanage itsexposureonapproximately9millioncash-settledRSUsandPSUsvestingbetween2021and2023.

e. Creditriskmanagement:

Credit riskarises fromthepotential thattheCorporationmay incura loss ifacounterparty fails tomeet itsobligationsinaccordancewithagreedterms.TheCorporationappliesthesimplifiedapproachtoprovidingforexpectedcreditlossesprescribedbyIFRS9,whichpermitstheuseofthelifetimeexpectedlossprovisionforall trade receivables. The Corporation uses a combination of historical and forward looking information todetermine the appropriate loss allowance provisions. Credit risk exposure is mitigated through the use ofcredit policies governing the Corporation’s credit portfolio andwith credit practices that limit transactions

18

according to each counterparty's credit quality. A substantial portion of accounts receivable are withinvestment grade customers in the energy industry and are subject to normal industry credit risk. TheCorporation has experienced no material loss in relation to trade receivables. As at June 30, 2020, theCorporation’sestimatedmaximumexposuretocreditriskrelatedtotradereceivables,depositsandadvanceswas $228 million. All amounts receivable from commodity risk management activities are due from largeCanadian banks with strong investment grade credit ratings. Counterparty default risk associatedwith theCorporation’scommodityriskmanagementactivitiesisalsopartiallymitigatedthroughcreditexposurelimits,frequentassessmentofcounterpartycredit ratingsandnettingarrangements,asoutlined innote24of theCorporation’s2019annualconsolidatedfinancialstatements.

TheCorporation’scashbalancesareusedtofundthedevelopmentofitsproperties.Asaresult,theprimaryobjectivesof the investmentportfolioare lowriskcapitalpreservationandhigh liquidity.Thecashbalancesareheldinhighinterestsavingsaccountsorareinvestedinhighgrade,liquid,short-terminstrumentssuchasbankers’acceptances, commercialpaper,moneymarketdepositsor similar instruments.Thecashandcashequivalentsbalanceat June30,2020was$120million.Noneof the investmentsarepast theirmaturityorconsidered impaired. TheCorporation’s estimatedmaximumexposure to credit risk related to its cash andcashequivalentsis$120million.

f. Liquidityriskmanagement:

Liquidity risk is the risk that theCorporationwill notbeable tomeet all of its financial obligations as theybecome due. Liquidity risk also includes the risk that the Corporation cannot generate sufficient cash flowfromtheChristinaLakeProjector isunabletoraisefurthercapital inordertomeet itsobligationsunder itsdebt agreements. The lenders are entitled to exercise any and all remedies available under the debtagreements. The Corporationmanages its liquidity risk through the activemanagement of cash, debt andrevolvingcreditfacilitiesandbymaintainingappropriateaccesstocredit.

Management believes its current capital resources and its ability tomanage cash flow andworking capitallevelswillallowtheCorporationtomeetitscurrentandfutureobligations,tomakescheduledprincipalandinterest payments, and to fund the other needs of the business for at least the next 12months.Meetingcurrent and future obligations through the uncertainty associated with COVID–19 is supported by theCorporation'sfinancialframeworkincludingastrongcommodityriskmanagementprogramsecuringcashflowthrough 2020 and credit risk management policies minimizing exposure related to customer receivablesprimarilytoinvestmentgradecustomersintheenergyindustry.However,noassurancecanbegiventhatthiswillbethecaseorthatfuturesourcesofcapitalwillnotbenecessary.

TheCorporation'searliestmaturing long-termdebt isapproximately fouryearsout, representedbyUS$600million of senior unsecured notes dueMarch 2024. None of the Corporation’s outstanding long-term debtcontainfinancialmaintenancecovenants.Additionally,theCorporation'smodifiedcovenant-lite$800millionrevolvingcreditfacilityhasnofinancialmaintenancecovenantunlessdrawninexcessof$400million.Ifdrawninexcessof$400million,theCorporationisrequiredtomaintainaquarterlyfirstliennetleverageratio(firstliennetdebttolasttwelve-monthEBITDA)of3.5orless.UndertheCorporation'screditfacility,firstliennetdebtiscalculatedasdebtunderthecreditfacilityplusotherdebtthatissecuredonaparipassubasiswiththecreditfacility,lesscashonhand.

20. CAPITALMANAGEMENT

TheCorporation'scapitalconsistsofcashandcashequivalents,debtandshareholders'equity.TheCorporation'sobjective formanaging capital is toprioritizebalance sheet strengthwhilemaintaining flexibility to repaydebt,fund sustaining capital, return capital to shareholders or fund future production growth. In the current priceenvironment,managementbelievesitscurrentcapitalresourcesanditsabilitytomanagecashflowandworkingcapitallevelswillallowtheCorporationtomeetitscurrentandfutureobligations,tomakescheduledprincipalandinterestpayments,andtofundtheotherneedsofthebusinessforatleastthenext12months.DebtrepaymentandsustainingcapitalexpenditureactivitiesareanticipatedtobefundedbytheCorporation'sadjustedfundsflow,cashonhandand/orotheravailableliquidity.

19

On January 31, 2020, the Corporation closed the refinancing and extension of thematurity profile of its debtportfolio. Followingcompletionoftheassociatedtransactions,MEG'sfirstdebtmaturitywasextendedto2024.AsatJune30,2020,theCorporationhad$785millionofunutilizedcapacityunderthe$800millionrevolvingcreditfacilityandhad$63millionofunutilizedcapacityunderthe$500millionletterofcreditfacility.Aletterofcreditof$15millionwasissuedunderitsrevolvingcreditfacilityduringthesixmonthsendedJune30,2020.

ThefollowingtablesummarizestheCorporation'snetdebt:

Asat Note June30,2020 December31,2019

Long-termdebt 8 $ 3,096 $ 3,123

Cashandcashequivalents (120) (206)

Netdebt $ 2,976 $ 2,917

Netdebtisanimportantmeasureusedbymanagementtoanalyzeleverageandliquidity.DuringthesixmonthsendedJune30,2020,netdebtincreasedby$59millionduetotheweakeningoftheCanadiandollarrelativetotheUSdollaranddecreaseincashandcashequivalentsovertheperiod,partiallyoffsetbytheredemptionofits6.5%seniorsecuredsecondliennotes.

On January 31, 2020 the Corporation successfully closed a private offering of $1.6 billion (US$1.2 billion) inaggregateprincipalamountof7.125%seniorunsecurednotesdueFebruary2027.OnFebruary18,2020,thenetproceedsoftheoffering,togetherwithcashonhand,wereusedto:

• Fully redeem $1 billion (US$800million) of the 6.375% senior unsecured notes due January 2023 at aredemptionpriceof101.063%;

• Partially redeem$530million (US$400million)of theUS$1.0billion7.00%seniorunsecurednotesdueMarch2024ataredemptionpriceof102.333%;and

• Payfeesandexpensesrelatedtotheoffering.

Concurrent with the private offering, on February 18, 2020, the Corporation redeemed $132 million (US$100million) in aggregate principal amount of its 6.5% senior secured second lien notes due January 2025 at aredemption price of 104.875%. Cash on hand was used to fund this senior secured second lien notes partialredemption.

ThefollowingtablesummarizestheCorporation'sfundsflowfrom(usedin)operationsandadjustedfundsflow:


Note 2020 2019 2020 2019

Netcashprovidedby(usedin)operatingactivities $ 117 $ 302 $ 216 $ 233

Netchangeinnon-cashoperatingworkingcapitalitems (48) (75) (78) 145

Fundsflowfrom(usedin)operations 69 227 138 378

Adjustments:

Contractcancellation(i) 16 20 — 26 —

Decommissioningexpenditures 9 — — 2 —

Adjustedfundsflow $ 89 $ 227 $ 166 $ 378

(i) Costs incurred to mitigate rail sales contract exposure. Contract cancellation costs or recoveries are excluded fromadjustedfundsflowastheyarenotconsideredpartofordinarycontinuingoperatingresults.

Management utilizes funds flow from (used in) operations and adjusted funds flow as a measure to analyzeoperatingperformanceandcashflowgeneratingability.Fundsflowfrom(usedin)operationsandadjustedfundsflow impacts the level and extent of debt repayment, funding for capital expenditures and returning capital toshareholders. By excluding changes in non-cash working capital, non-recurring items and decommissioning

20

expendituresfromcashflows,thefundsflowfrom(usedin)operationsandadjustedfundsflowmeasuresprovidemeaningfulmetrics formanagement by establishing a clear link between the Corporation's cash flows and theoperatingnetbacksfromtheChristinaLakeProject.Fundsflowfrom(usedin)operationsandadjustedfundsflowarenotintendedtorepresentnetcashprovidedby(usedin)operatingactivities.

Netdebt,fundsflowfrom(usedin)operationsandadjustedfundsflowarenotstandardizedmeasuresandmaynotbecomparablewiththecalculationofsimilarmeasuresbyothercompanies.

21. COMMITMENTSANDCONTINGENCIES

a. Commitments

The Corporation’s commitments are enforceable and legally binding obligations to make payments in thefutureforgoodsandservices.Theseitemsexcludeamountsrecordedontheconsolidatedbalancesheet.TheCorporationhadthefollowingcommitmentsasatJune30,2020:

2020 2021 2022 2023 2024 Thereafter Total

Transportationandstorage(i) $ 215 $ 436 $ 425 $ 467 $ 452 $ 6,046 $ 8,041

Diluentpurchases 70 22 22 18 — — 132

Otheroperatingcommitments 8 15 14 13 11 45 106

Variableofficeleasecosts 2 4 4 4 5 30 49

Capitalcommitments 1 — — — — — 1

Commitments $ 296 $ 477 $ 465 $ 502 $ 468 $ 6,121 $ 8,329

(i) Thisrepresentstransportationandstoragecommitmentsfrom2020to2048,includingtheAccessPipelineTSA,andpipelinecommitmentswhichareawaiting regulatoryapprovalandarenotyet in service.Excludes finance leasesrecognizedontheconsolidatedbalancesheet(Note9(a)).

b. Contingencies

The Corporation is involved in various legal claims associated with the normal course of operations. TheCorporationbelievesthatanyliabilitiesthatmayarisepertainingtosuchmatterswouldnothaveamaterialimpactonitsfinancialposition.

TheCorporation is thedefendanttoastatementofclaimoriginally filed in2014 inrelationto legacy issuesinvolving aunit train transloading facility inAlberta. The claimwas amended in the fourthquarterof 2017assertingasignificantincreasetodamagesclaimed.TheCorporationfiledastatementofdefenseinthefirstquarterof2018.TheCorporationcontinuestoviewthisclaimaswithoutmeritandwillcontinuetodefendagainst all such claims. The Corporation believes that any liabilities that might arise from this matter areunlikelytohaveamaterialeffectonitsfinancialposition.

21

consolidated balance sheet · cash and cash equivalents 17 $ 120 $ 206 trade receivables and other...

Documents