Waterous Energy Fund Announces Cancellation of Strathcona Resources Ltd. Subscription Receipts
Waterous Energy Fund Management Corp. (the “WEF Manager”), acting as manager for a suite of Waterous Energy Funds, including Waterous Energy Fund III (Canadian) LP, Waterous Energy Fund III (US) LP, Waterous Energy Fund III (International) LP, Waterous Energy Fund III (Canadian FI) LP, and Waterous Energy Fund III (International FI) LP (collectively, the “WEF Receiptholders”), as well as other affiliated partnerships such as Waterous Energy Fund (Canadian) LP, Waterous Energy Fund (US) LP, Waterous Energy Fund (International) LP, and Waterous Energy Fund II Aggregator LP (together with the WEF Receiptholders and related entities, the “WEF Funds”), announced today that the 21,400,000 subscription receipts of Strathcona Resources Ltd. (TSX: SCR) (“Strathcona” or the “Issuer”) were cancelled on October 10, 2025 (the “Cancellation”).
The Cancellation followed the occurrence of a Termination Event as defined under the subscription receipt agreement dated June 27, 2025 (the “Subscription Receipt Agreement”) between Strathcona, the WEF Receiptholders, and Odyssey Trust Company, acting as subscription receipt agent. Under the terms of the Subscription Receipt Agreement, the WEF Receiptholders are entitled to receive, no later than three business days following the Termination Event, an aggregate payment comprising several components.
First, the WEF Receiptholders will receive $661,688,000, representing the original purchase price of the Subscription Receipts. Second, they are entitled to $12,840,000, representing cash dividends paid on the Issuer’s common shares (“Common Shares”) between May 29, 2025, and the date of the Termination Event. Finally, the WEF Receiptholders will also receive any interest or other income earned on the purchase price of the Subscription Receipts while held in escrow by the subscription receipt agent.
Prior to the Cancellation, the WEF Funds collectively held 170,536,718 Common Shares, accounting for approximately 79.6% of the issued and outstanding Common Shares of Strathcona, in addition to the 21,400,000 Subscription Receipts, representing all outstanding Subscription Receipts. Following the Cancellation, the WEF Funds continue to hold the same 170,536,718 Common Shares, maintaining their 79.6% ownership, while the Subscription Receipts have been eliminated, leaving none outstanding.
The Subscription Receipts had been purchased and maintained by the WEF Receiptholders primarily for investment purposes and in connection with Strathcona’s proposed acquisition of all issued and outstanding shares of MEG Energy Corp. (TSX: MEG) not already owned by Strathcona or its affiliates, via a formal take-over bid. The Cancellation transpired strictly in accordance with the terms and conditions outlined in the Subscription Receipt Agreement.
The WEF Manager emphasized that the Common Shares held by the WEF Funds remain as long-term investments. These holdings allow the WEF Funds to continue their strategic participation in Strathcona’s equity, supporting the Manager’s investment objectives across its portfolio of energy-focused funds. The Cancellation of the Subscription Receipts does not affect the WEF Funds’ existing equity ownership in Strathcona, which remains significant.
By facilitating the orderly cancellation of the Subscription Receipts, the WEF Manager ensured that the rights of the WEF Receiptholders were fully protected, including the return of the original investment, accrued dividends, and interest income earned while the subscription receipts were held in escrow. This process reflects the WEF Manager’s disciplined approach to managing investment risk while upholding contractual obligations and protecting investor value.
The WEF Manager continues to monitor and manage its portfolio holdings in Strathcona Resources Ltd., alongside its broader portfolio of energy investments. By maintaining a substantial equity position in Strathcona, the WEF Funds are well-positioned to benefit from the company’s operational and strategic initiatives, including potential growth from acquisitions and other value-generating activities within the energy sector.
In summary, the October 10, 2025, Cancellation of 21,400,000 Subscription Receipts by Strathcona Resources Ltd. was conducted pursuant to the Subscription Receipt Agreement following a Termination Event. The WEF Receiptholders will receive the aggregate purchase price, accrued dividends, and any income earned while held in escrow, while the WEF Funds continue to hold their substantial Common Share position in Strathcona. The WEF Manager reaffirmed its commitment to prudent fund management and maximizing investor value across its portfolio.
