- Production of 41,680 boe/d represents a new quarterly record for the Company
- Adjusted funds flow(1) totaled $131.1 million ($0.66/share) with free funds flow(1) of $57.8 million ($0.29/share)
- Net debt(1) reduced by $46.3 million, or 5%, over year-end 2024
- US$15 million open market Senior Notes repurchase below par in April 2025 further improves leverage metrics
Calgary, Alberta--(Newsfile Corp. - May 7, 2025) - Saturn Oil & Gas Inc. (TSX: SOIL) (OTCQX: OILSF) ("Saturn" or the "Company"), a light oil-weighted producer focused on unlocking value through the development of assets in Saskatchewan and Alberta, is pleased to report our operating and financial results for the three months ended March 31, 2025, featuring another period of record quarterly production and Adjusted funds flow ("AFF")(1). Saturn's financial statements ("Financial Statements"), as well as Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2025, are available on our website and filed on SEDAR+ at sedarplus.ca. A conference call and webcast to discuss the Q1/25 results has been scheduled for Thursday, May 8, 2025 at 8:00 am Mountain Time (10:00 am Eastern Time). Access details for the conference call and webcast are provided below.
"Saturn's Blueprint strategy and ability to extract incremental value from our asset base was demonstrated in Q1/25. New wells outperformed type curve by 20% on average, quarterly production volumes came in above both the upper end of guidance and our earlier records, and operational efficiencies were reflected in net operating expenses per boe that were below the low end of our guidance," said John Jeffrey, Chief Executive Officer. "This performance drove record AFF and contributed to strong free funds flow that enabled Saturn to supplement our share buybacks with the repurchase of US$15 million face value of Senior Notes below par subsequent to quarter end. We are well positioned to execute on our strategy while remaining defensive through continued market uncertainty and volatility."
Q1 2025 HIGHLIGHTS
Production of 41,680 boe/d exceeded peak guidance by 3%, reflecting a successful development program with new wells outperforming type curve(3) estimates by an average of 20%.
Adjusted EBITDA(1) totaled $153.2 million in the quarter.
AFF(1) totaled $131.1 million ($0.66/share basic), up 3% over Q4/24 on a per share basis.
Free funds flow(1) of $57.8 million ($0.29/share basic) contributed cash to the balance sheet and further bolstered Saturn's financial flexibility.
Liquidity totaled approximately $230 million at March 31, 2025, inclusive of $79.5 million in cash and an undrawn $150.0 million credit facility, positioning Saturn with resilience to navigate ongoing market challenges.
Capital expenditures(1)(4) totaled $73.3 million with four rigs running in Saskatchewan and one in Alberta, resulting in 33 gross (24.4 net) wells drilled, completed, equipped and tied-in, including 26 gross (22.3 net) wells in Southeast Saskatchewan, six gross (1.1 net) wells in West Saskatchewan and one gross (1.0 net) well in Alberta, all of which were brought on-production during the quarter, contributing to strong volumes.
Senior Notes repayment of US$16.3 million reduced principal outstanding to US$601.3 million, contributing to a reduction in net debt(1) to $813.9 million at March 31, 2025, a $46.3 million decrease from year-end 2024.
Leverage metrics declined to 1.3x net debt to annualized Adjusted EBITDA(1) and 1.6x net debt to annualized AFF(1).
Returned $5.8 million to shareholders during the quarter through the repurchase of 2.8 million common shares ("Common Shares") at a weighted average price of $2.08 per Common Share under our normal course issuer bid ("NCIB").
EVENTS SUBSEQUENT TO QUARTER END
Opportunistically repurchased for retirement US$15 million face value of our Senior Notes (approximately C$21 million) in April 2025 at a discount to par, reducing the current balance to US$586 million, down from US$650 million at June 30, 2024.
Retiring debt at a discount to par value allows Saturn to cost-effectively reduce total liabilities, while also lowering future interest obligations, enhancing financial flexibility.
Any open market purchases are over and above the quarterly 2.5% committed principal repayment, and will reduce the balance outstanding upon maturity.
High-graded our hedge book subsequent to quarter-end, eliminating two punitive WTI swaps in H2/26 and Q1/27, and adding new NGL propane swaps over the next twelve months, along with further WTI-MSW differential hedges through Q3/25.
Return of capital to shareholders has totaled $17.7 million since the launch of our NCIB in August, 2024 to May 7, 2025, through the repurchase of 8.4 million Common Shares in the open market, representing a shareholder return of approximately $0.09 per weighted average Common Share in Q1/25.
OUTLOOK
Through the majority of the second quarter, Western Canada experiences spring break-up conditions due to softened ground conditions caused by melting snow, which impedes the mobilization of rigs and heavy equipment. As a result, the Company's capital budget in Q2/25 is low, and affords Saturn time to continue monitoring market conditions and commodity prices. With our back-end weighted development program, and the nature of our asset base, the Company has the flexibility to defer decisions on capital allocation for the balance of 2025 and plans to re-evaluate in July. At this time, our existing production and capital guidance remains unchanged, but if required, Saturn could rapidly adjust capital without negative financial or contractual impacts.
For the second quarter of 2025, the Company's capital expenditures(1)(4) are expected to range between $15 and $20 million, pending future weather conditions. The impact of our well outperformance to date is expected to drive average Q2/25 production between 39,000 to 40,000 boe/d(2). As a result, Saturn anticipates our free funds flow generation will be the strongest during the second quarter, positioning the Company with enhanced resilience.
FINANCIAL AND OPERATING HIGHLIGHTS
| Three Months Ended | |||||||||
| ($000s, except per share amounts) | March 31, 2025 | December 31, 2024 | March 31, 2024 | ||||||
| FINANCIAL HIGHLIGHTS | |||||||||
| Petroleum and natural gas sales | 278,081 | 268,845 | 168,219 | ||||||
| Cash flow from operating activities | 165,372 | 91,157 | 70,222 | ||||||
| Operating netback, net of derivatives(1) | 157,567 | 152,616 | 91,711 | ||||||
| Adjusted EBITDA(1) | 153,185 | 152,823 | 88,153 | ||||||
| Adjusted funds flow(1) | 131,121 | 129,205 | 68,178 | ||||||
| per share - Basic | 0.66 | 0.64 | 0.46 | ||||||
| - Diluted | 0.65 | 0.63 | 0.45 | ||||||
| Free funds flow(1) | 57,826 | 23,785 | 34,212 | ||||||
| per share - Basic | 0.29 | 0.12 | 0.23 | ||||||
| - Diluted | 0.29 | 0.12 | 0.23 | ||||||
| Net income (loss) | 37,819 | (26,318 | ) | (62,982 | ) | ||||
| per share - Basic | 0.19 | (0.13 | ) | (0.42 | ) | ||||
| - Diluted | 0.19 | (0.13 | ) | (0.42 | ) | ||||
| Acquisitions, net of cash acquired | - | 26,011 | - | ||||||
| Proceeds from dispositions | - | 576 | - | ||||||
| Capital expenditures(1)(4) | 73,295 | 105,420 | 33,966 | ||||||
| Total assets | 2,188,307 | 2,161,578 | 1,326,721 | ||||||
| Net debt(1), end of period | 813,893 | 860,155 | 386,417 | ||||||
| Shareholders' equity | 837,958 | 803,972 | 595,736 | ||||||
| Common Shares outstanding, end of period | 196,212 | 199,555 | 161,206 | ||||||
| Weighted average, basic | 198,113 | 201,484 | 148,558 | ||||||
| Weighted average, diluted | 202,727 | 206,205 | 151,457 | ||||||
| OPERATING HIGHLIGHTS | |||||||||
| Average production volumes(2) | |||||||||
| Light and medium crude oil (bbls/d) | 27,697 | 27,330 | 18,981 | ||||||
| Heavy crude oil (bbls/d) | 3,445 | 3,119 | - | ||||||
| NGLs (bbls/d) | 3,318 | 3,381 | 2,344 | ||||||
| Natural gas (mcf/d) | 43,319 | 43,328 | 30,416 | ||||||
| Total boe/d | 41,680 | 41,051 | 26,394 | ||||||
| % Oil and NGLs | 83% | 82% | 81% | ||||||
| Average realized prices | |||||||||
| Crude oil ($/bbl) | 90.48 | 89.13 | 88.64 | ||||||
| NGLs ($/bbl) | 52.95 | 46.74 | 44.24 | ||||||
| Natural gas ($/mcf) | 2.48 | 1.41 | 2.44 | ||||||
| Processing expenses ($/boe) | (0.26 | ) | (0.27 | ) | (0.45 | ) | |||
| Petroleum and natural gas sales ($/boe) | 74.13 | 71.18 | 70.03 | ||||||
| Operating netback ($/boe) | |||||||||
| Petroleum and natural gas sales | 74.13 | 71.18 | 70.03 | ||||||
| Royalties | (9.04 | ) | (8.71 | ) | (8.82 | ) | |||
| Net operating expenses(1) | (19.58 | ) | (18.35 | ) | (19.80 | ) | |||
| Transportation expenses | (1.56 | ) | (1.07 | ) | (1.31 | ) | |||
| Operating netback(1) | 43.95 | 43.05 | 40.10 | ||||||
| Realized loss on derivatives | (1.96 | ) | (2.64 | ) | (1.92 | ) | |||
| Operating netback, net of derivatives(1) | 41.99 | 40.41 | 38.18 | ||||||
CONFERENCE CALL AND WEBCAST
The Company plans to host a conference call on Thursday, May 8, 2025, at 8:00 am Mountain Time (10:00 am Eastern Time), which will include a discussion with Saturn's leadership team, who will provide an overview of our Q1 2025 results, followed by a question-and-answer session with attendees.
- Date: Thursday, May 8, 2025
- Time: 8:00 am MT (10:00 am ET)
- Live Webcast Link: https://www.gowebcasting.com/14024
- North America (Toll Free) Dial In: 1-833-752-3741
- International Dial In: 1-647-846-8678
An audio replay of the webcast will be available one hour after the end of the call at the link above and will remain accessible for 12 months. The replay link will also be posted on Saturn's website.
NOTES
(1) See reader advisory: Non-GAAP and Other Financial Measures.
(2) See reader advisory: Supplemental Information Regarding Product Types.
(3) See reader advisory: 'Type Curve'.
(4) Includes capitalized G&A.
ABOUT SATURN
Saturn is a returns-driven Canadian energy company focused on the efficient and innovative development of high-quality, light oil weighted assets, supported by an acquisition strategy targeting accretive and complementary opportunities. The Company's portfolio of free-cash flowing, low-decline operated assets in Saskatchewan and Alberta provide a deep inventory of long-term economic drilling opportunities across multiple zones. With an unwavering commitment to building an entrepreneurial and ESG-focused culture, Saturn's goal is to increase per share reserves, production and cash flow at an attractive return on invested capital. The Company's Common Shares are listed for trading on the TSX under ticker 'SOIL' and on the OTCQX under the ticker 'OILSF'. Further information and our corporate presentation are available on Saturn's website at www.saturnoil.com.
INVESTOR & MEDIA CONTACTS
John Jeffrey, MBA - Chief Executive Officer
Tel: +1 (587) 392-7900
www.saturnoil.com
Cindy Gray, MBA - VP Investor Relations
Tel: +1 (587) 392-7900
info@saturnoil.com
READER ADVISORIES
Non-GAAP and Other Financial Measures
Throughout this news release and in other materials disclosed by the Company, Saturn employs certain measures to analyze financial performance, financial position and cash flow. These non-GAAP and other financial measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other entities. The non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS, such as net income (loss), cash flow from operating activities, and cash flow used in investing activities, as indicators of Saturn's performance.
The disclosure under the section "Non-GAAP and Other Financial Measures" in our MD&A, including non-GAAP financial measures and ratios, capital management measures and supplementary financial measures in the Company's Financial Statements and MD&A are incorporated by reference into this news release.
This news release may use the terms "Adjusted EBITDA", "Adjusted Funds Flow", "Net Debt", "Free Funds Flow", "Net Debt to Annualized Adjusted EBITDA" and "Net Debt to Annualized AFF" which are capital management financial measures. See the disclosure under "Capital Management" in our Financial Statements for the three months ended March 31, 2025, for an explanation and composition of these measures, how these measures provide useful information to an investor, the additional purposes, if any, for which management uses these measures, and, where applicable, a reconciliation of the Company's historical non-GAAP financial measures to the most directly comparable measure calculated in accordance with GAAP for the applicable period then ended.
Capital Expenditures
Saturn uses capital expenditures to monitor its capital investments relative to those budgeted by the Company on an annual basis. Saturn's capital budget excludes acquisition and disposition ("A&D") activities as well as the accounting impact of any accrual changes or payments under certain lease arrangements. The most directly comparable GAAP measure for capital expenditures is cash flow used in investing activities. The following table reconciles capital expenditures and capital expenditures, net A&D to the nearest GAAP measure, cash flow used in investing activities.
| Three months ended | |||||||||
| ($000s) | March 31, 2025 | December 31, 2024 | March 31, 2024 | ||||||
| Cash flow used in investing activities | 99,520 | 114,533 | 49,692 | ||||||
| Change in non-cash working capital | (26,225 | ) | 17,474 | (15,726 | ) | ||||
| Capital expenditures(1)(4), net A&D | 73,295 | 132,007 | 33,966 | ||||||
| Acquisitions, net of cash acquired | - | (26,011 | ) | - | |||||
| Proceeds from disposition | - | (576 | ) | - | |||||
| Capital expenditures(1)(4) | 73,295 | 105,420 | 33,966 | ||||||
Free Funds Flow
Saturn uses free funds flow as an indicator of the efficiency and liquidity of Saturn's business, measuring its funds after capital investment available to manage debt levels, pursue acquisitions and gauge optionality to pay dividends and/or and return capital to shareholders through activities such as share repurchases. Saturn calculates free funds flow as adjusted funds flow in the period less capital expenditures. By removing the impact of current period capital expenditures from adjusted funds flow, management monitors its free funds flow to inform its capital allocation decisions. The following table reconciles adjusted funds flow to free funds flow.
| Three months ended | |||||||||
| ($000s) | March 31, 2025 | December 31, 2024 | March 31, 2024 | ||||||
| Adjusted funds flow | 131,121 | 129,205 | 68,178 | ||||||
| Capital expenditures(1)(4) | (73,295 | ) | (105,420 | ) | (33,966 | ) | |||
| Free funds flow | 57,826 | 23,785 | 34,212 | ||||||
Gross Petroleum and Natural Gas Sales
Gross petroleum and natural gas sales is calculated by adding oil, natural gas and NGLs revenue, before deducting certain gas processing expenses in arriving at petroleum and natural gas revenue as required under IFRS-15. These processing expenses associated with the processing of natural gas and NGLs revenue are a result of the Company transferring custody of the product at the terminal inlet and, therefore, receiving net prices. This metric is used by management to quantify and analyze the realized price received before required processing deductions, against benchmark prices. The calculation of the Company's gross petroleum and natural gas sales is shown within the petroleum and natural gas sales section of the MD&A.
Net Operating Expenses
Net operating expense is calculated by deducting processing income primarily generated by processing third party production at processing facilities where the Company has an ownership interest, from operating expenses presented on the statement of income (loss). Where the Company has excess capacity at one of its facilities, it may process third-party volumes to reduce the cost of ownership in the facility. The Company's primary business activities are not that of a midstream entity whose activities are focused on earning processing and other infrastructure-based revenues, and as such third-party processing revenue is netted against operating expenses in the MD&A. This metric is used by management to evaluate the Company's net operating expenses on a unit of production basis. Net operating expense per boe is a non-GAAP financial ratio and is calculated as net operating expense divided by total barrels of oil equivalent produced over a specific period of time. The calculation of the Company's net operating expenses is shown within the net operating expenses section of the MD&A.
Operating Netback and Operating Netback, Net of Derivatives
The Company's operating netback is determined by deducting royalties, net operating expenses and transportation expenses from petroleum and natural gas sales. The Company's operating netback, net of derivatives, is calculated by adding or deducting realized financial derivative commodity contract gains or losses from the operating netback. The Company's operating netback and operating netback, net of derivatives are used in operational and capital allocation decisions. Presenting operating netback and operating netback, net of derivatives on a per boe basis is a non-GAAP financial ratio and allows management to better analyze performance against prior periods on a per unit of production basis. The calculation of the Company's operating netbacks and operating netback, net of derivatives are summarized as follows.
| Three months ended | |||||||||
| ($000s) | March 31, 2025 | December 31, 2024 | March 31, 2024 | ||||||
| Petroleum and natural gas sales | 278,081 | 268,845 | 168,219 | ||||||
| Royalties | (33,893 | ) | (32,881 | ) | (21,189 | ) | |||
| Net operating expenses | (73,441 | ) | (69,307 | ) | (47,563 | ) | |||
| Transportation expenses | (5,845 | ) | (4,056 | ) | (3,155 | ) | |||
| Operating netback | 164,902 | 162,601 | 96,312 | ||||||
| Realized loss on financial derivatives | (7,335 | ) | (9,985 | ) | (4,601 | ) | |||
| Operating netback, net of derivatives | 157,567 | 152,616 | 91,711 | ||||||
| ($ per boe amounts) | |||||||||
| Petroleum and natural gas sales | 74.13 | 71.18 | 70.03 | ||||||
| Royalties | (9.04 | ) | (8.71 | ) | (8.82 | ) | |||
| Net operating expenses | (19.58 | ) | (18.35 | ) | (19.80 | ) | |||
| Transportation expenses | (1.56 | ) | (1.07 | ) | (1.31 | ) | |||
| Operating netback | 43.95 | 43.05 | 40.10 | ||||||
| Realized loss on financial derivatives | (1.96 | ) | (2.64 | ) | (1.92 | ) | |||
| Operating netback, net of derivatives | 41.99 | 40.41 | 38.18 | ||||||
Capital Management Measures
National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure ("NI 52-110") defines a capital management measure as a financial measure that: (i) is intended to enable an individual to evaluate an entity's objectives, policies and processes for managing the entity's capital; (ii) is not a component of a line item disclosed in the primary financial statements of the entity; (iii) is disclosed in the notes to the financial statements of the entity; and (iv) is not disclosed in the primary financial statements of the entity. Please refer to note 12 "Capital Management" in Saturn's Financial Statements for additional disclosure on: adjusted working capital, net debt, adjusted EBITDA, adjusted funds flow, free funds flow, annualized quarterly adjusted funds flow and net debt to annualized quarterly adjusted funds flow each of which are capital management measures used by the Company in this news release.
Supplementary Financial Measures
NI 52-112 defines a supplementary financial measure as a financial measure that: (i) is, or is intended to be, disclosed on a periodic basis to depict the historical or expected future financial performance, financial position or cash flow of an entity; (ii) is not disclosed in the financial statements of the entity; (iii) is not a non-GAAP financial measure; and (iv) is not a non-GAAP ratio. The supplementary financial measures used in this news release are either a per unit disclosure of a corresponding GAAP measure, or a component of a corresponding GAAP measure, presented in the financial statements. Supplementary financial measures that are disclosed on a per unit basis are calculated by dividing the aggregate GAAP measure (or component thereof) by the applicable unit for the period. Supplementary financial measures that are disclosed on a component basis of a corresponding GAAP measure are a granular representation of a financial statement line item and are determined in accordance with GAAP.
Supplemental Information Regarding Product Types
References to gas or natural gas and NGLs in this press release refer to conventional natural gas and natural gas liquids product types, respectively, as defined in National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities, except where specifically noted otherwise.
- Q2 2025 average production, at the midpoint of the guidance range, is anticipated to be comprised of approximately 83% crude oil and NGLs and 17% natural gas.
Boe Presentation
Boe means barrel 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 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.
Type Curve
Certain type curve disclosure presented herein represents estimates of the production decline and ultimate volumes expected to be recovered over time. "Results Projected" are based on a forward estimate of ultimate volumes to be recovered over time based on the initial 30 days average production data. "Guidance Well Type Curves" are the forecasted well performance used in setting the Company's guidance for expected results of the drilling program. Projected Results and Type Curves are useful in confirming and assessing the potential for the presence of hydrocarbons; however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter, are not necessarily indicative of long-term performance or of long-term economics of the relevant well or fields, including future wells to be drilled, or of ultimate recovery of hydrocarbons.
Forward-Looking Information and Statements.
Certain information included in this press release constitutes forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project", "scheduled", "will" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this press release may include, but is not limited to, the Company's drilling and development plans, expectations regarding break-up conditions and record funds flow in Q2, expectations concerning the Q2 capital program, expectations regarding netbacks, hedging strategy, the business plan, cost model and strategy of the Company and expectations regarding anticipated pricing trends, growth opportunities and market conditions.
The forward-looking statements contained in this press release are based on certain key expectations and assumptions made by Saturn, including expectations and assumptions concerning: the timing of and success of future drilling, commodity prices, development and completion activities, the performance of existing wells, the performance of new wells, the availability and performance of facilities and pipelines, the ability to allocate capital to pay down debt and grow or maintain production, the impact of our hedging strategy, the geological characteristics of Saturn's properties, the application of regulatory and licensing requirements, the availability of capital, labour and services, the creditworthiness of industry partners and the ability to integrate acquisitions.
Although Saturn believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Saturn can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), constraints in the availability of services, commodity price and exchange rate fluctuations, actions of OPEC and OPEC+ members, changes in legislation impacting the oil and gas industry, adverse weather or break-up conditions and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. These and other risks are set out in more detail in Saturn's Annual Information Form for the year ended December 31, 2024, available on SEDAR+ at sedarplus.ca.
Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be incorrect. Although Saturn believes that the expectations reflected in its forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because Saturn can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this press release, assumptions have been made regarding and are implicit in, among other things, our capital expenditure and drilling programs, drilling inventory and booked locations, production and revenue guidance, ESG initiatives, debt repayment plans and future growth plans. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used.
The forward-looking information in this news release reflects the Company's current expectations, assumptions and/or beliefs based on information currently available to the Company. The forward-looking information contained in this press release is made as of the date hereof and Saturn undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. The forward-looking information contained in this press release is expressly qualified by this cautionary statement.
All dollar figures included herein are presented in Canadian dollars, unless otherwise noted.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/251195
SOURCE: Saturn Oil & Gas Inc.
