Saturn Oil & Gas Inc T.SOIL

Alternate Symbol(s): OILSF | T.SOIL.WT.A

Energy Oil & Gas E&P

Saturn Oil & Gas Inc. is a Canada-based resource company. The Company is engaged in the business of acquisition, exploration and development of petroleum and natural gas resource deposits in Western Canada. It focuses on advancing the exploration and development of its oil and gas properties in Alberta and Saskatchewan. It also focuses on the development of light oil weighted assets in Saskatchewan. Its portfolio includes Southeast Saskatchewan, West Central Saskatchewan, Central Alberta, and North Albert. The core producing properties in Southeast Saskatchewan include its Oxbow assets, which are concentrated within the Mississippian-aged, Midale and Frobisher oil formations and the Bakken assets concentrated in the Bakken formation of Southeast Saskatchewan. The core producing properties in West Central Saskatchewan consist of its Viking assets. The core producing properties in Central Alberta consist of its Cardium assets.

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Saturn Oil & Gas Inc > Decline

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Comment by DreamNEONon Dec 21, 2021 4:51am

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Post# 34249380

RE:RE:RE:Decline

Every business man should be careful in order to keep his business alive. The hedging makes sense.
I saw an interesting analysis:

Record quarter production 6,970 boe/d

Record quarter Free Cash Flow $9.5M CAD

Record production. The company has produced 6,970 boe/d during Q3-2021. This represents an increase of 270% over their Q2 results and 1297% over Q3 2020.

Record Free Cash Flow. The company Q3 EBITDA resulted in $17.2M CAD. The company posted a $9.5M CAD positive free cash flow, after capital expenditures, compared to $0.3M CAD in Q3 2020.

Balance sheet discipline. Its lean structure and conservative capital expenditure of $4.5M CAD allows the company to exit Q3 2021 with over $14M CAD cash on hand.

Mature assets. The maturity of the Oxbow asset and low decline rate of 12% gives Saturn Oil & Gas flexibility for future development. There are currently 370 drilling location with certified reserves. Additionally, there is the opportunity for low capex and rapid increase in oil production as brought about by 400 reactivations of non-producing wells.
Hard counter to oil price volatility. The strong hedge against WTI spot price secures debt repayment at the cost of capping a potential increase in revenues. However, it creates revenue stability, easier long-term projections and secures internal funding of growth projects.
Future profitability. Saturn Oil & Gas has incurred $66.8M CAD in 2021 in unrealized non-cash losses on future oil hedging positions. Therefore, in future periods Saturn Oil & Gas is expected to report higher earnings based on increased future production levels (88% of the $66.8M CAD is for 2022- to-2025 derivative contracts)

Market and financier support. The company has completed a share consolidation. With 25.1M shares out and the support of their financier, the company could be looking for more unique acquisition opportunities.
Asset fully integrated. The Q3 results indicate to the markets that the integration of the asset is now complete.

Brighter future. The company is poised and ready for their next development stage. Acquisition or organic growth. The oil price will most definitely guide the next phase for Saturn Oil & Gas.

Based on our DCF model we have raised our price target to 12.17 CAD per share and maintain our BUY rating.