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Saturn Oil & Gas Inc T.SOIL

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

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.


TSX:SOIL - Post by User

Post by Puma1backon Jun 02, 2022 7:54am
491 Views
Post# 34725746

Release comments

Release comments

The new assets are in the Viking play of west-central Saskatchewan. They will add 4,000 barrels a day and cost Saturn $260-million, which the company will cover with the proceeds of a $65-million bought deal and a $200-million term loan. It took a similar approach when it arranged its first major acquisition last year. That was when it bought Crescent Point Energy Corp.'s (CPG: $11.35) 6,700-barrel-a-day Oxbow assets for $93-million -- prices have rocketed since then -- which it came up with by issuing $32.2-million in equity and taking out $82-million in debt. (The original equity amount was much lower, but Saturn increased it because of extra demand.) Saturn then announced another acquisition and equity financing in February, 2022. The one announced today is its most expensive yet.

Shareholders were unenthused. The new $65-million bought deal -- assuming it is not increased -- will see Saturn issue 23.6 million units at $2.75, a significant discount to recent trading levels above $3. It will also be significantly dilutive. Saturn currently has just 32 million shares outstanding, with this trimness being entirely thanks to a 1-for-20 rollback last October, before which its share count exceeded 500 million. Investors do not like to see a share count climbing too quickly. Some will also have their eye on Saturn's balance sheet, which is moving further away from management's earlier goal of being debt free in early 2023. It now says perhaps late 2024 instead.

The important thing, emphasized management, is that the "transformational" deal will help Saturn achieve "greater institutional appeal, improved liquidity and the potential for inclusion in key indexes." It outlined a roughly three-year plan whereby it will aim to generate over $500-million in free cash flow while boosting total production to around 15,000 barrels a day. No doubt these will be useful talking points for the underwriters of the $65-million bought deal, co-led by Canaccord Genuity and Eight Capital. It would be equally unsurprising if analysts from those firms suddenly felt an urge to launch some boosterish coverage.

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