Saturn Oil & Gas Inc T.SOIL

My take...

[kavern23]

Well it almost has to be Crescent Point's assets based on the size of production...don't think others like Ridgeback or Vermillion are that big in that part of Sask.

I think it is a win win for both Crescent Point and Saturn.

It is a very bad sign for the Western Canadian Sector. Don't let Eric Nuttall fool you.

The reason these assets sold so cheap is Saturn wouldnt have had that much competition in the bidding process as the likely public potential companies to also be interest in these assets like Cardinal Energy, or IPCO or Whitecap...they all have lots of existing decommisiioning liablities and propably don't want to increase them at this point as it is used in lending ratios.  Canadian banks are afraid of decomissioning liabilities right now.

These are actually great assets FOR a company like Saturn...a company that doesnt have much.
If Saturn had 50 million or more in already existing decomissiong liabilties that probably could not do this deal.

Only a company that is new with little was likely in the bidding pool.

Gear energy for example couldnt really handle another 200M plus in decomissioning liabilities.

Notice they don't mention the amount of decomissiong liabilities in the press release?

I guess over 125M in decomissioning liablities...on the low side...could be over 200M.  The low cash price makes me think 150M at least.  I am so sure that I will shave my head if the reclmation liabiltities are under 100M.  These is the only real negative thing with the property.

If it is CPG, they can improve their balancesheet by more then 93M as they can also take some decomissioning liabilties off.  

Saturn should look to implement a divy at some point as these assets are perfect for that. Steady 5-10 barrels a day wells for  years and years. Lots of water old wells for water disposal and injection so operating costs really arent that bad...and at 55 plus oil...not a worry.

Such a riskless deal for them..they have hedged alot of cashflow.

I really commend Saturns management for having the gonads to do this deal. Like the first new company created inawhile.  Only been contractions of companies.

It's still a bad sign for the sector that a Canadian Bank wouldnt tackle this.

But it is a likely win win deal for whoever sold the assets and for Saturn.  The assets likely were not looked after the best as non core to whoever owned them so probably a ton of room for improvement with some more close attention.

[Maistre]

Yikes, that's quite a gamble on the oil price staying high.  This package has been on the market for years.  As you noted, liabilities are much higher than value here, but the real problem is that there is no drillable upside here and why it went unsold for so long.

[oiltycoon11]

How can you say, "no drillable upside"? In the press release they said they have 244 booked locations and 200 unbooked locations. Those booked locations would be numbers given to them from the reserve reports of the previous company. With 444 locations identified, I think that will keep them busy for awhile!

[oiltycoon11]

I've been sitting on the sidelines reading these posts for the last few days, but nobody has a clue what they are talking about. This was the first post that actually made sense and had actual thought put into it. The assets are probably Crescent's Point SE Sask assets based on the fact that CPG has been marketting them and the production profile fits exatly what they were looking to sell

[halkirkbob]

Is that you John pumping your own wheels? Based on the news releases or lack there of over the course of the last year, who in there right mind wouldn't think they are dead in the water.

[Theconsortman]

What doesn't make sense to me its that whoever sold this probably did this so they could reduce their debt. Saturn buys it with debt and claims it will pay back all debt in 2-3 years. If this is true and the property is this lucrative why did Company A simply not do the same? Surerly their lender couldn't have been that impatient..If they were then good for Saturn.

[halkirkbob]

That many drill locations and the other company moved on? Must not be that lucrative. Hope it works out, but seems pretty high risk. If the stars align.

[Theconsortman]

If oil stays high then the patch will ride again!

[Backinblack1000]

This post has been removed in accordance with Community Policy

[Theconsortman]

No idea why they didn't unhalt it after the announcement..

[KevinKT]

Today CPG finally announced that they have sold the property. You are correct to say that a month ago.

[Theconsortman]

Did anyone read the CPG release? I know they were the seller but yikes... CALGARY, AB – Crescent Point Energy Corp. (“Crescent Point” or the “Company”) (TSX: CPG) and (NYSE: CPG) has completed the disposition of its remaining non-core southeast Saskatchewan conventional assets (“Assets”), which were previously identified as disposition candidates, for cash proceeds

[KM24207]

Yeah consortman, that's one nasty aro estimate - when you add in the aro to the purchase price, they paid close to $50k/boe - I wish them well but how does a company with such a small market cap handle nearly a quarter billion dollar aro?!?

[Theconsortman]

How did the Sask government allow it?

[peterj99]

It will be interesting to see what you say if they make more deals LOL. Did you buy shares in Saturn oil and gas yet?

[peterj99]

How much net back on about 7000 BOE per day give, especially with the rising price of oil?

[Theconsortman]

Well according to the company which just sold it, not very much. The bill to clean up and reclaim this ( ARO) is lots. This deal may work if oil price continues to march higher and stays there. That being said they did the deal with debt so if things go sideways the shareholder is in line behind: The government (ARO) The debt holders (secured) Shareholder.

[peterj99]

Hey  Maybe you will be right tbis time. Even a broken clock is right, twice a day LOL