National Bank Financial analyst Dan Payne initiated coverage on Saturn Oil & Gas Inc. with a “sector perform” rating and C$4 price target. His price target is below the Street average of C$5.61.
The company has gone from a junior producer to a mid-cap player in the conventional oil industry after several transactions starting in 2022. It’s now a diversified entity, with production of 39,000 barrels of oil equivalent a day across multiple assets spanning Alberta and Saskatchewan.
“Assessing management’s strategy in association with its asset complexion, we believe SOIL holds multiple investment themes that should validate shareholder value & returns, with 40% prospective upside through outperformance, to support an expansion of its free cash flow yield to 50-55%, and should directly accrete to shareholder value through the implied de-leveraging and/or multiple expansion,” the National Bank analyst said.
“In our view, a new management team in the sector will utilize an overlooked asset complex to execute a differentiated approach to harvest inventory in support of an optimized financial outcome for maximum free cash generation and an optimal risk-adjusted shareholder value proposition,” he said.