Saturn Oil & Gas (SOIL) is pleased to report its second quarter financial and operating results.
John Jeffrey, Chief Executive of Saturn, commented,
"We are proud to a report a historic quarter in the development of the company. The acquisition of the Oxbow Asset provides a substantial platform for Saturn's future growth by contributing numerous new drilling opportunities and production optimization projects, as well as a stable long-term cash flow stream to fund these initiatives."
Q2 2021 highlights:
- Closed acquisition of assets in the Oxbow area of Southeast Saskatchewan for cash consideration of $76.8 million
- Completed $119.2 million of debt and equity financing, including a $87.0 million senior secured term loan, an upsized and oversubscribed brokered private placement and a non-brokered private placement raising total gross proceeds of $32.2 million
- Generated second quarter petroleum and natural gas sales of $12.6 million and Adjusted Funds Flow) of $2.9 million
- Achieved strong operating netbacks for the three and six months ended June 30, 2021 of $29.58 per boe and $30.87 per boe; and
- Exited the second quarter with net debt of $74.5 million.
Saturn has made a transformational acquisition by adding the Oxbow Asset to our existing Saskatchewan operations. The company now has a long-term steady cash flow source that we are re-deploying to increase shareholder value. We are immediately focused on the repayment of debt and concurrently directing a portion of free cash flow to fund our deep inventory of production growth projects.
"Maintaining a strong balance sheet is a priority for Saturn," commented Scott Sanborn, Chief Financial Officer. "The accelerated repayment of debt increases the Company's financial capacity for future acquisitions."
The company has re-established its drilling program that was suspended with the onset of the COVID-19 pandemic in 2020 and expects to be actively drilling going forward, starting in Q3 2021.
Saturn now has two growth vehicles, the Viking Asset and the Oxbow Asset that collectively hold over 550 identified drilling locations representing over two decades of inventory.
The second-quarter financial statements incorporate the 23-days of operations from the Oxbow Asset from the June 7, 2021 closing date to the quarter-end date of June 30, 2021. The average daily revenue for this 23-day period was approximately $520,000 and has generated an average daily free cash flow of approximately $265,000 using second-quarter operating netbacks, net of hedging adjustments.
The company's average daily production for July 2021 was 6,700 boe/d, based on field estimates. Saturn anticipates new production from the drilling and workover programs, planned for the second half of 2021, which will offset the natural declines incurred to date for the company's pro forma base production. Management forecasts the exit rate production for year-end 2021 to be approximately 7,000 boe/d.
On June 7, Saturn closed on the acquisition of the Oxbow Asset for total cash considerations of $76.8 million, after closing adjustments. The Oxbow Asset is performing in line with our expectations with natural declines of approximately 1 per cent per month.
In July 2021, Saturn participated in the drilling of two non-operated wells in Queensdale, Southeast Saskatchewan, which was brought onto production in August of 2021. Saturn anticipates completing an operated drilling program at Oxbow in Q4 2021.
The company commissioned a NI 51-101 third-party evaluation of the Oxbow Asset, which was completed by Ryder Scott Canada in August 2021, effective date April 1, 2021. The new report confirms management's internal evaluation, certifying 43 million barrels of proved plus probable reserves and 260 booked drilling locations.
Saturn Oil & Gas Inc. is a growing Canadian energy company focused on the development of high-quality, light oil-weighted assets.
Saturn Oil & Gas Inc. (SOIL) opened trading at C$0.15 per share.