SOIL Saturn Oil and Gas Inc

Saturn Oil & Gas Inc. (“Saturn” or the “Company”) (TSX.V: SOIL) (FSE: SMK) today announced its financial and operating results for the three month period ended March 31, 2019. 

The Company’s unaudited interim financial statements and corresponding Management’s Discussion and Analysis (“MD&A”) for the three month period ended March 31, 2019, are available on SEDAR at www.sedar.com and on Saturn’s website at www.saturnoil.com.  Copies of the materials can also be obtained upon request without charge by contacting the Company directly.  Please note, currency figures presented herein are reflected in Canadian dollars, unless otherwise noted.

Q1 2019 Highlights

• Achieved record production of 806 barrels of oil per day (bbls/d), an increase of 318% compared to the same period in 2018, and an increase of 53% over the previous quarter, with a peak production rate in the period that exceeded 1,400 bbls/d.
• Realized strong operating netbacks of $49.25 per bbl, a 232% improvement over the $14.82 per bbl in Q4 2018 due to higher realized prices, and an increase of 16% over the first quarter of 2018 primarily attributable to lower royalties per boe stemming from increased drilling on Crown land where royalties are significantly lower relative to freehold land.
• Revenue of $4.6 million was 319% higher, or $3.5 million greater than the first quarter of 2018, directly related to Saturn’s successful drilling program and production growth over the past 12 months.
• Drilled, completed and tied-in nine 100% working interest extended reach horizontal (“ERH”) wells in the first quarter at an average cost per well of approximately $1.09 million, executed despite extreme cold weather in the period which delayed some activity.  The program included:
  • Five wells in Prairiedale which posted an area average initial production rate after 30 days (“IP30”) of 91 bbls/d, with an IP30 of 132 bbls/d for the top-producing area well;
  • Two wells in Milton had an average IP30 of 62 bbls/d, and an IP30 of 74 bbls/d for the area’s top-producing well; and
  • Two wells in Kerrobert posted an area average initial production rate after 60 days (“IP60”) of 144 bbls/d, with the top producing well in the area posting an IP30 of 153 bbls/d.
• Saturn also further strengthened the Company’s asset portfolio with the acquisition of 9.13 sections of land at an average cost of approximately $202 per hectare, situated within the prolific and highly economic Viking play in Saskatchewan, bringing Saturn’s total acreage to 50.75 gross sections as at March 31, 2019.
• Capital expenditures in Q1 of $9.85 million were lower than originally budgeted and were funded from the Company’s USD$20 million revolving note facility, coupled with cash flow generated during the period.  Capital expenditures for the balance of 2019 will be reviewed and determined quarterly depending on oil and differential prices, availability of funding sources and the broader operating environment.
• At March 31, 2019, Saturn had US$17.27 million of borrowings (CAD$23.09 million using March 31, 2019 exchange rate) drawn against the Company’s US$20.0 million Revolving Note (CAD$26.74 million using December 31, 2018 exchange rate).
• Relocated the Company’s corporate headquarters to Calgary, Alberta, designed to support Saturn’s ongoing growth, enhance market visibility and build further relationships with energy-focused capital markets participants.

Results of Oil and Gas Activities

	Three months ended March 31,
($, except per unit amounts)	2019		2018
Financial
Oil revenue	4,579,854		1,094,577
Net income	1,638,776		260,111
Per share – basic & diluted	0.01		(0.00	)
Production Volumes
Crude oil (bbls/d)	806		193
Natural gas (Mcf/d)	-		-
Natural gas liquids (bbls/d)	-		-
Total (bbls/d)	806		193
% liquids	100	%	100	%
Average Realized Prices
Crude Oil ($/bbl)	63.11		63.13
Natural gas ($/Mcf)	-		-
Natural gas liquids ($/bbl)	-		-
Total ($/boe)	63.11		63.13
Operating Netback ($/boe)
Realized price	63.11		63.13
Royalties	2.43		9.11
Operating costs	11.43		11.40
Operating netbacks	49.25		42.62
Realized loss on derivative instruments	(0.41	)	-
Operating netback, after realized loss on derivative instruments	48.84		42.62

“Due to the exceptional operational execution of our team, including through the extremely cold weather experienced in the first quarter, Saturn delivered record production volumes,” stated John Jeffrey, CEO of Saturn.  “As a result of our continued success, we are well positioned to execute our aggressive growth strategy through 2019 with a focus on enhancing production, reserves and cash flow per share, and ultimately to provide compelling returns for shareholders.”

Outlook

Building on the performance momentum achieved in the first quarter, the Company is well positioned to drive further success in 2019. Over the past few years, the Company has assembled a high-quality asset base comprised of light oil properties with proven production in west-central Saskatchewan, and successfully leveraged its extensive operational experience while aggressively managing costs.  This combination has allowed Saturn to continue to generate attractive netbacks while advancing our capital activities in a prudent manner. 

Saturn intends to remain focused on generating value for shareholders through the successful execution of its full year 2019 capital budget, estimated at approximately $41.5 million which will be directed to drilling, completion, equip and tie-in of an estimated 36 wells within the Viking light oil area, targeting an exit rate of approximately 2,000 bbls/d.  With increases in reserves, production and cash flow, the Company anticipates benefitting from greater financial flexibility and access to capital to underpin future growth strategies.

About Saturn Oil & Gas Inc.

Saturn Oil & Gas Inc. (TSX.V: SOIL) (FSE: SMK) is a public energy Company focused on the acquisition and development of undervalued, low-risk assets.  Saturn is driven to build a strong portfolio of cash flowing assets with strategic land positions.  De-risked assets and calculated execution will allow Saturn to achieve growth in reserves and production through retained earnings. Saturn's portfolio will become its key to growth and provide long-term stability to shareholders.

Investor & Media Contact:

Saturn Oil & GasJohn Jeffrey, MBA - Chief Executive Officer & Chairman Tel: +1 (306) 955-9946 www.saturnoil.com

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Information Regarding Disclosure on Oil and Gas Operational Information and Non-IFRS MeasuresThis news release contains metrics commonly used in the oil and natural gas industry, such as “cash flow” and "operating netbacks".  These terms are not defined in IFRS and do not have standardized meanings or standardized methods of calculation and therefore may not be comparable to similar measures presented by other companies, and therefore should not be used to make such comparisons.  Such metrics have been included herein to provide readers with additional information to evaluate the Company’s performance, however such metrics should not be unduly relied upon. Management uses oil and gas metrics for its own performance measurements and to provide shareholders with measures to compare Saturn’s operations over time.  Readers are cautioned that the information provided by these metrics, or that can be derived from the metrics presented in this press release, should not be relied upon for investment or other purposes.

Forward-Looking Information and StatementsCertain statements contained in this release include statements which contain words such as "anticipate", "could", "should", "expect", "seek", "may", "intend", "likely", "will", "believe" and similar expressions, relating to matters that are not historical facts, and such statements of our beliefs, intentions and expectations about development, results and events which will or may occur in the future, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and are based on certain assumptions and analysis made by us derived from our experience and perceptions. Forward-looking information in this release includes, but is not limited to: expected cash flow provided by continuing operations; future capital expenditures, including the amount and nature thereof; oil and natural gas prices and demand; expansion and other development trends of the oil and gas industry; business strategy and outlook; expansion and growth of our business and operations; and maintenance of existing customer, supplier and partner relationships; supply channels; accounting policies; credit risks; and other such matters.

All such forward-looking information is based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. The risks, uncertainties, and assumptions are difficult to predict and may affect operations, and may include, without limitation: foreign exchange fluctuations; equipment and labour shortages and inflationary costs; general economic conditions; industry conditions; changes in applicable environmental, taxation and other laws and regulations as well as how such laws and regulations are interpreted and enforced; the ability of oil and natural gas companies to raise capital; the effect of weather conditions on operations and facilities; the existence of operating risks; volatility of oil and natural gas prices; oil and gas product supply and demand; risks inherent in the ability to generate sufficient cash flow from operations to meet current and future obligations; increased competition; stock market volatility; opportunities available to or pursued by us; and other factors, many of which are beyond our control.

Actual results, performance or achievements could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do, what benefits will be derived there from. Except as required by law, Saturn disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

The forward-looking information contained herein is expressly qualified by this cautionary statement.