The Company’s unaudited interim financial statements and corresponding Management’s Discussion and Analysis (“MD&A”) for the three and six month period ended June 30, 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.
Q2 and First Half 2019 Highlights
- Achieved record production of 857 barrels of oil per day (bbls/d), an increase of 426% compared to the same period in 2018, and average volumes of 834 bbls/d over the first half of 2019, a level 369% higher than in the first six months of 2018.
- Generated revenue of $5.5 million in Q2 2019, $4.4 million or 417% higher than the same period in 2018, while first half 2019 revenue of $10.0 million was $7.9 million, or 367%, higher than first half 2018, directly related to Saturn’s successful drilling program, production growth and cost control over the past 12 months.
- Realized strong operating netbacks1 (before realized loss on derivative instruments) in Q2 2019 and first half 2019 of $55.48 per bbl and $52.36 per bbl, respectively, improvements of 11% and 14% over the same periods in 2018, due to lower royalties and operating costs per boe.
- Recorded net income of $1.2 million ($0.01 per share basic and diluted) for Q2 2019 which was more than 1500% higher than Q2 2018, and for the first six months of 2019 totaled $2.8 million ($0.01 per share basic and diluted), growth of 744% compared to the first half of 2018.
- Adjusted EBITDAX1 (before pro-forma adjustments) totaled $3.9 million in Q2 2019, an increase of $3.53 million over Q2 2018, and for first half 2019 was $7.0 million, over $6.1 million higher than first half 2018, with the increases in both periods attributable to Saturn’s successful drilling program and increased operating netbacks.
- Through the first half of 2019, drilled, completed and tied-in nine 100% working interest extended reach horizontal (“ERH”) wells at an average cost per well of approximately $1.09 million, which included the following:° Five wells in Prairiedale which posted an area average initial production rate after 30 days (“IP30”) of 91 bbls/d2, with an IP30 of 132 bbls/d2 for the top-producing area well;° Two wells in Milton had an average IP30 of 62 bbls/d2, and an IP30 of 74 bbls/d2 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/d2, with the top producing well in the area posting an IP30 of 153 bbls/d2.
- Bolstered the asset portfolio in Q2 2019 with the acquisition of 6.75 sections of land within the highly economic Viking play in Saskatchewan at an average cost of approximately $121 per hectare, bringing Saturn’s total acreage to 55.5 gross sections as at June 30, 2019. Subsequent to quarter-end, acquired an additional 1,506 hectares of land for $408,741, bringing Saturn’s total holdings to 59.5 sections.
- At June 30, 2019, Saturn had US$18.17 million of borrowings (CAD$23.78 million using June 30, 2019 exchange rate) drawn against the Company’s US$20.0 million Revolving Note (CAD$26.17 million using the period-end exchange rate).
|Results of Oil and Gas Activities
|Three months ended June 30,
||Six months ended June 30,
|($, except per unit amounts)||2019||2018||2019||2018|
|Per share – basic & diluted||0.01||(0.00||)||0.01||(0.00||)|
|Crude oil (bbls/d)||857||163||834||178|
|Natural gas (Mcf/d)||–||–|
|Natural gas liquids (bbls/d)||–||–|
|Average Realized Prices|
|Crude Oil ($/bbl)||70.05||71.15||66.53||66.83|
|Natural gas ($/Mcf)||–||–|
|Natural gas liquids ($/bbl)||–||–|
|Operating Netback ($/bbl)|
|Realized loss on derivative instruments||(2.59||)||–||(1.53||)||–|
|Operating netbacks, after realized loss on derivative instruments1||52.89||49.86||50.83||46.10|
|1 Non-IFRS Measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Refer to the section entitled “Information Regarding Disclosure on Oil and Gas Operational Information and Non-IFRS Measures”.|
“Saturn’s record production volumes and robust financial results to date in 2019 have demonstrated the high-quality nature of our light oil-weighted Viking asset base, combined with strong operational performance,” stated John Jeffrey, CEO of Saturn. “Building on the momentum achieved over the first two quarters of this year, we have commenced our second half 2019 drilling program while continuing to accumulate prospective land in our portfolio with the ultimate goal of delivering meaningful shareholder returns despite a very challenging market environment.”
As previously announced, Saturn’s second half 2019 drilling program commenced in early August with the drilling of five (5.0 net) ERH wells largely focused in the Company’s core Prairiedale area. All of these wells are expected to be completed and equipped by early September and on-line and producing by the end of September, positively contributing to Saturn’s fourth quarter volumes. The Company intends to remain focused on generating value for shareholders through the successful execution of its strategy. In response to continued oil price volatility, market uncertainty and a goal of maintaining financial flexibility, the Company intends to defer a portion of its previously planned 2019 capital budget until prices and market conditions stabilize. As a result, Saturn expects its full year 2019 capital program to be approximately $21.9 million, which will result in a total of 27 wells being drilled, completed, equipped and tied-in within its Viking light oil area, with a target 2019 exit rate of approximately 950 bbls/d, representing 67% growth over its 2018 exit rate. Capital expenditures for the balance of 2019 will be reviewed and determined on a regular basis depending on oil and differential prices, availability of funding sources and the broader operating environment. 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.