Calgary, Alberta – Saturn Oil & Gas Inc. (TSXV: SOIL) (FSE: SMKA) (“Saturn” or the “Company”) is pleased to announce the results of the independent reserves evaluation of the Company’s crude oil and natural gas assets, dated March 23, 2022 and effective December 31, 2021, in compliance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and in accordance with the Canadian Oil and Gas Evaluation Handbook (the “Reserve Report”).
Reserves Evaluation Highlights
The Reserve Report, prepared by Ryder Scott Company-Canada (“Ryder Scott”), evaluated the Company’s assets in Southeast Saskatchewan (the “Oxbow Asset”) and in West Central Saskatchewan (the “Viking Asset”) and is highlighted by:
- 50.7 million BOE of Total Proved + Probable (“TP+P”) reserves, representing a 668% year over year increase
- 351 booked drilling locations, 85% located in the Oxbow Asset
- High oil weighting, reserves comprise 96% light & medium oil and natural gas liquids (“NGL”)
- Long reserve life index (“RLI”) of 8.7 years Proved Developed Producing (“PDP”) and 19.2 years TP+P1
- Net asset value per fully diluted share:
- Proved Developed Producing of $4.49
- Total Proved of $6.76
- Total Proved + Probable of $10.79
Summary of Gross Oil and Gas Reserves and Net Present Value of Revenue
The following tables are a summary of the Company’s estimated corporate reserves (Company share gross volumes) and net present values (“NPV”) of future net revenue, before tax, based on forecast price and costs as contained in the Reserve Report2. The Reserve report encompasses 100% of the Company’s oil and gas properties at December 31, 2021 and was prepared in accordance with NI 51-101 by Ryder Scott:
|Reserves Category||Light and Medium Oil||Natural Gas Liquids||Conventional Natural Gas||Barrels of Oil Equivalent||Liquids Ratio|
|Total Proved + Probable||46,374||2,067||13,330||50,663||96|
|NPVs before tax||Discounted at:|
|Total Proved + Probable||909.0||819.8||648.4||521.3||431.1|
- Proved Developed Producing (“PDP”) and Total Proved and Probable (“TP+P”) RLIs based on year end 2021 reserves and Q4 2021 average production of 7,245 boe/d.
- Total values may not add due to rounding.
Net Asset Value
The following table sets out a calculation of NAV based on the estimated before-tax estimated net present value of future net revenue discounted at 10% (“NPV10 BT”) associated with the PDP, TP and TP+P reserves, as evaluated in the Reserve Report, including deductions for future development costs, abandonment and reclamation obligations:
|Proved Developed Producing||Total Proved||Total Proved
|NPV10 BT (MM$)||276.1||410.5||648.4|
|Estimated net debt December 31, 2021 (MM$)1||71.1||71.1||71.1|
|Net Asset Value (MM$)||205.0||339.4||577.3|
|Basic shares outstanding (MM)2||25.2||25.2||25.2|
|Estimated NAV/ basic share ($)2||8.14||13.47||22.91|
|Estimated NAV/ fully diluted share ($)2||4.49||6.76||10.79|
See – “Non-GAAP measures Net Debt“.
Includes basic common shares of 25.2 million and fully diluted common shares of 59.1 million, as at December 31, 2021 and net debt adjusted for $60.0 million of common share purchase warrant and option exercise proceeds that would be in-the-money at the corresponding NAV per share value. The estimated NPV does not represent fair market value of the reserves.
Reconciliation of Reserves
The following table provides a summary of the reconciliation of the changes in the Company’s gross reserves as at December 31, 2021 against reserves at December 31, 2020, based on forecast prices and costs assumptions in effect at the applicable reserve evaluation date:
|Light and Medium Oil||Natural Gas Liquids||Natural Gas||Total BOE|
|Total Proved||T. Proved||Total Proved||T. Proved||Total Proved||T. Proved||Total Proved||T. Proved|
|+ Probable||+ Probable||+ Probable||+ Probable|
|December 31, 2020||3,345||6,601||–||–||–||–||3,345||6,601|
|December 31, 2021||30,949||46,374||1,357||2,067||8,864||13,330||33,783||50,663|
|Year over year change||825%||603%||n/a||n/a||n/a||n/a||910%||668%|
|FD&A Cost per BOE, Excluding FDC1||$||3.15||$||2.14|
|FD&A Cost per BOE, Including FDC1||$||9.69||$||9.28|
- See “non-GAAP measures FD&A Cost”.
Future Development Costs
The following table provides a summary of the estimated Future Development Costs (“FDC”) required to bring Saturn’s Total Proved and Total Proved + Probable undeveloped reserves to production, as reflected in the Reserve Report, which costs have been deducted in Ryder Scott’s estimation of future net revenue associated with such reserves:
|Future Development Costs (MM$)||Proved||+ Probable|
|Total FDC undiscounted||188.8||303.4|
The following table summarizes the commodity price forecasts and foreign exchange rate assumptions of three consultant’s average forecasts1 as of January 1, 2022 as applied in the Reserve Report, for the next five years.
|Year||Exchange Rate||WTI @ Cushing||Canadian Light Sweet 40º API||Saskatchewan Avg. Natural Gas||Edmonton Butane|
- Average forecasts of GLJ Ltd., McDaniel & Associates Consultants Ltd. and Sproule Associates Ltd. and includes 2.3% inflation in Year 2023 and 2% per annum thereafter.
Total Location Summary
The following table summarizes the drilling locations identified for future development in the Reserve Report:
Year End 2021
Year End 2020
Year End Disclosures
The 2021 financial information in this news release is unaudited and accordingly, such financial information is subject to change based on the results of the Company’s year-end audit, schedule to be released on April 28, 2022.
Additional reserve information as required under NI 51-101 will be included in the Company’s annual information form which will be filed on SEDAR on or before May 2, 2022.
About Saturn Oil & Gas Inc.
Saturn Oil & Gas Inc. is a growing Canadian energy company focused on generating positive shareholder returns through the continued responsible development of high-quality, light oil weighted assets, supported by an acquisition strategy that targets highly accretive, complementary opportunities. Saturn has assembled an attractive portfolio of free-cash flowing, low-decline operated assets in Southeastern Saskatchewan and West Central Saskatchewan that provide a deep inventory of long-term economic drilling opportunities across multiple zones. With an unwavering commitment to building an ESG-focused culture, Saturn’s goal is to increase reserves, production and cash flows at an attractive return on invested capital. Saturn’s shares are listed for trading on the TSXV under ticker ‘SOIL’ and on the Frankfurt Stock Exchange under symbol ‘SMKA’.