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Saturn Oil & Gas Inc. – Saskatchewan’s fast growing oil producer

Oil Rig Worker Welding a Pipeline

(Operations July 2018, source: www.saturnoil.com)

One of Canada’s fastest growing oil producers is Saskatoon-based Saturn Oil + Gas Inc. (TSX.V: SOIL). Since John Jeffrey (CEO) and Scott Newman (COO) took over the management of Saturn in early 2017, the company went through an exciting transition and in a recent interview the team explained their vision moving forward – link to video.

This management is focused on cash flow and profits since day one. They started with a vision and experiences from drilling more than 800 wells in western Canada and based on news release in June the company was the top purchaser of acreage in the Kindersley-Kerrobert area at the recent Crown land sale. The team is targeting the Success (heavy oil) and Viking (light oil) formations. Saturn acquired 9 lease parcels totaling 6.75 sections, which is bringing the total land position to 24.25 sections (19.25 net). A great start for a new player in that region of Saskatchewan.

(Saturn’s portfolio July 2018, source: www.saturnoil.com)

In December 2017 Saturn drilled their first two Viking horizontals in the Flaxcombe area. The IP30 numbers were already impressive and exceeded 130 barrels per day and IP60 exceeded 110 barrels per day of API 36 light oil. Three additional Viking horizontals were drilled in the following months and the production of Saturn reached more than 1.0M CAD in revenues in the first quarter 2018 and net profits of more than 260,000 CAD.

The land acquisitions seem to be a strategic step and the foundation for a diversified de-risked portfolio of reserves and production in the neighborhood of well-known oil producers as Novus, Whitecap and Painted Pony. Saturn is not only surrounded 360° by production, also by potential buyers. It is simply the nature of the industry that the major producers have to replace their decline rate not only through organic growth; also acquisitions with upside potential are on their agenda.

The financial backing of Saturn is in good hands. The company recently announced the closing of a 4.04M CAD financing. This equity financing puts more strength in the balance sheet. The current drill program of five wells is exciting for the company. Saturn is drilling four horizontals and owns a 50% working interest in another well. We expect first initial production rates already in August. “The drilling of these wells went smooth and the program had zero accidents or incidents. We are looking forward to a busy fall and continuing to develop our Viking and Success assets,” stated Justin Kaufmann, P.Geo VP of Exploration at Saturn in the latest news release.

The team is building the foundation for growth. “Our team has been preparing for this program for several months. We have designed these wells to prove production at each of our major fields and lead way to a large development program for Q4/2018 and Q1/2019. These wells will be the foundation for Saturn to exit 2018 with a production rate in excess of 1,000 barrels of oil per day,” stated Scott Newman, Chief Operating Officer at Saturn Oil & Gas Inc. in a news release.

Based on Saturn’s corporate presentation the current net back is at 48.50 CAD per barrel, which has a positive impact on the payback of each well. The stock is currently trading around 0.23 CAD with a market capitalization of above 40M CAD. Make sure to keep an eye on SOIL.

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