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Saturn Oil & Gas Inc. Announces Q1 2020 Results


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Source: Saturn Oil + Gas Inc

CALGARY, Alberta, June 04, 2020 (GLOBE NEWSWIRE) — 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, 2020.

The Company’s unaudited interim financial statements and corresponding Management’s Discussion and Analysis (“MD&A”) for the three month period ended March 31, 2020 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.

First Quarter Highlights

  • Saturn’s strategy continues to be focused on the acquisition and development of high-quality Viking light oil assets.
  • Production averaged 706 bbls/day, despite not bringing any new wells on-line given the current world economic conditions resulting from the impact of COVID-19.
  • Adjusted EBITDAX (before pro-forma adjustments) was $2.05 million, a $0.78 million decrease from the same period in 2019 (see “Non-IFRS Measures”), primarily due to the decrease in production and realized price per barrel (see “Non-IFRS Measures”).
  • Net income for the period ending March was $657,851, compared to $1.64 million in the same period of 2019.  The decrease of $0.98 million was primarily a result of lower production from not bringing on any new wells in the period.
  • Realized gain on derivative instruments was $288,015 for the period ending March 31, 2020, a $317,453 increase from the same period in 2019.
  • Unrealized gain on derivative instruments was $3.28 million for the period ending March 31, 2020.
  • Saturn’s operating netback (see “Non-IFRS Measures”) before realized loss on derivatives was $37.00/bbl, a decrease of $12.25/bbl from the same period in 2019.  The year-over-year decrease was primarily due to a decline of $13.87/bbl in the realized price, offset by a reduction in operating costs of $1.06/bbl.
  • At March 31, 2020, Saturn had US$19.99 million of borrowings (CAD$28.36 million converted at an exchange rate of $1.00 USD to $1.4187 CAD on March 31, 2020) drawn against its US$20.00 million Revolving Note (CAD$28.37 million using the period-end exchange rate).
Three months ended
March 31,
 ($, except per unit amounts) 2020 2019
Financial    
Oil revenue 3,165,453 4,579,854
  Net income 657,851 1,638,776
    Per share – basic & diluted 0.00 0.01
Sales Volumes  
Crude oil (bbls/d) 706 806
Natural gas (Mcf/d)
Natural gas liquids (bbls/d)
Total (bbls/d) 706 806
% liquids 100 % 100%
  Three months ended
March 31,
  2020 2019
Average Realized Prices  
Crude Oil ($/bbl) 49.24 63.11
Natural gas ($/Mcf)
Natural gas liquids ($/bbl)
Total ($/bbl) 49.24 63.11
Operating Netback1 ($/bbl)  
Realized price 49.24 63.11
Royalties 1.86 2.43
Operating costs 10.37 11.43
Operating netback1 37.00 49.25
Realized gain (loss) on derivative instruments 4.48 (0.41)
Operating netback, after realized gain (loss) on derivative instruments 41.48 48.84

Outlook

In March 2020, the COVID-19 pandemic coupled with the price war between Saudi Arabia and Russia resulted in significant downfall in global oil prices. Saturn is cautious with its capital spending in light of uncertainties around worldwide energy consumption and supplies and the duration of this turmoil. The Company plans to suspend its capital program to preserve future development economics until oil prices recover and stabilize. Over 60% of Saturn’s 2020 forecast base oil production (net of royalties) is hedged, which is expected to help the Company endure the current economic situation. In addition, Saturn is continually reviewing its 2020 budget, including exploring all avenues to reduce debt, G&A and operating expenses, along with the implementation of a 20% reduction on all management salaries.

(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.”
(2) Information Regarding Disclosure on Oil and Gas Operational Information and Non-IFRS Measures

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 & Gas
John Jeffrey, MBA – Chief Executive Officer & Chairman
Tel: +1 (587) 392-7902
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 Measures

This news release contains metrics commonly used in the oil and natural gas industry, such as “operating netbacks” and “Adjusted EBITDAX” 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.

Operating Netback: equals petroleum sales (before realized hedging gains or losses on derivative instruments) less royalties and operating costs calculated on a boe basis.

Adjusted EBITDAX: equals Consolidated Net Income adding back items deducted in determining Consolidated Net Income, including financing charges, exploration expenses, income taxes, depreciation, depletion, amortization and other non-cash items, losses attributable to extraordinary and non-recurring losses for such period minus all non-cash items of income which were included in determining such Consolidated Net Income and earnings attributable to extraordinary and non-recurring gains for such period. Management believes that such a measure provides an insightful assessment of Saturn’s operational performance on a continuing basis by eliminating certain non-cash charges and charges that are non-recurring or discretionary and utilizes the measure to assess its ability to finance capital expenditures and debt repayments. Adjusted EBITDAX as presented is not intended to represent cash flow from operating activities, net earnings or other measures of financial performance calculated in accordance with IFRS.

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. See “Non-IFRS Measures” contained within Saturn’s MD&A for applicable definitions, calculations, rationale for use and reconciliations to the most directly comparable measure under IFRS.

Boe equivalent

Where applicable, oil equivalent amounts have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil. The use of boe amounts may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Forward-Looking Information and Statements

Certain 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.



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