
March 14, 2024
Saturn Oil & Gas Inc. (TSX: SOIL) (FSE: SMKA) (OTCQX: OILSF) ("Saturn" or the "Company") is pleased to report its financial and operating results for the three and twelve months ended December 31, 2023.
"2023 was a tremendous year of progress for Saturn in creating a substantial and sustainable free cash generating enterprise. In addition to doubling our production base over last year, we have assembled a deep inventory of high-quality development drilling locations to sustain current production levels for decades," commented John Jeffrey, Chief Executive Officer. "Saturn has maintained its strategic focus on developing light oil focused assets and optimizing our cost structure to deliver some of the highest cash flow margins in Canada, and to further our ultimate goal of shareholder value creation."
2023 Fourth Quarter and Annual Highlights:
- Delivered record crude oil and natural gas production with fourth quarter 2023 averaging 26,891 boe/d (82% oil and NGLs), compared to 12,514 boe/d (96% oil and NGLs) in the fourth quarter of 2022, an increase of 115%;
- Generated quarterly adjusted EBITDA(1) of $100.1 million compared to $62.2 million in the fourth quarter of 2022, an increase of 61%;
- Achieved record quarterly adjusted funds flow(1) of $80.2 million compared to $50.7 million in the fourth quarter of 2022, an increase of 58%;
- Invested $57.2 million of capital expenditures(1) in the fourth quarter, drilling 19 (16.9 net) horizontal wells;
- Generated free funds flow(1) of $23.1 million in the fourth quarter 2023, compared to $15.1 million in the fourth quarter of 2022, an increase of 53%; and
- Exited 2023 with net debt(1) of $460.5 million, realizing a net debt to fourth quarter annualized adjusted funds flow(1) of 1.4x.
Three months ended December 31, | Year ended December 31, | ||||||||||||
(CAD $000s, except per share amounts) | 2023 | 2022 | 2023 | 2022 | |||||||||
FINANCIAL HIGHLIGHTS | |||||||||||||
Petroleum and natural gas sales | 185,384 | 111,558 | 693,891 | 367,957 | |||||||||
Cash flow from operating activities | 75,380 | 58,100 | 283,988 | 102,314 | |||||||||
Operating netback, net of derivatives(1) | 104,328 | 64,661 | 382,890 | 153,450 | |||||||||
Adjusted EBITDA(1) | 100,092 | 62,191 | 363,143 | 146,740 | |||||||||
Adjusted funds flow(1) | 80,247 | 50,729 | 278,138 | 118,658 | |||||||||
per share | - Basic | 0.58 | 0.85 | 2.20 | 2.67 | ||||||||
- Diluted | 0.56 | 0.84 | 2.15 | 2.64 | |||||||||
Free funds flow(1) | 23,072 | 15,053 | 147,565 | 29,553 | |||||||||
per share | - Basic | 0.17 | 0.25 | 1.17 | 0.67 | ||||||||
- Diluted | 0.16 | 0.25 | 1.14 | 0.66 | |||||||||
Net income (loss) | 131,456 | (16,728 | ) | 290,623 | 74,815 | ||||||||
per share | - Basic | 0.94 | (0.28 | ) | 2.30 | 1.68 | |||||||
- Diluted | 0.92 | (0.28 | ) | 2.25 | 1.66 | ||||||||
Net Debt(1), end of period | 460,483 | 219,803 | 460,483 | 219,803 |
Three months ended December 31, | Year ended December 31, | |||||||||||
(CAD $000s, except per share amounts) | 2023 | 2022 | 2023 | 2022 | ||||||||
OPERATING HIGHLIGHTS | ||||||||||||
Average production volumes | ||||||||||||
Crude oil (bbls/d) | 19,407 | 11,590 | 18,177 | 8,841 | ||||||||
NGLs (bbls/d) | 2,533 | 428 | 1,992 | 353 | ||||||||
Natural gas (mcf/d) | 29,704 | 2,971 | 24,559 | 2,392 | ||||||||
Total boe/d | 26,891 | 12,514 | 24,262 | 9,593 | ||||||||
% Oil and NGLs | 82% | 96% | 83% | 96% | ||||||||
Average realized prices | ||||||||||||
Crude oil ($/bbl) | 95.09 | 103.03 | 96.75 | 111.84 | ||||||||
NGLs ($/bbl) | 44.21 | 51.47 | 43.75 | 58.41 | ||||||||
Natural gas ($/mcf) | 2.49 | 5.36 | 2.77 | 5.57 | ||||||||
Processing expenses ($/boe) | (0.61 | ) | (1.56 | ) | (0.53 | ) | (1.52 | ) | ||||
Petroleum and natural gas sales ($/boe) | 74.93 | 96.90 | 78.35 | 105.09 | ||||||||
Operating netback ($/boe) | ||||||||||||
Petroleum and natural gas sales | 74.93 | 96.90 | 78.35 | 105.09 | ||||||||
Royalties | (9.75 | ) | (9.57 | ) | (9.10 | ) | (13.61 | ) | ||||
Net operating expenses(1) | (18.17 | ) | (22.42 | ) | (20.33 | ) | (24.67 | ) | ||||
Transportation expenses | (1.25 | ) | (0.45 | ) | (1.28 | ) | (0.61 | ) | ||||
Operating netback(1) | 45.76 | 64.46 | 47.64 | 66.20 | ||||||||
Realized loss on derivatives | (3.59 | ) | (8.29 | ) | (4.41 | ) | (22.38 | ) | ||||
Operating netback, net of derivatives(1) | 42.17 | 56.17 | 43.23 | 43.82 | ||||||||
Common shares outstanding, end of period | 139,313 | 59,892 | 139,313 | 59,892 | ||||||||
Weighted average, basic | 139,313 | 59,869 | 126,230 | 44,402 | ||||||||
Weighted average, diluted | 142,292 | 60,363 | 129,225 | 44,955 |
Message to Shareholders
In 2023, Saturn achieved its third consecutive year of growth in production and cash flow from operations:
- Average production increased 153% to 24,262 boe/d, compared to 9,593 boe/d average production in 2022;
- Adjusted EBITDA(1) increased 147% to $363.1 million, compared to $146.7 million in 2022; and
- Adjusted funds flow(1) increased 134% to $278.1 million, compared to $118.7 million in 2022.
During 2023, Saturn successfully drilled and rig released a total of 59 gross (48.8 net) horizontal wells across its four core operating areas, comprised of:
- 28 gross (25.2 net) wells in Southeast Saskatchewan;
- 19 gross (14.3 net) wells in West Central Saskatchewan;
- 8 gross (5.3 net) wells in Central Alberta; and
- 4 gross (4.0 net) wells in North Alberta.
The February acquisition of privately held oil and gas producer, Ridgeback Resources Inc. ("Ridgeback"), was a key contributor to Saturn's growth in 2023, adding 670 net sections of land featuring development opportunities to sustain the Company's production going forward. The acquisition of Ridgeback was highly synergistic to the Company's existing Southeast Saskatchewan assets expanding its high cash flow, light oil production base by approximately 65%; more than doubling the light oil reserve volumes in the area; and added a large undeveloped land position featuring Bakken light oil resource that Saturn can continue to develop. In addition to growing the Company's Saskatchewan footprint, the acquisition also expanded Saturn's operations into Alberta's prolific Cardium, Kaybob and Swan Hills areas.
The Company has continued to focus on streamlining its cost structure by reducing overall royalties, decreasing operating costs and improving average hedging pricing:
- Average royalties decreased to 11.5% in 2023, compared 12.8% in 2022;
- Average net operating expenses(1) decreased 18% to $20.33 per boe in 2023, compared to $24.67 per boe in 2022; and
- Average realized loss on derivatives decreased 80% to $4.41 per boe in 2023, compared to $22.38 in 2022.
In light of the above cost reduction impacts, the Company's 2023 operating netback(1), net of derivatives of $43.23 per boe, was comparable to the $43.82 per boe in 2022, despite an approximately 17% drop in the average benchmark WTI oil price to US $77.60 in 2023, compared to an average WTI oil price of US $94.25 in 2022.
Saturn drilled as operator in 2023, 47 gross (45.2 net) wells, with the results of the 46 gross operated wells that were placed on production summarized in the table below:
Gross Wells Drilled by Formation (number): | Avg. IP30 per Location (boe/d) | 2023 Guidance Type Curve (boe/d) | Performance vs. Type Curve (%) | Total Gross Capital Invested ($MM) | Capital Efficiency ($ per boe/d) |
SE Sask - Frob. & Midale (10) | 80.4 | 69.0 | +17 | 13.2 | 16,420 |
SE Sask - Spearfish (6) | 89.2 | 77.0 | +16 | 7.1 | 13,270 |
SE Sask - Stimulated Bakken (7) | 109.7 | 101.0 | +9 | 12.3 | 16,020 |
SE Sask - OHML Bakken (2) | 168.5 | 147.0 | +15 | 4.6 | 13,650 |
WC Sask - Viking (12) | 97.9 | 68.0 | +44 | 19.4 | 16,510 |
Central AB - Lochend Cardium (3) | 279.0 | 260.0 | +7 | 17.7 | 21,150 |
Central AB - Pembina (2) | 239.5 | 248.0 | -3 | 9.4 | 19,620 |
North AB - Montney (4) | 314.4 | 330.0 | -5 | 14.3 | 11,390 |
Weighted Average | 134.6 | 121.0 | +11 | 98.0 | 15,830 |
Commitment to Debt Repayment
On February 28, 2023, the Company expanded its Senior Term Loan by $375.0 million in relation to the acquisition of Ridgeback. Saturn continues to prioritize the rapid repayment of its Senior Term Loan, and in 2023, the Company made principal payments totaling approximately $164.5 million, with additional aggregate payments of approximately $50.7 million made to date in 2024, for a total of $215.2 million of principal payments since December 31, 2022. The Company intends to continue directing free cash flow to ongoing debt repayment and balance sheet strengthening.
Southeast Saskatchewan
In Q4 of 2023, Saturn rig released six gross (4.6 net) Bakken wells, of which two gross wells (2.0 net) were drilled as open hole multi-lateral ("OHML") wells. These OHML wells feature seven to eight horizontal legs per well and represent the first on which Saturn has deployed this innovative drilling technique. The Company's Bakken light oil development has been a strong addition to its capital program in Southeast Saskatchewan, where Saturn has already successfully drilled a total of 11 gross (9.1 net) Bakken wells in 2023. Saturn has 197 net booked Bakken drilling locations (including 16.9 net OHML locations) and has identified over 100 net unbooked Bakken wells for future development.
Saturn successfully drilled three gross (2.3 net) Frobisher wells in Q4 of 2023 for an annual total of 11 gross (10.1 net) Mississippian wells, including two gross (1.9 net) Midale wells, which collectively outperformed IP30 type curve expectations by 17%. The six gross (6.0 net) Spearfish wells drilled in 2023 were a highlight of the year's development program, outperforming IP30 type curve expectations by 16%, while experiencing lower than expected declines. Further budgeted development of Frobisher and Spearfish light oil is expected to be a prominent component of Saturn's 2024 capital investment plan.
For the three months ended December 31, 2023, the Company's Southeast Saskatchewan assets collectively averaged 12,550 boe/d of production, an increase of 67% from 7,522 boe/d in the comparative 2022 period.
West Central Saskatchewan
The Company added a third rig to the fourth quarter development plan in order to extend the drilling success of its Viking light oil targets in West Central Saskatchewan, adding four additional wells with 100% working interest. In 2023 Saturn successfully drilled 19 gross (14.3 net) Viking wells and continued to follow up on its best performing areas of Hershel and Plato with 12 operated wells. These 12 wells were drilled with 100% working interest, had an average IP30 of 97.9 bbls/d of light oil, which outperformed the type curve expectations by 44%. Saturn has 165 net locations booked for future Viking development.
The Company's West Central Saskatchewan assets averaged 3,504 boe/d of production for the three months ended December 31, 2023, compared to 4,992 boe/d in the prior year.
Central Alberta
Saturn successfully drilled three Cardium horizontal wells in the fourth quarter of 2023, with 100% working interest, for a total of eight gross (5.3 net) Cardium wells being rig released in 2023. The 2023 Cardium wells drilled by Saturn were Extended Reach Horizontal ("ERH") wells having an average lateral length of 2.2 miles. Five of the Saturn operated Cardium wells were put on production in Q4 of 2023, with IP30 rates consistent with type cure expectations, and delivering approximately 1,316 boe/d in aggregate during the first 30 days on production. The 6th Cardium well drilled in late 2023 has now been completed along with an additional three gross (3.0 net) ERH Cardium wells drilled to date in 2024. The four new wells are expected to be brought online before the end of Q1 2024. In total during 2024, Saturn expects to drill eight net Cardium ERH wells.
For the three months ended December 31, 2023, the Company's Central Alberta assets produced an average of 8,066 boe/d.
North Alberta
In December 2023, the Company brought on production a four well pad in Kaybob, with 100% working interest to Saturn. The four wells were within expectations of the Montney type curve for this area and delivered an IP30 rate of approximately 1,254 boe/d in aggregate. Saturn plans to drill an additional four well pad in Kaybob during 2024.
For the three months ended December 31, 2023, the Company's North Alberta assets produced an average of 2,771 boe/d.
ESG Initiatives
Saturn continued its dedication to responsible environmental stewardship by directing approximately $10.7 million in 2023 to decommissioning expenditures, including the abandonment of 114 wells that no longer had economic production potential, amounting to approximately 2x the number of gross new wells the Company drilled in 2023.
Outlook
Saturn's Board of Directors has approved the Company's largest ever development plan in 2024, with a budget of approximately $145.6 million targeting the drilling of up to 61 net wells. With Saturn's extensive pipeline network and facilities infrastructure within each of its core operating areas, the Company has ample capacity to handle incremental new production coming on-stream. Over 85% of the Company's 2024 development capital expenditures will be directed to drilling, completions, equipping and tie-in of new production.
Through the first quarter of 2024, the Company employed a full-time rig in Southeast Saskatchewan, resulting in the drilling of five gross (5.0 net) conventional wells (two Frobisher, two Spearfish, one Tilston) all of which have been put onto production. The Company is now drilling the first of two Bakken OHML wells that will continue through the first half of 2024 with 100% working interest to Saturn.
Additional details on Saturn's 2024 Capital Investment Program is available within the Company's Guidance Presentation now available on the website at https://saturnoil.com/investors/#presentations-and-events.
Investor Webcast
Saturn will host a webcast at 10:00 AM MDT (12:00 PM Noon EDT) on Wednesday, March 13, 2024, to review the year end and fourth quarter 2023 financial results and provide additional colour on the Company's operational highlights. Participants can access the live webcast via https://saturnoil.com/invest/q4-2023-results-webcast. A recorded archive of the webcast will be available afterwards on the Company's website.
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 Saskatchewan and Alberta 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 TSX under ticker 'SOIL' on the Frankfurt Stock Exchange under symbol 'SMKA' and on the OTCQX under the ticker 'OILSF'.
The Company's consolidated financial statements and corresponding Management's Discussion and Analysis for the three months and year ended December 31, 2023 are available on SEDAR+ at www.sedarplus.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.
Further information and a corporate presentation is available on Saturn's website at www.saturnoil.com.
Saturn Oil & Gas Investor & Media Contacts:
John Jeffrey, MBA - Chief Executive Officer
Tel: +1 (587) 392-7900
www.saturnoil.com
Kevin Smith, MBA - VP Corporate Development
Tel: +1 (587) 392-7900
info@saturnoil.com
Note:
(1) See Reader Advisory "Non-GAAP and Other Financial Measures"
Reader Advisory
Non-GAAP and Other Financial Measures
Throughout this news release and in other materials disclosed by the Company, we employ certain measures to analyze financial performance, financial position and cash flow. These non-GAAP and other financial measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures provided by other issuers. Non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS. The disclosure under the section "Non-GAAP and Other Financial Measures" including non-GAAP financial measures and ratios, capital management measures and supplementary financial measures in the Company's Condensed consolidated interim financial statements and MD&A are incorporated by reference into this news release.
This press release uses the terms "adjusted EBITDA", "adjusted funds flow", "free funds flow" and "net debt" which are capital management measures. See the disclosure under "Capital Management" in our audited consolidated financial statements for the three months and the year ended December 31, 2023, for an explanation and composition of these measures and how these measures provide useful information to an investor, and the additional purposes, if any, for which management uses these measures.
Free funds flow
The Company considers free funds flow to be a key capital management measure as it is used to determine the efficiency and liquidity of Saturn's business, measuring its funds available after capital investment available for debt repayment, pursue acquisitions and gauge optionality to pay dividends and/or return capital to shareholders through share repurchases. Saturn calculates Free funds flow as Adjusted funds flow in the period less expenditures on property, plant and equipment and exploration and evaluation assets, together "capital expenditures". By removing the impact of current period capital expenditures from adjusted funds flow, management monitors its free funds flow to inform its capital allocation decisions.
Three months ended December 31, | Year ended December 31, | |||||||||||
($000s) | 2023 | 2022 | 2023 | 2022 | ||||||||
Adjusted funds flow | 80,247 | 50,729 | 278,138 | 118,658 | ||||||||
Capital expenditures | (57,175 | ) | (35,676 | ) | (130,573 | ) | (89,105 | ) | ||||
Free funds flow | 23,072 | 15,053 | 147,565 | 29,553 |
Capital Expenditures
Saturn uses capital expenditures to monitor its capital investments relative to those budgeted by the Company on an annual basis. Saturn's capital budget excludes acquisition and disposition activities as well as the accounting impact of any accrual changes or payments under certain lease arrangements. The most directly comparable GAAP measure for capital expenditures is cash flow used in investing activities. The following table reconciles capital expenditures and capital expenditures, net acquisitions and dispositions ("A&D") to the nearest GAAP measure, cash flow used in investing activities.
Three months ended December 31, | Year ended December 31, | |||||||||||
($000s) | 2023 | 2022 | 2023 | 2022 | ||||||||
Cash flow used in investing activities | 38,725 | 41,747 | 576,405 | 318,238 | ||||||||
Change in non-cash working capital | 18,450 | (5,266 | ) | 20,830 | 19,234 | |||||||
Capital expenditures, net A&D | 57,175 | 36,481 | 597,235 | 337,472 | ||||||||
Acquisitions, net of cash acquired | - | (805 | ) | (466,662 | ) | (248,367 | ) | |||||
Capital expenditures | 57,175 | 35,676 | 130,573 | 89,105 |
Net operating expenses
Net operating expense is calculated by deducting processing income primarily generated by processing third party production at processing facilities where the Company has an ownership interest, from operating expenses presented on the Statement of income (loss). Where the Company has excess capacity at one of its facilities, it will process third-party volumes to reduce the cost of ownership in the facility. The Company's primary business activities are not that of a midstream entity whose activities are focused on earning processing and other infrastructure-based revenues, and as such third-party processing revenue is netted against operating expenses in the MD&A. This metric is used by management to evaluate the Company's net operating expenses on a unit of production basis. Net operating expense per boe is a non-GAAP financial ratio and is calculated as net operating expense divided by total barrels of oil equivalent produced over a specific period of time. The calculation of the Company's net operating expenses is shown within the net operating expenses section of our MD&A for the three months and year ended December 31, 2023.
Operating netback and Operating netback, net of derivatives
The Company's operating netback is determined by deducting royalties, net operating expenses and transportation expenses from petroleum and natural gas sales. The Company's operating netback, net of derivatives is calculated by adding or deducting realized financial derivative commodity contract gains or losses from the operating netback. The Company's operating netback and operating netback, net of derivatives are used in operational and capital allocation decisions. Presenting operating netback and operating netback, net of derivatives on a per boe basis is a non-GAAP financial ratio and allows management to better analyze performance against prior periods on a per unit of production basis. The calculation of the Company's operating netbacks and operating netback, net of derivatives are summarized as follows.
Three months ended December 31, | Year ended December 31, | |||||||||||
($000s) | 2023 | 2022 | 2023 | 2022 | ||||||||
Petroleum and natural gas sales | 185,384 | 111,558 | 693,891 | 367,957 | ||||||||
Royalties | (24,124 | ) | (11,022 | ) | (80,565 | ) | (47,640 | ) | ||||
Net operating expenses | (44,945 | ) | (25,817 | ) | (180,074 | ) | (86,379 | ) | ||||
Transportation expenses | (3,094 | ) | (518 | ) | (11,314 | ) | (2,139 | ) | ||||
Operating netback | 113,221 | 74,201 | 421,938 | 231,799 | ||||||||
Realized loss on financial derivatives | (8,893 | ) | (9,540 | ) | (39,048 | ) | (78,349 | ) | ||||
Operating netback, net of derivatives | 104,328 | 64,661 | 382,890 | 153,450 | ||||||||
($ per boe amounts) | ||||||||||||
Petroleum and natural gas sales | 74.93 | 96.90 | 78.35 | 105.09 | ||||||||
Royalties | (9.75 | ) | (9.57 | ) | (9.10 | ) | (13.61 | ) | ||||
Net operating expenses | (18.17 | ) | (22.42 | ) | (20.33 | ) | (24.67 | ) | ||||
Transportation expenses | (1.25 | ) | (0.45 | ) | (1.28 | ) | (0.61 | ) | ||||
Operating netback | 45.76 | 64.46 | 47.64 | 66.20 | ||||||||
Realized loss on financial derivatives | (3.59 | ) | (8.29 | ) | (4.41 | ) | (22.38 | ) | ||||
Operating netback, net of derivatives | 42.17 | 56.17 | 43.23 | 43.82 |
Adjusted EBITDA
The Company considers adjusted EBITDA to be a key capital management measure as it is both used within certain financial covenants prescribed under the Company's Senior Term Loan (note 11) and demonstrates Saturn's standalone profitability, operating and financial performance in terms of cash flow generation, adjusting for interest related to its capital structure. Adjusted EBITDA is defined by the Company as earnings before interest, taxes, depreciation, amortization and other noncash or extraordinary items.
Adjusted funds flow
The Company considers adjusted funds flow to be a key capital management measure as it demonstrates Saturn's ability to generate the necessary funds to manage production levels and fund future growth through capital investment. Management believes that this measure provides an insightful assessment of Saturn's operations on a continuing basis by eliminating certain non-cash charges, actual settlements of decommissioning obligations, of which the nature and timing of expenditures may vary based on the stage of the Company's assets and operating areas, and transaction costs which vary based on the Company's acquisition and disposition activity.
Free funds flow
The Company considers free funds flow to be a key capital management measure as it is used to determine the efficiency and liquidity of Saturn's business, measuring its funds available after capital investment available for debt repayment, pursue acquisitions and gauge optionality to pay dividends and/or return capital to shareholders through share repurchases. Saturn calculates free funds flow as adjusted funds flow in the period less expenditures on property, plant and equipment and exploration and evaluation assets, together "capital expenditures". By removing the impact of current period capital expenditures from adjusted funds flow, management monitors its free funds flow to inform its capital allocation decisions.
The following table reconciles adjusted EBITDA, adjusted funds flow and free funds flow to cash flow from operating activities:
Year ended December 31, | ||||||
($000s) | 2023 | 2022 | ||||
Cash flow from operating activities | 283,988 | 102,314 | ||||
Change in non-cash working capital | (20,993 | ) | 14,536 | |||
Decommissioning expenditures | 10,486 | 582 | ||||
Transaction costs | 4,657 | 1,226 | ||||
Current tax recovery | (1,915 | ) | - | |||
Net interest(1) | 86,920 | 28,082 | ||||
Adjusted EBITDA | 363,143 | 146,740 | ||||
Current Tax Recovery | 1,915 | - | ||||
Net Interest(1) | (86,920 | ) | 28,082 | |||
Adjusted Funds Flow | 278.138 | 118,658 | ||||
Capital Expenditures(2) | (130,573 | ) | (89,105 | ) | ||
Free Funds Flow | 147,565 | 29,553 | ||||
(1) Calculated as interest expense, net of interest revenue. (2) Calculated as expenditures on exploration and development assets on the consolidated statements of cash flows. |
Market capitalization and net debt
Management considers net debt a key capital management measure in assessing the Company's liquidity. Total market capitalization and net debt to annualized quarterly adjusted funds flow are used by management and the Company's investors in analyzing the Company's balance sheet strength and liquidity. The summary of total market capitalization, net debt, annualized quarterly adjusted funds flow and net debt to annualized quarterly adjusted funds flow is as follows:
Year ended December 31, | ||||||
($000s) | 2023 | 2022 | ||||
Total common shares outstanding (000s) | 139,313 | 59,892 | ||||
Share price(1) | 2.20 | 2.35 | ||||
Total market capitalization | 306,489 | 140,746 | ||||
Adjusted working capital(2) | 8,240 | (3,128 | ) | |||
Senior Term Loan | 451,153 | 240,843 | ||||
Convertible notes | 1,090 | 2,361 | ||||
Long-term deposit | - | (21,101 | ) | |||
Promissory notes | - | 828 | ||||
Net debt | 460,483 | 219,803 | ||||
Current quarter adjusted funds flow | 80,247 | 50,729 | ||||
Annualized factor | 4 | 4 | ||||
Annualized quarterly adjusted funds flow | 320,988 | 202,916 | ||||
Net debt to annualized quarterly adjusted funds flow | 1.4x | 1.1x | ||||
(1) Represents the closing share price on the TSX on the last day of trading of the period. (2) Adjusted working capital is calculated as cash, accounts receivable, deposits and prepaids net of accounts payable. |
Supplemental Information Regarding Product Types
References herein to boe/d include gas or natural gas and NGLs which refer to conventional natural gas and natural gas liquids product types, respectively, as defined in National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities ("NI 51-101"), except where specifically noted otherwise.
The following table is intended to provide the product type composition for each of the production figures provided herein, where not already disclosed within tables above for average production for the three months and the year ended December 31, 2023 and 2022:
Three months ended December 31, 2023 | Three months ended December 31, 2022 | |||||||
Crude oil (bbls/d) | NGLs (bbls/d) | Natural gas (mcf/d) | Total (boe/d) | Crude oil (bbls/d) | NGLs (bbls/d) | Natural gas (mcf/d) | Total (boe/d) | |
Southeast Saskatchewan | 10,832 | 939 | 4,673 | 12,550 | 6,714 | 398 | 2,457 | 7,522 |
West Central Saskatchewan | 3,389 | 29 | 514 | 3,504 | 4,876 | 30 | 514 | 4,992 |
Central Alberta | 3,543 | 1,172 | 20,105 | 8,066 | - | - | - | - |
North Alberta | 1,643 | 393 | 4,412 | 2,771 | - | - | - | - |
Total boe/d | 19,407 | 2,533 | 29,704 | 26,891 | 11,590 | 428 | 2,971 | 12,514 |
Year ended December 31, 2023 | Year ended December 31, 2022 | |||||||
Crude oil (bbls/d) | NGLs (bbls/d) | Natural gas (mcf/d) | Total (boe/d) | Crude oil (bbls/d) | NGLs (bbls/d) | Natural gas (mcf/d) | Total (boe/d) | |
Southeast Saskatchewan | 9,596 | 770 | 3,968 | 11,027 | 6,401 | 340 | 2,118 | 7,094 |
West Central Saskatchewan | 4,262 | 20 | 468 | 4,360 | 2,440 | 13 | 274 | 2,499 |
Central Alberta | 3,005 | 915 | 16,602 | 6,687 | - | - | - | - |
North Alberta | 1,314 | 287 | 3,521 | 2,188 | - | - | - | - |
Total boe/d | 18,177 | 1,992 | 24,559 | 24,262 | 8,841 | 353 | 2,392 | 9,593 |
Initial Production Rates
Any reference in this news release to initial production rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter. Any reference in this news release to initial production rates consist of the above noted product types, using a conversion rate of 1 bbl : 6 MCF (where applicable). Readers are cautioned not to place undue reliance on such rates in calculating aggregate production for Saturn.
Per boe or ($/boe)
Any reference in this news release to disclosures for petroleum and natural gas sales, royalties, operating expenses, transportation expenses and marketing expenses on a per boe basis are supplementary financial measures that are calculated by dividing each of these respective GAAP measures by Saturn's total production volumes for the period.
Per Share Amounts
Per share amounts noted in this news release are based on Saturn's weighted average issued and outstanding common shares as of December 31, 2023, unless noted otherwise.
Boe Presentation
Boe means barrel of oil equivalent. All boe conversions in this news release are derived by converting gas to oil at the ratio of six thousand cubic feet ("Mcf") of natural gas to one barrel ("Bbl") of oil. Boe may be misleading, particularly if used in isolation. A Boe conversion rate of 1 Bbl : 6 Mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio of oil compared to natural gas based on currently prevailing prices is significantly different than the energy equivalency ratio of 1 Bbl: 6 Mcf, utilizing a conversion ratio of 1 Bbl : 6 Mcf may be misleading as an indication of value.
Forward-Looking Information and Statements.
Certain information included in this press release constitutes forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project", "scheduled", "will" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this press release may include, but is not limited to, the Company's drilling and development plans, timing of bringing wells on-stream, 2024 production, expectations regarding netbacks, the business plan, cost model and strategy of the Company.
The forward-looking statements contained in this press release are based on certain key expectations and assumptions made by Saturn, including expectations and assumptions concerning: the timing of and success of future drilling, development and completion activities, the performance of existing wells, the performance of new wells, the availability and performance of facilities and pipelines, the ability to allocate capital to pay down debt and grow or maintain production, the geological characteristics of Saturn's properties, the application of regulatory and licensing requirements and the availability of capital, labour and services.
Although Saturn believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Saturn can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), constraints in the availability of services, commodity price and exchange rate fluctuations, actions of OPEC and OPEC+ members, changes in legislation impacting the oil and gas industry, adverse weather or break-up conditions and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. These and other risks are set out in more detail in Saturn's Annual Information Form for the year ended December 31, 2023.
Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be incorrect. Although Saturn believes that the expectations reflected in its forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because Saturn can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this press release, assumptions have been made regarding and are implicit in, among other things, our capital expenditure and drilling programs, drilling inventory and booked locations, production and revenue guidance, ESG initiatives, debt repayment plans and future growth plans. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used.
The forward-looking information contained in this press release is made as of the date hereof and Saturn undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. The forward-looking information contained in this press release is expressly qualified by this cautionary statement.
All dollar figures included herein are presented in Canadian dollars, unless otherwise noted.
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Partnership with K LINE to Accelerate Hydrogen Shipping
18 June
IEA: World Energy Investment to Hit US$3.3 Trillion in 2025
Despite geopolitical and macroeconomic headwinds, global energy investment is expected to rise to an unprecedented US$3.3 trillion in 2025, according to the International Energy Agency (IEA).
The bulk of that capital — US$2.2 trillion — will go to clean energy technologies, including renewables, grids, storage, nuclear and efficiency initiatives, signaling the accelerating dominance of the so-called “Age of Electricity.”
This marks a 2 percent real-term increase from 2024, and, more significantly, it reflects a decisive structural shift.
For the first time in history, global investment in electricity is set to more than double that of fossil fuels, which are expected to receive only US$1.1 trillion in total funding next year.
“Ten years ago, investments in fossil fuel supply were 30 percent higher than those for electricity generation, grids and storage,” the IEA notes in a new report. “Today, these positions are reversed.”
China, US and Europe lead the charge
The report identifies three geopolitical regions that have been chiefly responsible for the surge in clean energy investment over the past five years: China, Europe and the US.
China alone accounts for nearly one-third of global clean energy investment, up from one-quarter a decade ago.
The Asian nation's strategy is shaped by a mix of industrial policy, energy security concerns and a desire to lead in cleantech manufacturing. The IEA notes that Chinese solar panel exports to developing economies surged in early 2025, overtaking shipments to advanced economies. Pakistan, for instance, imported 19 gigawatts worth of solar panels from China in 2024 — about half of its grid-connected capacity.
Meanwhile, Europe has scrambled to accelerate renewable and efficiency spending following Russia’s 2022 invasion of Ukraine and the subsequent cut in natural gas deliveries.
The continent's response has focused heavily on electrification and energy independence.
In the US, the Inflation Reduction Act and other incentives have driven a near doubling of clean energy investment in the last decade. However, the IEA warns this momentum may plateau as federal support measures are scaled back.
Solar dominates, but grid investment lags
Solar power remains the world’s standout investment magnet.
Spending on photovoltaics (PV) — both utility scale and rooftop — is expected to reach US$450 billion in 2025, making it the largest single item in global energy investment.
This surge is being driven by plunging tech costs and intense supplier competition, particularly from Chinese firms.
Battery storage for the power sector is also gaining traction, with investment projected at US$66 billion. Yet despite these advances, a critical bottleneck remains: power grids.
“Maintaining electricity security amid rising electricity use requires a rapid increase in grid spending, moving towards parity with the amount spent on generation,” the IEA cautions.
At present, just US$400 billion is allocated annually to grid infrastructure — less than half of what goes to generation assets. Barriers include long permitting times, strained supply chains for transformers and cables and financial stress on utilities, especially in developing nations.
Fossil fuel investment slumps
Investment in upstream oil is set to fall by 6 percent in 2025, the first annual drop since the 2020 pandemic slump and the steepest since 2016. The IEA attributes this decline to softening oil prices and weaker investor sentiment.
Refining investment is also shrinking, set to hit its lowest point in a decade.
The US shale sector, once a barometer for oil market optimism, is expected to reduce spending by nearly 10 percent in 2025, although production may still inch upward due to cost cutting and recent consolidations.
On the other hand, natural gas investments are more resilient. Final investment decisions (FIDs) for gas-fired power generation have rebounded, with the US and Middle East accounting for nearly half of global FIDs.
Spending on LNG infrastructure is also on an upswing, fueled by major new projects in the US, Qatar and Canada. Between 2026 and 2028, the IEA projects some of the largest ever annual expansions in LNG export capacity.
Electrification and end-use efficiency rising
The global shift to electric vehicle (EVs), heat pumps and smart appliances is reshaping end-use energy investment, now expected to reach US$800 billion in 2025. EV adoption is a major factor in this rise, especially in China, where many EV models are now price competitive with traditional combustion engines.
Buildings investment, however, is being dragged down by a sluggish construction sector, particularly in China. This is partly offset by rising demand for efficient appliances and cooling systems amid global temperature increases.
Furthermore, the IEA notes that the cost of many clean technologies has resumed a downward trend.
The IEA’s Clean Energy Equipment Price Index hit a record low in early 2024, with solar and wind components from China seeing price drops of 60 and 50 percent, respectively, since 2022.
Yet inflation looms in other sectors. Grid material costs have nearly doubled in five years, and oil and gas upstream costs are forecast to rise 3 percent in 2025. US developers are facing additional cost pressures due to rising tariffs on imported steel and aluminum.
World not yet on track for COP28 goals
Despite historic investment levels, the IEA warns that the world is still not on track to meet the tripling of renewable power capacity pledged at COP28. To reach those targets, annual investments in renewables must double, and efficiency and electrification spending must nearly triple within five years.
“Efforts to reduce the cost of capital need to be the cornerstone of the ‘Baku to Belem Roadmap’ launched at COP29,” the organization's report concludes, referencing a plan to mobilize at least US$1.3 trillion for low-emissions projects in developing economies by 2035.
With the world entering a new phase of electrification and energy transition, the IEA emphasizes that the challenge is no longer just innovation — but scale, equity and speed.
Don’t forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
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17 June
LCO2 Design Milestone and Yinson Joint Venture
16 June
Source Rock Royalties Declares Monthly Dividend
Source Rock Royalties Ltd. ("Source Rock") (TSXV: SRR), a pure-play oil and gas royalty company with an established portfolio of oil royalties, announces that its board of directors has declared a monthly dividend of $0.0065 per common share, payable in cash on July 15, 2025 to shareholders of record on June 30, 2025.
This dividend is designated as an "eligible dividend" for Canadian income tax purposes.
About Source Rock Royalties Ltd.
Source Rock is a pure-play oil and gas royalty company with an existing portfolio of oil royalties in southeast Saskatchewan, central Alberta and west-central Saskatchewan. Source Rock targets a balanced growth and yield business model, using funds from operations to pursue accretive royalty acquisitions and to pay dividends. By leveraging its niche industry relationships, Source Rock identifies and acquires both existing royalty interests and newly created royalties through collaboration with industry partners. Source Rock's strategy is premised on maintaining a low-cost corporate structure and achieving a sustainable and scalable business, measured by growing funds from operations per share and maintaining a strong netback on its royalty production.
Neither the 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 of this release.
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16 June
Alvopetro Announces Q2 2025 Dividend of US$0.10 Per Share and Reminder of Upcoming AGM
Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) announces that our Board of Directors has declared a quarterly dividend of US$0.10 per common share, payable in cash on July 15, 2025 to shareholders of record at the close of business on June 30, 2025. This dividend is designated as an "eligible dividend" for Canadian income tax purposes.
Dividend payments to non-residents of Canada will be subject to withholding taxes at the Canadian statutory rate of 25%. Shareholders may be entitled to a reduced withholding tax rate under a tax treaty between their country of residence and Canada. For further information, see Alvopetro's website at https://alvopetro.com/Dividends-Non-resident-Shareholders.
Annual General Meeting
Alvopetro's annual general and special meeting (the "Meeting") will be held on Wednesday, June 18, 2025 at the offices of Torys LLP (Suite 4600, 525 8th Avenue SW, Calgary, Alberta) beginning at 9:30 a.m. Mountain time. All interested parties are invited to attend the Meeting, however only registered shareholders of record at the close of business on May 5, 2025 and duly appointed proxyholders will be entitled to vote at the Meeting.
We will also be broadcasting the meeting via live webcast for the interest of all shareholders. Please be advised that shareholders will not be able to vote any shares through this webcast format. Details for joining the event are as follows:
DATE: June 18, 2025
TIME: 9:30 AM Mountain/11:30 AM Eastern
LINK:https://us06web.zoom.us/j/89512204386
DIAL-IN NUMBERS: https://us06web.zoom.us/u/kenh5nLlte
WEBINAR ID: 895 1220 4386
Corporate Presentation
Alvopetro's updated corporate presentation is available on our website at: http://www.alvopetro.com/corporate-presentation.
Social Media
Follow Alvopetro on our social media channels at the following links:
Twitter - https://twitter.com/AlvopetroEnergy
Instagram - https://www.instagram.com/alvopetro/
LinkedIn - https://www.linkedin.com/company/alvopetro-energy-ltd
Alvopetro Energy Ltd. is deploying a balanced capital allocation model where we seek to reinvest roughly half our cash flows into organic growth opportunities and return the other half to stakeholders. Alvopetro's organic growth strategy is to focus on the best combinations of geologic prospectivity and fiscal regime. Alvopetro is balancing capital investment opportunities in Canada and Brazil where we are building off the strength of our Caburé and Murucututu natural gas fields and the related strategic midstream infrastructure.
Neither the 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 news release.
All amounts contained in this new release are in United States dollars, unless otherwise stated and all tabular amounts are in thousands of United States dollars, except as otherwise noted.
Forward-Looking Statements and Cautionary Language
This news release contains forward-looking information within the meaning of applicable securities laws. The use of any of the words "will", "expect", "intend", "plan", "may", "believe", "estimate", "forecast", "anticipate", "should" and other similar words or expressions are intended to identify forward-looking information. Forward–looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the expectations discussed in the forward-looking statements. These forward-looking statements reflect current assumptions and expectations regarding future events. Accordingly, when relying on forward-looking statements to make decisions, Alvopetro cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties. More particularly and without limitation, this news release contains forward-looking information concerning the Company's dividends, plans for dividends in the future, the timing and amount of such dividends and the expected tax treatment thereof. Forward-looking statements are necessarily based upon assumptions and judgments with respect to the future including, but not limited to the success of future drilling, completion, testing, recompletion and development activities and the timing of such activities, the performance of producing wells and reservoirs, well development and operating performance, expectations and assumptions concerning the timing of regulatory licenses and approvals, equipment availability, environmental regulation, including regulations relating to hydraulic fracturing and stimulation, the ability to monetize hydrocarbons discovered, the outlook for commodity markets and ability to access capital markets, foreign exchange rates, the outcome of any disputes, the outcome of redeterminations, general economic and business conditions, forecasted demand for oil and natural gas, the impact of global pandemics, weather and access to drilling locations, the availability and cost of labour and services, and the regulatory and legal environment and other risks associated with oil and gas operations. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. Current and forecasted natural gas nominations are subject to change on a daily basis and such changes may be material. In addition, the declaration, timing, amount and payment of future dividends remain at the discretion of the Board of Directors. Although we believe that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because we can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, reliance on industry partners, availability of equipment and personnel, uncertainty surrounding timing for drilling and completion activities resulting from weather and other factors, changes in applicable regulatory regimes and health, safety and environmental risks), commodity price and foreign exchange rate fluctuations, market uncertainty associated with trade or tariff disputes, and general economic conditions. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Although Alvopetro believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Alvopetro can give no assurance that it will prove to be correct. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on factors that could affect the operations or financial results of Alvopetro are included in our AIF which may be accessed on Alvopetro's SEDAR+ profile at www.sedarplus.ca. The forward-looking information contained in this news release is made as of the date hereof and Alvopetro undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
www.alvopetro.com
TSX-V: ALV, OTCQX: ALVOF
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11 June
Jupiter Energy Eyes Production Growth, Profitability with Kazakhstan AIX Listing
Jupiter Energy (ASX:JPR) Chairman Geoff Gander discusses his company’s listing on the Astana International Exchange (AIX), Kazakhstan’s largest stock exchange, in a bid to raise US$5 million and increase productivity to 1,000 barrels of oil per day at the Akkar East field.
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