Saturn Oil & Gas Provides Operational Update Including Q1 2019 Capital Budget and Production Guidance
- Mar 07 2019
CALGARY, ALBERTA – March 7, 2019 - Saturn Oil & Gas Inc. (“Saturn” or the “Company”) (TSX.V: SOIL) (FSE: SMK) is pleased to provide an operational update, including details of the Company’s Q1/19 capital budget and drilling program (the “Program”), along with forecast average production volumes for the quarter.
Capital Budget & Production Guidance for Q1 2019
Saturn’s Q1 2019 capital expenditure budget anticipates investing approximately $10 million, to be allocated to drilling, completion, equip and tie-in of approximately nine gross (9.0 net) wells. The Company commenced its program with the first well spud on January 14, 2019 in Saturn’s core Milton area, targeting the light oil Viking play. Through the end of February 2019, Saturn has drilled, completed and tied-in a total of five gross (5.0 net) extended reach horizontal (“ERH”) Viking wells, generating new volumes that have resulted in Saturn achieving a production rate over the last two weeks of February of over 1,000 boe/d. With Saturn’s capital spending program for Q1 2019, coupled with the well results realized through January and February, the Company forecasts its Q1 production volumes will average approximately 950 boe/d, and achieve a peak production rate in Q1 of approximately 1,300 boe/d. This peak production rate is an increase of over 80% from Q4 2018 average production.
In addition to the five (5.0 net) wells that have been brought on production, Saturn has drilled an additional three (3.0 net) wells and anticipates drilling the ninth and final well in the week ending March 8th. As such, the Company anticipates bringing four gross (4.0 net) additional wells online before the end of March 2019.
Based on current oil prices and oil differentials, Saturn’s forecast royalties of $3.00 to $4.00/boe, and operating and transportation cost forecasts of $10.00 to $11.50/boe, the Company anticipates field netbacks(*) in the quarter would range between $40.00 and $50.00/boe.
Q1 2019 Capital Program Details
Drilling activity in Q1 has been, and will continue to be, primarily focused in the Company’s core areas of Prairiedale, Milton and Kerrobert. Of the eight Viking light oil wells drilled to date in 2019, two are ERH wells in Milton, two are ERH wells in Kerrobert, and the balance are in Prairiedale. Funding for the Q1 program has been derived from the Company’s USD$20 million revolving note facility with Prudential Capital Group (“Prudential”) coupled with cash flow generated during the period. Capital expenditures for the balance of 2019 will be reviewed and established quarterly to reflect commodity prices, funding sources and the broader operating environment.
Effective March 5, 2019, the Company has relocated its corporate headquarters to Calgary, Alberta from Saskatoon, Saskatchewan, designed to support Saturn’s ongoing growth, enhance its visibility and build further relationships with energy-focused capital markets participants.
To learn more about Saturn Oil & Gas Inc., please visit www.saturnoil.com.
(*) 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”.
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 & 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 (306) 955-9946
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 “cash flow” and "field netbacks". 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. 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.
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.
Barrel of oil equivalents or BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 mcf: 1 bbl 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 based on the current price of crude oil as compared to natural gas is significantly different than the energy equivalency of 6:1, utilizing the 6:1 conversion ratio may be misleading as an indication of value.