Original-Research: Saturn Oil & Gas Inc. - von GBC AG

Einstufung von GBC AG zu Saturn Oil & Gas Inc.

Unternehmen: Saturn Oil & Gas Inc.

ISIN: CA80412L1076

Anlass der Studie: Research Update

Empfehlung: BUY

Kursziel: 0,46 CAD

Kursziel auf Sicht von: 31.12.2021

Letzte Ratingänderung:

Analyst: Julien Desrosiers; Felix Haugg

Saturn Oil & Gas Inc. successfully closes the acquisition of the Oxbow

Assets

Saturn Oil & Gas Inc. announced that it has successfully closed the

previously announced transformational acquisition of the Oxbow assets in

Southeast Saskatchewan from Crescent Point Energy Corp. As discussed in our

recent Transaction Update (http://www.more-ir.de/d/22491.pdf) Saturn

acquired approximately 6,700 boe/d (~95% light oil and liquids) with over

450 net sections of land.

Total consideration for the Acquisition was $93 million. As previously

announced in the Company's press releases dated May 13, 2021, May 17, 2021,

May 28, 2021 and June 4, 2021, the Acquisition was funded through proceeds

from an $87.0 million senior secured term loan, as well as a brokered and

non brokered private placement which collectively raised total gross

proceeds of $32.8 million. The Senior secured term loan was subscripted by

a New York based Family Office.

'The closing of this transformational acquisition has truly elevated Saturn

to new heights and put our mark on the map for a very attractive purchase

price,' said John Jeffrey, CEO of Saturn. 'We have added high-quality,

light oil assets to our portfolio, which now features a robust long-term

inventory of future development drilling targets that are highly economic

at current commodity prices. The Saturn team is excited about the

opportunity to generate compelling returns for our shareholders, while

helping to meet the world's growing energy needs in an environmentally

responsible manner under Canada's stringent regulatory regime.'

Strategic Acquisition Highlights

The Acquisition enhances Saturn's financial and operational strength

through the addition of a high-quality and very low decline (12%) light oil

asset base that is projected to generate robust free cash flow at current

prices. Further, the Acquisition is aligned with the Company's strategy to

acquire and develop undervalued, low-risk opportunities that support the

building of a strong portfolio with strategic development upside. The Oxbow

Assets produce primarily from the Frobisher and Midale formations, feature

a sizeable inventory of targets for workover, development and optimization,

and are expected to generate $65-70 million in net operating income over

the next 12 months.

In addition to acquiring the assets for an attractive purchase price, the

Acquisition positions Saturn as one of the leading producers and land

holders in Southeast Saskatchewan, offering investors exposure to numerous

benefits, including:

- Production increase of more than 2,000% over current volumes, with over

1,300% PDP reserves growth compared to the Company's year end 2020

reserves.

- Land base increase of 775% with more than 180% growth in booked

drilling locations.

- Exposure to a conventional multi-zone asset base concentrated in the

Midale / Frobisher formations with a large, identified low-risk

drilling inventory of highly economic light oil plays, significant

workover opportunities, and competitive forecast returns.

- The potential to generate significant annual free cash flow through the

optimization and recompletion of more than 500 existing well bores over

the next three years with low capital expenditures. Saturn anticipates

directing approximately $5 million of annual workover capex to maintain

current production levels.

- Locked-in area economics with approximately 70% of forecast production

hedged over the next year, 60% for the second year and approximately

50% for years three and four with incremental volumes from growth

capital fully exposed to commodity prices.

- Expanded scale provides increased strategic optionality to adapt to

changing market conditions while financial capacity is improved due to

increased cash flow generation and low leverage as Saturn anticipates

being debt free in 24 months based on current strip pricing.

- A strong infrastructure position with multiple sales points and

capacity for future growth with 60 owned, operated and well-maintained

key production facilities with excess capacity.

- Strengthened environmental, social and governance ('ESG') performance,

supported by minimal freshwater usage due to no fracture stimulations

and future potential to initiate an enhanced oil recovery initiative

using only produced water. The Company's surface footprint will be

minimized due to pipeline-connected, multi-well pad development of the

Oxbow Assets, and liability clean up will be accelerated with the

support of over $10 million of federal Accelerated Site Closure Program

funding.

Financings

The $87.0 million senior secured term loan was subscripted by a New York

based Family Office.

Prudential Capital Energy Partners, L.P. agreeing to subordinate its

current loans, waiver certain prior loan defaults, extend out the maturity

of their existing revolving note facility and cancel 30,505,122 existing

share purchase warrants with an exercise price of $0.235 and an expiry of

Sept 14, 2022.

Prudential will be granted 43,800,000 million common share purchase

warrants at a $0.16 exercise price with expiry at the earlier of the

maturity date of the loan (November 2024) or 12 months after early

repayment of the loan facility.

Advisors

Alvarez & Marsal Canada Securities ULC ('A&M') acted as exclusive financial

advisor to Saturn with respect to the Senior Secured Term Loan and the

Acquisition, while Dentons Canada LLP acted as Saturn's legal counsel in

connection with the Acquisition, the Private Placements and the Senior

Secured Term Loan.

A&M is entitled to receive 3,000,000 compensation special warrants.

Die vollständige Analyse können Sie hier downloaden:

http://www.more-ir.de/d/22568.pdf

Kontakt für Rückfragen

GBC AG

Halderstraße 27

86150 Augsburg

0821 / 241133 0

research@gbc-ag.de

Date (time) of completion of English version: 08/06/2021 (13:26 h)

Date (time) of first distribution of English version: 08/06/2021 (14:30 h)

Target price valid until: max. 31/12/2021

-übermittelt durch die EQS Group AG.-

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