Saturn Oil & Gas (SOIL) Q2 2024 earnings summary

Executive summary

• Achieved record quarterly production and adjusted funds flow in Q2 2024, driven by a major acquisition and capital structure changes, increasing oil production by over 50% and adding 13,000 barrels per day of high netback oil and liquids production.

• Closed acquisition of two oil-weighted asset packages for $534.8 million, adding ~13,000 boe/d in core areas and over 950 drilling locations.

• Completed $100 million equity financing and entered a $150 million undrawn credit facility.

• Achieved record production of 30,127 barrels per day in Q2, with exit production at 38,300 barrels per day post-acquisition.

• Operating and transportation costs reduced below CAD 20 per BOE for the first time in three years.

Financial highlights

• Q2 revenue reached CAD 208.9 million, with net income of CAD 41.8 million.

• Record EBITDA of CAD 106 million, up from CAD 88 million in Q1; adjusted funds flow of CAD 0.52 per share (CAD 89 million), up from CAD 0.46 per share (CAD 68 million) in Q1.

• Free cash flow for the quarter was CAD 66.1 million; capital expenditures were CAD 22.5 million, with seven gross wells drilled.

• Exited Q2 2024 with $792.2 million net debt and a proforma net debt to annualized quarterly adjusted funds flow of 1.5x.

• Net operating expenses per boe decreased to $18.12 from $22.31 year-over-year.

Outlook and guidance

• Forecasting production of 38,000–40,000 boe/d for the next 12 months, targeting the upper end of the range.

• Largest drilling program in company history underway, targeting 82 net operated wells in 2024.

• Expecting over CAD 200 million in excess free cash flow over the next 12 months, to be directed toward debt reduction and strategic acquisitions.

• Plans to pay down Senior Notes on a 10% annual amortization schedule and consider shareholder returns via dividends or buybacks as leverage decreases.

• Guidance to be updated in the coming months following a full development review.