Saturn Oil & Gas Acquires Producing Assets in Saskatchewan
TSX-V listed Saturn Oil & Gas Inc. has entered into an arms-length definitive agreement with an undisclosed seller to acquire certain producing assets in the Oxbow area of southeast Saskatchewan, for a total consideration of approximately C$93 million.
The interests acquired include approximately 280,000 net acres (approximately 450 net sections) of producing assets located in the Oxbow area. The acreage primarily targets the Midale/Frobisher formations, and contains 244 net booked (200 unbooked) drilling locations, supporting long-term development. Saturn Oil & Gas has identified the potential to generate significant annual free cash flows through optimizing and completing more than 500 existing well bores over the next three years. As of December 31st, 2019, the total proved (1P) reserves attributable to the acreage were approximately 33.24 million barrels of oil equivalent (MMboe), while proved plus probable (2P) reserves were approximately 44.73 MMboe. The current average daily production from the assets is approximately 6,700 barrels of oil equivalent per day (boe/d), of which 95% is oil.
Upon completion of the acquisition, Saturn Oil & Gas will have a pro-forma of approximately 372 net booked (250 unbooked) drilling locations, with an estimated average daily production of 7,500 boe/d during 2021. The company is estimated to have an annual net operating income of approximately C$77-82 million.
“We believe the Oxbow assets – purchased from a very experienced oil operator – provide significant upside value with near-term recompletion and optimization opportunities, as well as long-term growth from a deep inventory of booked and un-booked drilling locations on the properties,” said John Jeffrey, Chairman & CEO of Saturn Oil & Gas.
Saskatchewan-based Saturn Oil & Gas is focused on the acquisition and development of undervalued, low-risk assets in west-central Saskatchewan, primarily targeting the Viking and Success Formations.
Alvarez & Marsal Canada Securities is acting as financial advisor to Saturn Oil + Gas.
The transaction is subject to customary closing conditions, including regulatory and other approvals, and is expected to close by May 31, 2021, with an effective date of April 1, 2021.