Original-Research: Saturn Oil & Gas Inc. - von GBC AG
Einstufung von GBC AG zu Saturn Oil & Gas Inc.
Unternehmen: Saturn Oil & Gas Inc.
Anlass der Studie: Research Update
Kursziel: 0,46 CAD
Kursziel auf Sicht von: 31.12.2021
Analyst: Julien Desrosiers; Felix Haugg
Saturn Oil & Gas Inc. successfully closes the acquisition of the Oxbow
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
- 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
- Land base increase of 775% with more than 180% growth in booked
- 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
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.
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:
Kontakt für Rückfragen
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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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