Saturn adding a fifth rig once drilling resumes after breakup

By Brian Zinchuk
PipelineOnline.ca

CALGARY – Saturn Oil & Gas Inc. reported Q1 2026 operating and financial results on May 6, marking the seventh consecutive quarter of production exceeding analyst consensus.

"The first quarter of 2026 represents the seventh consecutive quarter that Saturn has posted production volumes ahead of analyst consensus estimates as we built on the strong volume momentum achieved in Q4/25. In addition, with the onset of the Iranian conflict in March, Saturn's realized oil price increased materially to nearly $115/bbl in March, up from an average of $75/bbl during January and February," said John Jeffrey, chief executive officer.

Ensign Rig 808 was drilling for Saturn Oil & Gas in the Warmley area, near Corning, on Feb 28, 2028. Across the road, Panther Drilling Rig 3 was drilling for Whitecap. Photo by Brian Zinchuk

Jeffrey said the stronger pricing contributed to adjusted funds flow of $107 million and free funds flow over $62 million. Net debt exited the quarter at $725 million, a 5 per cent reduction from year-end 2025. The company plans to accelerate roughly $20 million of capital from the second half of 2026 into Q2/26 to capitalize on stronger pricing.

Q1 2026 HIGHLIGHTS

Production of 43,116 boe/d exceeded the high end of guidance by 3 per cent. Oil and liquids made up 81 per cent of production, with crude oil at 72 per cent. The realized oil price in March hit $114.92/bbl, 53 per cent higher than the $75.23/bbl average for January and February.

Adjusted funds flow totaled $107.2 million ($0.59/share diluted). Adjusted EBITDA was $126.5 million. Free funds flow was $62.5 million ($0.34/share diluted), up 13 per cent per share over the previous quarter.

Capital expenditures totaled $44.8 million, drilling 23 gross (18.7 net) wells. Of these, 21 were in southeast Saskatchewan, including 10 open hole multi-lateral (OHML) wells, plus two non-operated wells in central Alberta.

Saturn returned $12.1 million to shareholders through the repurchase and cancellation of 3.7 million common shares at a weighted average price of $3.29 under its normal course issuer bid (NCIB).

EXECUTION

Saturn ran four rigs in southeast Saskatchewan during the quarter. Three drilled OHML wells; the fourth drilled conventional wells. The 10 OHML wells comprised five Bakken, three Midale and two Spearfish wells.

The new 13-06 Spearfish well achieved an IP30 rate of approximately 365 bbl/d and is on track to rank among Saskatchewan's top producing wells for April, based on independent third-party reports.

Net debt of $725 million equates to a net debt to annualized adjusted EBITDA ratio of 1.4x. Saturn locked in several smaller-volume contracts in March, including collars with ceilings above $100/bbl Canadian, while maintaining its strategy of hedging 50 to 60 per cent of oil production net of royalties on a rolling 12-month basis.

Saturn has nearly filled the 12.1 million share maximum under its current NCIB, which expires in August 2026. Since program inception, Saturn has returned $59.1 million to shareholders through the repurchase of 23.2 million shares, or 11 per cent of shares outstanding at commencement.

OUTLOOK

If oil prices remain elevated and surface conditions stabilize after spring break-up, Saturn plans to restart southeast Saskatchewan development in late May or early June, earlier than originally planned. The company also intends to add a fifth rig in west-central Saskatchewan, targeting Viking and Success locations.

Q2/26 capital expenditures are expected between $35 and $40 million, subject to weather. Production is expected to average between 40,000 and 41,000 boe/d.

Article edited down for length. Used with permission.