SATurn. OIL + Gas inc. TSX.V : SOIL. October 2018 Corporate Presentation

Transcription

1 SATurn OIL + Gas inc. October 2018 Corporate Presentation TSX.V : SOIL

2 Management The ability to translate vision into reality John Jeffrey - Chief Executive Officer Mr. Jeffrey is a graduate of the University of Saskatchewan with a degree in economics and a MBA majoring in Finance. His experience as the area finance manager for a Fortune 200 engineering consulting firm gives him a strong background in operations and finance that has allowed him to successfully execute large international engineering and environmental projects. Mr. Jeffrey was the co-founder and CFO for Axiom Exploration Ltd. Scott Newman - Chief Operating Officer Mr. Newman was the CEO and founding partner of Axiom Exploration Ltd., a geological and engineering consulting company based in Saskatchewan. Mr. Newman attended the University of Saskatchewan majoring in geology. His technical and management experience within the sector, Saskatchewan in particular, brings a strong operational background to the team. Mr. Newman has been involved as an executive and director to a number of private and public oil and gas exploration companies. Geoff Jones Chief Financial Officer After graduating from the University of Saskatchewan with a Bachelor of Commerce, Geoff went on to earn his professional designation as a Chartered Professional Accountant. Mr. Jones has shared his significant tax expertise as Manager of Assurance and Owner Managed Businesses at Virtus Group LLP. His tax expertise includes advising numerous clients in a variety of industries including oil & gas, lawyers, engineers, residential and commercial construction, farm and industrial manufacturing and computer hardware/software design and manufacturing. Justin Kaufmann - VP Exploration Mr. Kaufmann is a graduate from the University of Saskatchewan with a degree in geology and is a registered Professional Geologists with APEGS. He has had roles of increasing responsibility in management and geology for both private and public companies. Mr. Kaufmann has been a consultant for Lightstream Resources and Tourmaline Energy as well as a co-founder of Axiom Energy Services. He brings with him a strong technical background and management experience to his role as Vice President of Exploration. Stuart Houle - VP Engineering & Operations Mr. Houle has worked in the oil and gas industry for over 13 years. He has held roles of increasing responsibility with Husky Energy as well Frontier Engineering Corp. and Horizon Resource Management Ltd. Mr. Houle brings a strong operational background in construction, drilling, completions, production and facility engineering. Mr. Houle is a registered Professional Engineer with APEGA TSX.V: SOIL I FRA: SMK 2

3 Directors John Jeffrey Chairman Mr. Jeffrey is a graduate of the University of Saskatchewan with a degree in economics and a MBA majoring in Finance. His experience as the area finance manager for a Fortune 200 engineering consulting firm gives him a strong background in operations and finance that has allowed him to successfully execute large international engineering and environmental projects. Mr. Jeffrey was the co-founder and CFO for Axiom Exploration Ltd. Scott Newman Director Mr. Newman was the CEO and founding partner of Axiom Exploration Ltd., a geological and engineering consulting company based in Saskatchewan. Mr. Newman attended the University of Saskatchewan majoring in geology. His technical and management experience within the sector, Saskatchewan in particular, brings a strong operational background to the team. Mr. Newman has been involved as an executive and director to a number of private and public oil and gas exploration companies. Ivan Bergerman Director Mr. Bergerman is a graduate from the University of Saskatchewan, College of Law. Mr. Bergerman started his career in 2002 practicing primarily general Corporate Commercial, Securities, M&A and Oil & Gas Law with a major Calgary law firm. In 2010 Mr. Bergerman made the decision to strike out on his own and founded what is now Bergerman Smith LLP. Mr. Bergerman s principal practice areas are Public Company Advising (having worked with companies listed on the TSX Venture Exchange, Toronto Stock Exchange, CSE, NASDAQ, NYSE and NYSE MKT LLC), Initial Public Offerings, Exempt Market Distributions, Corporate Governance, M&A, Corporate Structuring & Restructuring, Financing, Natural Resources, Intellectual Property and General Corporate and Commercial. Simon Akit Director Mr. Akit joined Canaccord Genuity in He is a Managing Director and Global Head of Energy Sales covering Canadian, U.S., and European funds with the firm s global energy product. Mr. Akit has over 20 years of experience between capital markets and the oil and gas industry. Previously, he worked at BMO Nesbitt Burns (New York) as Director Institutional Equities, Raymond James as VP Institutional Equities, and UBS Securities in Equity Research (Energy and Pipelines). Prior to, he worked at EnCana Corp as a Drilling and Completions Engineer, Drilling Foreman, and Production Operator in various parts of Canada. Mr. Akit holds a Bachelor of Engineering in Mechanical Engineering from McGill University, an MBA from the Rotman School of Management (University of Toronto), and is a registered Professional Engineer with APEGA. Calvin J. Payne Director Mr. Payne has a Bachelor of Applied Science from the University of British Columbia, an MBA from the University of Western Australia, and has been Registered as a Professional Engineer in many provinces, states and territories in Canada, the USA and Australia. Mr. Payne worked in the communications tower construction and ownership industry for 40 years, as a field construction worker, design engineer, and manager in Canada, Saudi Arabia, Australia and the USA. Mr. Payne, co-founded WesTower Communications in 1990 and as CEO led it through a highly successful IPO on the American Stock exchange in Mr. Payne led a team of partners in taking the company back private in 2003 and growing it to the largest company of its type in both Canada and the USA. The company was sold in 2011 and Mr. Payne retired from its operations in Chris Ryan Director Mr. Ryan is the Director of Midstream for Tundra Energy Marketing Ltd. (TEML). Prior to that, he was the Director of Operation Services for TEML and Exploitation Engineer with Tundra Oil and Gas. He has published 25 scientific publications, many of which were published during his time as a Research Scientist at the Canadian Light Source Inc. Chris currently sits on the Board for the Canadian Crude Quality Technical Association (CCQTA) as the Director of Midstream, and he is the Co-Chair of the Sampling and Frequency Working Group for the Crude Oil Quality Association (COQA). Chris is also an honorary founding member of the Global Institute of Water Security and is on various Canadian Association of Petroleum Producers (CAPP) Committees, specifically the CAPP Equalization Steering Committee and is a voted Working Group member of the Canadian Transportation of Dangerous Goods General Policy Advisory Council for Classification. TSX.V: SOIL I FRA: SMK 3

4 Our Strategy How it all comes together Acquisition of Premium Assets Saturn s focus has been to acquire premium light oil assets with proven production. The Viking has provided high netbacks with strong capital efficiencies. Evolve & Expand Proven assets and calculated execution will allow Saturn to achieve growth in reserves and production. Saturn has used its domain experience to evaluate properties that fall within its exploration and development criteria. Mitigate Risk Exercising fiscal prudence and upholding a strong balance sheet will allow Saturn to maintain constant growth. Shareholder Value Saturn s growth, execution and experienced management team will provide long-term stability and value to shareholders. TSX.V: SOIL I FRA: SMK 4

5 Saturn Profile TSX.V: SOIL Shares Outstanding M Options 24.5 M Warrants 59.3 M Insiders (FD) 8% Market Capitalization (@0.27$ CAD) $54.8 M CAD 2018 Exit Production Rate 1,250 bbl/d % Light Oil 90% 2018 Netback ($/boe) $49.5/bbl 2019 Netback* ($/boe) $52.5/bbl Taxable Loss Carry-Forwards Prudential Capital Debt $11.6 M CAD $26 M CAD *Projected Operating Netback TSX.V: SOIL I FRA:SMK 5

6 Health, Safety & Environment Safety is about more than compliance, it is the foundation of our value chain that leads to a more sustainable future Safety Culture Saturn is committed to protecting the health and safety of employees, contractors, stakeholders and the public through proper policies, procedures, standards and training. Environmental Focus Saturn is committed to implementing industry best practices to minimize adverse effects on the environment. Our People Our employees are encouraged to promote a culture that focuses on personal and professional development. Community Involvement Saturn works where it lives. Our relationships with our community and stakeholders is what allows us to grow. TSX.V: SOIL I FRA:SMK 6

7 Core Operations Viking Light Oil + Success Heavy Oil in West-Central Saskatchewan TSX.V: SOIL I FRA:SMK 7

8 Land Position Viking Light Oil + Success Heavy Oil in West-Central Saskatchewan Prairiedale Plenty Milton Kerrobert Lucky Hills Dodsland Whiteside Flaxcombe Plato TSX.V: SOIL I FRA:SMK 8

9 Viking Light Oil Resource Play Viking Light Oil Depth m Oil Quality API Well Spacing 150 m Undrilled Locations +125 Viking Economic Parameters* DCET $950,000 IP bbls/d Reserves mbbls NPV10 BT $1,135.1 M Payout yrs ROR 190% Operating Netbacks $48-$52/bbl *ERH Viking well, Sproule Q4/2018 Price Deck High Netbacks & Low Capex to Generate Significant Cash Flow TSX.V: SOIL I FRA:SMK 9

10 Horizontal Drill Inventory Drilling Inventory Building our platform for growth Q1/2017 Q2/2017 Q3/2017 Q1/2018 Q2/2018 Q3/2018 Q4/2018 Q1/2019 Q2/2019 TSX.V: SOIL I FRA:SMK 10

11 Development Plan From step outs to full field development Plato Saturn 100% working interest Viking Formation 2 wells planned to be drilled in Q4/2018 offsetting wells have cumulative production over 45,000 bbls 5 additional wells immediately planned Prairiedale Saturn 100% working interest Viking Formation 4 wells drilled to date Initial production average rate 160 bbls/d (IP30) 8 additional wells immediately planned TSX.V: SOIL I FRA:SMK 11

12 Barrels of oil/day Saturn Well Type Curves How our extended reach horizontal Vikings compare to our peers Comparative Prairiedale Viking Type Curve Saturn Prairiedale HZ VKG Sproule Prairiedale HZ VKG Offset Prairiedale HZ VKG Production Months TSX.V: SOIL I FRA:SMK 12

13 Development Plan From step outs to full field development Kerrobert Saturn 100% working interest Viking Formation 2 wells drilled to date Initial production average rate 100 bbls/d 10 additional wells immediately planned Plenty Saturn 100% working interest Viking Formation Recently acquired due to favorable Viking reservoir Offsetting Teine ERH wells with IP30 results over 60 bbls/d Plan to drill first well Q3/2019 TSX.V: SOIL I FRA:SMK 13

14 Barrels of oil/day Saturn Well Type Curves How our extended reach horizontal Vikings compare to our peers Comparative Kerrobert Viking Type Curve Saturn Kerrobert HZ VKG Sproule Kerrobert HZ VKG Offset Kerrobert HZ VKG Production Months TSX.V: SOIL I FRA:SMK 14

15 Development Plan From step outs to full field development Flaxcombe Saturn 100% working interest Viking Formation 6 wells drilled to date Initial production average rate 85 bbls/d (IP30) 11 additional wells immediately planned Stacked pay, Success heavy oil below Viking light oil Milton Saturn 100% working interest Viking Formation 2 wells drilled to date Offsetting Viking wells with 190 bbls/d (IP30) 10 additional wells immediately planned TSX.V: SOIL I FRA:SMK 15

16 Barrels of oil/day Saturn Well Type Curves How our extended reach horizontal Vikings compare to our peers Comparative Flaxcombe Viking Type Curve Saturn Flaxcombe HZ VKG Sproule Flaxcombe HZ VKG Offset Flaxcombe HZ VKG Production Months TSX.V: SOIL I FRA:SMK 16

17 Development Plan From step outs to full field development Lucky Hills Saturn 50% : Teine Energy 50% (Teine Operator) Viking Formation 1 well drilled to date Whiteside Saturn 50% : Teine Energy 50% (Teine Operator) Viking Formation 1 well licensed to drill Q4/2018 Offsetting wells production average rate 200 bbls/d (IP30) TSX.V: SOIL I FRA:SMK 17

18 Well Count Production Rate (bbls/d) Production Growth 60 ~ TSX.V: SOIL I FRA:SMK 18

19 Revenue and Netbacks Projected Operating Netbacks based on Realized Price* and Operating Costs $90.00 $90.00 $80.00 $80.00 $70.00 $70.00 $60.00 $50.00 $47.31 $45.28 $52.39 $54.93 $53.62 $53.82 $52.51 $51.91 $50.83 $50.68 $51.18 $52.96 $54.17 $53.53 $52.76 $51.93 $60.00 $50.00 $40.00 $40.00 $30.00 $30.00 $20.00 $20.00 $10.00 $10.00 $- Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Realized Price ($/bbl) Operating Costs ($/bbl) Operating Netback ($/bbl) $- *Sproule Q4_2018 Price Deck TSX.V: SOIL I FRA:SMK 19

20 2P Reserves (bbls) 10% BT Significant Growth Planned* 7,000,000 5,937,500 $94,758, $100,000, ,000,000 $90,000, $80,000, ,000,000 3,554,000 $58,333, $70,000, ,000,000 2,887,500 $45,586, $60,000, $50,000, ,000,000 $40,000, ,000,000 1,288,500 $15,484, $30,000, ,000, ,000 $1,981, ,000 $3,211, ,200 $10,529, $20,000, $10,000, Q1/2017 Q2/2017 Q3/2017 Q4/2017 Q1/2018 Q2/2018 Q3/2018 Q4/2018 2P Reserves (bbls) 10% $- *Based on Deloitte , Sproule Q3/2018 Valuation and Proforma Projections TSX.V: SOIL I FRA:SMK 20

21 Capital Expenditures for 2018 & Land Acquisition $ 2, 2 0 0, Seismic Acquisition & Interpretation $ 8 5 0, Drilling, Completions, Equipment & Tie -In (24 horizontal wells) $ 2 2, 5 0 0, Total $ 2 5, 5 5 0, Land Acquisition $ 2, 1 0 0, Seismic Acquisition & Interpretation $ 8 5 0, Drilling, Completions, Equipment & Tie -In (30 horizontal wells) $ 2 8, 0 0 0, Total $ 3 0, 9 5 0, TSX.V: SOIL I FRA:SMK 21

22 Contact Us Corporate Headquarters Suite Faithfull Ave Saskatoon, Saskatchewan Canada S7K 8H4 Phone: +1 (306) Website: Symbol: TSX.V: SOIL TSX.V: SOIL I FRA:SMK 22

23 Forward Looking Statement This presentation contains "forward-looking statements" including estimates of future production, cash flows and reserves, business plans for drilling and exploration, the estimated amounts and timing of capital expenditures, the assumptions upon which estimates are based and related sensitivity analyses, and other expectations, beliefs, plans, objectives, assumptions or statements about future events or performance (often, but not always, using words or phrases such as "expects" or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "estimated" or "intends", or stating that certain actions, events or results may", "could", "would", "might" or "will" be taken, occur or be achieved). In particular, this presentation contains forward-looking statements pertaining, to the following: the Company's anticipated 2018 land action approval, capital budget and average daily production, using internal funding to complete future acquisitions; the ability of the Company to maintain its balance sheet strength; type well economics and performance; drilling inventory and reserve life index expectations; the anticipated impact of technical advancements on productivity and decline rates and ultimate recoveries; the Company s strategy to increase recovery factors; the ability of the Company to manage the current oil price environment the Company s business strategy (including development, enhancement, acquisition and risk management); capital cost, cost per well, NPV, rate of return and payout. Statements relating to "reserves" are deemed to be forward looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future. There are numerous uncertainties inherent in estimating crude oil, natural gas and NGL reserves and the future cash flow attributed to such reserves. All forward-looking statements are based on Saturn's beliefs and assumptions based on information available at the time the assumption was made. Saturn believes that the expectations reflected in these forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this presentation should not be unduly relied upon. By their nature, such forward-looking statements are subject to a number of risks, uncertainties and assumptions, which could cause actual results or other expectations to differ materially from those anticipated, expressed or implied by such statements. In addition, risk factors include: financial risk of marketing reserves at an acceptable price given market conditions; volatility in market prices for oil; delays in business operations; processing restrictions; blowouts; the risk of carrying out operations with minimal environmental impact; industry conditions including changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced; uncertainties associated with estimating oil and natural gas reserves; economic risk of finding and producing reserves at a reasonable cost; uncertainties associated with partner plans and approvals; operational matters related to non-operated properties; increased competition for, among other things, capital, acquisitions of reserves and undeveloped lands; competition for and availability of qualified personnel or management; incorrect assessments of the value of acquisitions and exploration and development programs; unexpected geological, technical, drilling, construction and processing problems; availability of insurance; fluctuations in foreign exchange and interest rates; stock market volatility; failure to realize the anticipated benefits of acquisitions; general economic, market and business conditions; uncertainties associated with regulatory approvals; uncertainty of government policy changes; uncertainties associated with credit facilities and counterparty credit risk; and changes in income tax laws, tax laws, crown royalty rates and incentive programs relating to the oil and gas industry. These risks and uncertainties could cause actual results or other expectations to differ materially from those anticipated, expressed or implied by such statements. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent. Saturn assumes no obligation to update forward-looking statements should circumstances or management's estimates or opinions change. Certain information contained herein have been prepared by third-party sources. The information provided herein has not been independently audited or verified by the Company. TSX.V: SOIL I FRA: SMK 23