Advisory Statements TSX.V: SOIL I FRA: SMK 2

Transcription

1 Corporate Presentation August 2018

2 Advisory Statements 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 2

3 Capital Structure Trading Symbol Shares Outstanding Market Capitalization CAD) Options Warrants TSX.V : SOIL I FRA : SMK M $42.7 M CAD M M Fully Diluted M (insiders 9.12%) TSX.V: SOIL I FRA:SMK 3

4 OUR Strategy Saturn Oil + Gas Inc. deploys a three-part business strategy to accelerate shareholder growth. Acquisition of De-Risked Assets: Saturn s focus has been acquiring high quality, long life assets with proven production. Focusing on Saskatchewan's stable jurisdiction, Saturn has used its domain experience to evaluate properties that fall within its acquisition and development criteria. Mitigate Risk: Exercising fiscal prudence and maintaining a strong balance sheet will allow Saturn to maintain constant growth. Long term stability will be generated through proven land, experienced management and a strong technical team. Evolve & Expand: Proven assets and calculated execution will allow Saturn to achieve growth in reserves and production. Saturn s wells and land portfolio are its key to growth and provide long-term stability to shareholders. TSX.V: SOIL I FRA: SMK 4

5 Saturn s 2018 Outlook In July, Saturn closed a $4.04 million equity financing to execute a five well horizontal program Saturn s technical team has identified 110 gross drilling locations for its inventory Saturn currently has sections (20 net) of strategically acquired Viking and Success land in west-central Saskatchewan. The Company plans to increase this land position by 50% in Increase bookable reserves and maximize the value of Saturn s stacked Viking and Success oil production. Execute a capital investment plan of $25 million for the execution of development program + 1,250 bbls/d exit rate goal for TSX.V: SOIL I FRA:SMK 5

6 Value Creation upcoming catalysts Close $4.04 M equity financing Execute 5 horizontal wells in July 2018, brining Saturn s producing well count to 10 horizontal wells. Execute a capital investment program for $25 million Execute 14 well horizontal program to increase production to +1,250 bbls/d Increase in cashflow through production revenue Further develop assets based on results of drill program. Continue to grow assets, drill inventory and production revenue TSX.V: SOIL I FRA: SMK 6

7 OPERATIONS Viking Formation & Success Formation

8 Viking Formation Light oil growth Prairiedale Kerrobert Lucky Hills Flaxcombe Whiteside TSX.V: SOIL I FRA:SMK 8

9 Viking Formation Current Viking Producers Prairiedale Kerrobert Lucky Hills Flaxcombe Whiteside TSX.V: SOIL I FRA:SMK 9

10 Viking Formation Flaxcombe 100% working interest on all horizontal Viking wells Saturn drilled two Viking horizontals in December 2017 with IP30 results for each well in excess of 130 bbls/d. These wells were the 3 rd and 4 th highest producing Viking Horizontals in the Viking field for December 2017 In Q1/2018 Saturn drilled three additional Viking horizontal wells. These five horizontal wells are currently producing +220 bbls/d TSX.V: SOIL I FRA:SMK 10

11 Average Production Rate (bbls/d) Viking Formation Decline analysis of Saturn Wells v. offsetting producers Wells # of Months on Production TSX.V: SOIL I FRA:SMK 11

12 Viking Formation Flaxcombe Saturn s technical team have identified 33 additional Viking horizontal locations, 10 of which are PUD s. TSX.V: SOIL I FRA:SMK 12

13 Viking Formation Lucky Hills Land held 50:50 with Teine Energy, Teine as operator 4 PUD s booked with 2P reserves of $2.34 M (NPV@10%) The first well on the section was drilled, completed and brought online in late July 2018, IP30 results expected to be released in late August 2018 TSX.V: SOIL I FRA:SMK 13

14 Viking Formation Whiteside Land held 50:50 with Teine Energy, Teine as operator 4 PUD s booked with 2P reserves of $1.12 M (NPV@10%) Drilling of first extended reach horizontal anticipated for Q4/2018 Offsetting extended reach horizontals with IP30 results in excess of 200 bbls/d TSX.V: SOIL I FRA:SMK 14

15 Viking Formation Kerrobert Land held 100% by Saturn Oil 11 wells identified with bookable reserves by Sproule The first well on the section was drilled, completed and brought online in late July 2018, IP30 results expected to be released in late August 2018 TSX.V: SOIL I FRA:SMK 15

16 Viking Formation prairiedale Land held 100% by Saturn Oil 18 wells identified by technical team The first well on the section was drilled, completed and brought online in late July 2018, IP30 results expected to be released in late August 2018 TSX.V: SOIL I FRA:SMK 16

17 Viking Formation Economic Parameters Operating Costs Capital Costs Area Company Fixed Cost ($/w/mo) Variable Cost ($/bbl) Drilling (M$) Completion (M$) Equip and Tie-in (M$) Total (M$) Flaxcombe Viking Lucky Hills Viking Whiteside Viking Sproule 3, Deloitte 3, Sproule 3, Deloitte 3, Sproule 3, Deloitte 3, Saturn s current net $48.5 per barrel TSX.V: SOIL I FRA:SMK 17

18 Success Formation HEAVY oil growth Whiteside Flaxcombe TSX.V: SOIL I FRA:SMK 18

19 Success Formation Flaxcombe Saturn holds 16 gross (13 net) sections of land with highly favorable Success formation with both producing wells and 2P reserves. Two 100% WI vertical Success wells producing 30 bbls/d 3 PUD s booked with reserves of $1.68 M (NPV@10%) Saturn has identified 19 additional Success horizontal wells and one vertical Success well. TSX.V: SOIL I FRA:SMK 19

20 Success Formation Flaxcombe Petrophysical log analysis show defined Success zone across all sections 3D seismic available over proposed wells Saturn has 6 Success wells planned for 2018 TSX.V: SOIL I FRA:SMK 20

21 Economics + Capital allocation Viking Success Capital Cost (Drill, Complete, Equip & Tie-In) ($000) $751.2 $1,008.2 IP 90 (boe/d) IP 365 (boe/d) EUR (boe) 48,000 82,000 Op. Costs ($/boe) $15.1 $22.3 Realized Pricing $68.6 $42.4 Year 1 Operating Netback ($/boe) $53.5 $20.1 Before Tax Rate of Return Before Tax 10% ($000) $1, $935.9 Viking Drilling, Completions and Tie-In Capital ($000) 1 $9,725.0 Success Drilling, Completions and Tie-In Capital ($000) 1 $5,800.0 Land Acqusitions ($000) $930.0 Total 2018 Capital Expenditures ($000) $16, Assumes 15 Viking horizontals and 6 Success horizontals TSX.V: SOIL I FRA: SMK 21

22 2018 Summary Close $4.04 million equity financing Drill, complete, equip and tie-in 5 horizontal wells in Q3/2018 (3 ERH Viking horizontals, 1 half-mile Viking horizontal, 1 Success horizontal) Increase production rate, revenue and bookable reserves Execute the 2018 capital investment program from $25 million Drill, complete, equip and tie-in 13 horizontal wells in Q4/2018 (7 ERH Viking horizontals, 3 half-mile Viking horizontal, 3 Success horizontal) Achieve 2018 production exit rate of +1,250 bbls/d, representing a 400% increase in production for the year. Maintain a strong balance sheet and continue to grow reserves and drilling inventory Position Saturn for continued profitable growth. TSX.V: SOIL I FRA: SMK 22

23 Production Rate (bbls/d) Cumulative Net Operating Income (CAD) Forecasted Economics $ , $ , $ ,00 $ , $ , $ ,00 0 Current Q1/2019 Q1/2020 Q1/2021 $- Production Rate (bbl/d) Cumulative Net Operating Income (CAD) TSX.V: SOIL I FRA: SMK 23

24 Management 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 where he majored 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. 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. Geoff Jones - VP Finance 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 in-depth 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. TSX.V: SOIL I FRA: SMK 24

25 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 where he majored 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. 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. 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. 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 TSX.V: SOIL I FRA: SMK 25

26 CONTACT US Corporate Headquarters Suite Faithfull Ave. Saskatoon, Saskatchewan Canada S7K 8H4 Tel: John Jeffrey, Chief Executive Officer Cell Scott Newman, Chief Operating Officer Cell