Saturn Oil & Gas Inc. Announces 2026 Capital Budget and Guidance Designed to Optimize Free Funds Flow, Continue Debt Repayment and Preserve Long-Term Value

Executive Summary

• Saturn Oil & Gas Inc. announces its 2026 development capital budget of $180‑$190 million, targeting a flexible, low‑cost drilling program.
• Forecast average production for 2026 is 39,000‑41,000 boe/d (≈81% liquids) with an expected free‑funds‑flow yield of 25%‑35%.
• Up to 33% of the budget will be allocated to high‑return open‑hole multi‑lateral (OHML) drilling, supporting rapid payback and potential share buybacks or debt reduction.

Key Details

• Budget Allocation
• $180‑$190 M development capital; ~85% for drilling, completions, equipment & tie‑ins, ~5% waterflood, remainder for production optimization, facilities, land & seismic.

• Approximately 60% of the budget (≈$108‑$114 M) directed to Southeast Saskatchewan (SE SK) Bakken/Mississippian area; 20% to Central Alberta Cardium; balance to other initiatives.

• Drilling Program

• Total planned wells: 105 (78 net), including 32 OHML locations (21.8 net) – a 60% increase vs. 2025.
• SE SK: 77 wells (61 net); 23 conventional Mississippian wells; water‑flood expansion at Creelman with 3 re‑pressurized wells and 7 conversion to injectors.

• Central Alberta Cardium: two multi‑well pads (one 7‑well, one 6‑well) with extended‑reach horizontals up to 3 mi.

• Production & Financial Guidance

• Average annual production: 39,000‑41,000 boe/d (≈81% liquids).
• Adjusted Funds Flow (AFF): $325‑$375 M; AFF per share $1.75‑$2.00.
• Free Funds Flow (FFF): $120‑$170 M; FFF per share $0.65‑$0.95; Yield 25%‑35%.

• Year‑end Net Debt: $645‑$695 M (1.4x‑1.7x Adjusted EBITDA).

• Cost & Expense Assumptions

• Royalties: 12.0%‑12.5%; Net operating expense: $20.00‑$21.00/boe; Transportation: $1.70‑$1.85/boe; G&A: $1.70‑$1.85/boe.

• Additional capitalized administrative expenses: $15 M; Asset retirement obligations: $19 M; Lease payments (gas processing): $16 M.

• Sensitivity Analysis

• +US$5/bbl WTI → +≈$49 M AFF.
• +C$0.50/GJ AECO gas price → +≈$3 M AFF.
• +0.01 CAD/USD exchange rate → +≈$8 M AFF.

• +1,000 bbl/d oil production → +≈$25 M AFF.

• Capital Flexibility

• Budget structured for rapid scaling up/down based on commodity price movements; >40% of spend in Q3, ~30% in Q4, 20% in Q1, remainder in Q2.

• Free funds flow expected to peak in Q2 due to lower capital outlays.

• Conference Call

• Date: Thursday, December 18 2025
• Time: 8:00 am MT (10:00 am ET) – webcast link provided for live and replay access.

Notable Quotes

“In response to the near‑term WTI price outlook, we are taking a prudent approach to our 2026 capital spending profile… Our commitment to generating resilient free funds flow enables us to continue reducing leverage and remain nimble.” – John Jeffrey, President & CEO

Materiality Assessment: Material – Positive (forward‑looking guidance that materially impacts investors’ expectations of production, cash flow, debt levels, and capital allocation).