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Production / Operations

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

By The Northwire Desk — AI Analysis Dec 17, 2025 · 17:13 SOIL · 2.34 SATURN OIL & GAS INC.
SOIL · Price

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).

Read the original news release →

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