Saturn Oil & Gas Inc. Announces Second Quarter 2025 Results Highlighted by $119MM Net Debt Reduction Over Q1/25 and Record Free Funds Flow

Executive Summary

• Saturn Oil & Gas Inc. reported Q2 2025 financial results, highlighting a record Free Funds Flow of $93 million and a significant reduction in net debt to $695 million.
• Production averaged 40,417 boe/d, exceeding the high end of guidance, while net operating expenses came in at $18.28/boe, beating the low end of the guidance range.
• The company returned approximately $24 million to shareholders since August 2024 through share buybacks and closed a Substantial Issuer Bid (SIB), with plans to continue maximizing repurchases under the Normal Course Issuer Bid (NCIB).

Key Details

• Production: Average production of 40,417 boe/d for Q2 2025 (30,150 bbls/d crude oil, 3,310 bbls/d NGLs, 41,740 mcf/d natural gas).
• Financial Performance:
  • Adjusted EBITDA: $131.7 million (up 24% vs Q2 2024).
  • Adjusted Funds Flow (AFF): $108.9 million ($0.56/share basic).
  • Free Funds Flow: $93.0 million ($0.48/share basic), a record for the quarter.
  • Net Income: $95.1 million ($0.49/share basic).
• Balance Sheet & Debt:
  • Net debt reduced by $119.1 million to $694.8 million (15% decline from Q1/25).
  • Net debt to annualized quarterly Adjusted EBITDA ratio improved to 1.3x from 1.4x at year-end 2024.
  • Repurchased $19.8 million (US$16.3 million) principal amount of Senior Notes in April 2025 at a discount to par.
• Capital Allocation & Shareholder Returns:
  • Returned $3.3 million to shareholders in Q2 via repurchase of 2.0 million common shares at a weighted average price of $1.65/share under the NCIB.
  • Closed the inaugural Substantial Issuer Bid (SIB) on July 16, 2025; only 1.6 million shares were tendered, resulting in an additional $3.5 million returned to shareholders.
  • Total capital returned to shareholders from August 2024 to July 30, 2025, totaled ~$24 million, reducing shares outstanding to ~193 million.
  • Remaining NCIB capacity: 11.3 million shares available to be purchased by August 26, 2025 (9.6 million repurchased as of release date).
• Operational Efficiency:
  • Net operating expenses: $18.28/boe (beat guidance low of $20.00/boe).
  • Operating netback (net of derivatives): $35.84/boe.
  • Capital expenditures: $15.8 million, primarily for turnaround and facilities investments; drilled one gross non-operated well.
• Strategic Updates:
  • Terminated certain 2026/2027 WTI swap contracts for $2.3 million.
  • Saskatchewan carbon tax elimination expected to yield up to $20 million in annual operating cost savings.
  • First Viewfield waterflood project initiated at Creelman field by end of July.
• Q3 2025 Outlook:
  • Capital expenditures anticipated between $80–$90 million.
  • Planned drilling of ~21 wells.
  • Expected production average: 37,000–38,000 boe/d.

Notable Quotes

• "Saturn has continued to deliver results from our blueprint strategy, with net debt reduction of nearly $120 million between Q1/25 and Q2/25 exceeding the original expectations... This outperformance was achieved through scheduled quarterly principal repayments, an opportunistic open-market purchase of our bonds below par, and the benefit of foreign exchange rates." — John Jeffrey, CEO
• "Our strong operational performance is evidenced by quarterly production exceeding the high end of our guidance range for another consecutive quarter; operating costs coming in below the low end of guidance; and several Saturn wells being ranked among the highest performers in Saskatchewan..." — John Jeffrey, CEO