Resource World Magazine

64 www.resourceworld.com O C T O B E R / N O V E M B E R 2 0 1 9 Saturn Oil & Gas posts record Saskatchewan production A t a time when the oil and gas sector is characterized more by its struggles than its successes, one Calgary, Alberta firm is bucking the trend. Saturn Oil & Gas Inc. [SOIL-TSXV; SMK-FSE] achieved record production in the first half of 2019, according to results released in late August, achieving 857 barrels of oil per day (bbls/d), a 426% increase over the same period in 2018, and average volumes of 834 bbls/d over the first half of the year, a level 369% higher than in the first six months of 2018. Saturn Oil & Gas (formerly Saturn Minerals Inc.) is focused on the acquisition and development of undervalued, low-risk assets. The company is driven to build a strong portfolio of cash- flowing assets with strategic land positions, engaging in the acquisition, exploration, evaluation, and development of energy and resource deposits from the Viking light oil play in west- central Saskatchewan. It also concentrates on the production of hydrocarbons from properties in the western Canadian sedimen- tary basin. The company was founded on August 16, 2001 and went pub- lic in 2005 before switching its business plan from minerals to oil and gas in 2017, and has a focused management and strong tech- nical team with more than 25 years of oil and gas experience. "We wanted to take it in a new direction and start with a clean slate" said CEO and board chairman, John Jeffrey, who was asked to lead the new company, along with Chief Operating Officer Scott Newman, after the duo spent time as consultants to Saturn Minerals. Directly related to Saturn's successful drilling program, its production growth and cost control measures; the company gen- erated revenue of C$10 million in the first half of this year, 367% higher than the same period in 2018. "Saturn's record production volumes and robust financial results to date, in 2019, have demonstrated the high-quality nature of our light oil-weighted Viking asset base, combined with strong operational performance," Jeffrey said in a statement. "Building on the momentum achieved over the first two quar- ters of this year, we have commenced our second-half drilling program while continuing to accumulate prospective land in our portfolio, with the ultimate goal of delivering meaningful share- holder returns despite a very challenging market environment." Jeffrey attributed this year's success to the team Saturn has assembled. Necessity breeds a lot of things and we don't have the money others have, but our exploration and development (E&D) team…saw some things others missed." That led to the purchase of four of 12 sites in the Prairiedale area of the Viking play in Saskatchewan. Saturn's second-half 2019 drilling program commenced in early August with the drilling of five extended reach horizontal (ERH) wells and production that quickly reached 130-150 bbls/d. All were expected to be completed and equipped by early September and online and producing by the end of that month, which the company expects to have a posi- tive impact on production volumes for the fourth quarter of 2019. "Before, no one bid on this land but we did and now we want bigger land positions," said Jeffrey. Newman added that no wells had been drilled in Prairiedale since 2015 but Saturn's team saw the opportunity as 'the tip of the sword ' and they took a 'calcu- lated risk'. "We've been able to find undervalued properties and drill with the same economies of scale as the big companies," Newman said. "That's meant success even with the volatile oil prices." The industry faces many problems, Jeffrey said, including scarcity of capital. A major disappointment was the failure of the new Alberta government to support the industry. – "We hoped for more" – and the 2015 Redwater court case over requirements of defunct firms to clean up their well sites, which resulted in the Supreme Court of Canada ruling that site cleanups took prece- dence over repaying creditors after a firm's bankruptcy. "We had hoped this would give us some guidance but instead, this ambi- guity adds risk to creditors." Credit also goes to Saturn's drilling team, which has gone 'neck and neck with the big guys', Jeffrey said, working with engineer- ing to bring sites online 'as cheaply as the next guy '. But he said Oil Patch Report by Bruce Lantz Drilling for oil in Saskatchewan. Photo courtesy Saturn Oil & Gas Inc.

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