Saturn Oil and Gas Hits Record Q2 Production of 41,000 BOE per Day and Raises 2026 Exit Target to 50,000

Saturn Oil and Gas Inc. reported record production of more than 41,000 barrels of oil equivalent per day in the second quarter of 2026, exceeding its guidance range for the eighth consecutive quarter. The Calgary-based producer, which trades on the Toronto Stock Exchange as SOIL and on the OTCQB as OILSF, recorded its highest-ever quarterly revenue at CAD 359 million. Adjusted funds flow reached CAD 123 million, or CAD 0.68 per share, while free cash flow came in at CAD 82 million, or CAD 0.46 per share.

Three-Basin Light Oil Strategy Drives Record Output

Saturn operates across three distinct Canadian light oil plays: the Oxbow area of southeast Saskatchewan, Viking light oil assets in west-central Saskatchewan, and Cardium light oil in central Alberta including the West Pembina area. The company has budgeted 156 total wells in 2026, split roughly 64 percent in southeast Saskatchewan, 24 percent in west-central Saskatchewan, and 12 percent in Alberta. Its Cardium program includes a seven-well extended reach horizontal pad at West Pembina, with wellbores reaching up to three miles in length. Liquids account for approximately 84 percent of Saturn's production mix, weighting the portfolio toward light and medium crude oil.

Two Tuck-In Deals Add 4,000 BOE per Day and Raise Exit Guidance

Saturn raised its year-end 2026 exit production target to 48,000-50,000 boe per day, up from prior guidance. Two tuck-in acquisitions, Burgess Creek and Triland Energy, completed in July 2026, contribute approximately 4,000 boe per day to the revised exit rate. Both deals closed at less than 2.0 times cash flow and carry expected synergies of CAD 2.50 to CAD 3.00 per barrel. Full-year adjusted funds flow guidance now stands at CAD 535-570 million, a roughly 60 percent increase from Saturn's original 2026 budget.

Oil Authority Calculation: Refinancing Saves CAD 19 Million per Year

Saturn refinanced its senior secured notes into senior unsecured notes in 2026, cutting the coupon rate by more than 200 basis points and extending maturity to 2031. At Saturn's projected year-end net debt of CAD 955-990 million, a 200 basis point rate reduction translates to approximately CAD 19 million in annual interest savings. The shift from secured to unsecured debt also removed a mandatory 50 percent hedging requirement, giving management latitude to target a 40 to 60 percent hedge ratio based on market conditions. Net debt to proforma adjusted EBITDA is expected to fall to 1.3x-1.5x by year-end, inside the prior guidance band of 1.4x-1.7x.

WTI Above Saturn's Planning Base Creates Further Upside

Saturn's 2026 guidance assumes WTI at US$80.00 per barrel and a WCS-WTI differential of US$15.50 per barrel. WTI settled at US$84.67 per barrel on Friday's CME close, per CME Group, US$4.67 above Saturn's base case. Oil Authority's July market coverage tracked WTI's 20 percent monthly gain through July 31, driven by Iran-war supply disruptions. That rally has left most Canadian light oil operators above their H2 planning assumptions. Saturn's H2 sensitivity of approximately CAD 20 million in adjusted funds flow per US$5 per barrel WTI change implies an additional CAD 18.7 million in AFF at current prices relative to guidance, pointing toward the top of its CAD 535-570 million full-year guidance range.

CEO Commentary and 2027 Capital Outlook

CEO John Jeffrey called Q2 a showcase of operational capability, noting the team "again exceeded guidance for the eighth consecutive quarter" and expressed confidence in expanding the capital program "into a constructive oil price environment." Saturn's full-year capital program of CAD 365-385 million is funded from operating cash flow at current strip prices. Free cash flow guidance of CAD 150-200 million provides additional capacity for debt reduction and opportunistic tuck-in deals. The company estimates it will need approximately CAD 400 million per year in capital to sustain production at the 49,000 boe per day level into 2027.