Savvy Trades and Investments

[Bobwins]

Saturn Oil & Gas SOIL.v/OILSF C$2.64/US$2.00

Found this growing oil producer in Canada. Fairly new company that has been acquiring private producers in the Viking play in Saskatchewan. Viking is a pretty boring play in South Saskatchewan. Even with horizontal wells, the production is typically 60-100 bpd. This is a pure play on oil. There is less than 5% ngas, a similar amount of ngl liquids and the rest light oil. These are cheap wells to drill, around $1+million per well. The wells are fairly long life, with the ability to extend production thru waterfloods. This is not shale, the wells are fracked but don't need nearly as much stimulation to produce as in Texas.

Saturn recently(7/22) closed a C$240.1 million acquisition of a private Canadian producer near their other holdings. This added 4,000boepd to production and greatly increased revs and cashflow. The acquisition was done thru $200 million in debt and $75million in equity raises. The former owners were not given shares so there shouldn't be as much hangover from them selling near term. BUT the equity investors did get warrants and so some are likely selling the stock and holding the warrants for future appreciation. Financing was at C$2.75 with 1/2 warrant with a 7/23 maturity and C$3.20 strike price.

Here is the Q3 earnings report: https://finance.yahoo.com/news/saturn-oil-gas-inc-reports-221200843.html

Sales of C$105.7MM, funds flow of C$39.8MM or .69/share. That's ;why I bought some this morning. .69X4= C$2.76 fwd funds flow vs today's share price of C$2.67. Less than 1 X fwd cashflow!

That funds flow includes some hedging profits because the company did take out some hedges in July when oil prices were higher. But still extremely cheap.

The debt is fairly short term. They have to pay it back over the next 3 years. Terms are fairly expensive at CDOR+11.5% with 50% paid back the first year, 30% the second and 20% the third.

Here's where to download latest company presentation:
https://saturnoil.com/invest/presentations

They have a 15 year inventory of low risk, high payback oil wells. They have already drilled 30 wells on the new property with 100% success. I think this is dirt cheap and has the typical overhang from a recent financing. The fully diluted share count if all the warrants are exercised is ~102million shares.