Saturn Oil & Gas Inc.

First-quarter production was over 43,100 BOE/d, beating analyst expectations for the seventh consecutive quarter and exceeding quarterly guidance by more than 1,600 BOE/d. Adjusted funds flow was $170 million, or $0.59 per basic share, and free funds flow was $62 million; management said both beat average analyst consensus by 5% and 13%, respectively. Royalties averaged about 11%, operating costs were $20.49 per BOE, and the company recorded a realized hedging loss of $21 million, or $5.45 per BOE, plus a large unrealized hedging loss that hurt reported earnings but was noncash. Net debt declined 5% from year-end 2025 to approximately $725 million, with $150 million of credit capacity, a $14 million draw at quarter end, and over $1.6 billion of tax pools. For Q2 2026, Saturn expects capital spending of $35 million to $40 million and quarterly volumes of 40,000 to 41,000 BOE/d; management said it may update full-year 2026 capital if oil remains elevated.

John Jeffrey struck an opportunistic but disciplined tone, emphasizing that Saturn’s strategy is to protect downside, reduce debt, and improve per-share value while staying flexible on capital. He said the company may accelerate drilling into Q2 because breakup limits activity and the stronger oil strip supports earlier spending, with potential to revisit the full-year budget if prices stay high. He also highlighted buybacks, tuck-in acquisitions, and the company’s ability to ramp activity without harming the asset base.

Scott Sanborn focused on cash generation, leverage, and hedging. He said adjusted funds flow was $170 million and free funds flow was $62 million, while net debt ended Q1 at about $725 million, down 5% from year-end 2025; liquidity included a $150 million facility and a $14 million draw. He also said the company repurchased about 3.7 million shares for over $12 million in Q1, with another $3.4 million spent after quarter-end, and noted Saturn has more than $1.6 billion of tax pools and does not expect to become cash taxable until 2028 and beyond under its current strategy. On debt, he said the non-call feature on the U.S.-denominated senior notes rolls off June 15 and the first step-down premium is 4.81%, roughly USD 24 million if refinanced.

Analysts pressed management on what oil price level would trigger a bigger capital ramp, and John Jeffrey said Saturn is looking for stability, with sustained prices in the mid- to upper-$70s prompting a hard look and prices around $80 or higher allowing up to about a 50% expansion from the current plan. On hedging and debt, management said the company must maintain 50% rolling hedges for the next 12 months while currently running at 55% to 60%, and Scott added that the bond non-call feature ends June 15 with a 4.81% first step-down premium. Questions also focused on a large shareholder’s filed intention to sell shares; Jeffrey said such filings are routine, the shareholder relationship remains positive, and he was not concerned based on historical behavior.