Original-Research Saturn Oil & Gas Inc. (von GBC AG):
Original-Research: Saturn Oil & Gas Inc. - von GBC AG
Einstufung von GBC AG zu Saturn Oil & Gas Inc.
Unternehmen: Saturn Oil & Gas Inc.
Anlass der Studie: Transaction Update
Analyst: Julien Desrosiers; Felix Haugg
'Oxbow acquisition is transformative and will transform Saturn Oil & Gas into a leading producer and land holder throughout Saskatchewan'
Saturn Oil & Gas acquires the Oxbow asset
Saturn Oil & Gas has entered into an agreement to purchase the Oxbow assets for approximately 93M CAD. The Oxbow's assets are located in Southeast Saskatchewan and consist of 450 sections of land which produce approximately 6700 boe/d. The Oxbow property is a mature asset that has extensive infrastructure and facilities with direct pipeline connections to the global sales network. Through the transition Saturn will also be hiring all the employees who are currently working on the properties, thus ensuring a smooth transition in daily production and operations. Saturn Oil & Gas, after the closing of the transaction, will become a major player in the southeast Saskatchewan oilfield, comparable in size to Headwater Exploration, Yangarra Resources and Topaz Energy. More importantly Saturn Oil & Gas estimated 2021 production will consist of 95% liquid oil and only 5% gas.
The 5 main highlights of the transaction include:
1. Over 2,000% increase in daily boe production.
2. Lean and cost efficiency structure.
3. Prime assets with proven low depletion rates.
4. Pipeline to international markets.
5. Significant reduction in debt leverage of the company.
These assets in our opinion will also be generating a massive positive cashflow, allowing for both the maintenance of the oil production at current level and the initiation of an aggressive debt payback program.
The total acquisition costs are approximately 102M CAD composed of the following elements: 93M CAD as purchase price and 9M CAD in additional fees.
The financing of the transaction will be completed in 3 parts; previous earned cash flow, debt and capital raised. The effective date of the acquisition is April 1, 2021, meaning from this date forward all profits made from the production of the acquired assets are transferred to Saturn Oil & Gas. This amount is estimated at 14.7M CAD. The second part is a senior debt of 82M CAD secured by Saturn Oil & Gas assets. This debt runs at an interest rate of 11% + Prime adjusted quarterly for three (3) years, therefore corresponding to a 12.50% annual interest rate. The third part of the financing will be raised capital, which is currently underway. Saturn Oil & Gas is intending to complete a private placement of 15M CAD, with a second capital raise undertaken simultaneously with Echelon Wealth Partners Inc. to complete a 6M CAD best effort private placement.