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Q4 AND 2024 HIGHLIGHTS

• Record Q4/24 production of 41,051 boe/d, and 41,908 boe/d exit production⁽²⁾⁽⁴⁾ exceeding our previous guidance range of 39,000 to 40,000 boe/d.

• Adjusted EBITDA⁽¹⁾ was $152.8 million in Q4/24, 13% higher than Q3/24, and 2024 Adjusted EBITDA⁽¹⁾ increased 33% over 2023 to $483.0 million.

• Record Q4/24 Adjusted Funds Flow ("AFF")⁽¹⁾ of $129.2 million ($0.64/share basic), up 37% over Q3/24, with $380.1 million ($2.10/share) of AFF⁽¹⁾ generated during 2024, a 37% increase over 2023.

• Free funds flow⁽¹⁾ totaled $133.8 million ($0.74/share basic) in 2024, representing a free funds flow yield^(1)(15) of 39%, contributing to Saturn's return of capital initiatives, improvements in per share metrics and systematic net debt reduction, with $23.8 million ($0.12/share basic) generated in Q4/24.

• Lower net operating expenses⁽¹⁾ of $18.35 per boe in Q4/24 and $19.01 per boe in 2024 outperformed expectations, coming in below Saturn's 2025 guidance of $20.00 to $20.60 per boe due to operational efficiencies realized on the South SK Acquisition properties and increased processing income, with costs allocated across higher volumes.

• Invested $105.4 million in capital expenditures⁽¹⁾⁽⁵⁾ in Q4/24 directed to the drilling of 33 (26.2 net) wells, with $246.3 million⁽⁵⁾ invested during 2024 to drill 97 (81.6 net) wells.

• Net income of $54.1 million ($0.30/share basic) in 2024, and a loss of $(26.3) million ($(0.13) per share basic) in Q4/24, stemming from non-cash items.

• Net debt⁽¹⁾ of $860.2 million at year end 2024 drove leverage metrics of 1.4x net debt to annualized quarterly Adjusted EBITDA⁽¹⁾ and 1.7x net debt to annualized quarterly adjusted funds flow⁽¹⁾, largely due to the impact of a weaker Canadian dollar, while the principal on our Senior Notes declined 5% to US$617.5 million (from US$650.0 million at June 30/24) following two debt prepayments in the second half of 2024.

  • Saturn’s foreign exchange (“FX”) hedges lock in the first three years’ principal and interest payments on our US denominated debt, notionally offsetting $20.0 million of the increase in year end net debt due to FX changes.

• Liquidity maintained with $48.4 million of cash on the balance sheet plus a $150.0 million reserves-based revolving credit facility, fully undrawn at year end 2024.

• Returned $10.2 million to shareholders through year end 2024 with the purchase of 4.5 million common shares at a weighted average price of $2.28/share under our normal course issuer bid ("NCIB"), equating to $0.06 per weighted average basic share.

• Core-up strategy demonstrated with $20.5 million tuck-in acquisition of Cardium assets in the Brazeau area of Alberta on October 1, 2024, bolstering our production and land position immediately proximal to where Saturn drilled four of our most productive wells earlier in 2024.

EVENTS SUBSEQUENT TO YEAR-END 2024

• Additional $4.7 million directed to the repurchase of a further 2.24 million common shares to March 12, 2025, at a weighted average price of $2.11/share, further enhancing Saturn's per share metrics, and bringing the total shares repurchased to 6.7 million, or $14.9 million returned to shareholders. This represents 6% of our public float as at the commencement of the NCIB, or just over 3% of our current outstanding share count.

• Further price protection with incremental oil hedges on 5,000 bbl/d through the balance of 2025 at a floor price of C$100/bbl, plus additional natural gas hedges for 2025, 2026 and into Q1 2027, at prices ranging from $2.00/GJ to $3.35/GJ.

2024 RESERVES HIGHLIGHTS

• Reserves growth across all categories vs 2023:

  • Proved Developed Producing ("PDP") increased 42% to 86.7 million boe⁽³⁾ ("MMboe");

  • Total Proved ("1P") increased 36% to 132.5 MMboe⁽³⁾; and

  • Total Proved + Probable ("2P") increased 38% to 200.1 MMboe⁽³⁾.

• Increased liquids-weighting of our reserves with light and medium oil, heavy oil and natural gas liquids ("NGL") comprising 85%, 84% and 83% of PDP, 1P and 2P reserves, respectively.

• Enhanced PDP net present value ("NPV") of future net revenue discounted at 10% before tax ("NPV₁₀ BT")⁽³⁾, which increased 41% over 2023, totaling $2.0 billion⁽⁷⁾ ($9.87 per share), while 1P was $2.5 billion⁽⁷⁾ and 2P was $3.6 billion⁽⁷⁾, increases of 28% and 29% over 2023, respectively.

• Net asset value ("NAV") per share⁽¹⁾⁽³⁾ reflects clear disconnect between Saturn's market value and underlying reserves value, supported by continued asset development and ongoing NCIB purchases, with NAV per basic share of $5.56 on PDP, $8.36 on 1P, and $13.77 on 2P.

• Booked first waterflood reserves in 2024 with 0.6 MMboe of 2P additions at Viewfield, and booked 26 open hole multi-lateral ("OHML") locations targeting the Bakken at Viewfield and the Spearfish at Manor.

• Expanded inventory of future drilling opportunities, with over 1,100 booked drilling locations⁽³⁾, approximately 27% higher than in 2023, with increases to booked locations of 27% in Southeast Saskatchewan, 49% in West Saskatchewan and 8% in Alberta.

• Booked incremental reserves, stemming from extensions, improved recovery, infill drilling, technical revisions, discoveries and economic factors:

  • PDP additions totaled 6.3 MMboe or 10% of 2023 PDP reserves

  • 1P additions totaled 6.8 MMboe or 7% of 2023 1P reserves

  • 2P additions totaled 10.6 MMboe or 7% of 2023 2P reserves

• Reserve life index ("RLI")⁽³⁾ represents extensive development runway for Saturn, with approximately 6 years for PDP reserves, 9 years for 1P and 13.5 years for 2P.

• Robust 2024 production replacement⁽³⁾ across all categories, including 304% on a total PDP reserves basis, 379% on 1P and 538% on 2P.

• Recorded Finding, Development & Acquisition ("FD&A") costs^{(3)(10)(11)(13)} on 2P reserves, including change in future development costs ("FDC")⁽³⁾, of $19.82/boe, generating a recycle ratio^(3)(12) of 2.2x on our 2024 operating netback⁽¹⁾ of $43.07/boe (before realized losses on derivatives), and generated 2P F&D costs (excluding FDC)⁽¹⁰⁾ of $21.99/boe in 2024, resulting in a recycle ratio^(3)(12) of 2.0x.

FINANCIAL AND OPERATING HIGHLIGHTS

 

OPERATIONS OVERVIEW

Saturn safely and seamlessly integrated the South SK Acquisition assets into the portfolio during the latter half of 2024, with our operations team identifying and actioning numerous synergies and efficiency capture opportunities. Our Saturn Blueprint has proven successful in helping to drive down costs, optimize production, transfer development innovation between our core areas, and ultimately expand AFF and free funds flow. We showcased this strategy in action during Q4/24, realizing lower net operating expenses driven by battery consolidations and capturing other operational efficiencies, combined with increased processing income from higher throughput at our Innes gas plant in Southeast Saskatchewan.

To leverage momentum in Q4/24, we capitalized on favorable weather conditions and strong service availability to accelerate approximately $7 million of our planned Q1 2025 capital expenditures⁽¹⁾ into Q4 2024, which is expected to reduce 2025 spending by the proportionate amount. In the final quarter of the year, we drilled 33 wells, including 22 in Southeast Saskatchewan, 5 in West Saskatchewan and 6 in Central Alberta. This contributed to our full year 2024 drilling of 97 gross (81.6 net) wells, including 54 in Southeast Saskatchewan; 27 in West Saskatchewan; and 16 in Central Alberta.

In addition to being active on the drilling and completions front, Saturn also invested in abandonment and reclamation activities, with over 100 operated wells being worked on to advance reclamation. By maintaining a balanced ratio of new drills to legacy wellbore clean-up, the Company contributes to the ongoing responsible stewardship and sustainability of our land base. Further, we realized a 38% increase in total person-hours worked in 2024 over 2023, and proudly posted strong safety performance that included a Lost Time Injury Frequency Rate (LTIF) of zero and a 60% increase in hazard identifications which lead to incident prevention.

Subsequent to year end 2024, Saturn was able to layer on additional oil price collars on 5,000 bbls/d through 2025, strategically securing a floor of CAD$100/bbl with a ceiling of CAD$110/bbl, supporting our AFF generation and further insulating the Company from oil price weakness. In addition, we captured the opportunity to add some incremental natural gas hedges at attractive prices for 2025, 2026 and into Q1/27. Full details of our robust risk management position across oil price, differentials, FX and natural gas is available in Note 17 of our 2024 Financial Statements.

OUTLOOK

Saturn intends to continue executing our strategy and generating value from our assets amid an uncertain macro environment and is maintaining our 2025 guidance as previously disclosed on December 16, 2025. We remain committed to managing all factors within our control and to continue closely monitoring the U.S. tariff situation. Regardless of the outcome, we believe the nature of our business, low-cost operating model and declining cost structure affords insulation to withstand market volatility. Saturn maintains price protection on approximately 50 to 60% of our oil and liquids production, net of royalties, on a rolling forward 12-month basis, and approximately 30 to 40% up to 18 months out. We also benefit from a weaker Canadian dollar which drives higher oil sales revenue. While the Canadian MSW and WCS benchmark price differentials to WTI initially widened in Q1/25 in response to the tariffs, during the latter part of 2024, we had layered in hedges on the differential, which gives us greater pricing protection. Even with differentials slightly wider than our 2025 guidance assumptions, the Canadian dollar weakness and our hedge position are expected to largely offset the impact.

Saturn also hedged the FX rate at $1.3394 USD to CAD using currency swaps, which locks-in the principal and interest payments on our US denominated Senior Notes through mid-2027. Not only are future debt servicing payments fixed while these swaps are in place, but as the Canadian dollar weakens, Saturn notionally offsets a portion of the increase in net debt caused by the FX changes, which represented an offsetting value of $20.0 million at year end 2024. Although the Company is not permitted to reflect that offsetting asset in our net debt calculation due to accounting / reporting policies, if included, Saturn's year end 2024 net debt would be $840.2 million, driving lower net debt to AFF⁽¹⁾ of 1.6x and net debt to Adjusted EBITDA⁽¹⁾ of 1.4x.

Our team will continue to closely monitor commodity prices and can be nimble in adjusting our capital allocation to protect financial flexibility. In the interim, our Q1/25 capital expenditures⁽¹⁾ are anticipated to range between $70 to $75 million⁽⁵⁾, directed to the planned drilling of approximately 22 wells along with production optimization, facilities investments and ongoing well conversions from producers into injectors to facilitate secondary recovery at Flat Lake. Based on this level of capital, volumes in Q1/25 are expected to average between 39,500 to 40,500 boe/d⁽²⁾.

2024 RESERVES

The 2024 year end reserves evaluation of Saturn's crude oil and natural gas assets in Saskatchewan and Alberta was effective December 31, 2024, dated February 11, 2025, and prepared by independent reserves evaluators Ryder Scott Company-Canada ("Ryder Scott") in accordance with the Canadian Oil and Gas Evaluation Handbook and in compliance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101") (the "2024 Reserve Report"). Our 2024 Reserve Report reflects the impact of the South SK Acquisition, our drilling and development success realized during the year and Saturn's extensive inventory of highly economic drilling locations. Our fulsome reserves disclosure is included in the Company's Annual Information Form ("AIF") for the year ended December 31, 2024, which is available on SEDAR+ at www.sedarplus.com and on our website.

Summary of Crude Oil, Natural Gas and Natural Gas Liquids Reserves and Before Tax Net Present Values⁽³⁾⁽⁶⁾

The following tables are a summary of the Ryder Scott estimated Company reserves (Company share gross volumes) and NPVs of future net revenue, before tax, based on forecast price and costs as contained in the Reserve Report. The Reserve Report encompasses 100% of the Company's oil and gas properties as of December 31, 2024.

 

NPVs Before Tax^(3)(6)(7)(8)

 

Net Asset Value^(1)(3)(6)(8)

The following table sets out a calculation of NAV based on the before-tax estimated net present value of future net revenue discounted at 10% ("NPV₁₀ BT") associated with the PDP, 1P and 2P reserves, as evaluated in the 2024 Reserve Report, including deductions for future development costs, abandonment and reclamation obligations:

 

Reserves Reconciliation⁽³⁾⁽⁶⁾

The following table provides a summary of the reconciliation of the changes in the Company's gross reserves as of December 31, 2024 against reserves at December 31, 2023, based on forecast prices and costs assumptions in effect at the applicable reserve evaluation date:

 

 

Through 2024, as part of Saturn's continuous improvement efforts across the organization, we took the opportunity to high grade our future drilling location inventory, which resulted in Saturn moving some of our probable locations into the proved undeveloped category, and we also removed a small portion of our previously booked locations. This shift between categories ensures the Company's reserves bookings are optimized to align with our five year development plan. This, along with updating type curves, accounted for the majority of the negative technical revisions on both light and medium crude oil and natural gas.

Future Development Costs⁽³⁾⁽⁶⁾

The following table provides a summary of the estimated FDC required to bring Saturn's 1P and 2P undeveloped reserves to production, as reflected in the Reserve Report, which costs have been deducted in Ryder Scott's estimation of future net revenue associated with such reserves:

 

Performance Measures^{(3)(10)(11)(12)(13)}

The following table highlights Finding, Development and Acquisition ("FD&A") costs⁽¹⁾⁽³⁾ and associated recycle ratios based on the evaluation of reserves prepared by Ryder Scott:

 

The following table highlights Finding and Development ("F&D")⁽¹⁾⁽³⁾ costs (excluding changes in FDC) and associated recycle ratios based on the evaluation of reserves prepared by Ryder Scott:

 

Total Location Summary⁽³⁾

The following table summarizes the gross drilling locations identified for future development in the Reserve Report:

 

CONFERENCE CALL AND WEBCAST

The Company plans to host a conference call on Friday, March 14, 2025, at 8:00 am Mountain Time (10:00 am Eastern Time), which will include a discussion with Saturn's leadership team, who will provide an overview of our year-end 2024 results and reserves, followed by a question-and-answer session with attendees.

• Date: Friday, March 14, 2025

• Time: 8:00 am MT (10:00 am ET)

• Live Webcast Link: https://www.gowebcasting.com/13920

• North America (Toll Free) Dial In: 1-844-763-8274

• International Dial In: 1-647-484-8814

An audio replay of the webcast will be available one hour after the end of the call at the link above and will remain accessible for 12 months. The replay link will also be posted on Saturn's website.

NOTES

⁽¹⁾ See reader advisory: Non-GAAP and Other Financial Measures.
⁽²⁾ See reader advisory: Supplemental Information Regarding Product Types.
⁽³⁾ See reader advisory: Oil and Gas Metrics & Reserve Definitions.
⁽⁴⁾ Exit production defined as December 2024 month average volumes.
⁽⁵⁾ Includes capitalized G&A.
⁽⁶⁾ Total values may not add due to rounding.
⁽⁷⁾ The estimated NPV does not represent fair market value of the reserves.
⁽⁸⁾ Price forecasts and foreign exchange rate assumptions of three consultant's (GLJ Ltd., McDaniel & Associates Consultants Ltd. and Sproule Associates Ltd.) average forecast as of January 1, 2025 as applied in the Reserve Report.
⁽⁹⁾ Economic Factors include changes due to commodity pricing, price differentials and operating cost.
⁽¹⁰⁾ F&D and FD&A are calculated by dividing the identified capital expenditures, including expenditures associated with assets disposed of during the year, by the applicable reserves. These can include or exclude changes in future development capital costs.
⁽¹¹⁾ While Nl 51-101 requires that the effects of acquisitions and dispositions be excluded from the calculation of finding and development costs, FD&A costs have been presented because acquisitions and dispositions can have a significant impact on the Company's ongoing reserve replacement costs and excluding these amounts could result in an inaccurate portrayal of the Company's cost structure. Finding and development costs both including and excluding acquisitions and dispositions have been presented above.
⁽¹²⁾ Recycle ratio is calculated as operating netback before derivatives divided by F&D or FD&A costs. Based on a 2024 operating netback of $43.07 per boe.
⁽¹³⁾ The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserves additions for that year.
⁽¹⁴⁾ As noted in Saturn's 2023 AIF, negative technical revisions arose from an updated development scenario necessary due to the corporate acquisition of Ridgeback Resources Inc., which resulted in an aggregate write down on a number of undeveloped locations in 2023, driving negative reserve adds and a negative F&D cost of ($39.59) per boe, which is deemed not material ("nm") to the Company's reserves performance measures.
⁽¹⁵⁾ Based on the closing price of the Company's common shares on the TSX on March 12, 2025, of $1.88 per share.

ABOUT SATURN

Saturn is a returns-driven Canadian energy company focused on the efficient and innovative development of high-quality, light oil weighted assets, supported by an acquisition strategy targeting accretive and complementary opportunities. The Company's portfolio of free-cash flowing, low-decline operated assets in Saskatchewan and Alberta provide a deep inventory of long-term economic drilling opportunities across multiple zones. With an unwavering commitment to building an entrepreneurial and ESG-focused culture, Saturn's goal is to increase per share reserves, production and cash flow at an attractive return on invested capital. The Company's shares are listed for trading on the TSX under ticker 'SOIL' and on the OTCQX under the ticker 'OILSF'. Further information and our corporate presentation are available on Saturn's website at www.saturnoil.com.

INVESTOR & MEDIA CONTACTS

John Jeffrey, MBA – Chief Executive Officer
Tel: +1 (587) 392-7900
www.saturnoil.com

Cindy Gray, MBA – VP Investor Relations
Tel: +1 (587) 392-7900
info@saturnoil.com

READER ADVISORIES

Non-GAAP and Other Financial Measures

Throughout this news release and in other materials disclosed by the Company, Saturn employs certain measures to analyze financial performance, financial position and cash flow. These non-GAAP and other financial measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures provided by other entities. The non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS, such as net income (loss), cash flow from operating activities, and cash flow used in investing activities, as indicators of Saturn's performance.

The disclosure under the section "Non-GAAP and Other Financial Measures" including non-GAAP financial measures and ratios, capital management measures and supplementary financial measures in the Company's condensed consolidated interim Financial Statements and MD&A are incorporated by reference into this news release.

This news release may use the terms "Adjusted EBITDA", "Adjusted Funds Flow", "Net Debt", "Free Funds Flow", "Free Funds Flow Yield", "Net Debt to Annualized Adjusted EBITDA" and "Net Debt to Annualized Quarterly AFF" which are capital management financial measures. See the disclosure under "Capital Management" in our Audited Consolidated Financial Statements and MD&A for the three months and year ended December 31, 2024, for an explanation and composition of these measures and how these measures provide useful information to an investor, and the additional purposes, if any, for which management uses these measures.

Capital Expenditures

Saturn uses capital expenditures to monitor its capital investments relative to those budgeted by the Company on an annual basis. Saturn's capital budget excludes acquisition and disposition activities as well as the accounting impact of any accrual changes or payments under certain lease arrangements. The most directly comparable GAAP measure for capital expenditures is cash flow used in investing activities. The following table reconciles capital expenditures and capital expenditures, net acquisitions and dispositions ("A&D") to the nearest GAAP measure, cash flow used in investing activities.

 

F&D and FD&A Expenditures

Saturn uses finding and development ("F&D") and finding, development, and acquisition ("FD&A") expenditures as a basis to monitor its capital efficiency. The Company's F&D expenditures are calculated by removing certain capitalized overhead costs from capital expenditures. The Company's FD&A expenditures are calculated by adding A&D to FD&A expenditures. Both measures calculate the capital cost outlay associated with the Company's exploration and development activities for the purposes of finding, developing and, when desired, acquiring its reserves.

Free Funds Flow

Saturn uses free funds flow as an indicator of the efficiency and liquidity of Saturn's business, measuring its funds after capital investment available to manage debt levels, pursue acquisitions and gauge optionality to pay dividends and/or and return capital to shareholders through activities such as share repurchases. Saturn calculates free funds flow as adjusted funds flow in the period less capital expenditures. By removing the impact of current period capital expenditures from adjusted funds flow, management monitors its free funds flow to inform its capital allocation decisions. The following table reconciles adjusted funds flow to free funds flow.

 

Free Funds Flow Yield

The Company considers Free Funds Flow Yield to be an important measure as it is a key metric to reflect Saturn's ability the generate free funds flow relative to the Company's market value. Free funds flow yield is defined as free funds flow per share divided by the Company's current share price.

Adjusted EBITDA

The Company considers Adjusted EBITDA to be a key capital management measure as it was used within certain financial covenants prescribed under the Company's previous Senior Term Loan and demonstrates Saturn's standalone profitability, operating and financial performance in terms of cash flow generation, adjusting for interest related to its capital structure. Adjusted EBITDA is defined by the Company as earnings before interest, taxes, depreciation, amortization and other non-cash or extraordinary items. Adjusted EBITDA is presented both before and after derivatives to identify the impact of WTI commodity contracts hedges in place.

Adjusted Funds Flow

The Company considers adjusted funds flow to be a key capital management measure as it demonstrates Saturn's ability to generate the necessary funds to manage production levels and fund future growth through capital investment. Adjusted funds flow is calculated as cash flow from operating activities before changes in non-cash working capital, decommissioning expenditures and transaction costs. Management believes that this measure provides an insightful assessment of Saturn's operations on a continuing basis by eliminating certain non-cash charges, actual settlements of decommissioning obligations, of which the nature and timing of expenditures may vary based on the stage of the Company's assets and operating areas, and transaction costs which vary based on the Company's acquisition and disposition activity.

Net Debt

Net debt is a key capital management measure as it is used to assess the ongoing liquidity of the Company. Net Debt is calculated as the carrying value of the Senior Notes, less adjusted working capital including cash. The Company closely monitors its capital structure with a goal of maintaining a strong balance sheet to fund the future growth of the Company.

Net Debt to Adjusted EBITDA

Management considers Net Debt to Adjusted EBITDA an important measure as it is a key metric to identify the Company's ability to fund financing expenses, net debt reductions and other obligations. When this measure is presented quarterly, Adjusted EBITDA is annualized by multiplying by four. When this measure is presented on a trailing twelve-month basis, Adjusted EBITDA for the twelve months preceding the net debt date is used in the calculation. Net Debt to Adjusted EBITDA is calculated as Net Debt divided by annualized Adjusted EBITDA.

Gross Petroleum and Natural Gas Sales

Gross petroleum and natural gas sales is calculated by adding oil, natural gas and NGLs revenue, before deducting certain gas processing expenses in arriving at petroleum and natural gas revenue as required under IFRS 15. These processing expenses associated with the processing of natural gas and NGLs revenue are a result of the Company transferring custody of the product at the terminal inlet, and therefore receiving net prices. This metric is used by management to quantify and analyze the realized price received before required processing deductions, against benchmark prices. The calculation of the Company's gross petroleum and natural gas sales is shown within the petroleum and natural gas sales section within the MD&A for the year ended December 31, 2024.

Net Operating Expenses

Net operating expense is calculated by deducting processing income primarily generated by processing third party production at processing facilities where the Company has an ownership interest, from operating expenses presented on the Statement of income (loss). Where the Company has excess capacity at one of its facilities, it will process third-party volumes to reduce the cost of ownership in the facility. The Company's primary business activities are not that of a midstream entity whose activities are focused on earning processing and other infrastructure-based revenues, and as such third-party processing revenue is netted against operating expenses in the MD&A. This metric is used by management to evaluate the Company's net operating expenses on a unit of production basis. Net operating expense per boe is a non-GAAP financial ratio and is calculated as net operating expense divided by total barrels of oil equivalent produced over a specific period of time. The calculation of the Company's net operating expenses is shown within the net operating expenses section within the MD&A for the year ended December 31, 2024.

Operating Netback and Operating Netback, Net of Derivatives

The Company's operating netback is determined by deducting royalties, net operating expenses and transportation expenses from petroleum and natural gas sales. The Company's operating netback, net of derivatives is calculated by adding or deducting realized financial derivative commodity contract gains or losses from the operating netback. Derivative contract termination payments are excluded from realized financial derivative commodity contract gains or losses for the purposes of calculating the operating netback. The Company's operating netback and operating netback, net of derivatives are used in operational and capital allocation decisions. Presenting operating netback and operating netback, net of derivatives on a per boe basis is a non-GAAP financial ratio and allows management to better analyze performance against prior periods on a per unit of production basis. The calculation of the Company's operating netbacks and operating netback, net of derivatives are summarized as follows.

 

⁽¹⁾ Includes early termination payments on certain WTI oil derivative contracts for the three months and year ended December 31, 2024 of $0.4 million and $20.4 million respectively.

Capital Management Measures

NI 52-112 defines a capital management measure as a financial measure that: (i) is intended to enable an individual to evaluate an entity's objectives, policies and processes for managing the entity's capital; (ii) is not a component of a line item disclosed in the primary financial statements of the entity; (iii) is disclosed in the notes to the financial statements of the entity; and (iv) is not disclosed in the primary financial statements of the entity. Please refer to note 16 "Capital Management" in Saturn's financial statements for additional disclosure on: adjusted working capital, net debt, adjusted EBITDA, adjusted funds flow, free funds flow, annualized quarterly adjusted funds flow and net debt to annualized quarterly adjusted funds flow each of which are capital management measures used by the Company in this news release.

Supplementary Financial Measures

NI 52‐112 defines a supplementary financial measure as a financial measure that: (i) is, or is intended to be, disclosed on a periodic basis to depict the historical or expected future financial performance, financial position or cash flow of an entity; (ii) is not disclosed in the financial statements of the entity; (iii) is not a non‐GAAP financial measure; and (iv) is not a non‐GAAP ratio. The supplementary financial measures used in this news release are either a per unit disclosure of a corresponding GAAP measure, or a component of a corresponding GAAP measure, presented in the financial statements. Supplementary financial measures that are disclosed on a per unit basis are calculated by dividing the aggregate GAAP measure (or component thereof) by the applicable unit for the period. Supplementary financial measures that are disclosed on a component basis of a corresponding GAAP measure are a granular representation of a financial statement line item and are determined in accordance with GAAP.

Supplemental Information Regarding Product Types

References to gas or natural gas and NGLs in this press release refer to conventional natural gas and natural gas liquids product types, respectively, as defined in National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities ("NI 51-101"), except where specifically noted otherwise. The Company's aggregate average production for the years ended December 31, 2024, 2023, and 2022, and the references to "crude oil", "NGLs", and "natural gas" reported in this MD&A consist of the following product types, as defined in NI 51-101 and using a conversion ratio of 1 Bbl : 6 Mcf where applicable:

 

The Company's aggregate average production for the past eight quarters and the references to "crude oil", "NGLs", and "natural gas" reported in this MD&A consist of the following product types, as defined in NI 51-101 and using a conversion ratio of 1 Bbl : 6 Mcf where applicable:

 

• December 2024 average production, referred to herein as 'Exit 2024' average production, was comprised of approximately 67% light and medium crude oil, 6% heavy crude oil, 8% NGLs and 19% natural gas.

• Q1 2025 average production, at the midpoint of the guidance range, is anticipated to be comprised of approximately 83% crude oil and NGLs and 17% natural gas.

BOE Presentation

Boe means barrel of oil equivalent. All boe conversions in this news release are derived by converting gas to oil at the ratio of six thousand cubic feet ("Mcf") of natural gas to one barrel ("Bbl") of oil. Boe may be misleading, particularly if used in isolation. A Boe conversion rate of 1 Bbl : 6 Mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio of oil compared to natural gas based on currently prevailing prices is significantly different than the energy equivalency ratio of 1 Bbl: 6 Mcf, utilizing a conversion ratio of 1 Bbl : 6 Mcf may be misleading as an indication of value.

Oil and Gas Metrics & Reserve Definitions

This press release contains metrics commonly used in the oil and gas industry which have been prepared by management, such as "FD&A costs", "F&D costs", "Net Asset Value", "Recycle Ratio" and "Reserve Life Index". These terms do not have a standardized meaning and may not be comparable to similar measures presented by other companies, and therefore should not be used to make such comparisons.

"FD&A Cost" represents finding, developing and acquisition cost as calculated as the sum of 2024 capital expenditures not including capitalized general and administration expenses ($233.4 million) plus net acquisition costs ($539.3 million), divided by the change in reserves within the applicable reserves category.

"F&D Cost" represents finding and developing cost as calculated as the sum of 2024 finding and development capital expenditures, not including capitalized general and administration expenses ($233.4 million), divided by the change in reserves that are characterized as development for the period within the applicable reserves category.

"Net Asset Value" has been calculated based on the estimated net present value of all future revenue from the Company's reserves, before income taxes as estimated by Ryder Scott effective December 31, 2024, including expenditures for abandonment, decommissioning and reclamation costs for all producing and non-producing wells and facilities, less net debt.

"Recycle Ratio" is calculated by dividing operating netback per boe by FD&A costs or F&D costs for a year.

"Reserve life index" or "RLI" is calculated by dividing the applicable reserves category volumes by 2024 fourth quarter production of 41,051 boe/d for 365 days as an estimation of how many years at a steady production level would the reserve volumes support.

"Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

"Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.

"Developed" reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves on production.

"Developed Producing" reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.

"Developed Non-Producing" reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown.

"Undeveloped" reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned.

Forward-Looking Information and Statements

Certain information included in this press release constitutes forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project", "scheduled", "will" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this press release may include, but is not limited to: guidance relating to fiscal year 2025 including the amount of capital expenditures; the timing of capital expenditures; the Company's expected 2025 average production; quarterly fluctuations in production; the Company's average decline rate; the Company's anticipated use of available funds; the expected number of wells to be drilled at certain of the Company's locations in 2025; the Company's ability to withstand market volatility; the allocation of the Company's expected 2025 capital expenditure budget to certain areas; target production and debt levels; margin improvements through cost optimization; capitalizing on synergies and streamlining operational processes; expectations regarding netbacks, capital allocations, hedging strategy, capital return strategy and plans; the business plan; acquisition strategy; commodity and foreign exchange pricing; value creation strategy and cost model of the Company.

The forward-looking statements contained in this press release are based on certain key expectations and assumptions made by Saturn, including expectations and assumptions concerning: the timing of and success of future drilling; the ability to successfully replicate certain strategies across the Company's other areas; development and completion activities; the performance of existing wells; the performance of new wells; the availability and performance of facilities and pipelines; the ability to allocate capital to pay down debt and grow or maintain production; the impact of our hedging strategy; the geological characteristics of Saturn's properties; the application of regulatory and licensing requirements; the availability of capital, labour and services; the creditworthiness of industry partners; and the ability to integrate acquisitions.

Although Saturn believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Saturn can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual plans and results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks); trade relations and tariffs; constraints in the availability of services; commodity price and exchange rate fluctuations; actions of OPEC and OPEC+ members; changes in legislation impacting the oil and gas industry; adverse weather or break-up conditions; and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. These and other risks are set out in more detail in Saturn's Management Discussion and Analysis for the three and twelve months ended December 31, 2024 and Annual Information Form for the year ended December 31, 2024, available on SEDAR+ at sedarplus.ca.

Forward-looking information is based on a number of factors and assumptions which have been used to develop such information, but which may prove to be incorrect. Although Saturn believes that the expectations reflected in its forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because Saturn can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this press release, assumptions have been made regarding and are implicit in, among other things, our capital expenditure and drilling programs, drilling inventory and booked locations, production and revenue guidance, debt repayment plans and future production and growth plans. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used.

The forward-looking information contained in this press release is made as of the date hereof and Saturn undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. The forward-looking information contained in this press release is expressly qualified by this cautionary statement.

This news release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about Saturn's prospective results of operations including, without limitation, the Corporation's capital expenditures, production, asset retirement obligations, lease payments and administrative costs, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth above. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on FOFI. Saturn's actual results, performance or achievement could differ materially from those expressed in, or implied by, these FOFI, or if any of them do so, what benefits Saturn will derive therefrom. Saturn has included the FOFI in order to provide readers with a more complete perspective on Saturn's future operations and such information may not be appropriate for other purposes. Saturn disclaims any intention or obligation to update or revise any FOFI statements, whether as a result of new information, future events or otherwise, except as required by law.

All dollar figures included herein are presented in Canadian dollars, unless otherwise noted.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/244455