Saturn Oil & Gas Inc. press release

Saturn Oil & Gas Inc. Announces First Quarter 2026 Results Highlighted by Production, Adjusted Funds Flow and Free Funds Flow Ahead of Expectations

2026-05-06

TSX - Toronto Stock Exchange · Oil · Natural Gas · Natural Gas Liquids · Canada · Corporate Finance

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Production of 43,116 boe/d was 3% above the high end of guidance and again exceeded consensus estimates

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Adjusted funds flow(1)over $107 million ($0.59/share) with free funds flow(1)over $62 million ($0.34/share)

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Net debt(1)down 5% from year end 2025 to $725 million, reflecting Saturn's continued commitment to debt repayment

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Accelerating capital from H2/26 into Q2 supports volumes coming on sooner into a strong oil price environment

Calgary, Alberta--(Newsfile Corp. - May 6, 2026) - Saturn Oil & Gas Inc. (TSX: SOIL) (OTCQX: OILSF) ("Saturn" or the "Company"), a light oil-weighted producer focused on unlocking value through the development of assets in Saskatchewan and Alberta, is pleased to report our operating and financial results for the three months ended March 31, 2026, highlighted by yet another quarter of production that exceeded analyst consensus estimates. Saturn's financial statements ("Financial Statements"), as well as Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2026, are available on our website and filed on SEDAR+ at sedarplus.ca. A conference call and webcast to discuss the Q1/26 results has been scheduled for Thursday, May 7, 2026 at 8:00 am Mountain Time (10:00 am Eastern Time). Access details for the conference call and webcast are provided below.

"The first quarter of 2026 represents the seventh consecutive quarter that Saturn has posted production volumes ahead of analyst consensus estimates as we built on the strong volume momentum achieved in Q4/25. In addition, with the onset of the Iranian conflict in March, Saturn's realized oil price increased materially to nearly $115/bbl in March, up from an average of $75/bbl during January and February," said John Jeffrey, Chief Executive Officer. "This strengthening oil price environment contributed to adjusted funds flow ("AFF") of $107 million and free funds flow over $62 million, both of which also exceeded analysts' consensus forecasts, while we continued to reduce net debt, exiting the quarter at $725 million, a 5% reduction from year-end 2025. In light of continued elevated oil prices, we plan to accelerate approximately $20 million of capital from the second half of 2026 into Q2/26 to capitalize on the stronger pricing environment, supporting strong free funds flow generation that Saturn can direct toward further debt reduction, share buybacks or tuck-in acquisitions."

Q1 2026 HIGHLIGHTS

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Production of 43,116 boe/d exceeded the high end of guidance by 3%, as strong momentum from Q4/25 and a successful development program saw new wells continue to outperform type curve(3)estimates.

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Oil and liquids were 81% of production, with higher-value crude oil representing 72% of volumes that benefitted from rising oil prices, as our realized oil price in March increased to $114.92/bbl, 53% higher than the $75.23/bbl average for January and February.

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Adjusted funds flow("AFF")(1)totaled $107.2 million ($0.59/share diluted), while adjusted EBITDA was $126.5 million.

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Free funds flow(1)was$62.5 million ($0.34/share diluted) an increase of 13% on a per share basis over the previous quarter.

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Net debt(1)declined 5% quarter-over-quarter to $725 million, reflecting our US$16.5 million quarterly amortization payment that reduced the principal outstanding on our senior notes to US$520 million, along with repayments on our credit facility.

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Capital expenditures(1)(4)totaled $44.8 million,and resulted in 23 gross (18.7 net) wells being drilled and brought on production, driving our strong volumes. Of these wells, 21 were drilled in southeast Saskatchewan, including ten open hole multi-lateral ("OHML") wells, with two non-operated wells in Central Alberta.

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Returned $12.1 million to shareholders during the quarterthrough the repurchase and cancellation of 3.7 million common shares ("Common Shares")under ournormal course issuer bid ("NCIB") at aweighted average price of $3.29 per Common Share, continuing our steady return of capital to Saturn shareholders.

EVENTS SUBSEQUENT TO QUARTER END

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Closed a small 'core-up' asset acquisitionin the Flat Lake area of southeast Saskatchewan for approximately $13 million that features excellent synergies with our existing assets, including cost reduction potential, infrastructure streamlining and production optimization and reactivation, all of which showcase our Saturn Blueprint in action.

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Return of capital to shareholders has totaled over $59 millionsince the launch of our NCIB in August, 2024 to May 5, 2026, through the repurchase of 23.2 million Common Shares in the open market, at a weighted average price per share of $2.55.

FINANCIAL AND OPERATING HIGHLIGHTS

| | | Three Months Ended | | | | | | | | | ($000s, except per share amounts) | | March 31, 2026 | | | December 31, 2025 | | | March 31, 2025 | | | | | | | | | | | | | | FINANCIAL HIGHLIGHTS | | | | | | | | | | | | | | | | | | | | | | Petroleum and natural gas sales | | 270,237 | | | 233,554 | | | 278,081 | | | Cash flow from operating activities | | 113,246 | | | 76,065 | | | 165,372 | | | Operating netback, net of derivatives(1) | | 132,740 | | | 136,600 | | | 157,567 | | | Adjusted EBITDA(1) | | 126,528 | | | 140,854 | | | 153,185 | | | Adjusted funds flow(1) | | 107,228 | | | 120,697 | | | 131,121 | | | per share - Basic | | 0.59 | | | 0.64 | | | 0.66 | | | - Diluted | | 0.59 | | | 0.61 | | | 0.65 | | | Free funds flow(1) | | 62,478 | | | 55,933 | | | 57,826 | | | per share - Basic | | 0.34 | | | 0.30 | | | 0.29 | | | - Diluted | | 0.34 | | | 0.28 | | | 0.29 | | | Net income (loss) | | (97,324 | ) | | 31,230 | | | 37,819 | | | per share - Basic | | (0.53 | ) | | 0.17 | | | 0.19 | | | - Diluted | | (0.53 | ) | | 0.16 | | | 0.19 | | | Acquisitions, net of cash acquired | | (1,713 | ) | | 23,469 | | | - | | | Proceeds from dispositions | | (3,503 | ) | | - | | | - | | | Capital expenditures(1)(4) | | 44,750 | | | 64,764 | | | 73,295 | | | Total assets | | 2,174,597 | | | 2,190,825 | | | 2,188,307 | | | Net debt(1), end of period | | 724,763 | | | 761,476 | | | 813,893 | | | Shareholders' equity | | 845,780 | | | 946,591 | | | 837,958 | | | Common Shares outstanding, end of period | | 179,987 | | | 184,084 | | | 196,212 | | | Weighted average, basic | | 181,989 | | | 187,135 | | | 198,113 | | | Weighted average, diluted | | 181,989 | | | 197,604 | | | 202,727 | | | | | | | | | | | | | | OPERATING HIGHLIGHTS | | | | | | | | | | | Average production volumes | | | | | | | | | | | Light and medium crude oil (bbls/d) | | 27,645 | | | 27,962 | | | 27,697 | | | Heavy crude oil (bbls/d) | | 3,199 | | | 3,325 | | | 3,445 | | | NGLs (bbls/d) | | 3,938 | | | 4,052 | | | 3,318 | | | Natural gas (mcf/d) | | 50,004 | | | 49,906 | | | 43,319 | | | Total boe/d | | 43,116 | | | 43,657 | | | 41,680 | | | % Oil and NGLs | | 81% | | | 81% | | | 83% | | | Average realized prices | | | | | | | | | | | Crude oil ($/bbl) | | 88.94 | | | 72.52 | | | 90.48 | | | NGLs ($/bbl) | | 43.08 | | | 38.72 | | | 52.95 | | | Natural gas ($/mcf) | | 2.19 | | | 2.44 | | | 2.48 | | | Processing expenses ($/boe) | | (0.46 | ) | | (0.21 | ) | | (0.26 | ) | | Petroleum and natural gas sales ($/boe) | | 69.64 | | | 58.15 | | | 74.13 | | | Operating netback ($/boe) | | | | | | | | | | | Petroleum and natural gas sales | | 69.64 | | | 58.15 | | | 74.13 | | | Royalties | | (7.76 | ) | | (6.65 | ) | | (9.04 | ) | | Net operating expenses(1) | | (20.49 | ) | | (19.24 | ) | | (19.58 | ) | | Transportation expenses | | (1.73 | ) | | (1.57 | ) | | (1.56 | ) | | Operating netback(1) | | 39.66 | | | 30.69 | | | 43.95 | | | Realized loss on derivatives | | (5.45 | ) | | 3.32 | | | (1.96 | ) | | Operating netback, net of derivatives(1) | | 34.21 | | | 34.01 | | | 41.99 | |

SATURN'S CONTINUED EXECUTION

Our Q1/26 capital expenditure program of approximately $45 million was predominantly focused in southeast Saskatchewan, where we had four rigs running. Three of those rigs drilled OHML wells, while the fourth drilled conventional wells. In total, 21 wells were drilled in southeast Saskatchewan in the quarter, including ten OHML wells comprised of five Bakken, three Midale and two Spearfish wells. In addition, we participated in two non-operated Notikewin wells in the West Pembina area of Alberta. The impact of this active development program, together with production momentum carried forward from Q4/25, contributed to average volumes of 43,116 boe/d, again exceeding the Company's guidance and analysts' forecasts for the quarter.

Of particular note this quarter was the Company's new 13-06 Spearfish well, which came on production in Q1/26 and achieved an initial production rate at 30 days (IP30)(3)of approximately 365 bbl/d. The well is on track to rank among Saskatchewan's top producing wells for April, based on independent third-party reports. In addition to our active OHML program, Saturn drilled three fracked Bakken wells and eight conventional wells during the quarter. Strong production results were supported by the performance of new wells, which cleaned up faster than expected, were brought on stream sooner, and continued to outperform internal type curve estimates.

Alongside our operational progress, Saturn continued to deleverage, reducing net debt(1)to $725 million at quarter-end. This equates to net debt to annualized adjusted EBITDA(1)ratio of 1.4x or 1.7x net debt to annualized AFF(1), with further improvement in leverage metrics expected should oil prices remain higher for longer. To capitalize on the upward movement in oil, we locked in several smaller-volume contracts in March that provide incremental hedge protection at higher prices over the near-term, including collars with ceilings above $100/bbl Canadian. By maintaining a consistent strategy to hedge approximately 50 to 60% of oil production, net of royalties, on a rolling 12-month basis, Saturn protects downside risk across commodity price cycles while retaining meaningful exposure to pricing upside on our unhedged volumes. The Company's full hedge position is outlined in our Q1/26 financial statements.

Saturn's active normal course issuer bid ("NCIB") is at the heart of our current capital return framework. With a prevailing disconnect between the Company's market value and our net asset value, we continue to believe Saturn's shares represent the most cost-effective, high-quality barrels on the market. We were able to optimize the accumulation of shares when the stock traded at lower levels earlier in the year, and with the Company's share price increasing more than 2.5x since year-end 2025 have adjusted the daily buyback in tandem. As a result of this successful execution, we have nearly fulfilled the 12.1 million share maximum limit under the current program which expires in August of 2026. Since the inception of our first NCIB, and including the substantial issuer bid completed in 2025, Saturn has returned $59.1 million to shareholders through the repurchase and cancellation of 23.2 million shares, representing 11% of the shares outstanding at the commencement of the program.

OUTLOOK

Through the majority of the second quarter, Western Canada experiences a seasonal "spring break-up" period when the ground softens due to melting snow, and the mobilization of rigs and heavy equipment is restricted. With limited ability to drill during much of Q2, the Company's capital spending is typically much lower in this period. As a result, Saturn typically generates our highest free funds flow during the second quarter.

If oil prices remain elevated in the near-term, and once surface conditions stabilize, the Company plans to accelerate approximately $20 million of capital that was originally budgeted for the second half of 2026 into Q2/26. Assuming weather conditions are conducive, this capital is expected to be directed to restarting southeast Saskatchewan development in late May or early June, which is earlier than originally planned. In addition, we intend to add a 5thrig in West Central Saskatchewan targeting our inventory of high-impact and short cycle-time Viking and Success locations. This accelerated program is expected to support our efforts to bring incremental production on-stream within weeks, enabling Saturn to capture strong oil prices and support increased AFF.

With an agile asset base and approximately 70% of our capital program weighted to the back half of the year, Saturn intends to continue monitoring market conditions and commodity prices. We maintain the flexibility to quickly and efficiently increase our full year 2026 capital expenditures should pricing and broader market conditions remain supportive, and will update the market should budgets or guidance change.

In the second quarter of 2026, the Company's capital expenditures are expected to range between $35 and $40 million, subject to weather conditions through May and June. Based on this level of capital, production is expected to average between 40,000 to 41,000 boe/d(2), reflecting the accelerated capital and incremental activity planned in the quarter.

CONFERENCE CALL AND WEBCAST

The Company plans to host a conference call on Thursday, May 7, 2026, 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 Q1 2026 results, followed by a question-and-answer session with attendees.

Date: Thursday, May 7, 2026 Time: 8:00 am MT (10:00 am ET) Live Webcast Link: https://www.gowebcasting.com/14645 North America (Toll Free) Dial In: 1-800-715-9871 International Dial In: 1-647-932-3411

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 '_Type Curve and Initial Production'_. (4)Includes capitalized G&A.

ABOUT SATURN

Saturn is a returns-driven Canadian energy company focused on the efficient, responsible 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 safety-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 under IFRS and therefore may not be comparable to similar measures presented 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" in our MD&A, including non-GAAP financial measures and ratios, capital management measures and supplementary financial measures in the Company's 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", "Net Debt to Annualized Adjusted EBITDA" and "Net Debt to Annualized AFF" which are capital management financial measures. See the disclosure under "Capital Management" in our Financial Statements for the three months ended March 31, 2026, for an explanation and composition of these measures, how these measures provide useful information to an investor, and the additional purposes, if any, for which management uses these measures, and, where applicable, a reconciliation of the Company's historical non-GAAP financial measures to the most directly comparable measure calculated in accordance with GAAP for the applicable period then ended.

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 ("A&D") 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 A&D to the nearest GAAP measure, cash flow used in investing activities.

| | | Three months ended | | | | | | | | | ($000s) | | March 31, 2026 | | | December 31, 2025 | | | March 31, 2025 | | | Cash flow used in investing activities | | 54,473 | | | 104,906 | | | 99,520 | | | Change in non-cash working capital | | (14,939 | ) | | (16,673 | ) | | (26,225 | ) | | Capital expenditures(1)(4), net A&D | | 39,534 | | | 88,233 | | | 73,295 | | | Acquisitions, net of cash acquired | | 1,713 | | | (23,469 | ) | | - | | | Proceeds from disposition | | 3,503 | | | - | | | - | | | Capital expenditures(1)(4) | | 44,750 | | | 64,764 | | | 73,295 | |

FD&A Expenditures

Saturn uses finding, development, and acquisition ("FD&A") expenditures as a basis to monitor its capital efficiency. The Company's FD&A expenditures are calculated by adding A&D to capital expenditures less certain capitalized overhead costs. This measure calculates 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.

Adjusted Funds Flow per Share

Adjusted funds flow per share is a non-GAAP ratio by management to better analyze the Company's performance against prior periods on a more comparable basis. Adjusted funds flow per share is calculated as adjusted funds flow from operations divided by weighted average shares outstanding during the applicable period on a basic or diluted basis.

Free Funds Flow, Free Funds Flow per Share and Free Funds Flow Yield

Saturn uses free funds flow as an indicator of the efficiency and liquidity of its 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. Free funds flow is also presented on a per share basis as a non-GAAP financial ratio. Free funds flow yield is calculated by dividing free funds flow by Saturn's market capitalization as at year end 2025 ($447.4 million), expressed as a percentage, which is used as a valuation and capital allocation metric. The following table reconciles adjusted funds flow to free funds flow.

| | | Three months ended | | | | | | | | | ($000s) | | March 31, 2026 | | | December 31, 2025 | | | March 31, 2025 | | | Adjusted funds flow | | 107,228 | | | 120,697 | | | 131,121 | | | Capital expenditures(1)(4) | | (44,750 | ) | | (64,764 | ) | | (73,295 | ) | | Free funds flow | | 62,478 | | | 55,933 | | | 57,826 | |