Saturn Oil & Gas Inc. press release

Saturn Oil & Gas Inc. Announces Second Quarter 2026 Results with Production Ahead of Guidance and Over $82 Million of Free Funds Flow

2026-07-29

TSX - Toronto Stock Exchange · Oil · Natural Gas · Natural Gas Liquids · Canada · Production & Operations

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Production of 41,447 boe/d exceeded Saturn's guidance for the eighth consecutive quarter

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Adjusted funds flow(1)of $123 million ($0.68/share) drove free funds flow(1)of $82 million ($0.46/share)

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Nimble asset base and flexible capital program supported the acceleration of $20 million of capital from Q3 into Q2 to bring volumes on sooner into a stronger oil price environment

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Continued execution of our blueprint strategy with 'core-up' acquisitions in the quarter that expand scale, increase drilling inventory and enhance asset value

Calgary, Alberta--(Newsfile Corp. - July 29, 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 and six months ended June 30, 2026, featuring production ahead of guidance and strong adjusted funds flow ("AFF") of $122.6 million ($0.68/share basic) driving free funds flow of $82.5 million ($0.46/share basic). Saturn's financial statements ("Financial Statements"), as well as Management's Discussion and Analysis ("MD&A") for the three and six months ended June 30, 2026 are available on our website and filed on SEDAR+ at sedarplus.ca. As previously released, a conference call and webcast to discuss the results has been scheduled for Thursday, July 30, 2026 at 8:00 am Mountain Time (10:00 am Eastern Time). Access details for the conference call and webcast are provided below.

"Saturn's Q2/26 results reflect the positive momentum we are building throughout the organization, highlighted by quarterly production exceeding our previous guidance and analyst expectations for the eighth consecutive period. To capitalize on elevated oil prices during the quarter, we accelerated capital from the back half of 2026 into Q2, demonstrating the agile nature of our asset base and nimble capital program. Our development team rapidly mobilized to get drilling rigs back in the field a month sooner than originally planned," said John Jeffrey, Chief Executive Officer. "We have also continued 'coring-up' in our key operating areas, targeting accretive acquisitions that can further expand our drilling inventory, increase our size and scale, and enhance the value of our overall asset base. Saturn supported all of these efforts with the announced issue of new, dual-tranche US and Canadian dollar denominated Senior Unsecured Notes due 2031, which improve our financial flexibility, significantly lower our interest rate and relax covenants that were features of our previous secured senior notes."

Q2 2026 HIGHLIGHTS

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Production averaged 41,447 boe/d(2)(81% oil and liquids) in Q2, reflecting continued outperformance of Saturn's wells, slightly offset by some weather-related downtime in June. During the first half of 2026, volumes averaged 42,277 boe/d(2).

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Record corporate revenue of $359 millionin Q2, reflecting strong production volumes and supportive pricing, with first half 2026 revenue also setting a record at $629 million.

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AFF(1)was $123 million ($0.68/share basic) in Q2, bringing our first half AFF to $230 million, while adjusted EBITDA(1)was $142 million in the quarter and $269 million in the first half of 2026. Net income during the period was $108 million ($0.60/share basic).

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Free funds flow(1)totaled$82.5 million ($0.46/share basic) in the quarter, with $145 milliongenerated through the first half of 2026. Saturn has continued to direct free funds flow to ongoing debt repayment, our ongoing tuck-in acquisition strategy, and returning capital to our shareholders through buybacks.

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Capital expenditures(1)(4)in Q2 totaled $40 millionand include the previously announced acceleration of capital from Q3 into Q2 to capture stronger oil prices. Saturn was able to get rigs back into the field a full month sooner than originally planned due to our flexible capital program, along with favourable weather conditions at the tail end of the spring break-up period. Five rigs were deployed in late May and started drilling in early June, which resulted in 17 gross (11.4 net) wells being drilled and brought on production, with inclement weather delaying some capital and having a short-term impact on operations in southeast Saskatchewan ("SE SK").

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Enhanced Saturn's size and scale, with $45 million directed to close a series of strategic tuck-in acquisitions in the quarter. In addition to expanding Saturn's drilling inventory and land position within our existing core SE SK and Alberta areas, the acquisitions provide the Company with further synergies, cost reduction opportunities, infrastructure streamlining plus production optimization and reactivation potential.

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Net debt(1)of $762 millionat June 30, 2026 included US$504 million (C$716 million) outstanding on our 2029 Senior Notes, and a net $40.4 million draw on our credit facility, reflecting the tuck-in acquisitions and accelerated capital program described above. Saturn's net debt to annualized adjusted EBITDA ratio was 1.3x at June 30, 2026.

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Returned $8.4 million to shareholders during the quarter through the repurchase and cancellation of 1.3 million shares via our normal course issuer bid ("NCIB") at a weighted average price of $6.36 per share, continuing our steady return of capital to Saturn shareholders.

EVENTS SUBSEQUENT TO QUARTER END

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Strategic SE SK 'core-up'with the accretive tuck-in acquisitions of privately-held Burgess Creek Exploration Inc., expected to close in early August, and Triland Energy Inc., which closed in the latter part of July (collectively, the "SE SK Acquisitions"). Integrating the SE SK Acquisitions into Saturn's portfolio enhances the Company's size, scale and profitability. The total purchase price of the SE SK Acquisitions is estimated at $173 million, prior to customary closing adjustments, resulting in attractive acquisition metrics of less than 2x estimated 2026 net operating income.

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Priced a private placement dual-tranche offering of Senior Unsecured Notesdue 2031, including US$575 million at 8.5% and C$185 million at 7.5%, issued at par (together, the "NewNotes"), and announced the planned redemption of Saturn's outstanding senior secured second lien notes due 2029 (the "2L Notes"). Refinancing the 2L Notes significantly reduces interest costs and enhances our financial flexibility by transitioning to a senior unsecured note from a senior secured note. In addition, we have extended the tenor on the New Notes to 2031, eliminated the mandatory 10% amortization feature and relaxed some covenants that were required under the 2L Notes.

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Extended and increased syndicated credit facilityto three years, expanding the elected commitment to $200 million with a total available borrowing base and commitments up to $500 million, improving financial flexibility and lowering our cost of borrowing.

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Successfully completed our NCIB, repurchasing a total of 12.1 million shares in the open market from August 27, 2025 to July 22, 2026 at a weighted average price per share of $3.29, bringing Saturn's total return to shareholders since August of 2024 to $66 million, including our substantial issuer bid, and cancelling 24.2 million shares.

FINANCIAL AND OPERATING HIGHLIGHTS

| | | Three months ended | Six months ended | | | | | | | | | | | | | | ($000s, except per share amounts) | | June 30, 2026 | | | March 31, 2026 | | | June 30, 2025 | | | June 30, 2026 | | | June 30, 2025 | | | FINANCIAL HIGHLIGHTS | | | | | | | | | | | | | | | | | Petroleum and natural gas sales | | 358,714 | | | 270,237 | | | 236,712 | | | 628,951 | | | 514,793 | | | Cash flow from operating activities | | 126,955 | | | 113,246 | | | 89,865 | | | 240,201 | | | 255,237 | | | Operating netback, net of derivatives(1) | | 147,272 | | | 132,740 | | | 131,833 | | | 280,012 | | | 289,400 | | | Adjusted EBITDA(1) | | 142,055 | | | 126,528 | | | 131,712 | | | 268,583 | | | 284,897 | | | Adjusted funds flow(1) | | 122,609 | | | 107,228 | | | 108,854 | | | 229,837 | | | 239,975 | | | per share - Basic(1) | | 0.68 | | | 0.59 | | | 0.56 | | | 1.27 | | | 1.22 | | | - Diluted(1) | | 0.64 | | | 0.59 | | | 0.53 | | | 1.20 | | | 1.16 | | | Free funds flow(1) | | 82,528 | | | 62,478 | | | 93,012 | | | 145,006 | | | 150,838 | | | per share - Basic(1) | | 0.46 | | | 0.34 | | | 0.48 | | | 0.80 | | | 0.77 | | | - Diluted(1) | | 0.43 | | | 0.34 | | | 0.45 | | | 0.76 | | | 0.73 | | | Net income (loss) | | 108,116 | | | (97,324 | ) | | 95,054 | | | 10,792 | | | 132,873 | | | per share - Basic | | 0.60 | | | (0.53 | ) | | 0.49 | | | 0.06 | | | 0.67 | | | - Diluted | | 0.57 | | | (0.53 | ) | | 0.46 | | | 0.06 | | | 0.64 | | | Acquisitions, net of cash acquired | | 45,665 | | | (1,713 | ) | | 5,132 | | | 43,952 | | | 5,132 | | | Proceeds from dispositions | | - | | | (3,503 | ) | | - | | | (3,503 | ) | | - | | | Capital expenditures(1)(3) | | 40,081 | | | 44,750 | | | 15,842 | | | 84,831 | | | 89,137 | | | Total assets | | 2,192,572 | | | 2,174,597 | | | 2,103,571 | | | 2,192,572 | | | 2,103,571 | | | Net debt(1), end of period | | 761,553 | | | 724,763 | | | 694,835 | | | 761,553 | | | 694,835 | | | Shareholders' equity | | 909,286 | | | 845,780 | | | 929,573 | | | 909,286 | | | 929,573 | | | Common shares outstanding, end of period | | 178,300 | | | 179,987 | | | 194,809 | | | 178,300 | | | 194,809 | | | Weighted average, basic | | 179,788 | | | 181,989 | | | 195,644 | | | 180,883 | | | 196,872 | | | Weighted average, diluted | | 191,025 | | | 181,989 | | | 206,040 | | | 191,744 | | | 207,268 | | | | | | | | | | | | | | | | | | | | OPERATING HIGHLIGHTS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Average production volumes | | | | | | | | | | | | | | | | | Light and medium crude oil (bbls/d) | | 26,614 | | | 27,645 | | | 26,712 | | | 27,130 | | | 27,202 | | | Heavy crude oil (bbls/d) | | 3,244 | | | 3,199 | | | 3,438 | | | 3,218 | | | 3,441 | | | NGLs (bbls/d) | | 3,858 | | | 3,938 | | | 3,310 | | | 3,898 | | | 3,314 | | | Natural gas (mcf/d) | | 46,385 | | | 50,004 | | | 41,740 | | | 48,185 | | | 42,526 | | | Total boe/d | | 41,447 | | | 43,116 | | | 40,417 | | | 42,277 | | | 41,045 | | | % Oil and NGLs | | 81% | | | 81% | | | 83% | | | 81% | | | 83% | | | Average realized prices | | | | | | | | | | | | | | | | | Crude oil ($/bbl) | | 122.14 | | | 88.94 | | | 79.72 | | | 105.36 | | | 85.15 | | | NGLs ($/bbl) | | 58.35 | | | 43.08 | | | 40.24 | | | 50.68 | | | 46.57 | | | Natural gas ($/mcf) | | 1.81 | | | 2.19 | | | 1.80 | | | 2.01 | | | 2.14 | | | Processing expenses ($/boe) | | (0.34 | ) | | (0.46 | ) | | (0.26 | ) | | (0.40 | ) | | (0.26 | ) | | Petroleum and natural gas sales ($/boe) | | 95.11 | | | 69.64 | | | 64.36 | | | 82.19 | | | 69.29 | | | Operating netback ($/boe) | | | | | | | | | | | | | | | | | Petroleum and natural gas sales | | 95.11 | | | 69.64 | | | 64.36 | | | 82.19 | | | 69.29 | | | Royalties | | (12.25 | ) | | (7.76 | ) | | (7.68 | ) | | (9.97 | ) | | (8.36 | ) | | Net operating expenses(1) | | (20.98 | ) | | (20.49 | ) | | (18.28 | ) | | (20.73 | ) | | (18.93 | ) | | Transportation expenses | | (1.75 | ) | | (1.73 | ) | | (1.65 | ) | | (1.74 | ) | | (1.60 | ) | | Operating netback(1) | | 60.13 | | | 39.66 | | | 36.75 | | | 49.75 | | | 40.40 | | | Realized loss on derivatives | | (21.09 | ) | | (5.45 | ) | | (0.91 | ) | | (13.16 | ) | | (1.44 | ) | | Operating netback, net of derivatives(1) | | 39.04 | | | 34.21 | | | 35.84 | | | 36.59 | | | 38.96 | |

OPERATIONAL UPDATE

For the eighth consecutive quarter, Saturn's average production of 41,447 boe/d in Q2/26 exceeded previous guidance and analyst expectations. The continued outperformance of our wells during April and May was somewhat muted by weather impacts in June that caused short-term production downtime in SE SK, and delayed the start of the Company's accelerated Q2 capital program. Since spring break-up conditions in Q2 typically result in minimal capital spending and lower production, we are very pleased that Saturn was able to continue the momentum we built through Q1, which contributed to volumes again coming in above our guidance.

To capitalize on stronger oil prices in the second quarter, Saturn elected to accelerate capital from Q3 into Q2, which was supported by favourable surface conditions that enabled us to get rigs back into the field four to five weeks earlier than we typically would expect. With five rigs running during June, we drilled 17 gross (11.4 net) wells, including 13 in SE SK, two of which were open-hole multi-lateral ("OHML") wells.

Building on our growing expertise in OHML drilling, Saturn drilled our first-ever OHML Torquay well in June, the 7-16, positioning the Company as the only operator to have drilled OHML wells into four different formations in SE SK, including the Bakken, Spearfish, Midale and Torquay. Based on early production performance from the 7-16 well, volumes are trending ahead of our 180 bbl/d type curve(3)expectations, consistent with the outperformance exhibited by the majority of our OHML drills to date. We also drilled an OHML Bakken well at Viewfield during Q2, and our second OHML Torquay well at 8-22 finished drilling in early July.

Through the second quarter, Saturn successfully closed a series of strategic tuck-in acquisitions (the "Tuck-Ins") for an aggregate approximately $45 million, bolstering our footprint in SE SK and Alberta. The Tuck-Ins allow the Company to expand our operational scale in existing core areas, add incremental production, grow our development inventory and benefit from acquired infrastructure. Consistent with our strategic blueprint, we anticipate the integrated assets will provide meaningful operational synergies, enhance capital efficiencies going forward, and further consolidate Saturn's position across several of our highest-return operating areas. We also expanded our acreage position through some small Crown land sales in Saskatchewan, growing our secondary P1 Spearfish play that the team is excited to drill.

Consistent with our blueprint strategy, Saturn advanced the SE SK Acquisitions subsequent to the end of the quarter. The two assets are weighted approximately 96% to light oil and liquids, provide ideal expansion to our core acreage in SE SK, expand our booked location inventory and increase our OHML drilling targets. The purchase price for each company is less than the proved developed producing reserve net present values, while the acquired assets are expected to be accretive to our light oil weighting, operating netback and operating costs per boe.

OUR CONTINUED EVOLUTION

With the higher oil price environment that prevailed through most of Q2/26, we generated record revenue of $359 million, given our production is weighted over 80% to light oil and liquids. This strong performance in the quarter highlights the strength of our underlying business and the expertise of our technical teams, which collectively translated into robust AFF of $123 million and free funds flow of $82.5 million. Although hedge losses impacted our AFF during the quarter, Saturn's risk management portfolio served the intended purpose of protecting cash flows and limiting downside risk. Hedging continues to be an important part of Saturn's strategy, acting as a form of 'insurance' that adds certainty through volatile commodity price cycles.

With the issuance of our New Notes, Saturn realizes numerous benefits, including financial flexibility moving from a secured to unsecured structure, reduced interest costs, an extension of our tenor to 2031, and a more relaxed covenant framework that affords us greater control over capital allocation, operational decision-making and corporate strategy. As a result, the Company enters the second half of 2026 with an improved capital structure and enhanced flexibility that supports our primary focus of maximizing returns for Saturn shareholders.

We are also very proud to report that since first launching our NCIB in August of 2024, and including our substantial issuer bid, Saturn has returned $66 million to our shareholders, through the repurchase and cancellation of 24.2 million shares, or approximately 12% of the issued and outstanding shares in Aug/24. On July 22, 2026, we successfully completed the final purchase under our current NCIB, taking up 12.1 million shares from the open market during the period from August 27, 2025 to July 22, 2026. Upon the expiry of the current NCIB on August 26, 2026, we plan to renew our NCIB program with the Toronto Stock Exchange (the "TSX") for another 12-month period.

OUTLOOK

In addition to the issuance of our Q2/26 results, the Company has issued a separate press release dated July 29, 2026 outlining increased 2026 guidance, including an expanded full year development capital expenditure(1)budget of approximately $355 to $375 million. This is expected to drive estimated organic production growth of approximately 10% through the end of the year, with Saturn targeting to exit 2026 between 48,000 and 50,000 boe/d(2), weighted approximately 84% to oil and liquids. Full year 2026 annual production is anticipated to average between 43,000 and 44,000 boe/d(2), with higher capital in the second half offsetting a muted capital budget for the first half given lower oil prices.

For the third quarter of 2026, we expect capital spending to range between $165 and $175 million, with production expected to average between 42,000 to 43,000 boe/d(2), reflecting the higher capital and drilling activity planned in the quarter.

CONFERENCE CALL AND WEBCAST

The Company plans to host a conference call on Thursday, July 30, 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 Q2 2026 results, followed by a question-and-answer session with attendees.

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Date: Thursday, July 30, 2026

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Time: 8:00 am MT (10:00 am ET)

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Live Webcast Link: https://www.gowebcasting.com/14721

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North America (Toll Free) Dial In: 1-800-715-9871

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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.