Saturn Acquires Corex Resources for Production Boost
News related to:Saturn Oil & Gas Inc · 2 min read
Saturn Oil & Gas Inc. has expanded its core area into Manitoba with the acquisition of 100% of Light Oil-Weighted Corex Resources Ltd., adding approximately 7,000 barrels of oil per day (bbl/d) of 100% light oil production. This acquisition is expected to increase the company's forecast 2026 exit production rate to 54,000 to 56,000 barrels of oil equivalent per day (boe/d), according to the press release.
The transaction is expected to be immediately accretive to operating netback, adjusted funds flow per share, and free funds flow per share, while the exit 2027 target leverage metrics remain unchanged at under one times. Saturn Oil & Gas Inc. anticipates that the acquisition will contribute to an estimated $192 million of run-rate net operating income (NOI) over the next 12 months at current strip pricing.
The acquisition of Corex Resources Ltd. represents a significant step in Saturn's strategy to continue developing assets in Saskatchewan, Alberta, and Manitoba. The acquisition adds premium oil barrels for only 1.6 times net operating income (NOI) and approximately 82% of the present value of discounted future cash flows (PDP NPV10) value, aligning with Saturn's blueprint strategy.
The acquisition consists of approximately 7,000 bbl/d of 100% light oil-weighted, high-netback production in Southwest Manitoba (SW MB), immediately adjacent to the company's Southeast Saskatchewan (SE SK) core area. In addition, the assets offer attractive future development locations, including potential open hole multi-lateral (OHML) targets identified by the Saturn team that are not reflected in the current reserves value.
The acquisition is expected to close in December 2026, subject to the satisfaction or waiver of customary closing conditions. The transaction will be funded by cash on hand and a draw on Saturn's credit facility, with Saturn Shares issued to Corex shareholders having a deemed value of $50 million based on the preceding 20-day volume-weighted average price. The acquisition is expected to add approximately $252 million in cash and Saturn Shares to the company's balance sheet.
Saturn Oil & Gas Inc.
The acquisition of Corex Resources Ltd. will add approximately 323 gross (279 net) identified locations to Saturn's drilling inventory, including 206 gross (189 net) booked locations within Corex's most recent reserve report. Nearly 30 net unbooked OHML locations have been identified by Saturn in the Lodgepole formation at Virden, plus an estimated 25 net unbooked OHML Spearfish locations, representing potential value beyond what is booked in the most recent Corex reserves report.
The acquisition of Corex Resources Ltd. will also enhance marketing opportunities to improve realized pricing, with expanded production in the Southeast Saskatchewan (SE SK) and Southwest Manitoba (SW MB) areas positioning Saturn to capture synergies in transportation and blending agreements. The acquisition also includes owned and operated infrastructure, including underutilized marketing infrastructure, with no apportionment concerns in Southwest Manitoba (SW MB), and optimal positioning for pipeline egress.
The acquisition of Corex Resources Ltd. is expected to be immediately accretive to operating netback, adjusted funds flow per share, and free funds flow per share, while the acquisition is expected to support increased adjusted funds flow (AFF) per share and free funds flow per share in 2027, positioning Saturn to exit 2027 with net debt to adjusted EBITDA of less than one times.