Saturn Oil & Gas Inc.

Hello, and thank you for joining the investor webinar for Saturn Oil's Q1 2024 Financial and Operations Update. My name is Kevin Smith, Vice President of Corporate Development, and I'm your moderator. We'll start with a presentation from management, and following that, we'll address any of your questions or comments. Please feel free to submit your questions and comments through the Q&A button at the bottom of your screen. Joining us today is John Jeffery, Chief Executive Officer, Scott Sanborn, Chief Financial Officer, Justin Kaufman, Chief Development Officer, and Grant McKenzie, Chief Legal Officer. I'll now hand the conference call over to our CEO, John Jeffery.

Hello, and thank you for joining us today live or listening to the replay for our Q1 2024 investor update. We have a lot to cover today. In addition to details of our Q1 results, I expect many on the webcast will be interested in hearing about the highlights of the exciting acquisition we announced last week, and importantly, how we see it enhancing Saturn's capital structure and greatly improving our cost of capital moving forward. But for now, let's start with Q1 results announced yesterday. We began the year with excellent initial production rates from nine wells drilled in southeast Saskatchewan and central Alberta, I'll leave it for Justin to go over some highlights, but I will say these are the best wells Saturn has drilled to date. Q1 also came with some operational challenges, including a cold snap that delivered record-setting low temperatures across Alberta and Saskatchewan, which had temporary impact at some of our production facilities. At our Kindersley Field Office in West Central Saskatchewan, the temperature fell to an all-time record low of minus 44 degrees Celsius in early January, And for our investors south of the border, that was close to minus 50 Fahrenheit. We estimate we are down for about 2,000 barrels a day for approximately 10 days, impacting Saturn's quarterly average production by around 300 barrels a day. I'd like to thank Saturn's field staff who braved the cold to minimize the operational impact and downtime. It was a cold one and hopefully one for the ages. Another challenge to Western Canada oil producers in Q1 was the increased price differential between WTI and Western Canada's benchmark MSB, which averaged US about $8.50 a barrel for the quarter. This unusual price gap came as a result of refinery maintenance in the U.S. matched with some temporary export constraints to the U.S. during the quarter. Comparatively, last year Canada's MSB sold for approximately $3 U.S. less WTI, which is closer to its historical price range. The good news is the Trans Mountain pipeline has been recently expanded and was just filled with product in April, making an immediate impact to Canadian oil differentials. which are now back to normal levels around that $3 U.S. a barrel. The Trans Mountain expansion is shipping three times the previous volumes of oil from Alberta to the Pacific coast. This allows producers to receive Brent oil pricing, which typically sells to a premium to U.S.-based WTI. This new export expansion is a major win for all Western Canadian oil producers, and we expect the positive impacts to be realized in Saturn's Q2 financials and moving forward. But for now, let's turn our attention over to the highlights of the Saskatchewan asset acquisition we announced on May 6, which we expect to close in about a month from now on June 14. It is an absolutely terrific acquisition on many aspects, and one that will have a lasting positive impact for Saturn shareholders for years to come. The essence are made up of about 13,000 barrels a day, 96% liquids, with high net back of over $50 per barrel last year, with low declines of approximately 16%. This production is set to increase Saturn Oil's overall crude oil production by about 60%, and Saturn's overall liquids weighting from about 81% to 86%, further solidifying Saturn as one of the most light oil-weighted producers of its size. The new oil production we are adding is currently unhedged, which will have a very positive impact to Saturn's average sale price and expand our net back per BOE going forward. The new production is an incredible fit with our existing operations in southern Saskatchewan. As you've seen in previous acquisitions, there will be many opportunities to drive material development and operational synergies. The deal is very accretive on a per share basis, over 10% accretive on a net asset value for both PDP and 2P. For the next 12 months after close, we see the deal over 20% accretive on adjusted funds flow per share and 30% accretive on a free funds flow per share. The acquisition has also offered the opportunity for a major recapitalization of our debt structure. This will lead to a significant reduction in overall interest paid, enhanced capital allocation flexibility, and no development capital spending restrictions. And of course, since we were able to acquire these amazing assets at a low valuation, it just makes the whole transaction an incredible step forward for Saturn and its shareholders. But for now, I'm going to hand the webcast over to Justin Kaufman for an operational update. Justin?

Thank you, John. And as John commented, in Q1, 2024, we had one of the best development programs ever, exceeded production expectations in Southeast Saskatchewan and Central Alberta, which included record-setting Cardium wells for the company. These were our first Cardium wells in the Brazil area, which all four of them being completed and brought on to production in late Q1. These wells were all 100% working interest and delivered a total of 2,800 barrels per day, IP 30 between the four of them. To state how impressive this production number is, of the hundreds of wells Saturn has drilled since inception, these wells rank 1, 2, 3, and 4 on an IP30 basis. In doing that, they deliver production numbers that were 30% above forecasted expectations. These wells also came in 8% under budget, which set up a capital efficiency of about $6,000 per barrel. Saturn has over 120 booked and unbooked locations in the region, and we expect to be back drilling in the area within the next 12 months. Now turning to southeast Saskatchewan, Saturn drilled five conventional horizontal wells with 100% working interest in Q1, three Mississippian-age Frobisher and Tilston targets, and two Spearfish targets. As a group, these five wells exceed our expected IP30 type curve by 33%. Our Southeast Saskatchewan conventional well production results continue to get better year over year thanks to the strength of our technical team. Obviously, these results are important as the company has over 400 of these locations identified and they are currently our highest rate of return assets. Saturn also started drilling an open-hole multilateral well in the Bewfield area of Southeast Saskatchewan following our success with two open-hole multi-legs wells in Q4 last year. The new open-hole multi-leg well was drilled with eight horizontal legs up to two miles each. The well was just put onto production over the weekend, and we should have IP30 results in the next month. Q1 certainly produced some very excellent results with the drill bit, and after break, the team is excited to be drilling on the recently announced acquisition assets John described earlier. Given the close proximity of the assets to Saturn's existing operations, Saturn expects to seamlessly and efficiently expand the future capital program to include the Batram and Flatlake assets into the expanded capital development program. Our drilling and completions offsetting these two packages are direct analogs of how we are going to attack the exploitation of these plays. Also, the acquisition production has a very low decline rate of approximately 16%, which will reduce Saturn's corporate decline. and the acquisition comes with an extensive portfolio of high-quality oil-focused development opportunities that include approximately 950 locations. Between the decline rate and identified locations, we believe production levels can be maintained for over 20 years at a drilling pace of only about 20 to 30 wells per year. These are areas our technical teams know very well, and we are excited to get going in developing these new opportunities for years to come. I will now hand it over to Scott for a financial overview of Q1 and of the announced acquisition.