Mr. John Jeffrey reports

SATURN OIL & GAS INC. ANNOUNCES FULLY-FUNDED 2024 CORPORATE GUIDANCE HIGHLIGHTED BY $180 MILLION OF DEBT REDUCTION WHILE MAINTAINING PRODUCTION AND A $50 MILLION BOUGHT DEAL PRIVATE PLACEMENT FINANCING LED BY STRATEGIC U.S. INSTITUTIONAL INVESTORS

Saturn Oil & Gas Inc. has released its 2024 capital and operating budget, reflecting a focus on maximizing near-term free funds flow, continued rapid debt repayment, and sustainable oil and gas production, with high returns on capital investment.

Highlights of 2024 guidance:

• Sustainable oil-weighted production: 2024 average production is forecasted between 26,500 barrels of oil equivalent per day to 27,500 boe/d (80 per cent oil and NGLs (natural gas liquids));
• High margin adjusted funds flow: Low corporate cost structure contributes to robust adjusted funds flow in the range of $300-million to $316-million, at a forecast WTI (West Texas Intermediate) oil price of $75 (U.S.)/bbl (barrel);
• Disciplined capital allocation: Fully financed development capital budget of approximately $146-million, representing approximately 47 per cent of midpoint expected 2024 adjusted funds flow, which will be directed toward the company's deep portfolio of light-oil-weighted development opportunities in Saskatchewan and Alberta;
• Robust free funds flow: Forecasted free funds flow (FFF) of between $144-million and $160-million, representing a free cash flow yield of 38 per cent to 42 per cent, based on pro forma market capitalization after the offering (as defined below);
• Rapid debt reduction: Directing organic free funds flow to reducing net debt levels, year-over-year, by 38 per cent to 42 per cent, reducing 2024E net debt/adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) to a range of 0.7 times to 0.8 times (from 1.3 times at year-end 2023);
• High leverage to light oil: With an 80-per-cent production weighting to oil and NGLS, each additional $5 (U.S.)/bbl increase in WTI oil prices will add $15-million in additional FFF, which would be expected to be allocated to additional debt repayment, thereby accelerating the timeline to be debt-free (currently projected as Q1 2026);
• Commitment to ESG (environmental, social and governance)-focused culture: Saturn expects to invest approximately $12-million directed to abandonment and reclamation obligations;
• Shareholder support: The offering (as defined below) is to be led by four existing strategic United States institutional shareholders, including GMT Capital Corp. and Libra Advisors LLC.

"We are very excited for the 2024 capital investment program, the largest budget in Saturn's history, which we will direct towards some of the most economic light oil development plays in North America," commented John Jeffrey, Saturn's chief executive officer. "We look to build on the successes of an outstanding 2023 capital program with the continued deployment of innovative development technologies, including extended-reach horizontals and open-hole multilateral drilling to drive premium capital efficiencies and high rates of return on invested capital. The strong returns from our drilling program are expected to maintain current production levels through 2024, matched with a substantial reduction of debt levels year-over-year, which will provide significant value creation to our shareholders."

Capital investment overview

Saturn owns extensive underutilized pipeline and facilities infrastructure in each of its core operating areas, and has consequently allocated over 85 per cent of its 2024 development capital expenditures to drilling, completions, equipping and tie-in (DCET) of approximately 62 net new wells, with less than 10 per cent allocated to facilities expenditures, and the remaining approximate 5 per cent is designated to land, seismic and production optimization projects. The company prioritizes development drilling of derisked light oil targets in areas where Saturn has had previous drilling success and does not allocate funds to exploration-style drilling. Saturn's average oil and gas production in December, 2023, was approximately 28,000 boe/d (81 per cent oil and NGLs), based on field estimates, eclipsing previously stated 2023 exit guidance of 27,000 boe/d (80 per cent oil and NGLs), and the company is confident that it will maintain 2024 average production in the 26,500 boe/d to 27,500 boe/d (80 per cent oil and NGLs) range, based on its 2024 capital expenditure budget.

By maintaining a light-oil focus in all of Saturn's development activities, the company has matched premium field sales prices with decreasing unit operating costs, and reduced royalty rates to result in industry-leading operating netbacks. For the first nine months of 2023, the company has reduced operating and transportation costs per boe by 19 per cent, and the average royalty rate has decreased from 15.4 per cent to 11 per cent, compared with 2021. Saturn remains committed to drive operational efficiencies and maintain high margin production with select production and facilities optimization projects throughout 2024.

Southeastern Saskatchewan

Southeastern Saskatchewan will continue to be a major focus of field development, with an allocation of approximately 35 per cent of the company's DCET budget. Projects include follow-on development from some of 2023's most successful drilling programs, highlighted by: single and multileg drilling of the prolific Spearfish formations in the Manor area, development of Frobisher light oil targets across the over 225,000 acres of undeveloped land the company holds mineral rights in southeastern Saskatchewan, and development of the light oil Bakken resource using unconventional development and open-hole multilateral (OHML) techniques.

With the recent success of the Bakken 101/01-07-011-06W2 (Viewfield 01-07) OHML well, Saturn expects to spud three gross (2.5 net) OHML wells in the first quarter of 2024 in the Viewfield area. Saturn plans to operate the drilling of two of the OHML wells, with 100-per-cent interest, and one gross (0.5 net) of the OHML wells are expected to be operated by an industry partner. The Viewfield 01-07 well was drilled with eight lateral legs of approximately one mile horizontal lengths and had an IP30 (initial production of the first 30 days) of 233 bbl/d (barrels per day) of light oil. The Q1 2024 planned OHML wells are expected to be drilled with lateral legs with lengths ranging from 1.5 miles to two miles to enhance production rates. Approximately 20 OHLM Bakken wells were drilled industry wide in the Viewfield area in 2023, with strong average initial production rates, providing encouraging evidence that OHML drilling has the potential to open increased drilling inventory with greater capital efficiencies.

West-central Saskatchewan

The company will continue developing its Viking light oil resource play in west-central Saskatchewan in 2024, which allows quick cycle times for drilling and bringing new production on-line. Saturn will focus its development activities in the East Plato and Herschel areas, where the company has had success discovering expansions to the Viking resource in these areas. The company expects to invest approximately 20 per cent of drilling capital expenditures to Viking development in 2024.

Central Alberta

In central Alberta, Saturn will look to continue to drive strong capital efficiencies by utilizing extended-reach horizontal (ERH) drilling targeting Cardium light oil. The company is currently drilling the last well of a four-well program initiated in 2023, and expects to drill up to 10 gross (8.0 net) additional ERH Cardium wells in 2024 for approximately 30 per cent of the DCET budget.

Northern Alberta

Development in Northern Alberta will continue to focus on targeting Montney light oil in the Kaybob area, where the company holds a 100-per-cent working interest with plans to drill a four-well ERH pad in the second half of 2024, and drill its first ERH well in Deer Mountain, targeting Swan Hills light oil. The company intends to allocate 15 per cent of the DCET budget to Northern Alberta.

Guidance

The associated table outlines the company's 2024 guidance. Per-share metrics are calculated after taking into effect the offering.

Two thousand twenty-four debt reduction program

During 2023, Saturn repaid approximately $152-million in principal payments to its senior term loan that had an original principal amount of $608-million owing as at Feb. 28, 2023. Estimated net debt at Dec. 31, 2023, is estimated at $463-million. The company intends that 2024 free funds flow will be directed to further reduce the senior term loan balance for targeted Dec. 31, 2024, net debt of between $275-million and $290-million. The company has executed an amendment to its senior term loan agreement, including all applicable covenant waivers, to ensure Saturn is able to fully finance its 2024 capital program. The senior term loan schedule to be repaid in full in Q1 2026 remains unchanged. Principal repayments will be fully financed with organic free funds flow.

Bought-deal equity financing

In connection with the approved capital expenditure program, Saturn has entered into an agreement, with Echelon Capital Markets acting as lead underwriter and sole book runner on behalf of a syndicate of underwriters, to issue and sell approximately 22.2 million common shares on a bought-deal private placement basis. The common shares will be offered at a price of $2.25 per share for aggregate gross proceeds of approximately $50-million. The company will use the net proceeds of the offering to finance the 2024 capital expenditure program and for working capital purposes. The offering is to be led by four existing strategic United States institutional shareholders, including GMT Capital and Libra Advisors. Closing of the offering is expected on or about Feb. 22, 2024, and is subject to certain conditions, including, but not limited to, the receipt of all necessary regulatory and other approvals, including the approval of the Toronto Stock Exchange. The common shares will be subject to a statutory four-month-and-one-day hold period from the date of closing.

About Saturn Oil and Gas Inc.

Saturn Oil & Gas is a growing Canadian energy company focused on generating positive shareholder returns through the continued responsible development of high-quality, light-oil-weighted assets, supported by an acquisition strategy that targets highly accretive, complementary opportunities. Saturn has assembled an attractive portfolio of free-cash-flowing, low-decline operated assets in Saskatchewan and Alberta that provide a deep inventory of long-term economic drilling opportunities across multiple zones. With an unwavering commitment to building an environmental, social and governance-focused culture, Saturn has a goal to increase reserves, production and cash flows at an attractive return on invested capital. Saturn's shares are listed for trading on the Toronto Stock Exchange under ticker SOIL, on the Frankfurt Stock Exchange under symbol SMKA and on the OTCQX under ticker OILSF.

Notes

Production breakdown by product type

Disclosure of production on a per-boe basis in this press release consists of the constituent product types as defined in National Instrument 51-101, and their respective quantities disclosed in the associated table.

Guidance pricing assumptions: WTI at $75 (U.S.)/bbl; MSW (mixed sweet blend) differential of $4 (U.S.); Canadian:United States foreign exchange rate of 0.74; and AECO (Alberta Energy Company) of $2.75/mcf (thousand cubic feet).

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