VIDEOCAST: Saturn Oil's acquisition realigns Canada's energy industry

Little-known Canadian stock Saturn Oil & Gas (TSXV: SOIL) just increased production by 2000%.

Paul Hunt

Deputy Editor: Energy & Commodities

Paul Hunt

SATURN Oil & Gas is listed is on the Toronto Stock Exchange Venture (TSXV: SOIL) and the Frankfurt Stock Exchange (FSE: SMK).

While 2020-2021 was a challenging time for the oil and gas industry generally, Saturn Oil turned lemons into… well... oil.

It made a game changing acquisition this year, buying a massive parcel of land dubbed the Oxbow project in the southeast region of Saskatchewan, Canada.

Total reserves and resources stand at a whopping 43 million barrels of oil equivalent.

Saskatchewan is of course one of the two biggest oil producing provinces in Canada and feeds hungry domestic and international markets with light crude produced onshore.

The deal saw Saturn Oil buy thousands of producing or soon-to-be-producing wells. In fact, now the deal is sealed, it will deliver approximately 6700 barrels of oil equivalent per day into the company's balance sheet.

This is a 2000% increase on its current production rate. Something you cannot laugh at all.

At international benchmark prices, this is nothing but a windfall for the company which was only recently called a junior.

Saturn Oil has now officially become one of the leading independent oil producers in the country, almost overnight, thanks to this acquisition.

The Oxbow project is expected to generate between US$65 million to US$70 million in net revenue over the next 12 months alone.

Saturn Oil already had a track record of developing land other companies had overlooked, or just not invested in.

It's this strategy which brings Saturn Oil into the sights of investors internationally, and one of the reasons why we're covering this company in detail.

"We've created value where others have missed it," Saturn chief executive John Jeffery told Energy News Au.

"Prior to Oxbow we'd never purchased land without a reserve booked on it, however. This acquisition gives us a major production base and serves as a cash cow for future projects."

The proof is certainly in the pudding, by our book.

"Not only does Oxbow have significant upside… but at current oil prices, we'll be able to pay off all debt in the next three years."

The acquisition was well-received by investors when first announced. Saturn Oil went to market with a market cap of under $50 million.

It raised $130 million in capital to buy Oxbow, which shows how bullish investors are. With steady cash flow, the company is now looking to invest in future production. This will involve both workovers and new wells.