Saturn Oil & Gas Inc. Reports Q1 2023 Results and Record Production

Calgary, Alberta--(Newsfile Corp. - May 16, 2023) - Saturn Oil & Gas Inc. (TSXV: SOIL) (FSE: SMKA) (OTCQX: OILSF) ("Saturn" or the "Company") is pleased to report its financial and operating results for the three months ended March 31, 2023.

"The first quarter of 2023 was a landmark period for Saturn that set new performance records following the closing of the acquisition of Ridgeback Resources, which has enhanced the sustainability and potential profitability of Saturn for years to come," commented John Jeffrey, Saturn's CEO. "Building on the successes from last year's development program, the 13 new horizontal wells drilled in Q1 2023 have been the most productive group of new wells in Saturn's history."

First Quarter 2023 Highlights:

• Closed the transformational acquisition of Ridgeback Resources Inc. on February 28, 2023 (the "Ridgeback Acquisition"), for total consideration of approximately $525 million, increasing the Company's March exit production to approximately 30,000 boe/d⁽²⁾⁽³⁾;
• Realized record average production for the quarter of 17,783 boe/d⁽²⁾ (88% oil and NGLs) in 2023, representing an increase of 137% compared to 7,499 boe/d⁽²⁾ (95% oil and NGLs) in the first quarter of 2022;
• Posted record quarterly Adjusted EBITDA⁽¹⁾ of $70.4 million in 2023, an increase of 332% compared to $16.3 million in first quarter of 2022;
• Generated record Adjusted funds flow⁽¹⁾ of $54.5 million ($0.63 per basic share), an increase of 252% compared to $15.5 million ($0.50 per basic share) in first quarter of 2022, with record free funds flow⁽¹⁾ of $30.2 million;
• Achieved operating netbacks, net of derivatives⁽¹⁾ of $46.14 per boe in Q1 2023, an increase of 75% compared to $26.38 per boe in the first quarter of 2022, despite oil prices decreasing year over year;
• Closed a bought-deal equity financing for aggregate gross proceeds of $125 million and expanded the Company's Senior Term Loan by $375 million in connection with the Ridgeback Acquisition;
• Closed a $30 million unsecured demand letter of credit facility with a syndicate of Canadian banks supported by a Performance Security Guarantee from Export Development Canada, providing Saturn with flexibility to replace cash-collateralized letters of credit;
• Invested $24.3 million of development capital expenditures in the first quarter, drilling 13 (12.8 net) horizontal wells including: eight Viking and five Oxbow wells, which were all brought on production before the end of March; and
• Exited the first quarter with $556.6 million net debt⁽¹⁾.

Message to Shareholders

The acquisition of Ridgeback Resources Inc. ("Ridgeback") on February 28, 2023, was an important step to both bolstering Saturn's production base in its flagship production area of Southeast Saskatchewan (the "Oxbow Asset") and diversifying the Company's light oil development opportunities into Alberta. With the integration of the talented employees, information systems and oil and gas production are now largely complete, Saturn is focused on an active development program for the second half of 2023, with capital and activities balanced between Alberta and Saskatchewan.

The first quarter was a busy period for the development of Saturn's legacy assets with the successful drilling of 13 horizontal wells in Saskatchewan, representing a 63% increase over the number of wells drilled in Q1 2022. Saturn's new wells delivered average initial 30-day production ("IP30") of 94.0 bbls/d of light oil, which was approximately 37% higher than Saturn's guidance type curve expectation for its Saskatchewan wells.

As a result of the successful drilling programs through 2022 and to date in 2023, along with the impact of both the 2022 Viking acquisition and the Ridgeback Acquisition, Saturn is proud to have record results across several metrics in Q1 2023, with growth over Q1 2022 as follows:

• 92% higher petroleum and natural gas sales totaling $131,407;
• 137% higher oil and gas production averaging 17,783⁽³⁾ boe/d;
• 332% higher adjusted EBITDA⁽¹⁾ of $70.4 million; and
• 252% higher Adjusted funds flow⁽¹⁾ of $54.5 million.

The Ridgeback Acquisition contributed financially for only one month in Q1 2023. Had the Ridgeback Acquisition occurred on January 1, 2023, on a pro forma basis, Saturn would have achieved for the period ended March 31, 2023:

• Petroleum and natural gas sales of $204.1 million; and
• Adjusted funds flow⁽¹⁾ of $79.5 million.

Oxbow Update

During the three months ended March 31, 2023, the Oxbow Asset produced 8,494⁽³⁾ boe/d, an increase of 19% from 7,153 boe/d⁽³⁾ in the comparative 2022 period. The increase is primarily due to the Ridgeback Acquisition which produced 4,960 boe/d in the month of March, contributing an average of 1,709 boe/d during the first quarter of 2023.

The highlight of Saturn's Q1 drilling program was the 101/11-21-006-05W2 well ("Weir Hill 11-21") targeting Frobisher oil in the Oxbow Asset. This well achieved an average IP30 rate of 149 bbls/d of light oil and was a top five best performing oil well in Saskatchewan, based on February 2023 production, ranked against more than 200 wells drilled in province in January 2023. The Weir Hill 11-21 well was a follow up location to three wells drilled in the Weir Hill pool in 2022 that had strong production rates and underscores Saturn's plans for continued development in this area for the remainder of 2023. The IP30 rate of the five (4.8 gross) Oxbow wells drilled by Saturn in Q1 2023 averaged 79.2 bbls/d of light oil per well, which is 15% above the Company's expected type curves for Oxbow wells.

Viking Update

The Company's assets located in West Central Saskatchewan (the "Viking Asset") produced 5,156 boe/d⁽³⁾ for the three months ended March 31, 2023. This represents an increase of 1,332% from 360 boe/d⁽³⁾ in the comparative period in 2022. The increase is due to Saturn's successful 2022 and Q1 2023 drilling programs, coupled with the impact of the Viking acquisition that was completed during the third quarter of 2022.

Saturn drilled eight (8.0 net) Viking development wells to date in the first three months of 2023, achieving an average IP30 rate of 103.2 bbls/d of light oil per well, a rate that is approximately 52% above the Company's expected type curves for Viking wells. Development activities in the Viking Asset during Q1 2023 were focused on those areas that provided the most productive Viking wells drilled in 2022. The Viking Asset activities in Q1 2023 included six (6.0 net) wells drilled in the Herschel area and two (2.0 net) wells drilled in the Plato area pool extension that the Company discovered in 2022.

Alberta Update

Saturn's Alberta assets were acquired as part of the Ridgeback Acquisition and are comprised of Cardium focused development areas located in Central Alberta (the "Cardium Asset") and the Kaybob and Deer Mountain areas of Northern Alberta (the "North Alberta Assets" and collectively with the Cardium Assets, the "Alberta Assets"). Production from the Alberta Assets include:

• 8,810 boe/d⁽³⁾ from the Cardium Asset in the month of March, which contributed an average of 3,034 boe/d⁽³⁾ during the first quarter of 2023; and

• 3,189 boe/d⁽³⁾ from the North Alberta Assets in the month of March, which contributed an average of 1,099 boe/d⁽³⁾ in the first quarter of 2023.

Unsecured Letter of Credit Facility

The Company entered into a new $30 million unsecured demand letter of credit facility (the "LC Facility") with a syndicate of Canadian banks, supported by a performance security guarantee ("PSG") from Export Development Canada. The LC Facility has no impact to Saturn's debt balance, and as such provides the Company with additional liquidity by providing Saturn with flexibility to replace cash-collateralized letters of credit.

Production Curtailment from Alberta Wildfires

In light of the ongoing wildfires affecting communities and operations in Alberta, Saturn confirms that the Alberta Assets continue to be curtailed, although no significant damage or loss to its owned or third-party infrastructure has been reported. Approximately 10,000 Boe/d⁽³⁾ (60% oil and NGLs) of production has been temporarily shut in since May 4, 2023 and Saturn continues to monitor and prepare for resumed production as soon third-party infrastructure is available for restart. The Company wishes to thank its dedicated staff and emergency responders for their tireless efforts dealing with this situation and sends thoughts and best wishes to everyone affected.

Outlook

Saturn is extremely pleased with the initial results of its 2023 drilling program to date and looks forward to recommencing drilling operations in June 2023. For the remainder of the year, the Company's development budget is approximately equally balanced between Alberta and Saskatchewan, with a continued focus on locations offering the highest potential rates of return. Saturn has contracted one drilling rig for the rest of 2023 at the Oxbow Asset which will be directed to: 1) developing Mississippian aged light oil targets, including the Company's initial development of identified Spearfish formations; and 2) development of the light oil Bakken resource gained through the Ridgeback Acquisition. An additional drilling rig has been contracted for full time development of Saturn's Alberta Assets, primarily focused on: 1) targeting Cardium light oil in the West Pembina and Lochend areas, and 2) targeting Montney light oil in the Kaybob area.

Subsequent to quarter-end, Saturn was proud to publish the Company's first Sustainability Report referencing the Task Force on Climate-related Financial Disclosures ("TCFD") framework, and showcasing its commitment to responsible operations, strong governance and robust community investments. The report is available on Saturn's website.

Investor Webcast

Saturn will host a webcast at 10:00 AM MDT (12:00 PM Noon EDT) on Wednesday May 17, 2023, to review the first quarter 2023 financial and operational results. Participants can access the live webcast via https://saturnoil.com/invest/q1-2023-results-webcast. A recorded archive of the webcast will be available afterwards on the Company's website.

About Saturn Oil & Gas Inc.

Saturn Oil & Gas Inc. 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 Southeastern Saskatchewan, West Central Saskatchewan and Central Alberta that provide a deep inventory of long-term economic drilling opportunities across multiple zones. With an unwavering commitment to building an ESG-focused culture, Saturn's goal is to increase reserves, production and cash flows at an attractive return on invested capital. Saturn's shares are listed for trading on the TSX.V under ticker 'SOIL' on the Frankfurt Stock Exchange under symbol 'SMKA' and on the OTCQX under the ticker 'OILSF'.

The Company's unaudited interim financial statements and corresponding Management's Discussion and Analysis for the three month period ended March 31, 2023 are available on SEDAR at www.sedar.com and on Saturn's website at www.saturnoil.com. Copies of the materials can also be obtained upon request without charge by contacting the Company directly. Please note, currency figures presented herein are reflected in Canadian dollars, unless otherwise noted.

Further information and a corporate presentation is available on Saturn's website at www.saturnoil.com.

Saturn Oil & Gas Investor & Media Contacts:

John Jeffrey, MBA - Chief Executive Officer
Tel: +1 (587) 392-7902
www.saturnoil.com

Kevin Smith, MBA - VP Corporate Development
Tel: +1 (587) 392-7900
info@saturnoil.com

Notes

(1) See reader advisory: non-GAAP and Other Financial Measures
(2) Based on field reports for average production between March 26, 2023 and March 31, 2023
(3) See reader advisory: Supplemental Information Regarding Product Types

Reader Advisory

Non-GAAP and Other Financial Measures

Throughout this news release and in other materials disclosed by the Company, we employ 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 by IFRS and therefore may not be comparable to similar measures provided by other issuers. Non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS. The disclosure under the section "Non-GAAP and Other Financial Measures" including non-GAAP financial measures and ratios, capital management measures and supplementary financial measures in the Company's Condensed consolidated interim financial statements and MD&A are incorporated by reference into this news release.

This press release may use the terms "Adjusted EBITDA", "Adjusted Funds Flow", and "Net Debt" which are capital management financial measures. See the disclosure under "Capital Management" in our Condensed consolidated interim financial statements for the three months ended March 31, 2023, for an explanation and composition of these measures and how these measures provide useful information to an investor, and the additional purposes, if any, for which management uses these measures.

This press release may use the terms "capital expenditures", "free funds flow", "operating netback", "operating netback, net of derivatives", and "net operating expenses", which are non-GAAP financial measures. These non-GAAP financial measures are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other issuers. See the disclosure under the section "Non-GAAP Financial Measures and Ratios" in our MD&A for the three months ended March 31, 2023, for an explanation and composition of these measures and how these measures provide useful information to an investor, and the additional purposes, if any, for which management uses these measures.

Capital Expenditures

Saturn uses capital expenditures to monitor its capital investments relative to those budgeted by the Company on an annual basis. Saturn's capital budget excludes acquisition and disposition activities as well as the accounting impact of any accrual changes or payments under certain lease arrangements. The most directly comparable GAAP measure for capital expenditures is cash flow used in investing activities. The following table details the composition of capital expenditures and capital expenditures, net acquisitions and dispositions to cashflow used in investing activities.

Free Funds Flow

Saturn uses free funds flow as an indicator of the efficiency and liquidity of Saturn's business, measuring its funds after capital investment available to manage debt levels, pursue acquisitions and gauge optionality to pay dividends and/or and return capital to shareholders through activities such as share repurchases. Saturn calculates free funds flow as Adjusted funds flow in the period less capital expenditures. By removing the impact of current period capital expenditures from adjusted funds flow, management monitors its free funds flow to inform its capital allocation decisions. The following table reconciles Adjusted funds flow to Free funds flow.

Gross petroleum and natural gas sales

Gross petroleum and natural gas sales is calculated by adding oil, natural gas and NGLs revenue, before deducting certain gas processing expenses in arriving at Petroleum and natural gas revenue as required under IFRS-15. These processing expenses associated with the processing of natural gas and NGLs revenue are a result of the Company transferring custody of the product at the terminal inlet, and therefore receiving net prices. This metric is used by management to quantify and analyze the realized price received before required processing deductions, against benchmark prices. The calculation is shown within the Petroleum and natural gas sales section of the MD&A.

Net operating expenses

Net operating expense is calculated by deducting processing income primarily generated by processing third party production at processing facilities where the Company has an ownership interest, from operating expenses presented on the Statement of income (loss). Where the Company has excess capacity at one of its facilities, it will process third-party volumes to reduce the cost of ownership in the facility. The Company's primary business activities are not that of a midstream entity whose activities are focused on earning processing and other infrastructure-based revenues, and as such third-party processing revenue is netted against operating expenses in the MD&A. This metric is used by management to evaluate the Company's net operating expenses on a unit of production basis. Net operating expense per boe is a non-GAAP financial ratio and is calculated as net operating expense divided by total barrels of oil equivalent produced over a specific period of time. The calculations are shown within the Net operating expenses section of the MD&A.

Operating netback and Operating netback, net of derivatives

The Company's operating netback is determined by deducting royalties, net operating expenses and transportation expenses from petroleum and natural gas sales. The Company's operating netback, net of derivatives is calculated by adding or deducting realized financial derivative commodity contract gains or losses from the operating netback. The Company's operating netback and operating netback, net of derivatives are used in operational and capital allocation decisions. Presenting operating netback and operating netback, net of derivatives on a per boe basis is a non-GAAP financial ratio and allows management to better analyze performance against prior periods on a per unit of production basis. The calculation of the Company's operating netbacks and operating netback, net of derivatives are summarized as follows.

Where applicable, the supplementary financial measures used in this news release are either a per unit disclosure of a corresponding GAAP measure, or a component of a corresponding GAAP measure, presented in the audited condensed consolidated financial statements. Supplementary financial measures that are disclosed on a per unit basis are calculated by dividing the aggregate GAAP measure (or component thereof) by the applicable unit for the period. Supplementary financial measures that are disclosed on a component basis of a corresponding GAAP measure are a granular representation of a financial statement line item and are determined in accordance with GAAP.

Supplemental Information Regarding Product Types

References to gas or natural gas and NGLs in this press release refer to conventional natural gas and natural gas liquids product types, respectively, as defined in National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities ("NI 51-101"), except where specifically noted otherwise.

The following table is intended to provide the product type composition for each of the production figures provided herein, where not already disclosed within tables above for the three months ended March 31, 2023 and 2022, and March 2023 stand alone average production:

The following table is intended to provide the product type composition for March 2023 exit production between March 26, 2023 and March 31, 2023:

Boe Presentation

Boe means barrel of oil equivalent. All boe conversions in this news release are derived by converting gas to oil at the ratio of six thousand cubic feet ("Mcf") of natural gas to one barrel ("Bbl") of oil. Boe may be misleading, particularly if used in isolation. A Boe conversion rate of 1 Bbl : 6 Mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio of oil compared to natural gas based on currently prevailing prices is significantly different than the energy equivalency ratio of 1 Bbl: 6 Mcf, utilizing a conversion ratio of 1 Bbl : 6 Mcf may be misleading as an indication of value.

Forward-Looking Information and Statements.

Certain information included in this press release constitutes forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project", "scheduled", "will" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this press release may include, but is not limited to, the drilling of development wells, workover program and the maintenance of bas production and the business plan, cost model and strategy of the Company.

The forward-looking statements contained in this press release are based on certain key expectations and assumptions made by Saturn, including expectations and assumptions concerning: the timing of and success of future drilling, development and completion activities, the performance of existing wells, the performance of new wells, the availability and performance of facilities and pipelines, the ability to allocate capital to pay down debt and grow or maintain production, the geological characteristics of Saturn's properties, the application of regulatory and licensing requirements, the availability of capital, labour and services, the creditworthiness of industry partners and the ability to source and complete asset acquisitions.

Although Saturn believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Saturn can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), constraints in the availability of services, commodity price and exchange rate fluctuations, actions of OPEC and OPEC+ members, changes in legislation impacting the oil and gas industry, adverse weather or break-up conditions and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. These and other risks are set out in more detail in Saturn's Annual Information Form for the year ended December 31, 2022.

Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be incorrect. Although Saturn believes that the expectations reflected in its forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because Saturn can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this press release, assumptions have been made regarding and are implicit in, among other things, our capital expenditure and drilling programs, drilling inventory and booked locations, production and revenue guidance, ESG initiatives, debt repayment plans and future growth plans. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used.

The forward-looking information contained in this press release is made as of the date hereof and Saturn undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. The forward-looking information contained in this press release is expressly qualified by this cautionary statement.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

All dollar figures included herein are presented in Canadian dollars, unless otherwise noted.

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