- Saturn Oil and Gas (TSXV:SOIL) has today announced it has hedged 50 per cent of production for 2020
- The company has stated market volatility caused by the COVID-19 pandemic and oil price weakness are behind the decision
- The oil price was hedged at C$65.40 per barrel through to February 2021
- The company’s strategy for 2020 has moved away from organic drilling to accretive acquisitions
- Saturn Oil and Gas (SOIL) is trading down 12 per cent at $0.08 per share with a market cap of $20 million
Saturn Oil and Gas (TSXV:SOIL) has stated it has now hedged 50 per cent of its oil production for the year, amid intense market volatility.
Saturn have stated that intense market volatility due to the COVID-19 pandemic and some of the lowest Brent crude prices in history.
The agreed price was C$65.40, and the hedge runs until February 2021.
Saturn have stated they are going to move the company in a different financial direction, moving away from organic drilling opportunities and instead looking for accretive acquisition targets.
Accretive acquisitions boost share prices as the price paid is usually lower than the boost the new acquisition gives the acquiring company’s earnings per share.
The company believe they have identified several potential acquisitions would enable the company to leverage its existing infrastructure, capacity and expertise.
Saturn believes this would position it for continued growth, once the market volatility subsides.
A move that in the current violently volatile market, makes a lot of sense.
Saturn’s CEO John Jeffrey said the company was currently navigating uncharted waters.
“In this uncertain time when people and families are facing numerous challenges due to the continued spread of COVID-19, Saturn is doing what we can do support the health and well-being of our employees, partners and shareholders.
“One of Saturn’s strengths is our flexibility to respond rapidly to changes in the broader market and to pursue those strategies offering the best potential rated of returns for our shareholders.
“As a result, we have locked in attractive pricing on approximately one half of our current production for the next twelve months, and have turned our focus to portfolio-building for the future rather than risk eroding value by drilling into such a weak pricing environment,” he said.
Saturn Oil and Gas (SOIL) is trading down 12 per cent at $0.07 per share at 11:27 am EST.