Saturn Oil & Gas agrees to buy Corex Resources for C$302M
The Manitoba acquisition would add light oil production, with C$252 million in cash consideration and a December closing target.
Ines Halvorsen
In December 2026, about 7,000 barrels a day of light oil would join Saturn Oil & Gas Inc. TSESOIL OTCMKTSOILSF under a Manitoba acquisition agreement announced on Monday. The agreement provides for approximately C$302 million in shareholder consideration, split between C$252 million in cash and C$50 million in shares. Privately held Corex Resources Ltd. is selling all its outstanding shares under the definitive arrangement agreement.
Saturn shares rose 16.96 per cent to C$9.38 at the Toronto close on Monday, according to TSESOIL, which recorded the price at 4:00 p.m. EDT.
The acquisition would extend Saturn's southeastern Saskatchewan operations into southwestern Manitoba. Its Oct. 19 announcement forecasts year-end production of 54,000 to 56,000 barrels of oil equivalent a day, while full-year average guidance remains unchanged because the acquired production would arrive in December.
Corex's Oct. 19 release caps the share issuance at 6,976,128, using a deemed price of C$7.17 each. That represents about 3.9 per cent of the 178.7 million shares Saturn reported outstanding on Oct. 9 in its October presentation.
Corex describes the C$302 million announced on Oct. 19 as shareholder consideration after adjusting for its net debt. Corex shareholders would receive approximately C$6.31 for each of their shares.
Shares issued to Corex's majority shareholder, the Azimuth Energy Partners funds, would be released from lock-up in three equal tranches over 18 months after closing. Corex shareholders can elect cash, shares or a combination, subject to the aggregate limits.
Corex Says The Deal Has No Financing Condition
Corex's Oct. 19 release says the transaction has no financing contingency and provides for reciprocal C$15 million termination fees in specified circumstances. Saturn's fee can be triggered if it fails to fund the consideration.
Saturn's October presentation lists C$761.6 million in net debt as of June 30. The acquisition announcement leaves its target for net debt below one times adjusted EBITDA at the end of 2027 unchanged.
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At the strip prices used in the Oct. 19 announcement, Saturn forecasts approximately C$192 million in net operating income from the acquired assets over the following 12 months. Estimated operating netbacks are C$82 a barrel, before potential integration savings.
Fellow oil producer Cardinal Energy Ltd. TSECJ reported net debt of C$172.7 million at June 30 and second-quarter production of 25,636 barrels of oil equivalent a day. Its production included light oil alongside medium and heavy oil, natural gas liquids and natural gas.
Corex says shareholders holding approximately 72 per cent of its shares have signed a written resolution approving the transaction, exceeding the required two-thirds threshold. Corex's board unanimously recommends the transaction. Closing conditions include court approval, approval under Canada's Competition Act and Toronto Stock Exchange approval.
"We expect to issue our full 2027 capital budget, program and guidance concurrent with, or shortly after, closing of the Acquisition in the first half of December," Saturn chief executive John Jeffrey said in the announcement.
Saturn's next scheduled financial update is its third-quarter results on Nov. 4, after the market closes. Corex expects the acquisition to close on or before Dec. 31, subject to the closing conditions.
