Q: Can you comment on Saturns announced 2026 capital plan and forecast. At what point do you like its debt ratio to be attractive.
5i Research Answer:
Debt is currently about 1.5X cash flow, which is not so bad, if commodity prices do not collapse. However investors have been rewarding financial strength, and we would like to see this ratio go below 1X. Still, the stock is very cheap vs peers. The 2026 budget does address this, and free cash flow looks good. The budget of $180+ million is 27% below previous (September) estimates. Year end debt is expected to drop to $645+ million, from $800M (net) today. Certainly the stock has potential if it can hit its target. Its ultra-low valuation should get re-rated as debt declines.