Saturn Oil & Gas : Annual MD&A 2019

Management's Discussion and Analysis

SATURN OIL & GAS INC.

For the three months and year ended December 31, 2019

(in Canadian Dollars)

2019 MANAGEMENT'S DISCUSSION AND ANALYSIS 1

SATURN OIL & GAS INC.

SATURN AT-A-GLANCE

Saturn Oil & Gas Inc. (TSX.V: SOIL) (FSE: SMK) is a public energy Company focused on the acquisition and development of undervalued, low-risk assets. Saturn is driven to build a strong portfolio of cash flowing assets with strategic land positions. De- risked assets and calculated execution will allow Saturn to achieve growth in reserves and production through retained earnings. Saturn's portfolio will become its key to growth and provide long-term stability to shareholders.

$18.3 M	$51.84/bbl	$12.7 M
2019 Revenue	2019 Operating	2019 Adjusted
	Netback*	EBITDAX*
$875,047 Bbls	$26.5 M	766 Bbls/d
Gross Proved +	2019 Proved Developed	2019 Net Average
Probable Reserves	Producing NPV10**	Production

*See "Non-IFRS Measures"

** Based on Saturn's December 31, 2019 annual year end independent reserves evaluation

2019 MANAGEMENT'S DISCUSSION AND ANALYSIS 2

SATURN OIL & GAS INC.

INTRODUCTION

The following Management's Discussion and Analysis ("MD&A") of Saturn Oil & Gas Inc. (the "Company" or "Saturn") has been prepared by management in accordance with the requirements of National Instrument of 51-102 as of December 31, 2019, and should be read in conjunction with the audited financial statements for the twelve months ended December 31, 2019 and 2018 and related notes which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. The information contained herein is not a substitute for detailed investigation or analysis on any particular issue. The information provided in this document is not intended to be a comprehensive review of all matters and developments concerning the Company. The Company is presently a "Venture Issuer" as defined in NI 51-102 Continuous Disclosure Obligations. Additional information relevant to the Company's activities can be found on SEDAR at www.sedar.comand the Company's website at www.saturnoil.com.

All financial information in this MD&A has been prepared in accordance with IFRS, unless otherwise indicated, and all dollar amounts are quoted in Canadian dollars, the reporting and functional currency of the Company, unless specifically noted.

This MD&A contains forward-looking statements and non-IFRS measures. Readers are cautioned that the MD&A should be read in conjunction with the Company's disclosures under the headings "Forward-Looking Statements" and "Non-IFRS Measures" included at the end of this MD&A.

Saturn's website, www.saturnoil.com, is a valuable source for the latest news of the Company's activities. Prior years' reports are also available on Saturn's website and on the SEDAR website at www.sedar.com.

OVERVIEW OF THE BUSINESS

Saturn Oil & Gas Inc. was incorporated under the laws of British Columbia on August 16, 2001 and continued into the province of Saskatchewan on December 17, 2018. The Company is in the business of acquiring, exploring, evaluating and developing economically viable energy and resource deposits in Canada. The Company's current focus is to advance the exploration and development of its oil and gas properties in west-central Saskatchewan. In January 2017, the Company changed its strategic direction from a mining / mineral exploration company to an entity focused on the acquisition and development of oil and gas assets and the subsequent successful production of hydrocarbon from primarily crude oil weighted properties in the Western Canadian Sedimentary Basin.

The Company's corporate headquarters are at Suite 1000 - 207 9 Ave SW, Calgary, Alberta, T2P 1K3. Effective May 3, 2004, the common shares of the Company were listed on the TSX Venture Exchange and trade under the symbol "SOIL".

Management is actively working to grow the Company's production and revenue through a combination of drilling and accretive acquisitions. In addition, management closely monitors commodity prices of oil and gas, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company if favorable or adverse market conditions occur.

2019 MANAGEMENT'S DISCUSSION AND ANALYSIS 3

SATURN OIL & GAS INC.

SELECT QUARTERLY AND ANNUAL HIGLIGHTS

	Three months ended	Twelve months ended
	December 31,	December 31,
($, except per unit amounts)	2019	2018	2019	2018
Financial
Oil revenue	4,454,008	1,463,592	18,294,103	4,522,563
Net income (loss)	(1,450,606)	(1,415,443)	822,242	(1,523,123)
Per share - basic & diluted	(0.01)	(0.01)	0.00	(0.01)
Sales Volumes
Crude oil (bbls/d)	753	415	766	233
Natural gas (Mcf/d)	-	-	-	-
Natural gas liquids (bbls/d)	-	-	-	-
Total (bbls/d)	753	415	766	233
% liquids	100%	100%	100%	100%
Average Realized Prices
Crude Oil ($/bbl)	64.25	30.20	65.47	48.52
Natural gas ($/Mcf)	-	-	-	-
Natural gas liquids ($/bbl)	-	-	-	-
Total ($/bbl)	64.25	30.20	65.47	48.52
Operating Netback1 ($/bbl)
Realized price	64.25	30.20	65.47	48.52
Royalties	2.36	1.22	2.87	4.99
Operating costs	10.59	14.15	10.76	13.32
Operating netback1	51.31	14.82	51.84	30.22
Realized loss on derivative instruments	0.63	-	0.98	-
Operating netback, after realized loss on derivative instruments	50.68	14.82	50.85	30.22

1. See "Non-IFRS Measures"

2019 YEAR-END RESERVES:

Proved Developed Producing ("PDP")

• 57% increase to 875.0 thousand barrels ("Mbbls")
• 53% increase on a per share (basic) basis
• 26% growth in net present value discounted at 10% (before tax) ("NPV10 BT")
• Achieved FD&A costs of $29.38/bbl and F&D costs of $27.34/bbl
• Generated FD&A and F&D recycle ratios of 1.8x and 1.9x, respectively
• Total PDP reserve additions of 0.6 million barrels replaced 213% of production
• PDP reserves represent 24% of the TP reserves, consistent with the prior year

Total Proved ("TP")

• 65% increase to 3,612.5 Mbbls
• 60% increase on a per share (basic) basis
• 29% growth in NPV10 BT
• Achieved FD&A costs of $28.98/bbl and F&D costs of $28.26/bbl
• Generated FD&A and F&D recycle ratios of 1.8x
• Total TP reserve additions of 1.7 million barrels replaced 603% of production
• TP reserves represent 49% of the TP+P reserves, consistent with the prior year

2019 MANAGEMENT'S DISCUSSION AND ANALYSIS 4

Total Proved + Probable ("TP+P")

• 63% increase to 7,418.0 Mbbls
• 58% increase on a per share (basic) basis
• 22% growth in NPV10 BT
• Achieved FD&A costs of $26.21/bbl and F&D costs of $25.82/bbl
• Generated FD&A and F&D recycle ratios of 2.0x
• Total TP+P reserve additions of 3,145.6 million barrels replaced 1,113% of production

Reserves Summary	December 31,	December 31,
2019	2018
Proved developed producing (bbls)	875,000	557,080
Total proved (bbls)	3,612,500	2,190,603
Total proved plus probable (bbls)	7,418,000	4,554,972
Proved developed producing - NPV10(1)	26,454,000	21,039,000
Total proved - NPV10(1)	61,052,000	47,348,000
Total proved plus probable - NPV10(1)	111,650,000	91,369,000

1)NPV 10 is net present value before tax cash flows discounted at 10%.

2019 HIGHLIGHTS:

• Saturn's strategy continues to be focused on the acquisition and development of high-quality Viking light oil assets.
• Saturn was successful in drilling and bringing on-line 17 extended reach horizontal ("ERH") Viking wells. This includes eleven wells in Prairiedale, two in Loverna, two in Milton and two in Kerrobert.
• Production averaged 766 bbls/day, with a peak production rate of over 1,450 bbls/day.
• Adjusted EBITDAX (before pro-forma adjustments) was $12.7 million, a $11.8 million increase from the same period in 2018 (see "Non-IFRS Measures"), primarily due to the successful drilling of wells and an increase in operating netbacks (see "Non-IFRS Measures").
• Net income for the year ending December 31, 2019 was $822,242, compared to net loss of $1.52 in the same period of 2018. The increase of $2.35 million was primarily a result of increased production, and higher operating netbacks
  (see "Non-IFRS Measures"), net of increases in interest on long-term debt and non-cash loan structuring costs and amortization and depletion expenses.
• Saturn's operating netback (see "Non-IFRS Measures") before realized loss on derivatives was $51.84/bbl, an increase of $21.63/bbl from the same period in 2018. The increase was primarily due to a decrease of $2.12/bbl in royalty costs and a decrease of $2.56/bbl in operating costs. The decrease in royalty costs was due to the drilling of wells on crown land where realized royalties are much lower than those drilled on freehold land.
• Saturn successfully drilled, completed, equipped and tied-in ("DCET") a total of 17 100% working interest ("WI") wells for total DCET expenditures of $17.53 million, or approximately $1.03 million per well.

1. In Milton, two 100% WI ERH wells were drilled in Q1 2019 with an area average 30-day production rate
   ("IP30") of 62 bbls/d (see "Advisory Regarding Oil and Gas Information"). The top producing well in the area was 102/12-11-030-27W3/00 with an IP30 of 74 bbls/d (see "Advisory Regarding Oil and Gas Information").

1. In Kerrobert, two 100% WI ERH wells were drilled with an area average 30-day production rate ("IP30") of
   148 bbls/d (see "Advisory Regarding Oil and Gas Information"). The top producing well in the area was 104/09-09-032-24W3/00 with an IP30 of 158 bbls/d (see "Advisory Regarding Oil and Gas Information").

1. In Prairiedale, eleven 100% WI ERH wells were drilled with an area average IP30 of 111 bbls/d (see "Advisory Regarding Oil and Gas Information"). The top producing well in the area was 105/14-01-033-27W3 with an IP30 of 175 bbls/d (see "Advisory Regarding Oil and Gas Information").

2019 MANAGEMENT'S DISCUSSION AND ANALYSIS 5