Spartan Delta Corp. (“Spartan”) (TSX:SDE) is pleased to announce the completion of a series of asset acquisitions (collectively, the “Acquisitions”) in the West Shale Basin Duvernay (the “Duvernay”) for aggregate cash consideration of approximately $25 million and preliminary 2024 guidance.
MESSAGE TO SHAREHOLDERS
Spartan’s Deep Basin asset has been the foundation of the Company’s success since inception in December
2019, providing the Company and its shareholders with significant return on investment through consolidation and
development.
Spartan’s go-forward strategy is to grow through the continued optimization of its Deep Basin asset, participate in
the consolidation of the Deep Basin fairway, and leverage the Company’s balance sheet and Free Funds Flow to
build a new growth core area in the Duvernay, commencing with the Acquisitions.
“I believe that the West Shale Basin Duvernay represents a unique opportunity to build a meaningful position at a
low cost of entry in an oil and condensate resource play that is fragmented, undercapitalized, and proximal to
Spartan’s Deep Basin asset. The Company is excited to establish and develop a new core area,” commented
Fotis Kalantzis, President and CEO of Spartan.
2024 BUDGET AND PRELIMINARY GUIDANCE
Spartan is pleased to provide its financial and operating guidance for 2024 for its foundational Deep Basin asset.
For 2024, Spartan’s Board has approved an initial capital budget of $130 million to drill and complete 19.2 net (21
gross) wells, resulting in annualized production of 39,500 BOE/D, a 7% increase in corporate production versus
H2 2023 guidance. Spartan’s development plan includes adding a second rig to the Deep Basin program through
the first half of the year targeting Spirit River and Cardium locations and oil weighted drilling locations targeting
the Viking, Wilrich, and Rock Creek formations, increasing Spartan’s oil and condensate production by 17%.
Spartan’s Deep Basin drilling inventory continues to grow as the Company further evolves its petrophysical,
geological, and geophysical understanding of the region. Industry leading 3D seismic reservoir characterization,
combined with the Company’s detailed geological understanding of the subsurface is unveiling new locations that
were previously overlooked. In addition, the quality of inventory in Spartan’s future drilling campaigns are being
optimized for capital efficiencies by extending lateral length, continuing to use existing surfaces, and lowering
drilling and completion costs. In 2024, Spartan expects to see capital efficiency improvements of greater than 20%
compared to 2023.
Based on forecast average production of 39,500 BOE/d and commodity price assumptions of US$75/bbl for WTI
crude oil and $2.75/GJ for AECO natural gas, Spartan expects to generate approximately $177 million of Adjusted
Funds Flow in 2024. Free Funds Flow is forecasted to be $47 million on a capital expenditure budget of $130
million, exiting 2024 with Net Debt of $19 million resulting in a 0.1X Net Debt to Annualized AFF ratio.
Spartan’s 2023 guidance is unchanged except for the $25 million of additional A&D capital associated with the
Acquisitions.
DUVERNAY HIGHLIGHTS
The Acquisitions include a material Duvernay land position, extensive 3D seismic, and approximately 400 BOE/d
of Duvernay production. Pursuant to the Acquisitions, Spartan accumulated approximately 137,000 gross acres
(130,000 net acres) with the majority of the acreage residing in the volatile oil, condensate, and liquids-rich gas
window of the Duvernay.
After over a decade of development, Spartan believes the Duvernay is poised to offer repeatable, economic results
with a significant depth of inventory. Similar to Spartan’s entry into the up-dip oil window of the Montney in 2021,
the Company views its timing on the entry into the West Shale Basin Duvernay as optimal as the fairway is
fragmented, undercapitalized and supports growth with available egress and existing underutilized infrastructure.
Additionally, the West Shale Basin Duvernay possess geotechnical attributes comparable to the Kaybob Duvernay
and the East Shale Basin Duvernay. Recent activity and new top-tier well results from bordering operators
demonstrate the commerciality and scalability of the play.
Spartan looks forward to providing additional details on its Duvernay strategy in the new year as it continues to
advance its current position and solidify its future operating plans for the area.
CFO RETIREMENT AND PROMOTION OF DIRECTOR, FINANCE TO VP, FINANCE AND CFO
The Company also announces Ms. Geri Greenall will retire as Chief Financial Officer effective December 31,
2023, to focus on other commitments. Ms. Greenall has been instrumental in the Company’s success and value
creation since inception. The Board and management team wish to express their gratitude to Ms. Greenall for her
many contributions and wish her well in her future endeavors.
Effective January 1, 2024, Mr. Ronald Williams, Director, Finance of the Company, will be promoted to the roles
of Vice President, Finance and Chief Financial Officer. Mr. Williams has been with Spartan since March 2021. He
brings more than 31 years of industry experience in audit, finance, taxation, as well as corporate and asset
acquisitions. Most recently, Mr. Williams has been providing financial accounting and taxation services to a variety
of public and private Alberta based entities. Mr. Williams was the VP Finance, CFO and Co-Founder of two Alberta
focused oil & gas companies traded on the TSX-V, and currently serves as a director on a private transportation
logistics company.
