SPARTAN DELTA CORP. ANNOUNCES DUVERNAY UPDATE, THIRD QUARTER 2024 RESULTS, AND UPDATED GUIDANCE FOR 2024
CALGARY, AB, Nov. 5, 2024 /CNW/ - Spartan Delta Corp. ("Spartan" or the "Company") (TSX:SDE) is pleased to report its unaudited financial and operating results for the three and nine months ended September 30, 2024, as well as an inaugural Duvernay operational update, and updated guidance for 2024.
Selected financial and operational information is set out below and should be read in conjunction with Spartan's unaudited consolidated interim financial statements and related management's discussion and analysis ("MD&A") for the three and nine months ended September 30, 2024, and 2023, which are filed on SEDAR+ at www.sedarplus.ca and are available on the Company's website at www.spartandeltacorp.com. The highlights reported in this press release include certain non-GAAP financial measures and ratios which have been identified using capital letters. The reader is cautioned that these measures may not be directly comparable to other issuers; please refer to additional information under the heading "Reader Advisories, Non-GAAP Measures and Ratios".
MESSAGE TO SHAREHOLDERS
"In the last twelve months, Spartan has established one of the largest positions in the Duvernay at a low cost of entry, organically creating a second core area with a focus in the oil and condensate rich fairway. During the third quarter of 2024, Spartan initiated drilling and completion operations in the Duvernay with strong initial production results from its first two wells, warranting the acceleration of the Duvernay program. The Company also elected to shut-in new gas production from one of the highest rate gas wells drilled in Spartan's history and further deferred certain Deep Basin activity in the third quarter in response to low natural gas prices. Spartan reallocated capital from the Deep Basin to drill and complete two additional wells in the Duvernay in the fourth quarter of 2024. Spartan continues to prudently manage production and capital with a focus on accelerating growth in the Duvernay," commented Fotis Kalantzis, President and CEO of Spartan.
DUVERNAY UPDATE
Spartan has begun operations in the West Shale Basin Duvernay (the "Duvernay") and is very encouraged by the strong initial results. To date, Spartan has successfully drilled 4.0 (3.4 net) wells, including a vertical stratigraphic well, and has completed and brought on-stream 2.0 (2.0 net) wells, including a previously drilled and uncompleted well ("DUC"), all in the Willesden Green Duvernay ("Willesden Green"). Spartan is currently completing 2.0 (1.4 net) wells in Willesden Green with initial results anticipated in December 2024. Additionally, the Company has begun construction on water infrastructure to further accelerate Duvernay development and reduce future capital requirements.
16-12-044-04W5 is Spartan's inaugural completion in the Duvernay. The DUC was drilled by the previous operator in 2019 to a cased lateral length of 3,441 meters (11,290 feet). Spartan completed and brought the well on-stream in September. Initial production results are exceeding internal expectations, averaging 30-day peak production of approximately 1,394 BOE/d (82% liquids) (808 BBL/d of condensate, 329 BBL/d of NGLs, and 1.5 MMcf/d of natural gas).
01-11-044-03W5 is Spartan's inaugural drill in the Duvernay. The well was drilled to a lateral length of 3,970 meters (13,026 feet). However, mechanical issues resulted in the casing of only 2,451 meters (8,042 feet) of lateral length. The Company successfully completed the well in October and despite the length impediment the well averaged 30-day initial production of approximately 937 BOE/d (92% liquids) (754 BBL/d of condensate, 104 BBL/d of NGLs, and 0.5 MMcf/d of natural gas). Scaling the well linearly to the drilled lateral length of 3,970 meters (13,026 feet) would result in a 30-day initial production of approximately 1,518 BOE/d (92% liquids) (1,221 BBL/d of condensate, 168 BBL/d of NGLs, and 0.8 MMcf/d of natural gas).
05-18-042-03W5-PAD is licensed as an eight well pad. To date, Spartan has successfully drilled 2.0 (1.4 net) wells; the 03-26-042-04W5 well at a lateral length of 3,560 meters (11,680 feet) and the 09-05-042-03W5 well at a lateral length of 3,720 meters (12,200 feet). The Company is currently completing the two wells and anticipates initial results in December 2024.
The Company continues to execute on its Duvernay strategy by significantly growing oil and liquids acreage and production, improving well costs and productivity by optimizing well designs and completions through the application of modern drilling techniques and technologies, while leveraging underutilized infrastructure in the region. To date, Spartan has accumulated approximately 250,000 net acres and believes the majority of its acreage is in the tier one oil and condensate rich Duvernay fairway with initial production results validating the thesis as production rates and flowing pressures are stronger than the nearest offsetting wells completed by the previous operators. Spartan's Duvernay presents the opportunity to generate significant shareholder returns.
THIRD QUARTER 2024 HIGHLIGHTS
Spartan reported production of 37,020 BOE/d (32% liquids) during the third quarter of 2024, a 1% decrease from the third quarter of 2023 due to the delay of drilling activity in the Deep Basin, as well as multiple production impediments and facility outages.
The Company's third quarter volumes were impacted by the voluntary intermittent shut-in of a recently completed well due to depressed natural gas prices resulting in a reduction of approximately 3,300 BOE/d of production during the quarter.
During the third quarter, the Company experienced a loss of approximately 900 BOE/d of production as a result of third-party natural gas liquids force majeures and facility outages. The force majeures have since been rescinded.
Spartan achieved a 138% increase in crude oil production and a 9% increase in condensate production as compared to the third quarter of 2023.
Third quarter 2024 oil and gas sales totaled $60.6 million, generating Adjusted Funds Flow of $31.3 million ($0.18 per share, diluted).
The Company successfully executed a $54.5 million capital program in the third quarter of 2024, continuing to focus on developing liquids-rich targets in the Deep Basin and commencing Spartan's inaugural drilling and completion campaign in the Duvernay, exiting the quarter with Net Debt of $159.2 million.
In the Duvernay, Spartan rig released 2.0 (2.0 net) wells, inclusive of a vertical stratigraphic well, completed 2.0 (2.0 net) wells, and brought on-stream 1.0 (1.0 net) well.
In the Deep Basin, Spartan rig released 4.0 (4.0 net) wells, completed 4.0 (4.0 net) wells, and brought on-stream 2.0 (2.0 net) wells, continuing to target the liquids-rich Cardium and Wilrich formations.
Successfully acquired 8,364 net acres in the Duvernay for cash consideration of $4.5 million.
To date, Spartan has hedged approximately 78,315 GJ/d of AECO 7A at an average price of $2.98/GJ for the fourth quarter of 2024 and 27,745 GJ/d of AECO 7A at an average price of $2.50/GJ for 2025. Additionally, the Company has hedged approximately 600 BBL/d of its oil production at an average price of $101.06/BBL for the fourth quarter of 2024 and 1,900 BBL/d at an average price of $99.16/BBL for 2025.
The following table summarizes the Company's financial and operating results for the three and nine months ended September 30, 2024, and 2023.
Three months ended September 30
Nine months ended September 30
(CA$ thousands, unless otherwise indicated)
2024
2023
%
2024
2023
%
FINANCIAL HIGHLIGHTS
Oil and gas sales
60,551
81,878
(26)
218,150
566,937
(62)
Net income and comprehensive income
3,528
9,005
(61)
29,094
552,523
(95)
$ per share, basic (1)
0.02
0.05
(60)
0.17
3.21
(95)
$ per share, diluted (1)
0.02
0.05
(60)
0.17
3.19
(95)
Cash provided by operating activities
35,025
63,180
(45)
127,850
424,380
(70)
Adjusted Funds Flow (2)
31,300
63,875
(51)
114,150
369,451
(69)
$ per share, basic (1)(2)
0.18
0.37
(51)
0.66
2.14
(69)
$ per share, diluted (1)(2)
0.18
0.37
(51)
0.64
2.12
(70)
Free Funds Flow (2)
(23,238)
36,380
(164)
(7,977)
106,330
(108)
Cash used in (provided by) investing activities
27,984
42,501
(34)
180,497
(1,393,387)
(113)
Capital Expenditures before A&D (2)
54,538
27,495
98
122,127
263,121
(54)
Adjusted Net Capital A&D (2)
4,358
837
421
76,826
(1,702,858)
(105)
Total assets
921,710
862,245
7
921,710
862,245
7
Debt
104,130
148,197
(30)
104,130
148,197
(30)
Net Debt (2)
159,223
64,513
147
159,223
64,513
147
Shareholders' equity
464,366
318,328
46
464,366
318,328
46
Common shares outstanding, end of period (000s) (1)
173,603
173,201
-
173,603
173,201
-
OPERATING HIGHLIGHTS
Average daily production
Crude oil (bbls/d)
1,140
478
138
961
7,614
(87)
Condensate (bbls/d) (3)
1,799
1,653
9
2,035
2,300
(12)
NGLs (bbls/d) (3)
8,989
8,670
4
9,171
10,994
(17)
Natural gas (mcf/d)
150,553
160,301
(6)
155,249
