Spartan Delta Corp. Announces Second Quarter 2024 Results
Press Release
Calgary, Alberta – August 7, 2024 – Spartan Delta Corp. (“Spartan” or the “Company”) (TSX:SDE) is pleased to report its unaudited financial and operating results for the three and six months ended June 30, 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 six months ended June 30, 2024, and June 30, 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
Spartan has established core areas in the Deep Basin and the West Shale Basin Duvernay (the “Duvernay”). The Deep Basin is a liquids-rich natural gas asset that provides significant torque to natural gas prices and possesses a large multi-horizon inventory of liquids-rich targets, while the Duvernay asset is an oil and condensate rich resource play that supports significant production and value growth. The Company intends to continue leveraging its technical expertise in the Deep Basin to further optimize the asset and pursue opportunistic acquisitions while allocating its Free Funds Flow to fund the development and growth of its Duvernay asset. Spartan believes its portfolio of assets is poised to offer repeatable and economic results presenting the opportunity to generate significant shareholder returns.
In the Deep Basin, Spartan is optimizing operations and maintaining flat production as it continues to develop liquids-rich targets. In the second quarter, the Company prudently shut-in a recently completed well due to the depressed price of natural gas and anticipates bringing the production online in the fourth quarter. Spartan continues to boast a strong inventory of Deep Basin drilling locations primed to capture the contango forward curve in natural gas prices.
To date, Spartan has established one of the largest positions in the Duvernay at a low cost of entry, with a focus in the oil and condensate rich Willesden Green fairway. The Company intends to significantly grow oil and liquids production, improve 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.
SECOND QUARTER 2024 HIGHLIGHTS
- Spartan reported production of 38,583 BOE/d (32% liquids) during the second quarter of 2024, flat from 38,533 (32% liquids) in the first quarter of 2024, despite multiple production impediments.
- Spartan achieved a 33% increase in crude oil production and 4% increase in condensate production as compared to the first quarter of 2024.
- During the quarter, the Company experienced a loss of approximately 800 BOE/d of production as a result of a third-party natural gas liquid force majeure. The force majeure has since been rescinded.
- The Company’s second quarter volumes were also impacted by the voluntary shut-in of a recently completed well due to depressed natural gas prices resulting in a reduction of approximately 1,200 BOE/d of production during the quarter.
- Additionally, Spartan successfully and safely completed multiple facility turnarounds on budget and on time.
- Second quarter 2024 oil and gas sales totaled $73.5 million, generating Adjusted Funds Flow of $37.2 million ($0.21 per share, diluted).
- The Company successfully executed a $22.6 million capital program in the second quarter of 2024, continuing to focus on developing liquids-rich targets in the Deep Basin.
- In the Deep Basin, Spartan drilled 2.0 net wells, completed 3.8 net wells, and brought 4.6 net wells on production.
- The Company elected to defer the drilling of 1.0 net well in the quarter due to depressed natural gas prices.
- Despite challenging commodity prices, Spartan continued to generate positive Free Funds Flow in the second quarter of 2024, exiting the quarter with Net Debt of $132.4 million.
- Spartan successfully completed a strategic acquisition in the Duvernay (the “Willesden Green North Acquisition”) on May 1, 2024, for total consideration of approximately $49.8 million in cash. The acquisition included 38,000 net acres (59.5 net sections) of Duvernay rights and approximately 1,600 BOE/d (70% liquids) of production and associated infrastructure.
- As at June 30, 2024, Spartan had $699 million in tax pools, of which $370 million are non-capital losses.
The following table summarizes the Company’s financial and operating results for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, and the six months ended June 30, 2024, and June 30, 2023. As a result of the 2023 Montney divestitures, certain metrics in the reported three and six months ended financials may not be comparable year over year.
| Three months ended | Six months ended | ||||||
| (CA$ thousands, unless otherwise indicated) | June 30, | March 31, | June 30, | June 30, | June 30, | ||
| 2024 | 2024 | 2023 | 2024 | 2023 | |||
| FINANCIAL HIGHLIGHTS | |||||||
| Oil and gas sales | 73,451 | 84,148 | 168,847 | 157,599 | 485,059 | ||
| Net income and comprehensive income | 14,371 | 11,195 | 457,069 | 25,566 | 543,518 | ||
| $ per share, basic (1) | 0.09 | 0.06 | 2.65 | 0.15 | 3.16 | ||
| $ per share, diluted (1) | 0.09 | 0.06 | 2.64 | 0.15 | 3.14 | ||
| Cash provided by operating activities | 44,674 | 48,151 | 146,482 | 92,825 | 361,200 | ||
| Adjusted Funds Flow (2) | 37,177 | 45,673 | 123,300 | 82,850 | 305,576 | ||
| $ per share, basic (1)(2) | 0.22 | 0.26 | 0.72 | 0.48 | 1.78 | ||
| $ per share, diluted (1)(2) | 0.21 | 0.26 | 0.71 | 0.47 | 1.76 | ||
| Free Funds Flow (2) | 14,623 | 638 | 27,507 | 15,261 | 69,950 | ||
| Cash used in (provided by) investing activities | 101,377 | 51,136 | (1,563,240) | 152,513 | (1,435,888) | ||
| Capital Expenditures before A&D (2) | 22,554 | 45,035 | 95,793 | 67,589 | 235,626 | ||
| Adjusted Net Capital A&D (2) | 54,401 | 18,067 | (1,704,464) | 72,468 | (1,703,695) | ||
| Total assets | 884,244 | 833,574 | 2,500,443 | 884,244 | 2,500,443 | ||
| Long Term Debt | 109,040 | 49,571 | 146,981 | 109,040 | 146,981 | ||
| Net Debt (2) | 132,449 | 92,668 | 96,673 | 132,449 | 96,673 | ||
| Net Debt to Annualized AFF Ratio (2) | 0.9X | 0.5X | 0.4X | 0.9X | 0.4X | ||
| Shareholders’ equity | 458,802 | 442,249 | 308,825 | 458,802 | 308,825 | ||
| Common shares outstanding, end of period (000s) (1) | 173,201 | 173,201 | 173,201 | 173,201 | 173,201 | ||
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