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    Canada’s Spartan Delta Rebounds in Q4

Summary

Stronger commodity prices, improved operating efficiency cited

by: Dale Lunan

Posted in:

Natural Gas & LNG News, Americas, Corporate, Mergers & Acquisitions, Financials

Canada’s Spartan Delta Rebounds in Q4

Spartan Delta Corp, a gas-weighted Canadian Deep Basin producer, said March 12 it had Q4 2020 net income of C$12.36 (US$9.9)mn, reversing a C$60,000 loss in Q4 2019 and a C$7.3mn loss in Q3 2020.

Net income for the year increased to C$47.66mn from a loss of C$1.99mn in 2019.

The recovery comes in the wake of Spartan Delta’s acquisition in June 2020 of gas-weighted Bellatrix Exploration and reflects increased oil and gas production, improved operating netbacks and “meaningful” cost savings.

Total production averaged 26,010 barrels of oil equivalent (boe)/day in the fourth quarter, up from pre-Bellatrix production (as Return Energy) of 223 boe/day in Q4 2019. Natural gas production averaged 106.9mn ft3/day, up from just 1.1mn ft3/day in Q4 2019, while crude oil, condensate and natural gas liquids production surged to 8,191 b/d from 45 b/d.

Spartan’s operating netback increased to C$9.59/boe in Q4 2020 from a loss of C$7.95/boe in Q4 2019, while general and administrative expenses were reduced to just C$1.48/boe from C$27.19/boe.

Subsequent to the end of the quarter, in February, Spartan entered into definitive agreements for three acquisitions totaling C$147.9mn, the completion of which will provide an entry into the oil-weighted Alberta Montney fairway – the acquisition of Inception Exploration – and complementary assets in the gas-weighted Simonette area of the Montney and the Deep Basin Willesden Green area.

The Willesden Green acquisition closed on March 5; the others are expected to close on or about March 18.

Alongside the acquisitions, Spartan announced its intention to complete C$80mn of equity financings, consisting of a C$50mn non-brokered private placement and a C$30mn bought deal prospectus offering. Subsequent to that announcement, the equity financings were upsized by 55%, to aggregate gross proceeds of C$124mn: C$79mn from the private placement and C$45mn from the prospectus offering.

The financings are expected to be completed concurrently with, and are conditional upon, the successful close of the Inception Exploration acquisition.