CALGARY, Alberta, May 10, 2018 (GLOBE NEWSWIRE) — Spartan Energy Corp. (“Spartan” or the “Company”) (TSX:SPE) is pleased to report its financial and operating results for the three months ended March 31, 2018. Selected financial and operational information is set out below and should be read in conjunction with Spartan’s March 31, 2018 interim consolidated financial statements and the related management’s discussion and analysis, which are available for review at www.sedar.com or on the Company’s website at www.spartanenergy.ca.
FIRST QUARTER FINANCIAL AND OPERATIONAL HIGHLIGHTS
Spartan’s highlights for the first quarter include:
- Achieved average production of 22,736 boe/d, comprised of 91% oil and liquids, representing an increase of 6% (5% per share) over the first quarter of 2017.
- Generated adjusted funds flow from operations of $65.7 million ($0.37 per basic and $0.35 per diluted share), representing an increase of 34% (32% per share) over the first quarter of 2017.
- Delivered excess funds flow (funds flow from operations less capital expenditures exclusive of acquisitions, land and seismic) in the quarter of approximately $12.2 million.
- Drilled 52 (39.6 net) development wells and brought 50 (40.9 net) wells on production in the quarter, with 6 (2.4 net) wells remaining to be brought on production at the end of the quarter.
- Applied a portion of our excess funds flow to long term value creation, investing a total of $10.8 million to advance our Oungre waterflood project, acquire additional land and seismic and complete a tuck-in acquisition of a long life, low decline light oil asset.
- Continued our focus on cost reduction, delivering production expenses of $16.82 per boe (a decrease of 4% from the Q1 2017) and net general and administrative expenses of $0.43 per boe (a 60% decrease from Q1 2017).
- Maintained our balance sheet strength, with net debt (exclusive of finance lease obligations) at the end of the quarter of approximately $199 million, down from $215 million at the end of the first quarter of 2017 and representing only 0.7x annualized first quarter adjusted funds flow from operations. Available liquidity and the end of the first quarter was $151 million.
|Three Months Ended||Three Months Ended|
|(Cdn$000s except per boe and per share amounts)||March 31, 2018||March 31, 2017|
|Average daily production (boe/d)||22,736||21,455|
|Net realized oil and gas sales price (excluding derivatives) ($/boe)||60.49||53.82|
|Production costs ($/boe)(1)||16.82||17.56|
|Operating netback ($/boe)(3)||33.70||27.84|
|Net general and administrative expenses ($/boe)||0.43||1.07|
|Interest expense ($/boe)||1.17||1.38|
|Adjusted funds flow from operations(3)(4)||65,685||49,023|
|per share – basic(7)||0.37||0.28|
|per share – diluted(7)||0.35||0.27|
|Net income (loss)||(133,749||)||244|
|per share – basic(7)||(0.76||)||0.00|
|per share – diluted(7)||(0.76||)||0.00|
|Total development capital expenditures(3)(5)||53,516||42,335|
|Total capital expenditures(5)||64,293||49,892|
|Net debt exclusive of finance lease obligations(3)||199,021||215,290|
|Weighted average shares outstanding|
- Including transportation costs.
- Royalties include Saskatchewan resource surcharge.
- Adjusted funds flow from operations, operating netback, net debt and net debt excluding finance lease obligations are non-IFRS measures. See “Non-IFRS Measures”.
- Excluding transaction costs.
- Total development capital expenditures calculated as total capital expenditures less land, seismic, waterflood capital and acquisitions.
- Includes acquisitions.
- Prior period numbers restated on a 3 for 1 basis to reflect share consolidation that occurred on June 20, 2017.
Spartan remained active in the field in the first quarter of 2017, drilling 52 (39.6 net) development wells in the quarter. We brought 50 (40.9 net) wells on production in the quarter, including 4 (3.6 net) wells that were drilled in the fourth quarter of 2017, and had 6 (2.4 net) wells that were drilled but not yet on production at the end of the quarter. Our southeast Saskatchewan drilling program consisted of 27 (20.1 net) open-hole Mississippian wells, 10 (8.3 net) frac Midale wells and 12 (8.7 net) open-hole Ratcliffe wells. In addition, we drilled 3 (2.5 net) Detrital wells on our Alberta properties. Spring break-up conditions have been relatively mild in southeast Saskatchewan to date and Spartan anticipates resuming drilling ahead of schedule in mid to late May.
Spartan has consistently demonstrated an ability to deliver production per share growth while spending less than cash flow. This continued in the first quarter of 2018, as we generated adjusted funds flow from operations of $65.7 million on development capital spending of $53.5 million. Consistent with our business plan, we applied a portion of our excess funds flow toward projects designed to generate additional long term shareholder value. We invested $4.7 million in waterflood projects, primarily related to the commencement of water injection at our Oungre unit waterflood project. We also spent $2.1 million to acquire additional land and seismic and completed a small acquisition of long life light oil assets for consideration fo $4.0 million.
BUSINESS COMBINATION WITH VERMILION ENERGY INC.
As previously announced, Spartan entered into an arrangement agreement with Vermilion Energy Inc. (“Vermilion”) on April 16, 2018 providing for a business combination between Spartan and Vermilion (the “Arrangement”). Pursuant to the Arrangement, Spartan shareholders will receive 0.1476 of a Vermilion share for each of their Spartan shares. The special shareholder meeting to vote upon the Arrangement will be held on May 25, 2018 at the offices of McCarthy Tétrault LLP, Suite 4000, 421 7th Avenue S.W., Calgary, Alberta, T2P 4K9, at 9:00 a.m. (Calgary time). All Shareholders entitled to vote are encouraged to vote in person or by proxy at the meeting. Assuming receipt of shareholder approval and the satisfaction of all other conditions to the Arrangement, Spartan expects the Arrangement to be completed on May 28, 2018.