CALGARY, AB, Feb. 26, 2024 /CNW/ – Spartan Delta Corp. (“Spartan” or the “Company”) (TSX:SDE) is pleased to report its financial and operating results for the fourth quarter and year ended December 31, 2023, highlights of the Company’s year-end reserves evaluation, as well as updated guidance for 2024.
Selected financial and operational information is set out below and should be read in conjunction with Spartan’s audited consolidated annual financial statements and related management’s discussion and analysis (“MD&A”) for the years ended December 31, 2023 and 2022, 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
“2023 was a transformational year for Spartan strategically executing on the opportunity to crystalize outsized shareholder returns.
From growing the Company to over 80,000 BOE/d in Q1 2023, to divesting its Montney assets in Q2 2023, Spartan has created tremendous value for its shareholders by having declared, since our initial recapitalization transaction in 2019, $1.8 billion in dividends and distributions, after only having raised $537 million in equity. As a result of the Montney divestitures, certain metrics year over year in the reported year-end financials and reserves may not be comparable.
Spartan continues to demonstrate the underlying strength of its foundational Deep Basin asset by executing on a successful second half 2023. We are excited to continue building value for Spartan’s shareholders in 2024 through the optimization and development of its Deep Basin asset, participating in the consolidation of the Deep Basin, and leveraging the strength of the Company’s balance sheet and Free Funds Flow to continue advancing our Duvernay strategy,” commented Fotis Kalantzis, President and CEO of Spartan.
2023 FINANCIAL AND OPERATING HIGHLIGHTS
Spartan successfully closed the sale of its Gold Creek and Karr Montney assets on May 10, 2023, to Crescent Point Energy Corp. for cash consideration of $1.7 billion (the “Asset Sale”).
The Company declared $1.7 billion, or $9.60 per share, in dividends and distributions to its shareholders during the year ended December 31, 2023. Since inception Spartan has raised $537 million of equity at an average cost of $3.16 per share.
On June 20, 2023, Spartan successfully completed the spin-out of its early stage Montney assets (the “Spin-Out”) to Logan Energy Corp. (“Logan”) at a net asset value of $0.35 per share by distributing 1.0 Logan Share and 1.0 Logan Warrant per Spartan Share, with each warrant entitling the holder to acquire 1.0 Logan Share at an exercise price of $0.35 per share.
The Company reported production of 53,179 BOE/d in 2023, a decrease from 73,084 BOE/d in 2022. The decrease in production volume year over year is a result of the Asset Sale and the Spin-Out.
Fourth quarter 2023 production averaged 37,664 BOE/d (31% liquids), reflecting a slight increase in production and an 8% increase in liquids production from the third quarter of 2023.
As a result of the Asset Sale, the Spin-Out, and reduced commodity prices, Spartan reported oil and gas sales of $652.8 million in 2023 compared to $1.5 billion in 2022.
Fourth quarter 2023 oil and gas sales increased to $85.8 million, up 5% from the third of quarter 2023.
The Company’s operations generated Adjusted Funds Flow of $425.2 million ($2.45 per share, diluted) in 2023, 7% higher than 2023 guidance. In H2 2023, Spartan generated Adjusted Funds Flow of $119.6 million, 29% higher than H2 2023 guidance.
Spartan successfully executed a capital program of $295.0 million in 2023, of which $31.9 million was in the fourth quarter.
Spartan generated Free Funds Flow of $130.1 million in 2023, 10% higher than 2023 guidance. In H2 2023, Spartan generated Free Funds Flow of $60.2 million, 32% higher than H2 2023 guidance.
In the fourth quarter of 2023, Spartan closed acquisitions in the West Shale Basin Duvernay (the “Duvernay“) for aggregate cash consideration of approximately $32.5 million. The acquisitions included undeveloped acreage, 3D seismic, and approximately 400 BOE/d of Duvernay production. To date, Spartan has accumulated greater than 170,000 net acres in the Duvernay.
On December 29, 2023, the Company fully repaid its term facility of $150 million and exited 2023 with Net Debt of $75.3 million resulting in a 0.3X Net Debt to Annualized AFF ratio.
As at December 31, 2023, Spartan had $641.3 million tax pools, of which $398.0 million are non-capital losses.
Subsequent to December 31, 2023, Spartan increased its 2024 AECO 7A hedge position to 41% of net natural gas production at an average price of $2.79/GJ and has hedged 21% of its net oil and condensate production at an average price of $101.06/bbl.
The table below summarizes the Company’s financial and operating results for the fourth quarters and years ended December 31, 2023, and December 31, 2022:
Three months ended December 31
Year ended December 31
(CA$ thousands, except as otherwise noted)
2023
2022
%
2023
2022
%
FINANCIAL HIGHLIGHTS
Oil and gas sales
85,832
357,126
(76)
652,769
1,464,467
(55)
Net income and comprehensive income
110,584
152,919
(28)
663,107
681,086
(3)
$ per share, basic (a)
0.64
0.95
(33)
3.84
4.36
(12)
$ per share, diluted (a)
0.64
0.87
(26)
3.82
3.88
(2)
Cash provided by operating activities
51,289
200,363
(74)
475,669
795,371
(40)
Adjusted Funds Flow (b)
55,722
232,839
(76)
425,173
825,667
(49)
$ per share, basic (a)(b)
0.32
1.45
(78)
2.46
5.29
(53)
$ per share, diluted (a)(b)
0.32
1.31
(76)
2.45
4.66
(47)
Free Funds Flow (b)
23,798
73,689
(68)
130,128
391,510
(67)
Cash (provided by) used in investing activities
68,457
134,048
(49)
(1,324,930)
442,303
(400)
Capital Expenditures before A&D (b)
31,924
159,150
(80)
295,045
434,157
(32)
Adjusted Net Capital A&D (b)
32,661
231
nm
(1,670,197)
5,183
nm
Total assets
819,524
2,099,475
(61)
819,524
2,099,475
(61)
Long-term debt
44,476
145,180
(69)
44,476
145,180
(69)
Net Debt (b)
75,296
138,376
(46)
75,296
138,376
(46)
Net Debt to Annualized AFF Ratio (b)
0.3X
0.2X
50
0.3X
0.2X
50
Shareholders’ equity
429,717
1,516,821
(72)
429,717
1,516,821
(72)
Common shares outstanding (000s), end of period (a)
173,201
171,410
1
173,201
171,410
1
Three months ended December 31
Year ended December 31
2023
2022
%
2023
2022
%
OPERATING HIGHLIGHTS AND NETBACKS (e)
Average daily production
Crude oil (bbls/d)
570
13,714
(96)
5,838
12,976
(55)
Condensate (bbls/d) (c)
1,870
2,549
(27)
2,192
2,328
(6)
Natural gas liquids (bbls/d) (c)
9,196
12,757
(28)
10,541
12,612
(16)
Natural gas (mcf/d)
156,170
273,716
(43)
207,645
271,010
(23)
BOE/d
37,664
74,639
(50)
53,179
73,084
(27)
% Liquids (d)
31 %
39 %
(21)
35 %
38 %
(8)
Average realized prices, before financial instruments
Crude oil ($/bbl)
95.93
109.76
(13)
100.07
119.94
(17)
Condensate ($/bbl) (c)
100.76
111.19
(9)
100.81
119.70
(16)
Natural gas liquids ($/bbl) (c)
31.22
44.94
(31)
34.00
50.45
(33)
Natural gas ($/mcf)
2.58
5.55
(54)
3.01
5.69
(47)
Combined average ($/BOE)
24.77
52.01
(52)
33.63
54.90
(39)
Netbacks ($/BOE) (e)
Oil and gas sales
24.77
52.01
(52)
33.63
54.90
(39)
Processing and other revenue
0.59
0.39
51
0.49
0.35
40
Royalties
(3.05)
(5.53)
(45)
(3.58)
(5.99)
(40)
Operating expenses
(5.32)
(8.64)
(38)
(7.08)
(8.75)
(19)
Transportation expenses
(1.70)
(2.76)
(38)
(2.36)
(2.80)
(16)
Operating Netback, before hedging ($/BOE) (e)
15.29
35.47
(57)
21.10
37.71
(44)
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