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Press release from Marketwire

Spartan Oil Corp. Announces Year End 2011 Financial Results and Filing of Annual Information Form

Wednesday, March 14, 2012

Spartan Oil Corp. Announces Year End 2011 Financial Results and Filing of Annual Information Form07:30 EDT Wednesday, March 14, 2012CALGARY, ALBERTA--(Marketwire - March 14, 2012) - Spartan Oil Corp. ("Spartan" or the "Company") (TSX:STO), is pleased to announce it has filed on SEDAR its audited financial statements and related Management's Discussion and Analysis ("MD&A") for the seven month period ended December 31, 2011 as well as its annual information form ("AIF") for the period ended December 31, 2011. Selected financial and operational information is outlined below and should be read in conjunction with Spartan's audited financial statements, the related MD&A and the AIF which are available for review at www.sedar.com or on the Company's website at www.spartanoil.ca.FINANCIAL AND OPERATIONAL HIGHLIGHTSCurrent production is approximately 2,000 boe/d (84% oil and liquids) based on field estimates. Average 2011 fourth quarter production was 1,512 boe per day (82% oil and liquids), representing an increase of 128% over average production for the third quarter (of 664 boe/d). Since commencing operations on June 1, 2011, Spartan has drilled a total of 21 (17.9 net) horizontal wells and participated in an additional 4 (1.0 net) horizontal wells targeting Cardium oil at Spartan's Keystone properties. Spartan currently has a total of 23 (14.8 net) Cardium horizontal oil wells producing in the Keystone area and an additional 5 (4.9 net) Cardium horizontal wells awaiting completion and/or tie-in. Spartan is very encouraged by the results it has seen to date at Keystone, having achieved a 100% success rate on its drilling program. Emphasizing the quality of the Company's production base and the efficiency of its operations, Spartan achieved an operating netback of $53.95 per boe and a corporate netback of $50.18 for the seven month period ended December 31, 2011; for the quarter ended December 31, 2011, Spartan achieved an operating netback of $60.72 per boe and a corporate netback of $57.83. Cash flow from operations for the fourth quarter was $8.1 million, cash flow for the seven month period ended December 31, 2011 was $11.2 million. Spartan raised a total of $31.25 million in December 2011, consisting of $28.75 million at a price of at $2.80 per share and $2.5 million on a flow through basis at a price of $3.20 per share. Spartan finished the year with a strong balance sheet; as at December 31, 2011 the Company's working capital surplus was $27 million. Net capital expenditures were $86.1 million during the seven month period ended December 31, 2011 (including $44.9 million related to the acquisition and disposition of oil and gas properties). Proved plus probable ("P+P") reserves increased by 613% to 21.4 million barrels of oil equivalent ("MMboe") at December 31, 2011. Spartan's 2011 capital program added reserves at a cost of $23.79 (Proved) and $16.79 (P+P) (includes undiscounted future development capital); based upon an average corporate netback of $50.18 per boe during 2011, Spartan achieved a recycle ratio of 2.1 for Proved reserves and 3.0 for P+P reserves. Spartan replaced reserves at the rate of 82.1 boe (P+P) for each 1.0 boe produced during the period ended December 31, 2011. Spartan's available line of credit has recently been increased to $50 million, giving the Company significant financial flexibility moving forward for the remainder of the year; as at the date hereof nothing is drawn on the line of credit. HIGHLIGHTS Three Months EndedPeriod EndedDecember 31, 2011December 31, 2011FinancialTotal revenue$11,380,066$17,174,653Net earnings$155,465$9,404,532per share - basic$0.00$0.16per share - diluted$0.00$0.15Cash flow from operations (1)$8,050,882$11,244,586per share - basic$0.13$0.19per share - diluted$0.13$0.18Capital expenditures$15,953,675$86,137,593Working capital surplus (deficit)$27,023,986$27,023,986Weighted average shares outstandingBasic61,991,43359,085,879Diluted63,610,94461,034,863OperatingOil equivalent (6:1)Barrels of oil equivalent (000's)139.2224.1Barrels of oil equivalent per day1,5121,047Average selling price ($CDN per boe)$81.74$76.65Interest income ($CDN per boe)$0.24$0.32Royalties$9.22$9.94Transportation costs (per boe)$0.44$0.38Operating costs (per boe)$11.60$12.70Three Months EndedPeriod EndedDecember 31, 2011December 31, 2011G&A (cash - per boe)$1.99$2.88Interest expense ($ - per boe)$0.90$0.89Oil productionBarrels (000's)102.8149.8Barrels per day1,117700Average selling price ($CDN per barrel)$96.21$93.92Gas productionThousand cubic feet (000's)154.2290.6Thousand cubic feet per day1.681.36Average selling price ($CDN per mcf)$4.19$4.28NGL productionBarrels (000's)10.725.9Barrels per day116121Average selling price ($CDN per barrel)$78.72$72.08(1) Cash flow from operations is a non-GAAP measurement. See MD&A.2011 IN REVIEWSpartan commenced active operations on June 1, 2011, following the completion of the Plan of Arrangement among Spartan Exploration Ltd., Penn West Petroleum Ltd. and the Company.Since commencing operations on June 1, 2011, Spartan has drilled a total of 21(17.9 net) horizontal wells and participated in an additional 4 (1. net) horizontal wells targeting Cardium oil at Spartan's Keystone properties. Spartan currently has a total of 23 (14.8 net) Cardium horizontal oil wells producing in the Keystone area and an additional 5 (4.9 net) Cardium horizontal wells awaiting completion and/or tie-in. Spartan is very encouraged by the results it has seen to date at Keystone, having achieved a 100% success rate on its drilling programA large part of our focus in the new Spartan has been to reduce the cost of the Company's drilling operations. As a result of these efforts, Spartan has seen average on-stream costs for its Cardium wells decrease from $3.3 million in June, 2011, to approximately $2.5 million currently. This has a material impact on the economics of the Company's Cardium wells.Production has grown from approximately 550 boe/d in June, 2011 (net of the disposition of approximately 190 boe/d) to over 1,600 boe/d at year end. Current production is in excess of 2,000 boe/d.Spartan's high quality, oil weighted production base and continued strength in commodity prices allowed us to realize strong netbacks during 2011. The Company's average operating netback in the fourth quarter was $60.72 per boe. For the seven month period ended December 31, 2011, the Company's operating netback was $53.95. Funds flow from operations was $8.1 million in the fourth quarter and $11.2 million for the seven month period ended December 31, 2011.Net capital expenditures totaled $86.1 million in 2011. Of this amount, $44.9 million related to the acquisition of oil and gas properties in Alberta and southeast Saskatchewan as part of the Plan of Arrangement and the disposition of certain properties in southwest Saskatchewan in June, 2012.2012 OUTLOOKBuilding on the success Spartan has enjoyed through 2011, the focus of Spartan's 2012 capital program will remain on the Cardium with targeted deployment of capital in southeast Saskatchewan to advance its projects at Torquay and Ceylon. The Company recently completed a private placement of $57.5 million special warrants at a price of $4.40 per special warrant. Each special warrant entitles the holder to acquire one common share of the Company on the earlier of the date that is (a) four months and a day following the closing, and (b) the day on which a receipt is issued for a final prospectus by the securities regulatory authorities in each of the provinces where the special warrants were sold. This recent financing gives the Company significant financial flexibility moving forward into 2012. In combination with Spartan's year end working capital surplus of $27 million, its $50 million line of credit and its forecast 2012 cash flow of $43 million, Spartan expects to have at least $175 million of available liquidity during 2012.Spartan recently announced a capital budget of $80.2 million for 2012. Management is reviewing this budget in light the recent $57.5 million financing. Any changes to the published 2012 capital program and guidance will be made following the date on which a receipt is issued for a final prospectus relating to the special warrant offering.READER ADVISORYThis press release contains certain forward-looking statements (forecasts) under applicable securities laws relating to future events or future performance. Forward-looking statements are necessarily based upon assumptions and judgements with respect to the future including, but not limited to, the outlook for commodity markets and capital markets, the performance of producing wells and reservoirs, well development and operating performance, general economic and business conditions, weather, the regulatory and legal environment and other risks associated with oil and gas operations. In some cases, forward- looking statements can be identified by terminology such as "may", "will", "should", "expect", "projects", "plans", "anticipates" and similar expressions. These statements represent management's expectations or beliefs concerning, among other things, future operating results and various components thereof affecting the economic performance of Spartan. Undue reliance should not be placed on these forward-looking statements which are based upon management's assumptions and are subject to known and unknown risks and uncertainties, including the business risks discussed above, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted.In the interest of providing Spartan shareholders and potential investors with information regarding the Company, including management's assessment of Spartan's future plans and operation, certain statements throughout this press release constitute forward looking statements. All forward-looking statements are based on the Company's beliefs and assumptions based on information available at the time the assumption was made. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward looking statements. By its nature, such forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward looking statements. Spartan believes the expectations reflected in those forward looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward looking statements contained throughout this press release should not be unduly relied upon. These statements speak only as of the date specified in the statements.The Company's actual results could differ materially from those anticipated in the forward looking statements contained throughout this press release.Except as required by law, Spartan does not undertake any obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet (mcf) of natural gas to one barrel (bbl) of oil is based on an energy conversion method primarily applicable at the burner tip and is not intended to represent a value equivalency at the wellhead. All boe conversions in this press release are derived by converting natural gas to oil in the ratio of six thousand cubic feet of natural gas to one barrel of oil.FOR FURTHER INFORMATION PLEASE CONTACT: Richard F. McHardySpartan Oil Corp.President & CEO(403) 457-4006(403) 457-4028 (FAX)ORMichelle WigginsSpartan Oil Corp.Vice President Finance & CFO(403) 457-4006(403) 457-4028 (FAX)OR1400, 606 - 4th Street SWSpartan Oil Corp.Calgary, Albertawww.spartanoil.ca