Welcome!

News Feed Item

Spartan Energy Corp. Announces Southeast Saskatchewan Asset Acquisition, Upward Revision to Guidance and $100 Million Equity Financing

CALGARY, ALBERTA -- (Marketwired) -- 05/27/14 -- Spartan Energy Corp. ("Spartan" or the "Company") (TSX VENTURE:SPE) is pleased to announce a strategic southeast Saskatchewan light oil acquisition (the "Acquisition"). Spartan has entered into a definitive purchase and sale agreement to acquire properties from an arm's length oil and gas producer for consideration of $98 million. The assets to be acquired pursuant to the Acquisition (the "Assets") are currently producing approximately 1,000 boe/d of high netback, low decline light and medium oil and are complementary to Spartan's existing southeast Saskatchewan assets.

As a result of the Acquisition, Spartan is revising upward our 2014 guidance, as detailed below.

Closing of the Acquisition is expected to occur on or about July 7, 2014. Completion of the Acquisition is subject to customary conditions and receipt of all regulatory approvals, including the approval of the TSX Venture Exchange.

Concurrent with the Acquisition, Spartan has entered into a $100 million bought deal financing (the "Financing") with a syndicate of underwriters, which is further described below. The Financing is subject to customary conditions, including receipt of all regulatory and stock exchange approvals, and is expected to close on or about June 17, 2014.

ACQUISITION OVERVIEW

The Assets consolidate our existing core area in southeast Saskatchewan and consist of operated, low decline crude oil production. Characteristics of the Asset include:


--  Approximately 1,000 boe/d (96% oil and liquids); 
--  Annual decline of approximately 18% with immediate free cash flow
    generation; 
--  Netbacks in excess of $52 per boe (based on current realized pricing); 
--  Proved plus probable reserves of approximately 3.95 million boe (96% oil
    and liquids) as assigned by Sproule and Associates Ltd., effective
    December 31, 2013; 
--  Ownership of key producing infrastructure including batteries, pipelines
    and waterflood facilities; 
--  Thirty-one net sections of undeveloped land; and 
--  Twenty-nine net low risk development drilling locations, including
    locations in Queensdale, Wordsworth and Crystal Hills. 

The Acquisition is accretive to Spartan shareholders on all key metrics and provides a stable production base with upside through step-out and infill drilling locations, optimization opportunities and waterflood potential.

The Acquisition fits well with Spartan's overall strategy of sustainable production growth, as the low decline Assets will reduce our base corporate decline rate to approximately 23%. This will provide the opportunity to further grow production through accelerated drilling and/or additional acquisitions while continuing to maintain our corporate decline rate at acceptable levels.

ACQUISITION METRICS

Metrics associated with the Acquisition are set out below. Purchase price metrics are presented net of undeveloped land and seismic, which Spartan internally values at approximately $10.1 million.

Purchase Price

The aggregate purchase price for the Acquisition is $98 million, payable in cash at closing of the Acquisition, and is subject to customary closing adjustments. The effective date of the Acquisition is May 1, 2014.

Production

Production relating to the Assets is approximately 1,000 boe/d, comprised of approximately 96% oil and liquids. On this basis, Spartan is paying approximately $87,900 per flowing barrel of production.

Annual Cash Flow

Based on production of 1,000 boe/d and an operating netback of $52, annualized cash flow from the Assets is approximately $19 million. On this basis, Spartan estimates that it is paying approximately 4.6 times annual cash flow for the Acquisition.

Reserves

The Acquisition adds gross proved plus probable reserves of approximately 3.95 million boe (96% oil and liquids), as assigned by Sproule and Associates Ltd. effective December 31, 2013, representing an acquisition cost of approximately $22.25 per boe (excluding undiscounted future development capital of $16.3 million).

Infrastructure and Operating Costs

The Assets are tied into existing infrastructure, including batteries, pipelines and waterflood facilities. The acquired properties are located within Spartan's core operating areas, providing the opportunity for operating cost efficiencies.

Upside Opportunities

The Assets include approximately 31 net sections of undeveloped lands, and Spartan has identified approximately 29 net low risk development drilling locations.

EQUITY FINANCING

In connection with the Acquisition, Spartan has entered into an agreement on a "bought-deal" basis with a syndicate of underwriters (the "Underwriters") co-led by Peters & Co. Limited, Clarus Securities Inc. and GMP Securities L.P., and including TD Securities Inc., Dundee Securities Ltd., Desjardins Securities Inc., FirstEnergy Capital Corp., AltaCorp Capital Inc., Macquarie Capital Markets Canada Ltd., National Bank Financial Inc., Paradigm Capital Inc. and Scotia Capital Inc. for an offering of 26,670,000 common shares ("Shares") of the Company at a price of $3.75 per Share. The Underwriters will have an option to purchase up to an additional 15 percent of the Shares, on the same terms, exercisable in whole or in part at any time up to the 30th day following initial closing of the Financing.

A portion of the net proceeds from the Financing will be used to fund the Company's ongoing capital expenditure program and for general corporate purposes.

The Financing will be completed by way of short form prospectus in certain of the provinces of Canada except Quebec and on a private placement basis in the United States pursuant to exemptions from the registration requirements of the U.S securities laws. The Financing is subject to customary conditions including receipt of applicable regulatory approvals and is expected to close on or about June 17, 2014.

UPWARD REVISION TO GUIDANCE

In connection with the Acquisition and the Financing, Spartan is increasing its 2014 guidance as follows:


                                                  Revised Guidance Following
                             Guidance Prior to the         Completion of the
                                       Acquisition               Acquisition
                        ----------------------------------------------------
Average Production                           5,200                     5,700
Exit Production                              7,500                     8,600
Cash Flow (1)                          $80 million               $88 million
Capital Expenditures                   $74 million               $84 million
                                                                            
(1)   See "Non-IFRS measures."                                              

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

READER ADVISORY

BOE Disclosure. The term barrels of oil equivalent ("BOE") may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet per barrel (6Mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All BOE conversions in the report are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.

Forward-Looking Statements. Certain information included in this press release constitutes forward-looking information under applicable securities legislation. Statements relating to "reserves" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements in this press release may include, but is not limited to, timing for completion of the Acquisition and the Financing, characteristics of the Assets, decline rates, average production, exit production, cash flow and capital expenditures.

These statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control, including: the impact of general economic conditions; industry conditions; changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced; fluctuations in commodity prices and foreign exchange and interest rates; stock market volatility and market valuations; volatility in market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital, acquisitions, of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry; geological, technical, drilling and processing problems and other difficulties in producing petroleum reserves; and obtaining required approvals of regulatory authorities. Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be incorrect. Although Spartan believes that the expectations reflected in its forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because Spartan can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this press release, assumptions have been made regarding and are implicit in, among other things, the timely receipt of any required regulatory approvals and the satisfaction of all conditions to the completion of the Acquisition and the Financing. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used.

Forward-looking information is based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Spartan and described in the forward-looking information. The forward-looking information contained in this press release is made as of the date hereof and Spartan undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. The forward looking information contained in this press release is expressly qualified by this cautionary statement.

Non-IFRS Measures. This press release provides certain financial measures that do not have a standardized meaning prescribed by IFRS. These non-IFRS financial measures may not be comparable to similar measures presented by other issuers. Cash flow from operations and operating netback are not recognized measures under IFRS. Management believes that in addition to net income (loss), cash flow from operations and operating netback are useful supplemental measures that demonstrate the Company's ability to generate the cash necessary to repay debt or fund future capital investment. Investors are cautioned, however, that these measures should not be construed as an alternative to net income (loss) determined in accordance with IFRS as an indication of the Company's performance. Spartan's method of calculating these measures may differ from other companies and accordingly, they may not be comparable to measures used by other companies. Cash flow from operations is calculated by adjusting net income (loss) for other income, unrealized gains or losses on financial derivative instruments, accretion, share based compensation, impairment and depletion and depreciation. Operating netback is calculated based on oil and gas revenue less royalties and operating and transportation expenses.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
With the introduction of IoT and Smart Living in every aspect of our lives, one question has become relevant: What are the security implications? To answer this, first we have to look and explore the security models of the technologies that IoT is founded upon. In his session at @ThingsExpo, Nevi Kaja, a Research Engineer at Ford Motor Company, discussed some of the security challenges of the IoT infrastructure and related how these aspects impact Smart Living. The material was delivered interac...
Wooed by the promise of faster innovation, lower TCO, and greater agility, businesses of every shape and size have embraced the cloud at every layer of the IT stack – from apps to file sharing to infrastructure. The typical organization currently uses more than a dozen sanctioned cloud apps and will shift more than half of all workloads to the cloud by 2018. Such cloud investments have delivered measurable benefits. But they’ve also resulted in some unintended side-effects: complexity and risk. ...
The taxi industry never saw Uber coming. Startups are a threat to incumbents like never before, and a major enabler for startups is that they are instantly “cloud ready.” If innovation moves at the pace of IT, then your company is in trouble. Why? Because your data center will not keep up with frenetic pace AWS, Microsoft and Google are rolling out new capabilities. In his session at 20th Cloud Expo, Don Browning, VP of Cloud Architecture at Turner, posited that disruption is inevitable for comp...
In 2014, Amazon announced a new form of compute called Lambda. We didn't know it at the time, but this represented a fundamental shift in what we expect from cloud computing. Now, all of the major cloud computing vendors want to take part in this disruptive technology. In his session at 20th Cloud Expo, Doug Vanderweide, an instructor at Linux Academy, discussed why major players like AWS, Microsoft Azure, IBM Bluemix, and Google Cloud Platform are all trying to sidestep VMs and containers wit...
While DevOps most critically and famously fosters collaboration, communication, and integration through cultural change, culture is more of an output than an input. In order to actively drive cultural evolution, organizations must make substantial organizational and process changes, and adopt new technologies, to encourage a DevOps culture. Moderated by Andi Mann, panelists discussed how to balance these three pillars of DevOps, where to focus attention (and resources), where organizations might...
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend 21st Cloud Expo October 31 - November 2, 2017, at the Santa Clara Convention Center, CA, and June 12-14, 2018, at the Javits Center in New York City, NY, and learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
No hype cycles or predictions of zillions of things here. IoT is big. You get it. You know your business and have great ideas for a business transformation strategy. What comes next? Time to make it happen. In his session at @ThingsExpo, Jay Mason, Associate Partner at M&S Consulting, presented a step-by-step plan to develop your technology implementation strategy. He discussed the evaluation of communication standards and IoT messaging protocols, data analytics considerations, edge-to-cloud tec...
New competitors, disruptive technologies, and growing expectations are pushing every business to both adopt and deliver new digital services. This ‘Digital Transformation’ demands rapid delivery and continuous iteration of new competitive services via multiple channels, which in turn demands new service delivery techniques – including DevOps. In this power panel at @DevOpsSummit 20th Cloud Expo, moderated by DevOps Conference Co-Chair Andi Mann, panelists examined how DevOps helps to meet the de...
When growing capacity and power in the data center, the architectural trade-offs between server scale-up vs. scale-out continue to be debated. Both approaches are valid: scale-out adds multiple, smaller servers running in a distributed computing model, while scale-up adds fewer, more powerful servers that are capable of running larger workloads. It’s worth noting that there are additional, unique advantages that scale-up architectures offer. One big advantage is large memory and compute capacity...
Cloud applications are seeing a deluge of requests to support the exploding advanced analytics market. “Open analytics” is the emerging strategy to deliver that data through an open data access layer, in the cloud, to be directly consumed by external analytics tools and popular programming languages. An increasing number of data engineers and data scientists use a variety of platforms and advanced analytics languages such as SAS, R, Python and Java, as well as frameworks such as Hadoop and Spark...
The Internet giants are fully embracing AI. All the services they offer to their customers are aimed at drawing a map of the world with the data they get. The AIs from these companies are used to build disruptive approaches that cannot be used by established enterprises, which are threatened by these disruptions. However, most leaders underestimate the effect this will have on their businesses. In his session at 21st Cloud Expo, Rene Buest, Director Market Research & Technology Evangelism at Ara...
"We are a monitoring company. We work with Salesforce, BBC, and quite a few other big logos. We basically provide monitoring for them, structure for their cloud services and we fit into the DevOps world" explained David Gildeh, Co-founder and CEO of Outlyer, in this SYS-CON.tv interview at DevOps Summit at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
Automation is enabling enterprises to design, deploy, and manage more complex, hybrid cloud environments. Yet the people who manage these environments must be trained in and understanding these environments better than ever before. A new era of analytics and cognitive computing is adding intelligence, but also more complexity, to these cloud environments. How smart is your cloud? How smart should it be? In this power panel at 20th Cloud Expo, moderated by Conference Chair Roger Strukhoff, paneli...
"When we talk about cloud without compromise what we're talking about is that when people think about 'I need the flexibility of the cloud' - it's the ability to create applications and run them in a cloud environment that's far more flexible,” explained Matthew Finnie, CTO of Interoute, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
Join us at Cloud Expo June 6-8 to find out how to securely connect your cloud app to any cloud or on-premises data source – without complex firewall changes. More users are demanding access to on-premises data from their cloud applications. It’s no longer a “nice-to-have” but an important differentiator that drives competitive advantages. It’s the new “must have” in the hybrid era. Users want capabilities that give them a unified view of the data to get closer to customers and grow business. The...