|By Marketwired .||
|May 27, 2014 08:29 AM EDT|
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.
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.
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.
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 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.
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.
The Assets include approximately 31 net sections of undeveloped lands, and Spartan has identified approximately 29 net low risk development drilling locations.
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.
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.
Spartan Energy Corp.
Richard (Rick) McHardy
President and Chief Executive Officer
(403) 355-2779 (FAX)
Spartan Energy Corp.
Vice-President Finance and Chief Financial Officer
(403) 355-2779 (FAX)
Father business cycles and digital consumers are forcing enterprises to respond faster to customer needs and competitive demands. Successful integration of DevOps and Agile development will be key for business success in today’s digital economy. In his session at DevOps Summit, Pradeep Prabhu, Co-Founder & CEO of Cloudmunch, covered the critical practices that enterprises should consider to seamlessly integrate Agile and DevOps processes, barriers to implementing this in the enterprise, and pr...
Feb. 13, 2016 03:00 AM EST Reads: 461
Sensors and effectors of IoT are solving problems in new ways, but small businesses have been slow to join the quantified world. They’ll need information from IoT using applications as varied as the businesses themselves. In his session at @ThingsExpo, Roger Meike, Distinguished Engineer, Director of Technology Innovation at Intuit, showed how IoT manufacturers can use open standards, public APIs and custom apps to enable the Quantified Small Business. He used a Raspberry Pi to connect sensors...
Feb. 13, 2016 02:30 AM EST Reads: 365
The principles behind DevOps are not new - for decades people have been automating system administration and decreasing the time to deploy apps and perform other management tasks. However, only recently did we see the tools and the will necessary to share the benefits and power of automation with a wider circle of people. In his session at DevOps Summit, Bernard Sanders, Chief Technology Officer at CloudBolt Software, explored the latest tools including Puppet, Chef, Docker, and CMPs needed to...
Feb. 13, 2016 02:30 AM EST Reads: 367
Let’s face it, embracing new storage technologies, capabilities and upgrading to new hardware often adds complexity and increases costs. In his session at 18th Cloud Expo, Seth Oxenhorn, Vice President of Business Development & Alliances at FalconStor, will discuss how a truly heterogeneous software-defined storage approach can add value to legacy platforms and heterogeneous environments. The result reduces complexity, significantly lowers cost, and provides IT organizations with improved effi...
Feb. 13, 2016 12:45 AM EST Reads: 272
It's easy to assume that your app will run on a fast and reliable network. The reality for your app's users, though, is often a slow, unreliable network with spotty coverage. What happens when the network doesn't work, or when the device is in airplane mode? You get unhappy, frustrated users. An offline-first app is an app that works, without error, when there is no network connection.
Feb. 12, 2016 10:00 PM EST Reads: 245
Data-as-a-Service is the complete package for the transformation of raw data into meaningful data assets and the delivery of those data assets. In her session at 18th Cloud Expo, Lakshmi Randall, an industry expert, analyst and strategist, will address: What is DaaS (Data-as-a-Service)? Challenges addressed by DaaS Vendors that are enabling DaaS Architecture options for DaaS
Feb. 12, 2016 09:45 PM EST Reads: 386
One of the bewildering things about DevOps is integrating the massive toolchain including the dozens of new tools that seem to crop up every year. Part of DevOps is Continuous Delivery and having a complex toolchain can add additional integration and setup to your developer environment. In his session at @DevOpsSummit at 18th Cloud Expo, Miko Matsumura, Chief Marketing Officer of Gradle Inc., will discuss which tools to use in a developer stack, how to provision the toolchain to minimize onboa...
Feb. 12, 2016 09:00 PM EST Reads: 134
Companies can harness IoT and predictive analytics to sustain business continuity; predict and manage site performance during emergencies; minimize expensive reactive maintenance; and forecast equipment and maintenance budgets and expenditures. Providing cost-effective, uninterrupted service is challenging, particularly for organizations with geographically dispersed operations.
Feb. 12, 2016 06:00 PM EST
SYS-CON Events announced today that Catchpoint Systems, Inc., a provider of innovative web and infrastructure monitoring solutions, has been named “Silver Sponsor” of SYS-CON's DevOps Summit at 18th Cloud Expo New York, which will take place June 7-9, 2016, at the Javits Center in New York City, NY. Catchpoint is a leading Digital Performance Analytics company that provides unparalleled insight into customer-critical services to help consistently deliver an amazing customer experience. Designed...
Feb. 12, 2016 06:00 PM EST Reads: 404
When building large, cloud-based applications that operate at a high scale, it’s important to maintain a high availability and resilience to failures. In order to do that, you must be tolerant of failures, even in light of failures in other areas of your application. “Fly two mistakes high” is an old adage in the radio control airplane hobby. It means, fly high enough so that if you make a mistake, you can continue flying with room to still make mistakes. In his session at 18th Cloud Expo, Lee...
Feb. 12, 2016 04:45 PM EST
With the proliferation of both SQL and NoSQL databases, organizations can now target specific fit-for-purpose database tools for their different application needs regarding scalability, ease of use, ACID support, etc. Platform as a Service offerings make this even easier now, enabling developers to roll out their own database infrastructure in minutes with minimal management overhead. However, this same amount of flexibility also comes with the challenges of picking the right tool, on the right ...
Feb. 12, 2016 04:30 PM EST Reads: 192
DevOps is not just last year’s buzzword. Companies with DevOps practices are 2.5x more likely to exceed profitability, market share, and productivity goals. But how do you enable high performance? What can you do right now to start? Find out from DevOps experts including Gene Kim, co-author of "The Phoenix Project," and the Dynatrace Center of Excellence.
Feb. 12, 2016 04:30 PM EST
SYS-CON Events announced today that Column Technologies will exhibit at SYS-CON's @DevOpsSummit at Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Established in 1998, Column Technologies is a global technology solutions provider with over 400 employees, headquartered in the United States with offices in Canada, India, and the United Kingdom. Column Technologies provides “Best of Breed” technology solutions that automate the key DevOps principal...
Feb. 12, 2016 04:15 PM EST
SYS-CON Events announced today that Interoute, owner-operator of one of Europe's largest networks and a global cloud services platform, has been named “Bronze Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. Interoute is the owner-operator of one of Europe's largest networks and a global cloud services platform which encompasses 12 data centers, 14 virtual data centers and 31 colocation centers, with connections to 195 ad...
Feb. 12, 2016 04:15 PM EST Reads: 430
Join us at Cloud Expo | @ThingsExpo 2016 – June 7-9 at the Javits Center in New York City and November 1-3 at the Santa Clara Convention Center in Santa Clara, CA – and deliver your unique message in a way that is striking and unforgettable by taking advantage of SYS-CON's unmatched high-impact, result-driven event / media packages.
Feb. 12, 2016 03:00 PM EST