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
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, pane...
SYS-CON Events announced today that Hitachi, the leading provider the Internet of Things and Digital Transformation, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Hitachi Data Systems, a wholly owned subsidiary of Hitachi, Ltd., offers an integrated portfolio of services and solutions that enable digital transformation through enhanced data management, governance, mobility and analytics. We help globa...
SYS-CON Events announced today that Grape Up will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct. 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Grape Up is a software company specializing in cloud native application development and professional services related to Cloud Foundry PaaS. With five expert teams that operate in various sectors of the market across the U.S. and Europe, Grape Up works with a variety of customers from emergi...
@ThingsExpo has been named the Most Influential ‘Smart Cities - IIoT' Account and @BigDataExpo has been named fourteenth by Right Relevance (RR), which provides curated information and intelligence on approximately 50,000 topics. In addition, Right Relevance provides an Insights offering that combines the above Topics and Influencers information with real time conversations to provide actionable intelligence with visualizations to enable decision making. The Insights service is applicable to eve...
SYS-CON Events announced today that Hitachi Data Systems, a wholly owned subsidiary of Hitachi LTD., will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City. Hitachi Data Systems (HDS) will be featuring the Hitachi Content Platform (HCP) portfolio. This is the industry’s only offering that allows organizations to bring together object storage, file sync and share, cloud storage gateways, and sophisticated search an...
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm.
@GonzalezCarmen has been ranked the Number One Influencer and @ThingsExpo has been named the Number One Brand in the “M2M 2016: Top 100 Influencers and Brands” by Analytic. Onalytica analyzed tweets over the last 6 months mentioning the keywords M2M OR “Machine to Machine.” They then identified the top 100 most influential brands and individuals leading the discussion on Twitter.
All organizations that did not originate this moment have a pre-existing culture as well as legacy technology and processes that can be more or less amenable to DevOps implementation. That organizational culture is influenced by the personalities and management styles of Executive Management, the wider culture in which the organization is situated, and the personalities of key team members at all levels of the organization. This culture and entrenched interests usually throw a wrench in the work...
SYS-CON Events announced today that T-Mobile will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. As America's Un-carrier, T-Mobile US, Inc., is redefining the way consumers and businesses buy wireless services through leading product and service innovation. The Company's advanced nationwide 4G LTE network delivers outstanding wireless experiences to 67.4 million customers who are unwilling to compromise on ...
In his keynote at 19th Cloud Expo, Sheng Liang, co-founder and CEO of Rancher Labs, discussed the technological advances and new business opportunities created by the rapid adoption of containers. With the success of Amazon Web Services (AWS) and various open source technologies used to build private clouds, cloud computing has become an essential component of IT strategy. However, users continue to face challenges in implementing clouds, as older technologies evolve and newer ones like Docker c...
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend @CloudExpo | @ThingsExpo, June 6-8, 2017, at the Javits Center in New York City, NY and October 31 - November 2, 2017, Santa Clara Convention Center, CA. Learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
Building a cross-cloud operational model can be a daunting task. Per-cloud silos are not the answer, but neither is a fully generic abstraction plane that strips out capabilities unique to a particular provider. In his session at 20th Cloud Expo, Chris Wolf, VP & Chief Technology Officer, Global Field & Industry at VMware, will discuss how successful organizations approach cloud operations and management, with insights into where operations should be centralized and when it’s best to decentraliz...
Data is an unusual currency; it is not restricted by the same transactional limitations as money or people. In fact, the more that you leverage your data across multiple business use cases, the more valuable it becomes to the organization. And the same can be said about the organization’s analytics. In his session at 19th Cloud Expo, Bill Schmarzo, CTO for the Big Data Practice at Dell EMC, introduced a methodology for capturing, enriching and sharing data (and analytics) across the organization...
Five years ago development was seen as a dead-end career, now it’s anything but – with an explosion in mobile and IoT initiatives increasing the demand for skilled engineers. But apart from having a ready supply of great coders, what constitutes true ‘DevOps Royalty’? It’ll be the ability to craft resilient architectures, supportability, security everywhere across the software lifecycle. In his keynote at @DevOpsSummit at 20th Cloud Expo, Jeffrey Scheaffer, GM and SVP, Continuous Delivery Busine...