Spartan Delta (SDE.TO and DALXF) Q1 Results

[dan_s]

OPERATIONS UPDATE

During the first quarter, Spartan drilled 7.0 (5.6 net) wells and completed and brought 5.0 (3.9 net) wells on production in the Deep Basin and drilled 6.0 (4.2 net) wells in the West Shale Basin Duvernay (the "Duvernay").

Spartan continues to be encouraged by its Duvernay acreage as the results achieved to date exceed internal expectations, averaging an IP90 of more than 1,000 BOE/d (83% liquids) on its initial four wells. To date, the Company has established a dominant position in the Duvernay, amassing approximately 320,000 net acres (500 net sections). < The Joint Venture acreage with Journey Energy is a subset of this.

In the Duvernay, drilling operations benefited from rig efficiencies resulting in a significant reduction in drill times. Key water infrastructure projects have also progressed on schedule and on budget, including the completion of two water reservoirs. The reservoirs provide Spartan access to ample water storage to execute on its operations and growth, while also reducing future well completion costs in the Duvernay.

Currently the Deep Basin has 3.0 (2.6 net) drilled but uncompleted Cardium wells awaiting completion which will occur in the second quarter post break-up. In the Duvernay, the Company is currently drilling the final well on its 02-22-42-04W5 four well pad (70% WI), and the first well on its 07-15-44-03W5 four well pad (100% WI). In addition, Spartan is completing the 06-04-043-03W5 three well pad (70% WI) and anticipates completing the 02-22-042-04W5 pad afterwards.

FIRST QUARTER 2025 HIGHLIGHTS

On January 30, 2025, Spartan completed an upsized bought deal equity financing for gross proceeds of approximately $97.8 million. The net proceeds have been applied to amounts drawn on the credit facility, and the additional liquidity will be used to fund the acceleration of the development program in the Duvernay, as well as general corporate purposes.

Spartan reported production of 38,328 BOE/d (36% liquids) during the first quarter of 2025. < Slightly lower than my forecast of 39,000 Boepd.

Spartan achieved a 196% increase in crude oil production as compared to the first quarter of 2024 and a 9% increase as compared to the fourth quarter of 2024.

The Company's operations generated oil and gas sales of $91.2 million and Adjusted Funds Flow of $45.6 million ($0.23 per share, diluted) in the first quarter of 2025.

The Company successfully executed a capital program of $72.8 million in the first quarter of 2025, of which approximately 70% was spent on drilling, completing, equipping, and tie-ins.

In the Duvernay, Spartan drilled 6.0 (4.2 net) wells and completed the construction of two water reservoirs.

In the Deep Basin, Spartan continued to focus on the liquids-rich targets in the Cardium and Spirit River formations, drilling 7.0 (5.6 net) wells, and completing and bringing 5.0 (3.9 net) wells on production.

Spartan continues to maintain a strong statement of financial position with Net Debt of $81.9 million resulting in a 0.4X Net Debt to Annualized Adjusted Funds Flow ratio.
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I will update my forecast/valuation model for Spartan Delta this afternoon.