Summary
Spartan reported great 2025 results. Reserves are growing fast. Production was higher than expected. Spartan Delta is very profitable. 2025 profits were higher than expected. The 2025 PE is medium/high but can fall to low levels. Short-term shareholder returns are unlikely as Spartan Delta wants to grow production and reserves in the Duvernay, with the assets in due time to be sold off to a third party. In my 80-company oil and gas company ranking Spartan Delta sits inside the top 25 at a high 9th position.
Reserves
• Spartan proven reserves have grown substantially since 2019. Most of the reserves growth has been autonomous.
• Proven reserves initially increased from 294 M BoE (2021) to 319 M BoE (2022), to fall 154 M BoE (2023) after the sale of Montney basin assets with reserves of 158 M BoE to Veren, after which spartan paid a special C$ 9.50 special dividend..
• Spartan now focusing on reserves in the Deep Basin and the Duvernay.
• Since 2023 reserves growth has restarted. Proven reserves grew in 2025 with 19% from 166 M BoE (2024) to 197 M BoE (2025).
• The Reserves Replacement Ratio (RRR) over the period 2029-2025b was a high 1.98 (industry average 0.95-1.00).
• The 2025 RRR was a very good 2.99. Spartan is prioritizing growth in liquids. This can be seen in the 2025 oil RRR (11.53), while the NGL RRR was only 2.03 and the gas RRR only 2.07.
• The 2025 proven reserves (197 M BoE) are equivalent to a good 10.6 years of 2026 production (industry average is 9.5-10.0 years).
• Acreage increased in 2025 with 83% in the deep basin to 243,000 acres and with 87% in the Duvernay to 457,000 acres, indicating potential for further reserves and production growth.
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Production
• Spartan production increased from 15 K BoE/d (2020) to 73 K BoE/d (2022). In 2023 Spartan sold off the Montney basin assets and production fell back to 38 K BoE/d in 2024, restarting growth in 2025.
• Spartan Q4 production (50.1 K BoE/d) was 16% above Q3 (43.2 K BoE/d). I had expected a Q4 production of 45 K BoE/d.
• 2025 production (42.6 K BoE/d) was 19% above 2024 (38.2 K BoE/d). I had expected a 2025 production of 41.3 K BoE/d.
• Spartan Delta reiterated its 2026 outlook of 50-52 K BoE/d, indicating strong continued production growth. I expect for 2026 a production of 50.8 K BoE/d.
• After 2026 production can increase to 71 K BoE/d in 2030. Spartan has indicated that it targets to have in 2030 50 K BoE/d coming from the Duvernay. This is on top of the production coming from the Deep basin. Duvernay production in December 2025 was 14 K BoE/d.
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• Q4 fluids in were 19.2% oil/condensate, 24.4% NGL and 56.4% gas. The Q4 oil/condensate content of 19.2% is almost double that of the 10.9% in Q4 2024. Liquid content will continue to increase, as was confirmed by the 2026 guidance of 44% liquids.
Balance sheet
• The balance sheet is sound.
• The FCF in Q4 was negative (-C$ 17 M) as a consequence of the sustained high capex.
• As a consequence the equity ratio (=equity/balance sheet total) dropped from 56.0% (Q3) to a still good 55.3% (Q4).
• Long-term debt increased with C$ 52 M for C$ 107 M (Q3) to C$ 159 M (Q4).
• Q4 debt/EBITDA ratio on an annual basis was a good 0.5.
• The balance sheet allow shareholder returns in 2026/2027, but the negative FCF in 2026/2027 will not.
Profitability
• Spartan is a profitable company.
• Q4 profit (eps= C$ 0.18) was well above Q3 (eps=C$ 0.04). I had expected a Q4 eps = C$ 0.07.
• Realized oil prices (C$ 76.90/bbl) and condensate prices (C$ 76.79/bbl) were higher than expected, possibly as the composition of the oil/condensate is improving.
• Operational costs were in line with expectations.
• Despite lower oil prices, 2025 profits (eps= C$ 0.35), were above 2024 (eps=C$ 0.23).
• For 2026, with WTI at $ 60/bbl, I expect a eps C$ 0.55 (PE = medium/high 13.5)
• After 2026, with a growing production and higher gas prices, the eps in 2030 can reach C$ 1.21 (PE= low 6.0).
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• Spartan Delta saw a negative FCF in 2025 FCF and will continue to do so in 2026/2027.
• Spartan has a credit facility of C$ 450 M. Under the facility C$ 161 M was drawn in late Q4 2025.
• The long term FCF should be adequate to repay the credit facility.
Shareholder returns
• Spartan Delta has not paid any dividends since the C$ 9.50 special dividend in May 2023.
• There will be no shareholder returns in 2026/2027. The FCF is negative.
• In 2028, with a positive FCF due to higher gas prices and higher production, theoretically shareholder returns can start and grow to 6% in 2029-2030 and higher thereafter.
• New Duvernay acquisitions and extra investments will push back returns to a later date in the future.
• It is evident that Spartan Delta wants to grow production and reserves in the Duvernay, with the objective that the assets will be sold off in due time to a third party. Therefore, it is well possible that normal returns may never happen until a special dividend is announced after the sale of the company.
Conclusions
Spartan reported great 2025 results. Reserves are growing fast. Production was higher than expected. Spartan Delta is very profitable. 2025 profits were higher than expected. The 2025 PE is medium/high but can fall to low levels. Short-term shareholder returns are unlikely as Spartan Delta wants to grow production and reserves in the Duvernay, with the assets in due time to be sold off to a third party. In my 80-company oil and gas company ranking Spartan Delta sits inside the top 25 at a high 9th position.