Spartan Delta (SDE.TO) Valuation Update - May 11

[dan_s]

I have updated my forecast/valuation model for Spartan Delta for their Q1 2025 results and fresh guidance, which is basically unchanged since February. Since Q1 production was slightly higher than my forecast and several high-rate oil wells will be completed late in Q2, I have more confidence in my 2H 2025 and 2026 forecasts.

SDE.TO closed at $2.69Cdn on May 9.

My current valuation is now $5.85Cdn, slightly lower than my previous valuation just because I am using more conservative oil price assumptions.

For now, Spartan Delta is a "gasser" with a 2025 production mix of approximately 63% natural gas, 23.5% NGLs, 8% crude oil and 5.5% condensate that sold for a higher price than their crude oil in Q1 2025. I do expect natural gas prices in Western Canada to increase significantly in 2H 2025 and 2026, so my forecast should prove to be conservative.

TipRanks' current price target is $5.63Cdn
First Calls' current price target is $5.25Cdn

Spartan Delta's current drilling program is focused on increasing their oil production. If they continue to have report strong well results in the Duvernay Oil Play and oil prices get back to $75US/bbl, my valuation could increase to $10.00Cdn a year from now. This Company's management team has a strong track record of creating value for their shareholders. Their business plan is "Buy a large acreage position cheap, develop proven reserves, then sell the asset package at a much higher price".

For more leverage to the Duvernay Oil Play, see Journey Energy (JOY.TO).