Spartan Energy Corp. Announces 2017 Fourth Quarter and Year End Results and Announces Share Repurchase Program

March 15, 2010 Globe Newswire

CALGARY, Alberta, March 15, 2018 (GLOBE NEWSWIRE) — Spartan Energy Corp.(“Spartan” or the “Company”) (TSX:SPE) is pleased to report its financial and operating results for the fourth quarter and year ended December 31, 2017. Selected financial and operational information is set out below and should be read in conjunction with Spartan’s December 31, 2017 audited annual financial statements and the related management’s discussion and analysis (“MD&A”). The financial statements and MD&A are available for review at www.sedar.com or on the Company’s website at www.spartanenergy.ca.

FOURTH QUARTER 2017 HIGHLIGHTS

Achieved record average production of 22,635 boe/d (91% oil and liquids), representing a 44% increase (7% per basic share) over the fourth quarter of 2016.
Generated adjusted funds flow from operations of $64.5 million ($0.37 per basic share and $0.35 per diluted share), representing an increase of 96% (48% per basic share) over the fourth quarter of 2016 and an increase of 57% over the third quarter of 2017 (61% per basic share).
Generated excess adjusted funds flow from operations of $28.7 million, as the Company spent $35.8 million in total development capital expenditures (capital expenditures exclusive of land, seismic, waterflood capital and acquisitions) in the fourth quarter of 2017.
Reduced operating and transportation expenses to $16.02 per boe, a decrease of 11% from the fourth quarter of 2016 and a decrease of 7% from the third quarter of 2017.
Reduced net general and administrative (“G&A”) expenses to $0.80 per boe, a 35% decrease from the fourth quarter of 2016.
Drilled 36 (32.5 net) development wells and brought 46 (39.0 net) wells on production in the fourth quarter of 2017.
Completed the acquisition of certain oil and gas assets in southeast Saskatchewan for total consideration, net of closing adjustments, of $22.7 million. The acquisition added approximately 250 boe/d of low decline production and 45 net open-hole drilling locations in the Company’s core Winmore area where wells drilled to date have significantly outperformed our internal open-hole type curve.
Maintained balance sheet strength, with net debt excluding finance lease obligations at the end of the quarter of $199.2 million (down from $214.6 million at the end of the fourth quarter of 2016), representing 0.8x annualized fourth quarter adjusted funds flow from operations, and available liquidity of $150.8 million.

2017 ANNUAL HIGHLIGHTS

Achieved average production of 22,200 boe/d (92% oil and liquids), representing an 89% increase (17% per basic share) over 2016. The outperformance of our drilling program led to us increasing production guidance twice during the year while reducing our forecast development capital expenditures.
Generated adjusted funds flow from operations of $200.7 million ($1.14 per basic share and $1.09 per diluted share), representing an increase of 162% (61% per basic share) over 2016.
Delivered excess adjusted funds flow from operations of approximately $60.2 million, as the Company spent $140.5 million in total development capital expenditures during the year.
Invested a portion of our excess funds flow in projects designed to generate long term shareholder value, spending $27.4 million on four strategic acquisitions, $3.2 million on waterflood initiatives and $9.2 million on land and seismic.
Reduced net general and administrative (“G&A”) expenses to $1.01 per boe, a 40% decrease from 2016.
Drilled 141 (117.0 net) development wells and brought 139 (115.5 net) wells on production in 2017.

FINANCIAL AND OPERATIONAL RESULTS

			Three Months Ended				Year Ended
(Cdn$000s except per boe and per share amounts)			December 31, 2017		December 31, 2016		December 31, 2017		December 31, 2016

Average daily production (boe/d)			22,635		15,750		22,200		11,748

Net realized oil and gas sales price (excluding derivatives) ($/boe)			57.91		51.02		52.82		43.88
Royalties ($/boe)⁽¹⁾			8.94		7.68		8.49		6.59
Production costs ($/boe)⁽²⁾			16.02		17.96		17.32		16.81
Operating netback ($/boe)⁽³⁾			32.95		25.27		27.01		20.43

Net general and administrative expense ($/boe)			0.80		1.23		1.01		1.69
Interest expense ($/boe)			1.17		1.30		1.23		0.89

Adjusted funds flow from operations⁽³⁾⁽⁴⁾			64,499		32,958		200,730		76,749
		per share – basic⁽⁷⁾	0.37		0.25		1.14		0.71
		per share – diluted⁽⁷⁾	0.35		0.24		1.09		0.66

Net loss			(8,252	)	(3,175	)	(26,071	)	(18,613	)
		per share – basic⁽⁷⁾	(0.05	)	(0.02	)	(0.15	)	(0.17	)
	per share – diluted⁽⁷⁾		(0.05	)	(0.02	)	(0.15	)	(0.17	)

Total development capital expenditures⁽³⁾⁽⁵⁾			35,821		19,190		140,530		61,830
Total capital expenditures⁽⁶⁾			55,742		722,020		180,272		854,709

Net debt⁽³⁾			226,034		245,685		226,034		245,685
Net debt exclusive of finance lease obligations⁽³⁾			199,204		214,561		199,204		214,561
Bank Facility			350,000		350,000		350,000		350,000

Weighted average shares outstanding
		Basic⁽⁷⁾	175,725		131,000		175,562		108,568
		Diluted⁽⁷⁾	183,291		139,662		183,450		116,945

Notes:

Royalties include Saskatchewan resource surcharge.
Including transportation costs.
Adjusted funds flow from operations, operating netback, total development capital expenditures, net debt and net debt excluding finance lease obligations are non-IFRS measures. See “Non-IFRS Measures”.
Excluding transaction costs.
Total development capital expenditures calculated as total capital expenditures less land, seismic, waterflood capital and acquisitions.
Includes acquisitions.
Prior period numbers restated on a 3 for 1 basis to reflect share consolidation that occurred on June 20, 2017.

OPERATIONS UPDATE

Spartan has had an active first quarter in the field, with five rigs operating in southeast Saskatchewan and an additional rig drilling on our Alexander property in Alberta. First quarter activity levels have been in line with budget, and we anticipate we will drill 26 (19.7 net) open hole, 11 (8.4 net) frac Midale, 12 (8.7 net) Ratcliffe wells and 3 (2.5 net) Detrital wells in the quarter. In addition, 0.8 net frac Midale wells, 1.0 net Torquay well and 1.8 net Viking wells that were drilled in 2017 were brought on production during the quarter. Spring break-up conditions have been favourable to date and we anticipate all wells drilled will be brought on production prior to the end of the quarter. At our Oungre property in southeast Saskatchewan, in addition to drilling 8.7 net Ratcliffe wells, we have completed the conversion of 10 vertical wells within the Oungre unit for water injection. Injection operations will commence prior to the end of the first quarter which will provide pressure support for our phase 1 unit drills in the second half of the year.

SHARE REPURCHASE PROGRAM

Spartan continues to believe that our current share price does not properly reflect the underlying value of our asset base, providing us with an opportunity to utilize our excess funds flow to deliver significant value to our shareholders through strategic share repurchases. Spartan’s Board of Directors has authorized the Company to purchase for cancellation up to 8,620,148 common shares (representing approximately 5% of our basic issued and outstanding shares), which is the maximum number permitted to be repurchased under our existing normal course issuer bid (“NCIB”). The Company intends to renew our NCIB for another 12 month period in August 2018 and, subject to regulatory approval, will consider repurchasing additional common shares during the remainder of the year. Share repurchases are expected to be funded largely out of excess funds flow, and all decisions to repurchase shares from time to time will be subject to prevailing market conditions, commodity prices and the Company’s share price.