Spartan Energy Corp. Announces Third Quarter Financial and Operating Results
CALGARY, Alberta, Nov. 09, 2017 (GLOBE NEWSWIRE) -- Spartan Energy Corp. ("Spartan" or the "Company") (TSX:SPE) is pleased to report its financial and operating results for the three and nine months ended September 30, 2017. Selected financial and operational information is set out below and should be read in conjunction with Spartan's September 30, 2017 interim consolidated financial statements and the related management’s discussion and analysis, which are available for review at www.sedar.com or on the Company’s website at www.spartanenergy.ca.
THIRD QUARTER FINANCIAL AND OPERATIONAL HIGHLIGHTS
Spartan’s highlights for the third quarter include:
- Achieved record average production of 22,630 boe/d (91% oil and liquids), representing an 82% increase (14% per share) over the third quarter of 2016.
- Generated adjusted funds flow from operations of $41.1 million ($0.23 per basic share and $0.22 per diluted share), representing an increase of 117% (35% per basic share) over the third quarter of 2016.
- Delivered excess adjusted funds flow from operations (adjusted funds flow from operations less capital expenditures exclusive of acquisitions, land, seismic and waterflood capital) in the quarter of approximately $6.0 million, increasing 2017 year to date excess adjusted funds flow from operations to $31.5 million.
- Drilled 39 (28.0 net) development wells in the third quarter and brought 37 (27.2 net) wells on production.
- Reduced operating and transportation expenses to $17.28 per boe, a decrease of 5% from the third quarter of 2016 and a decrease of 6% from the second quarter of 2017.
- Reduced net general and administrative (“G&A”) expenses to $1.05 per boe, a 36% decrease from the third quarter of 2016.
- Maintained our balance sheet strength, with net debt (exclusive of finance lease obligations) at the end of the quarter of $205.1 million, representing 1.3x annualized third quarter adjusted funds flow from operations, and available liquidity of $144.9 million.
FINANCIAL RESULTS
| (Cdn$000s except per boe and per share amounts) | Three Months Ended
September 30 | | Nine Months Ended
September 30 |
| | 2017 | | 2016 | | 2017 | | 2016 | |
| | | | | | |
| Average daily production (boe/d) | 22,630 | | 12,429 | | 22,054 | | 10,403 | |
| | | | | | |
Net realized oil and gas sales price
(excluding derivatives) ($/boe) | 46.98 | | 44.20 | | 51.06 | | 40.25 | |
| | | | | | |
| Royalties ($/boe)(2) | 7.80 | | 6.83 | | 8.33 | | 6.04 | |
| | | | | | |
| Production costs ($/boe)(1) | 17.28 | | 18.28 | | 17.77 | | 16.23 | |
| | | | | | |
| Operating netback ($/boe)(3) | 21.90 | | 19.05 | | 24.96 | | 17.96 | |
| | | | | | |
| Net general and administrative expenses ($/boe) | 1.05 | | 1.63 | | 1.08 | | 1.92 | |
| | | | | | |
| Interest expense ($/boe) | 1.12 | | 0.86 | | 1.26 | | 0.68 | |
| | | | | | |
| Adjusted funds flow from operations(3)(4) | 41,066 | | 18,922 | | 136,231 | | 43,791 | |
| per share - basic(7) | 0.23 | | 0.17 | | 0.78 | | 0.43 | |
| per share - diluted(7) | 0.22 | | 0.16 | | 0.74 | | 0.40 | |
| | | | | | |
| Net income (loss) | (8,234 | ) | 4,102 | | (17,819 | ) | (15,438 | ) |
| per share - basic(7) | (0.05 | ) | 0.04 | | (0.10 | ) | (0.15 | ) |
| per share - diluted(7) | (0.05 | ) | 0.03 | | (0.10 | ) | (0.15 | ) |
| | | | | | |
| Total development capital expenditures(3)(5) | 35,111 | | 19,867 | | 104,709 | | 42,640 | |
| Total capital expenditures(6) | 40,904 | | 44,250 | | 124,530 | | 132,689 | |
| | | | | | |
| Net debt(3) | 233,076 | | 81,271 | | 233,076 | | 81,271 | |
| Net debt exclusive of finance lease obligations(3) | 205,135 | | 48,954 | | 205,135 | | 48,954 | |
Bank Facility
| 350,000 | | 150,000 | | 350,000 | | 150,000 | |
| Weighted average shares outstanding | | | | | |
| basic(7) | 175,603,993 | | 109,979,432 | | 175,507,426 | | 101,036,835 | |
| diluted(7) | 182,714,645 | | 118,715,905 | | 183,497,285 | | 109,211,605 | |
(1) Including transportation costs.
(2) Royalties include Saskatchewan resource surcharge.
(3) Adjusted funds flow from operations, operating netback, development capital expenditures, net debt and net debt exclusive of finance lease obligations are non-IFRS measures. See “Non-IFRS Measures”.
(4) Excluding transaction costs.
(5) Total development capital expenditures calculated as total capital expenditures less land, seismic, waterflood capital and acquisitions.
(6) Includes acquisitions.
(7) Prior period numbers restated on a 3 for 1 basis to reflect share consolidation that occurred on June 20, 2017.
OPERATIONAL UPDATE
Spartan had three rigs actively drilling across our southeast Saskatchewan asset base during the third quarter. We drilled 39 (28 net) development wells in the quarter and brought 37 (27.2 net) wells on production, with 12 (8.0 net) wells drilled and waiting to be brought on production at the end of the quarter. To date in 2017 we have drilled 105 (84.5 net) wells and brought 93 (76.5 net) wells on production. Total development capital expenditures (total capital expenditures excluding land, seismic, waterflood capital and acquisitions) were $35.1 million in the third quarter and $104.7 million year to date, leaving $35.3 million of our $140 million budget remaining to be spent in the fourth quarter.
As previously disclosed, production from wells on our conventional Frobisher and frac Midale plays have continued to outperform our internal type curves. The success of our drilling program has resulted in Spartan increasing our annual production guidance twice in 2017, with current guidance of 22,000 boe/d representing 16% per share production growth over 2016. We have remained active on our Frobisher and frac Midale assets in the fourth quarter with two rigs drilling continuously across these plays.
In the third quarter, Spartan commenced our first Ratcliffe drilling program on the core Oungre asset acquired from ARC Resources Ltd. in 2016. To date in 2017 we have drilled a total of 12 (6.5 net) Ratcliffe wells. The average initial thirty day production rate from the first eight Ratcliffe wells brought on production was 111 bbls/d, 39% above our internal type curve. We have continued to add to our Ratcliffe land position in 2017 and have identified over 100 net Ratcliffe drilling locations.
Spartan delivered adjusted funds flow from operations of $41.1 million in the third quarter and excess adjusted funds flow from operations (adjusted funds flow from operations less total development capital expenditures) of $6.0 million. We invested a portion of this excess funds flow on a tuck-in acquisition at Oungre, where we acquired a 10.7% interest in the Oungre unit from our joint venture partners for cash consideration of $4.4 million. This acquisition is strategic to Spartan as it gives us a 100% working interest in the Oungre unit and allows us to accelerate our waterflood project in the unit. The first phase of this project, which includes 8 horizontal producers, one new injector and 15 injector conversions, is scheduled for the fourth quarter of 2017 and first half of 2018.
OUTLOOK
Through three quarters of 2017, Spartan has delivered on our business plan of generating top tier organic growth while spending within funds flow. We grew our third quarter production by 14% per share over 2016 on year to date development capital spending that represented only 77% of our adjusted funds flow from operations. Our oil focused, unhedged production base provides a large upside to increases in commodity prices, generating the opportunity for significant excess funds flow growth. We will continue to invest excess cash flow on projects that will deliver long term value to our shareholders, including strategic land and asset acquisitions, advancement of our waterflood projects, drilling on emerging plays and/or repurchasing shares pursuant to our normal course issuer bid.
FURTHER INFORMATION
Richard (Rick) McHardy
President and Chief Executive Officer