New Coverage: $5.50 targetIn today's Globe & Mail online:
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Ventum Capital Markets’ Adam Gill initiated coverage of Spartan Delta Corp. SDE-T -0.93%) with a “buy” rating an $5.25 target. The average is $6.decrease
“With approximately 600 net potential locations in the Duvernay, we see a value potential of $3.3-billion ($16.45/shr) for the full development of the inventory,” he said. “That said, we do not believe the market will immediately ascribe that value, but expect the Company will gain credit for near-term value creation. Over 2025, we see $101.1-million of PDP additions at strip prices for this year’s drilling, which equates to $0.50/shr (16-per-cent upside), and over 2025 and 2026, we see $282.8-million of value, which is $1.42/shr (44-per-cent upside)
“We see Spartan Delta offering substantially strong CFPS growth as the Duvernay ramps up, forecast at 41 per cent at current strip prices and 48 per cent in a flat US$70/Bbl WTI/US$4.00/MMBtu NYMEX price assumption. This is the value creation from the Duvernay growth, which will increase volumes (expect 18-per-cent production growth on average in 2026 over 2024 levels, with liquids production up 54 per cemt), driving a stronger netback (up 29 per cent in 2026 as the Duvernay makes a sizeable impact on strip, higher at 35 per cent at a flat US$70/Bbl WTI price). In a strip price environment, it would take SDE trading at $4.80 to close that multiple compression gap (49-per-cent upside) and the share price would need to be $5.15 (59-per-cent upside) at flat US$70/Bbl WTI to close the compression gap.”