Spartan Delta Corp T.SDE

Scotia Confirms January 2022 Petrinex Data! Production up!

[Bamsmba]

Spartan Delta Corp. (SDE-T; SO; $14/share TP)
SDE beat Q4/21 production expectations by ~7% on strong
contributions from its Montney and Spirit River plays. As noted
in our previous Production Monitor, we have recalibrated our
production model forecasts based on the Q4/21 actuals. Our
updated calculations point to strong January 2022 production and
put the company ~4% ahead of Q1/22 consensus expectations one
month into the quarter.
New well update. The January production data shows higher month
over month productivity from SDE’s initial batch of Elmworth / Gold
Creek Montney wells drilled on the Inception lands (profiled in our
previous Production Monitor). The wells averaged 374 bbl/d of oil
(up 3% m/m; 328 bbl/d to 419 bbl/d range) and ~1.9 mmcf/d of
raw gas (up 36% m/m; 1.6 mmcf/d to 2.4 mmcf/d range) during the gas
month (see Exhibit 12). The strong January 2022 production data
gives us further confidence in the play and puts the wells ~in line
with our base Gold Creek Montney type curve peak month forecast
at 400 bbl/d of oil and ~1.4 mmcf/d of raw gas (76% IRR and 13
month payback period at $80/bbl Canadian light oil and 3.50 AECO.

[TouchDown12]

It would interesting to get Terrrible Engineer's take on this new data. TE was provding good colour on other data earlier in Feb. TE? With thanks... TD12

[TerribleEng]

Yeah this checks out with the conversions I did from Petrinex almost to the T. I was getting a 4.2% ahead of guidance of 72960, which was 70000.  I don't believe the guidance they put out. You don't spend that kind of growth capital almost entirely on drilling and go down in rates. If the capex/guidance were accurate, this company would be a dud as the ROCE would be one of the worst

[TouchDown12]

Thanks for your insight and analysis TE. Confidence building for all us long SDE working through a little geopolitics this week (see my link in an earlier post) and getting back to keeping our sticks on the ice and our eyes on the ball. Have a good weekend everyone! TD12

[fauxtomato]

The mixed sports metaphors, I can't handle it Touchdown. January/February are likely to be peak flush production from the winter drilling program: good timing on the pricing. Production will drop in Q2/Q3. If $90+ WTI holds I'd expect to see some acceleration of capex for the second half of the year. The conservative guidance from last year ($60 WTI and actual production from new wells

[Fyordian]

Yeah, based on my math a couple weeks ago, the capital efficiency forecasts doesn't translate into actual results. If you look at their $300M budget and try to allocate amounts to sustaining vs growth capex, the guidance doesn't live up to reality. For the life of me, I can't remember if it was VIII Capital info or management info, but... SDE is forecasting double digit cost inflation