TSX:SDE - Post Discussion
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retiredcf on May 26, 2023 8:59am
Ink Research
May 26, 2023
Morning Report: Spartan Delta insiders position for transition
On March 28th, INK Canadian Insider Index member and oil & gas producer Spartan Delta (SDE) announced a three-part strategy to return value to shareholders. The first element was the sale of Gold Creek and Karr Montney formation assets to Crescent Point Energy (Mostly Sunny; CPG) which closed on May 10th. Spartan will use the proceeds of the sale to fund a $9.50 cash distribution per Spartan common share to eligible shareholders. The company provided information on the eligibility, required steps, and timing for its distribution plan in its March 28th and May 10th press releases.
Spartan will also be spinning out 4,000 barrels of oil equivalent per day of production in the Pouce Coupe and Simonette areas of northwest Alberta and 500 boe/d from northeastern BC to a newly-formed subsidiary, Logan Energy, to be led by Rick McHardy, Spartan's current board chairman. Logan will also get 55,769 net undeveloped acres in the Flatrock area in BC. As part of the distribution plan, for each Spartan share held, eligible shareholders will get one Logan share plus one warrant for the purchase of a Logan share at $0.35 until July 31st, 2023. Spartan also plans to raise up to $43.5 million via a private placement to an insider group who will be able to subscribe for shares or units at $0.35. If all goes to plan, Logan will trade on the TSX Venture, and by the end of July, will have up to $104.1 million cash. A slimmer Spartan Delta will focus on the Alberta Deep Basin, led by current CEO Fotis Kalantzis. In H2 2023, Spartan expects to produce a midpoint of 37,000 boe/d (about 70% natural gas). It intends to return a portion of its free funds flow to shareholders through special dividends while targeting a 0.5x debt-to-cash-flow ratio. A special cash dividend of $0.10 per Spartan share will be paid on July 31st, 2023, to holders of record as of July 14th. Not surprisingly, insiders are exercising their options ahead of the distribution plan.
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