March 2, 2024

Spartan Delta Corp. has completed a series of asset acquisitions in the West Shale Basin Duvernay in Alberta, Canada, for an aggregate cash consideration of approximately $18.4 million (CAD 25 million).

The acquisitions include a material Duvernay land position, extensive 3D seismic, and approximately 400 barrels of oil equivalent per day (boepd) of Duvernay production. As a result, Spartan accumulated approximately 137,000 gross acres, or 130,000 net acres, with the majority of the acreage residing in the volatile oil, condensate, and liquids-rich gas window of the Duvernay, the Alberta-based company said in a news release Tuesday. The sellers of the assets were not disclosed.

After over a decade of development, Spartan said it believes the Duvernay is poised to offer repeatable, economic results with a significant depth of inventory. Similar to its entry into the up-dip oil window of the Montney in 2021, the company views its timing on the entry into the West Shale Basin Duvernay as optimal as “the fairway is fragmented, undercapitalized and supports growth with available egress and existing underutilized infrastructure”, it said.

Additionally, Spartan said that the West Shale Basin Duvernay possesses geotechnical attributes comparable to the Kaybob Duvernay and the East Shale Basin Duvernay and that “recent activity and new top-tier well results from bordering operators demonstrate the commerciality and scalability of the play”.

Spartan said it plans to grow through the continued optimization of its Deep Basin asset, participate in the consolidation of the Deep Basin fairway, and leverage the company’s balance sheet and free funds flow to build a new growth core area in the Duvernay, starting with the acquisitions.

“I believe that the West Shale Basin Duvernay represents a unique opportunity to build a meaningful position at a low-cost of entry in an oil and condensate resource play that is fragmented, undercapitalized, and proximal to Spartan’s Deep Basin asset. The company is excited to establish and develop a new core area”, Spartan President and CEO Fotis Kalantzis said.

2024 Capital Budget

For 2024, Spartan’s board approved an initial capital budget of $95.65 million (CAD 130 million) to drill and complete 19.2 net wells, or 21 gross wells, resulting in annualized production of 39,500 boepd, a seven percent increase in corporate production compared to the company’s second-half 2023 guidance.

Spartan’s development plan includes adding a second rig to the Deep Basin program through the first half of the year targeting Spirit River and Cardium locations and oil weighted drilling locations targeting the Viking, Wilrich, and Rock Creek formations, increasing Spartan’s oil and condensate production by 17 percent, according to the release.

Spartan said its Deep Basin drilling inventory continues to grow as the company further evolves its petrophysical, geological, and geophysical understanding of the region. The company noted that industry-leading 3D seismic reservoir characterization, combined with its detailed geological understanding of the subsurface, is “unveiling new locations that were previously overlooked”.

Further, the company said it is optimizing the quality of inventory in its future drilling campaigns for capital efficiencies by extending lateral length, continuing to use existing surfaces, and lowering drilling and completion costs. In 2024, Spartan expects to see capital efficiency improvements of greater than 20 percent compared to 2023.

New CFO Named

Meanwhile, Spartan Chief Financial Officer Geri Greenall is retiring effective December 31 to focus on other commitments. Effective January 1, 2024, Finance Director Ronald Williams will be promoted to the roles of vice president of finance and CFO.

Williams has been with Spartan since March 2021 and brings more than 31 years of industry experience in audit, finance, taxation, as well as corporate and asset acquisitions. Most recently, he had been providing financial accounting and taxation services to a variety of public and private Alberta-based entities. Williams was the vice president of finance, CFO and co-founder of two Alberta-focused oil & gas companies and currently serves as a director of a private transportation logistics company, according to the release.

To contact the author, email rocky.teodoro@rigzone.com

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