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Spartan’s Oil, Natural Gas Surge in Western Canada Spurred by Takeovers, High Prices
Increased prices for liquids-rich oil and natural gas production from Alberta and British Columbia, along with four corporate takeovers, fueled a solid second quarter for Calgary’s Spartan Delta Corp.
The independent put together a bundle of energy-rich properties from dealmaking in Western Canada that enriched the bottom line during 2Q2022.
Spartan, which reports in Canadian currency (C$1.00 = 77 cents), paid around $982 million total for a broad package of energy-rich assets that included Bellatrix Exploration Ltd., Inception Exploration Ltd., Canoe Point Energy Ltd., Velvet Energy Ltd. Spartan said it also added a few smaller deals.
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With the transactions, Spartan now controls a portfolio that crosses 430,000 acres of the Montney Shale and 130,000 acres of the Deep Basin in west-central Alberta.
During 2Q2022, production averaged 72,966 boe/d, up 84% year/year in part on the dealmaking. The gains were achieved even with unplanned downtime from third-party facilities and planned downtime from Spartan’s major facility turnaround operations, which were completed in the quarter.
While repaying debt incurred from the takeovers is a priority, management said the growth path also continues. To that end, Spartan increased its 2022 capital spending by 27% to $420 million. The increased capital is to be divided between Montney development and to cover anticipated overall cost inflation.
The producer recorded strong results from its drilling program in the second quarter, bringing online nine wells. Seven were in the Montney, which helped drive a 15% sequential increase in crude oil production, management said.
Spartan between April and June also completed and brought on production a four-well pad in Alberta at the Karr development. Another five-well pad was completed in West Gold Creek, which was brought online in late July. In addition, a three-well pad was completed in East Gold Creek during the quarter.
The company also brought two Cardium wells in the Deep Basin on production in April. Drilling also began drilling into the Viking formation in June.
Quarterly oil output soared by 561% year/year to average 13,009 b/d in 2Q2022. Natural gas output was up 61% to average 271,313 Mcf/d. Natural gas liquids (NGL) production was 62% higher at 12,373 b/d, while condensate increased 19% to 2,365 b/d.
Average realized prices in 2Q2022 were $137.94/bbl oil, $7.29/Mcf natural gas, $57.88/bbl NGL and $135.63/bbl condensate. In 2Q2022, Spartan’s realized prices were $71.98 oil, $3.15/Mcf gas, $30.21 NGL and $79.00 condensate.
Profits increased to nearly $181.7 million ($1.05/share) in 2Q2022 from year-ago earnings of $19.6 million (17 cents). Free cash flow climbed to $141.7 million from $43.6 million.
Gordon Jaremko contributed to this story.
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