Quarterly / Earnings Reports | Second Quarter (2Q) Update

Spartan Reactivates Drilling in Q2 with Two Rig Program

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Spartan Energy Corp. reported its financial and operating results for the three and six months ended June 30, 2016. 

• Spartan's second quarter was relatively quiet operationally due to spring break-up conditions in the field. We re-commenced our drilling program by activating two rigs in June and drilled 4 (3.5 net) wells prior to the end of the quarter.

Highlights:

• Successfully closed three light oil acquisitions in the quarter consolidating the Company's position in its southeast Saskatchewan core area.

• Achieved average production of 9,080 boe/d, comprised of 94% oil and liquids, a 4 % increase over the second quarter of 2015.

• Reduced production costs to $15.04 per boe from $16.13 per boe in the second quarter of 2015.

• Realized an operating netback of $22.23 per boe, resulting in quarterly funds flow from operations of $16.3 million ($0.05 per basic and diluted share).

• Maintained our balance sheet strength, with net debt at the end of the quarter of approximately $100.4 million and available liquidity of approximately $49.6 million.

Operational Update

Spartan's second quarter was relatively quiet operationally due to spring break-up conditions in the field. We re-commenced our drilling program by activating two rigs in June and drilled 4 (3.5 net) wells prior to the end of the quarter. The wells drilled in the second quarter were all open-hole wells drilled in our Winmore, Hastings and Pinto areas, 2 (2.0 net) of which were on production prior to the end of the quarter. We continue to have two rigs active in southeast Saskatchewan, with both rigs scheduled to drill continuously through the remainder of the year.

Outlook

Subsequent to the end of the quarter, Spartan announced the acquisition of light oil assets in southeast Saskatchewan producing approximately 450 boe/d for a cash purchase price of $24 million and a $70.3 million bought deal equity financing (the "Financing"). As a result of the Financing not having yet closed, Spartan is considered to be "in distribution" and is therefore unable to provide forward looking guidance other than what has previously been disclosed.

Following the completion of our recent acquisitions and the Financing, Spartan remains well positioned to deliver per share growth in a variable commodity price environment. The majority of our drilling locations remain economic in a depressed price scenario, allowing us to sustain production while using our strong cost of capital and balance sheet flexibility to pursue additional accretive acquisitions. In a rising price environment, the torque to oil prices provided by our light oil production base, together with our deep drilling inventory, provide the ability to deliver significant organic production growth within cash flow.