Aztek Energy Ltd.
NEX BOARD : AZK

Spartan Exploration Ltd.

Spartan Exploration Ltd.

November 27, 2009 07:30 ET

Spartan Exploration Ltd. Announces Execution of Definitive Agreement in Respect of Acquisition of Aztek Energy Ltd.

CALGARY, ALBERTA--(Marketwire - Nov. 27, 2009) - Spartan Exploration Ltd. ("Spartan"), a private oil and gas company with operations in Saskatchewan and Alberta, and Aztek Energy Ltd. ("Aztek") (NEX BOARD:AZT.H) are pleased to announce that they have entered into a definitive agreement (the "Arrangement Agreement") in respect of the previously announced acquisition of Aztek. Pursuant to the terms of the Arrangement Agreement, Spartan will acquire all of the issued and outstanding common shares ("Aztek Shares") of Aztek (the "Aztek Acquisition") on the basis of 0.0805 of a common share of Spartan (a "Spartan Share") for each 1.0 Aztek Share (which represents a share price of $0.17 per Aztek Share and $2.11 per Spartan Share) pursuant to a plan of arrangement (the "Arrangement"). 

The Arrangement Agreement provides for a non-brokered private placement (the "Private Placement") of up to 39,215,686 Subscription Receipts of Aztek at a price of $0.1275 per Subscription Receipt for aggregate gross proceeds of up to approximately $5.0 million. Certain persons designated by Spartan, which may include, among others, current and future directors and officers of Spartan, shall be entitled to participate in the Private Placement. Pursuant to the Arrangement, holders of Subscription Receipts will receive, for each Subscription Receipt held, 0.0805 of a Spartan Share. Completion of the Private Placement is subject to a number of conditions and approvals including, but not limited to, customary regulatory and stock exchange approvals.

Spartan intends to make application to list the Spartan Shares on the facilities of a recognized Canadian stock exchange in conjunction with the completion of the Arrangement. In connection with the completion of the Arrangement, the Aztek Shares shall be delisted.

Completion of the Aztek Acquisition is subject to receipt of the approval of 66 2/3% of the Aztek shareholders voting in person or by proxy at a meeting of the Aztek shareholders to be held to consider the Arrangement, as well as customary court, regulatory and exchange approvals. The information circular to be mailed to Aztek shareholders will contain detailed information in respect of the Arrangement, Spartan and Aztek.

The Board of Directors of Aztek concluded that the Arrangement is in the best interests of the Aztek shareholders from a financial perspective and resolved to recommend that shareholders vote their Aztek Shares in favour of the Arrangement. In connection with the execution of the Arrangement Agreement, certain of the directors and officers of Aztek have entered into support agreements with Spartan to vote their Aztek Shares in favour of the Arrangement.

The Arrangement Agreement prohibits Aztek from soliciting or initiating any discussion regarding any other business combination or sale of material assets, contains provisions for Spartan to match competing, unsolicited proposals and, subject to certain conditions, provides for a reciprocal termination fee of $50,000 payable by either Aztek or Spartan in certain circumstances.

About Spartan and the Public Company Resulting from the Aztek Acquisition

Spartan, a privately held corporation based in Calgary, Alberta, has been engaged in the business of acquiring crude oil and natural gas properties and exploring for, developing and producing oil and natural gas in western Canada since mid 2008. Upon completion of the Aztek Acquisition, Spartan will be uniquely positioned with a significant position in each of the three leading oil resource plays in western Canada, being the Bakken light oil resource play in southeast Saskatchewan, the Lower Shaunavon medium gravity oil resource play in southwest Saskatchewan and the Cardium light oil play in central Alberta. Pro forma the closing of the Aztek Acquisition, Spartan will have the following key attributes:

  • 2009 total company exit production of greater than 400 boe/d (86% oil);
  • Total proved reserves of 1,537 mboe and total proved plus probable reserves of 2,010 mboe (based on a National Instrument 51-101 compliant report dated effective October 31, 2009, evaluating the oil, natural gas and natural gas liquids reserves of Spartan prepared by Sproule Associates Limited);
  • Significant undeveloped land base of 80,800 acres (57,630 net acres), with over 59,470 acres (39,629 net acres) in southeast Saskatchewan prospective for Bakken and Mississippian, 20,050 acres (17,269 net acres) in southwest Saskatchewan prospective for Upper and Lower Shaunavon and 5,760 acres (4,960 net acres) in the Pembina area of central Alberta prospective for Cardium oil; and
  • 335+ potential horizontal drilling locations (at 4 wells per section), including 250 Bakken and Mississippian locations, 50 Shaunavon locations and 36 Cardium locations, representing a multi-year drilling inventory.

The Spartan Management Team has a solid track record of creating value in high-growth, junior oil and gas companies. The Spartan Management Team is led by Richard (Rick) McHardy as President and Chief Executive Officer, Fotis Kalantzis as Vice-President, Exploration, Albert Stark as Vice President, Engineering and Operations, and Michelle Wiggins as Chief Financial Officer. Rounding out the team is Ed Wong, Engineering Manager, Barry McNamara, Exploration Manager and Ingrid Becker, Land Administrator.

Upon the completion of the Aztek Acquisition, the Board of Directors of Spartan shall consist of Richard McHardy, Wade Becker, Reg Greenslade, Don Archibald, Michael Stark, Grant Greenslade and Brian Lavergne.

About Aztek Energy Ltd.

Aztek Energy Ltd. is a junior oil and gas company formed to generate and develop its own prospects, acquire oil and gas properties and participate with joint venture partners in oil and gas exploration and development in the Western Canadian Sedimentary Basin. The Aztek Shares trade on the NEX board of the TSX Venture Exchange under the symbol AZT.H.

READER ADVISORY

Statements in this joint press release contain forward-looking information including, without limitation, expectations of future production and exit production rates, components of cash flow and earnings, recoverable reserves, drilling results, timing and completion of the Aztek Acquisition, estimated potential of the Bakken, Lower Shaunavon or Cardium resource plays, the listing of the Spartan shares on a recognized Canadian stock exchange and ongoing corporate strategy and benefits of the Aztek Acquisition. Readers are cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Spartan and Aztek. These risks include, but are not limited to; the risks associated with the oil and gas industry, commodity prices and exchange rate changes. Industry related risks could include, but are not limited to; operational risks in exploration, development and production, delays or changes in plans, risks associated to the uncertainty of reserve estimates, health and safety risks and the uncertainty of estimates and projections of production, costs and expenses and access to capital. The risks outlined above should not be construed as exhaustive. The reader is cautioned not to place undue reliance on this forward-looking information. Neither Spartan or Aztek undertakes any obligation to update or revise any forward-looking statements except as expressly required by applicable securities laws.

Certain of the information contained in this joint press release assumes that Spartan has completed the Aztek Acquisition on the anticipated basis and times set forth herein. The Aztek Acquisition is subject to the receipt of the approval of the shareholders of Aztek, the approval of the Court of Queen's Bench for the province of Alberta as well as all other necessary regulatory approvals. The anticipated listing of the Spartan Shares on a recognized Canadian stock exchange is subject to the conditional approval of that stock exchange and Spartan satisfying the listing requirements and all other requirements of such exchange.

Boes may be misleading, particularly if used in isolation. A boe conversion ratio of six mcf to one bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. This conversion factor is an industry accepted norm and is not based on either energy content or current prices.

Readers are further cautioned that the preparation of financial statements in accordance with Canadian generally accepted accounting principles ("GAAP") requires management to make certain judgements and estimates that affect the reported amounts of assets, liabilities, revenues and expenses. Estimating reserves is also critical to several accounting estimates and requires judgments and decisions based upon available geological, geophysical, engineering and economic data. These estimates may change, having either a negative or positive effect on net earnings as further information becomes available, and as the economic environment changes.

Cash flow from operations and operating netbacks are not recognized measures under GAAP. Management of Spartan and Aztek believe that in addition to net income, cash flow from operations and operating netbacks are useful supplemental measures as they demonstrate an ability to generate the cash necessary to repay debt or fund future growth through capital investment. Readers are cautioned, however, that these measures should not be construed as an alternative to net income determined in accordance with GAAP as an indication of Spartan's or Aztek's performance. Spartan's and Aztek's method of calculating these measures may differ from other companies and, accordingly, they may not be comparable to measures used by other companies. For these purposes, Spartan and Aztek define cash flow from operations as cash provided by operations before changes in non-cash operating working capital and defines operating netbacks as revenue less royalties and operating expenses.

Readers are also cautioned that this joint press release contains the term reserve life index, which is not a recognized measure under GAAP. Management believes that this measure is a useful supplemental measure of the length of time the reserves would be produced over at the rate used in the calculation. Readers are cautioned, however, that this measure should not be construed as an alternative to other terms determined in accordance with GAAP as a measure of performance. The method of calculating this measure may differ from other companies, and accordingly, they may not be comparable to measures used by other companies.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws and may not be offered or sold within the United States or to United States Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Spartan Exploration Ltd.
    Richard F. McHardy
    President & CEO
    (403) 294-9196
    (403) 294-9126 (FAX)
    or
    Spartan Exploration Ltd.
    1000, 606 - 4th Street SW,
    Calgary, Alberta
    or
    Aztek Energy Ltd.
    Raymond J. Hodgkinson
    COO & Director
    (403) 662-2028
    (403) 299-9601 (FAX)
    or
    Aztek Energy Ltd.
    2800, 715 - 5th Avenue SW,
    Calgary, Alberta