Spartan Exploration Ltd.
TSX : SPE

Spartan Exploration Ltd.

March 23, 2010 20:47 ET

Spartan Exploration Ltd. Announces Year End 2009 Financial Results, Commencement of Pembina Cardium Drilling Program and Filing of Annual Information Form

CALGARY, ALBERTA--(Marketwire - March 23, 2010) - Spartan Exploration Ltd. ("Spartan" or the "Company") (TSX:SPE), is pleased to announce it has filed on SEDAR its audited financial statements and related Management's Discussion and Analysis ("MD&A") for the year ended December 31, 2009 as well as its annual information form ("AIF") for the year ended December 31, 2009. Selected financial and operational information is outlined below and should be read in conjunction with Spartan's audited financial statements, the related MD&A and the AIF which are available for review at www.sedar.com.



HIGHLIGHTS
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Three Months Ended Year Ended
December 31, December 31,
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2009 2008 2009 2008
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Financial

Total revenue $ 2,336,272 $ 856,046 $ 5,009,557 $ 1,626,628

Net earnings $ 240,880 $ 107,624 $ 410,859 $ 292,737
per share-basic $ 0.01 $ 0.01 $ 0.02 $ 0.02
per share-diluted $ 0.01 $ 0.01 $ 0.02 $ 0.02

Cash flow from
operations(1) $ 1,195,697 $ 534,019 $ 2,664,499 $ 1,081,737
per share-basic $ 0.06 $ 0.03 $ 0.14 $ 0.08
per share-diluted $ 0.05 $ 0.03 $ 0.11 $ 0.08

Capital expenditures $ 1,861,372 $ 6,840,606 $ 12,358,260 $14,497,554

Net Debt (Surplus) $(3,567,456) $ 6,126,305 $ (3,567,456) $ 6,126,305

Weighted average shares
outstanding (2)
Basic 19,376,251 19,376,251 19,376,251 13,311,063
Diluted 23,291,001 n/a 23,291,001 n/a

Operating

Oil equivalent (6:1)
Barrels of oil
equivalent (000's) 35,239 18,767 86,433 24,028
Barrels of oil
equivalent per day 383 204 237 70
Average selling price
($CDN per boe) $ 66.30 $ 42.89 $ 57.65 $ 55.93
Royalties 15% 2.8% 10% 2.4%


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Three Months Ended Year Ended
December 31, December 31,
-------------------------- --------------------------
2009 2008 2009 2008
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Transportation costs
(per boe) $ 1.59 $ 1.45 $ 1.67 $ 1.25
Operating costs
(per boe) $ 9.09 $ 8.36 $ 9.45 $ 7.18

Oil production 28,476 18,767 73,346 24,028
Barrels (000's) 307 204 237 70
Barrels per day $ 73.00 $ 42.89 $ 57.65 $ 59.93

Gas production
Thousand cubic feet
(000's) 28,079 - 56,389 -
Thousand cubic feet
per day 337 - 154 -
Average selling price
($CDN per mcf) $ 5.66 - $ 4.42 -

NGL production
Barrels (000's) 2,121 - 3,771 -
Barrels per day 19.53 - 10.25 -
Average selling price
($CDN per barrel) $ 46.42 - $ 41.27 -

(1) Cash flow from operations is a non-GAAP measurement. See MD&A.
(2) Excludes 883,563 common shares issued to employees on March 1, 2008 in
exchange for promissory notes. In accordance with Canadian Institute of
Chartered Accountants ("CICA") Handbook Emerging Issues Committee
("EIC")-132, "Share Purchase Financing", the Company was required to
treat such shares as stock options. See Note 9 to the December 31, 2009
audited financial statements.

Boe Presentation --For the purpose of calculating unit revenues and costs,
natural gas is converted to a barrel of oil equivalent ("Boe") using six
thousand cubic feet ("Mcf") of natural gas equal to one barrel of oil unless
otherwise stated. Barrels of oil equivalent ("Boe") may be misleading,
particularly if used in isolation. A Boe conversion ratio of six Mcf to one
barrel ("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. All Boe measurements and conversions in this report are
derived by converting natural gas to oil in the ratio of six thousand cubic
feet of gas to one barrel of oil. Mboe means 1,000 Boe.


PRESIDENT'S MESSAGE

2009 IN REVIEW

- Average 2009 production increased to 237 boe per day (89% oil and liquids), representing an increase of 239% from average production of 70 boe per day in 2008; on a per share basis, average production increased by 133% for the year ended 2009, as compared to the year ended 2008 using basic weighted average shares outstanding for each period;

- Average 2009 fourth quarter production increased to 383 boe per day (87% oil and liquids), representing a year over year increase of 88% from average fourth quarter production of 204 boe per day for 2008; on a per share basis, average fourth quarter production increased by 88%, as compared to the fourth quarter of 2008 using basic weighted average shares outstanding for each period;

- Field netback for the year was $41.29 per boe, highlighting the quality of the Company's oil weighted production mix; average revenue per boe (excluding interest income) was $57.65 per boe during 2009.

- Cash flow for the 2009 fiscal year was $2.66 million, an increase of 146% from cash flow of $1.08 million for fiscal 2008; on a per share basis, cash flow increased by 75% to $0.14 per share in 2009, as compared to $0.08 per share for 2008 (based upon average shares o/s during the year).

- Net earnings for the year ended 2009 were $0.41million, an increase of 41% from net earnings of $0.29 million for 2008.

- Net capital expenditures were $12.36 million during 2009. This included $8.93 million spent on acquisitions at Battle Creek, Saskatchewan (including facility reactivation) and in West Pembina in central Alberta. Spartan's 2009 capital program was funded primarily through cash on hand, cash flow and available credit facilities.



- 2009 reserves breakdown is as follows:

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Percentage
Increase Percentage Increase
Reserve Category MBOE Over 2008 Per Share (1)
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Proved Developed Producing (PDP) 989.9 84% 27%

Total Proved 1,540.7 63% 12%

Proved plus Probable (P+P) 2,081.0 73% 19%
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Note:

(1) Based upon average shares outstanding during the year


- PDP reserves as a percentage of total Proved reserves increased from 27.0% in 2008, to 62.7% in 2009, an increase of 132%.

- PDP reserves as a percentage of overall P+P reserves increased from 21.2% in 2008, to 46.4% in 2009, an increase of 119%.

- Spartan's 2009 capital program added reserves at a cost of $19.40 (Proved) and $13.20 (P+P) (includes all capital expenditures, the change in future development capital, acquisitions, dispositions and revisions); based upon an average corporate netback of $31.51 per boe during 2009, this translates into a recycle ratio of 1.62 for Proved reserves and 2.39 for P+P reserves.

- The cost to add reserves per National Instrument 51-101, which excludes the effect of acquisitions, dispositions and revisions, was $31.29 per boe (Proved) and $20.14 (P+P) for 2009.

- Spartan replaced reserves at the rate of 11.3 boe (P+P) for each 1.0 boe produced during 2009.

- Spartan successfully expanded its existing core areas in SE and SW Saskatchewan to approx. 88 net undeveloped sections (approx. 70% of undeveloped land is in SE Sask.).

- Successfully negotiated the acquisition of medium oil Battle Creek property in SW Sask.; total costs of acquisition/reactivation were $1.96 million, resulting in metrics of approx. $14,500 per flowing barrel and $5.72 per boe (reserves) (based upon average production of 135 boe/d).

- Established new core area in West Pembina with 2 acquisitions of 130 boe/d and 7.5 net sections of undeveloped land prospective for Cardium horizontal development.

- Successfully negotiated 6 net section farmin in greater Pembina area, prospective for Cardium oil with horizontal development.

- Announced the acquisition of Aztek Energy Ltd. ("Aztek"), a transaction designed to take the Company public.

- Raised approx. $15mm through Aztek in December 2009 at an effective price of at $2.11 per share (up from $1.00 per share on previous issuance in May/08).

OPERATIONS OVERVIEW

2009 represented the first full year of operations for Spartan. Spartan's continuing business plan in 2009 was to assemble a high quality asset base which offered significant growth potential for our shareholders. Although the beginning of the year was characterized by ongoing economic uncertainty, Spartan was well positioned to weather the downturn, with a significant drilling inventory and a strong balance sheet. February marked the bottom for crude oil, with index pricing for WTI crude oil hitting a low of US $34.03 per barrel on February 12, 2009.

Spartan executed on its stated business plan of preserving drilling capital and seeking out acquisitions which would provide the Company with stable, predictable cash flow. During 2009, Spartan drilled a total of 4 (1.525 net) horizontal Bakken wells in southeast Saskatchewan, for a 100% success rate.

Spartan was successful in closing three acquisitions, two of which marked the beginning of a new core area for Spartan. The first was a medium gravity crude oil property at Battle Creek in southwest Saskatchewan which added approx. 135 boe/d of long life production at a final cost of approximately $2.0 million. The second was an acquisition of approximately 130 boe/d of long life light oil at Cynthia in the west Pembina area of central Alberta at a cost of approximately $7.1 million. The third was an acquisition of approximately 3.1 net sections of land prospective for horizontal Cardium development in close proximity to our Cynthia acreage.

Spartan's production grew by 239% during 2009 to 237 boe/d (89% oil) average for the year. Fourth quarter production averaged 383 boe/d (87% oil).

Cash flow for the 2009 fiscal year was $2.66 million, an increase of 146% from cash flow of $1.08 million for fiscal 2008. Cash flow generated during the fourth quarter was $1.20 million, an increase of 124% as compared to the fourth quarter of 2008.

During 2009, Spartan continued with its efforts to assemble an inventory of high quality resource play assets. Our focus has been on the Bakken in southeast Saskatchewan, the Lower Shaunavon in southwest Saskatchewan and the Cardium in the Pembina area of central Alberta. Spartan's undeveloped land position is currently at approximately 82,000 (61,150 net) acres, consisting of 43,300 net acres in southeast Saskatchewan, 12,900 net acres in southwest Saskatchewan and 9,100 net acres at Pembina (including 4,174 acres that Spartan has access to through a previously announced farm-in).

In November, 2009, Spartan announced the acquisition of Aztek Energy Ltd. ("Aztek"), a transaction designed to improve Spartan's access to capital and to provide Spartan's shareholders with some measure of liquidity. In December, 2009, Spartan closed a bought deal financing through Aztek, raising gross proceeds of $15 million. Proceeds of the offering are allocated to Spartan's 2010 capital program.

Finally, in December, 2009, Spartan announced a strategic farmin in the Pembina area of central Alberta. The farmin provides Spartan with access to an additional 6 net sections of land. Combined with Spartan's owned lands, Spartan now has access to over 14.5 net sections of land that is prospective for horizontal development in the Cardium.

OUTLOOK

2010 marks the beginning of the next phase of Spartan's business plan where we shift from asset accumulation to production and reserves growth. Spartan intends to utilize its strong balance sheet to embark upon an aggressive 2010 capital program. As at January, 18, 2010, upon the closing of the Aztek acquisition and financing, Spartan had positive working capital of approximately $11.5 million and a undrawn line of credit of $10.5 million.

2010 will see Spartan drill up to 15 (11.7 net) wells targeting high quality light oil, including 8 (net) horizontal Cardium wells on our Pembina acreage, 5 (2.2 net) Bakken wells in southeast Saskatchewan and 2 (1.5 net) Shaunavon wells in southwest Saskatchewan.

The Company spud it first Cardium horizontal well in West Pembina on March 14, 2010. Spartan is fortunate to be able to drill continuously through break up, which will allow us to accelerate the timing of our Cardium drilling program. In total, Spartan plans to drill up to three horizontal wells prior to break up. All of the wells should be completed prior to the end of July.

From a capital investment perspective, approximately 85% of Spartan's 2010 capital budget is allocated to the Company's Pembina core area. Spartan is anticipating significant production and reserves growth from our 2010 Cardium horizontal drilling program. The Company does not currently have any Cardium drilling locations booked in its 2009 year end reserve report. We expect our 2010 budget to yield average production of 650 boe/d (82% oil) and exit production (based on estimated average production for the fourth quarter) in excess of 1,200 boe/d (81% oil). Spartan's production forecast is based upon a crude oil price of WTI US $75.00 per barrel, a natural gas price of Cdn. $5.50 per mcf, operating costs of $10.00 per boe, royalties of approximately 15% and net general and administrative costs of approximately $3.00 per boe.

2010 is setting up to be a watershed year for Spartan and its shareholders. Our 2010 capital program is aimed at transitioning Spartan from a start-up company with lots of potential, to a junior producer with significant per share reserves, production and cash flow growth.

We appreciate the support that our shareholders have shown us and remain committed to building share value growth for our investors.

Respectfully submitted on behalf of the Board of Directors,

Richard (Rick) McHardy President & CEO

RESERVES

In accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities (NI 51-101), Spartan's year end reserve evaluation effective December 31, 2009, was prepared by Sproule Associates Limited. ("Sproule"). Sproule evaluated 100% of Spartan's reserves. The AIF contains Spartan's reserves data and other oil and gas information for the period ended December 31, 2009 as mandated by NI 51-101. A copy of the AIF can be obtained under Spartan's profile at www.sedar.com. The summary information provided below should be read in conjunction with the detailed information in the AIF. The Sproule price forecast at December 31, 2009 was used to determine all estimates of future net revenue (also referred to as net present value or NPV). Spartan's Reserves Committee, comprised of independent and appropriately qualified directors, has reviewed and approved of the evaluation prepared by Sproule, and the report of the Reserves Committee has been accepted by the Company's Board of Directors.

Highlights

- Proved developed producing (PDP) reserves increased by 84% for the year ended December 31, 2009 to 989.9 mboe; on a per share basis, PDP reserves increased by 27% to 51.1 boe per thousand shares in 2009, as compared to 40.4 boe per thousand shares in 2008 (based upon average shares outstanding during the year).

- Total Proved reserves increased by 63% during 2009 to 1,540.7 mboe; on a per share basis, total Proved reserves increased by 12% to 79.5 boe per thousand shares in 2009, as compared to 71.0 boe per thousand shares in 2008 (based upon average shares outstanding during the year).

- Proved plus Probable (P+P) reserves increased by 73% during 2009 to 2,081.0 mboe; on a per share basis, total P+P reserves increased by 19% to 107.4 boe per thousand shares in 2009, as compared to 90.3 boe per million shares in 2008 (based upon average shares outstanding during the year).

- PDP reserves as a percentage of total Proved reserves increased from 27.0% in 2008, to 62.7% in 2009, an increase of 132%.

- PDP reserves as a percentage of overall P+P reserves increased from 21.2% in 2008, to 46.4% in 2009, an increase of 119%.

- Spartan's Proved plus Probable Developed Producing reserve life index ("RLI") is 9.2 years using fourth quarter average production of 383 boe/d.

- Spartan's Proved plus Probable RLI is 14.9 years using fourth quarter average production of 383 boe/d.

- Spartan's 2009 capital program added reserves at a cost of $19.40 (Proved) and $13.20 (P+P) (includes all capital expenditures, the change in future development capital, acquisitions, dispositions and revisions); based upon an average corporate netback of $31.51 per boe during 2009, this translates into a recycle ratio of 1.62 for Proved reserves and 2.39 for P+P reserves.

- The cost to add reserves per National Instrument 51-101 was $31.29 per boe (Proved) and $20.14 (P+P) for 2009. The change in future development costs was included in the calculation and the effect of acquisitions, dispositions and revisions was excluded.

- Future development costs were $12.59 million for both Proved and Proved plus Probable reserves. This amount relates to 2.175 booked drilling locations in southeast Saskatchewan and 4.75 booked drilling locations in southwest Saskatchewan. All of the Company's booked undrilled locations are in the Proved Undeveloped category. The Company plans to drill 8 net horizontal Cardium oil wells during 2010. The Company currently does not have any reserves booked to Cardium drilling locations.

- Spartan replaced reserves at the rate of 11.3 boe (P+P) for each 1.0 boe produced during 2009.

The tables below are a summary of the oil, NGL and natural gas reserves of the Company and the net present value of future net revenue attributable to such reserves as evaluated in the Sproule Report based on forecast price and cost assumptions. The tables summarize the data contained in the Sproule Report and as a result may contain slightly different numbers than such report due to rounding. Also due to rounding, certain columns may not add exactly.

Gross reserves means the total working interest (operating or non-operating) share of remaining recoverable reserves owned by Spartan before deductions of royalties payable to others and without including any royalty interests owned by Spartan. Net reserves are Spartan's working interest (operating or non-operating) share of remaining recoverable reserves after deduction of royalty obligations plus Spartan's royalty interests in production or reserves.

The net present value of future net revenue attributable to the Company's reserves is stated without provision for interest costs and general and administrative costs, but after providing for estimated royalties, production costs, development costs, other income, future capital expenditures, and well abandonment costs for only those wells assigned reserves by Sproule. It should not be assumed that the undiscounted or discounted net present value of future net revenue attributable to the Company's reserves estimated by Sproule represent the fair market value of those reserves. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized herein. The recovery and reserve estimates of the Company's oil, NGL and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided herein.



Summary of Oil and Gas Reserves - Forecast Prices and Costs

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Natural Gas
(non-associated
Light & Medium Oil Heavy Oil & associated)
Gross Net Gross Net Gross Net
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(mbbl) (mbbl) (mbbl) (mbbl) (mmcf) (mmcf)
Proved
Developed Producing 520.7 473.3 254.7 216.1 813 648
Developed Non-Producing 0.0 0.0 0.0 0.0 0 0
Undeveloped 540.4 492.4 0.0 0.0 91 74
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Total Proved 1,061.1 965.8 254.7 216.1 904 722
Probable 413.6 377.4 56.1 45.4 305 250
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Total Proved plus Probable 1,474.7 1,343.2 310.9 261.4 1,209 971
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Natural Gas Barrels of Oil
Liquids Equivalent
Gross Net Gross Net
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(mbbl) (mbbl) (mboe) (mboe)
Proved
Developed Producing 54.6 39.5 965.5 836.8
Developed Non-Producing 0.0 0.0 0.0 0.0
Undeveloped 19.5 15.9 575.1 520.6
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Total Proved 74.1 55.3 1,540.7 1,357.4
Probable 19.9 15.0 540.4 479.4
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Total Proved plus Probable 94.0 70.3 2,081.0 1,836.9
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Summary of Net Present Value of Future Net Revenue- Forecast Prices and
Costs ($000s)

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Before Income Taxes Discounted at (%/year)
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@0.0% @5.0% @10.0% @15.0% @20.0%
Proved
Developed Producing 37,598 28,489 23,116 19,591 17,099
Developed Non-Producing 0 0 0 0 0
Undeveloped 18,529 11,298 7,230 4,724 3,068
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Total Proved 56,128 39,787 30,347 24,315 20,167
Probable 31,801 15,049 8,789 5,880 4,292
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Total Proved plus Probable 87,928 54,836 39,136 30,195 24,459
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CAPITAL PROGRAM EFFICIENCY

The efficiency of the Company's capital program for the year ended December 31, 2008 is summarized below:



Netbacks 2008 2009
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($/boe)
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Revenue 59.93 57.65
Royalties (1.64) (5.55)
Operating costs (8.43) (11.12)
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Operating netback 49.86 40.98
General and administrative (11.57) (9.78)
Interest income 7.77 0.31
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Corporate netback 46.06 31.51
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Capital Program and Reserves
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Total capital expenditures excluding acquisitions
and dispositions ($000's) 14,240 3,426
Total capital expenditures including acquisitions
and dispositions ($000's) 14,240 12,358
Change in future development capital (Proved)
($000's) 11,553 1,033
Change in future development capital (Proved plus
Probable) ($000's) 12,101 485
Proved reserve additions (mboe)
- excluding acquisitions, dispositions and
revisions 944.0 142.5
- including acquisitions, dispositions and
revisions 944.0 690.1

Proved plus Probable reserve additions (mboe)
- excluding acquisitions, dispositions and
revisions 1,201.8 194.2
- including acquisitions, dispositions and
revisions 1,201.8 973.2


Capital Efficiency 2008 2009
-------------------

Finding, Development & Acquisition Costs
(including acquisitions, dispositions, reserve
revisions and changes in future development
capital)

Proved FD&A ($/boe) 27.32 19.40
Recycle Ratio 1.69x 1.62x

Proved plus probable FD&A ($/boe) 21.92 13.20
Recycle ratio 2.10x 2.39

Reserve Replacement (proved plus probable)
Reserve additions (mboe) 1,201.8 973.2
Production (total boe) 24,028 86,433
Reserve replacement 50.0x 11.3x

Reserve Life Index
Total company interest proved plus probable
developed reserves (mboe) 367.8 1,291.6
Total company interest proved plus probable
reserves (mboe) 1,201.8 2,081.0
Average fourth quarter production (boe/d) 204 383
RLI based on year end proved plus probable
developed reserves (years) 4.9 9.2
RLI based on year end proved plus probable
reserves (years) 16.1 14.9

NI 51-101 Finding and Development Costs
(excluding acquisitions, dispositions and reserve
revisions and including changes in future
development capital)

Proved F&D ($/boe) 27.32 31.29
Proved plus Probable F&D ($/boe) 21.92 20.14


READER ADVISORY

This press release contains certain forward-looking statements (forecasts) under applicable securities laws relating to future events or future performance. Forward-looking statements are necessarily based upon assumptions and judgements with respect to the future including, but not limited to, the outlook for commodity markets and capital markets, the performance of producing wells and reservoirs, well development and operating performance, general economic and business conditions, weather, the regulatory and legal environment and other risks associated with oil and gas operations. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "projects", "plans", "anticipates" and similar expressions. These statements represent management's expectations or beliefs concerning, among other things, future operating results and various components thereof affecting the economic performance of Spartan. Undue reliance should not be placed on these forward-looking statements which are based upon management's assumptions and are subject to known and unknown risks and uncertainties, including the business risks discussed above, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted.

In the interest of providing Spartan shareholders and potential investors with information regarding the Company, including management's assessment of Spartan's future plans and operation, certain statements throughout this press release constitute forward looking statements. All forward-looking statements are based on the Company's beliefs and assumptions based on information available at the time the assumption was made. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward looking statements. By its nature, such forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward looking statements. Spartan believes the expectations reflected in those forward looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward looking statements contained throughout this press release should not be unduly relied upon. These statements speak only as of the date specified in the statements.

In particular, this press release may contain forward looking statements pertaining to the following:

- the performance characteristics of the Company's oil and natural gas properties;

- oil and natural gas production levels;

- capital expenditure programs;

- the quantity of the Company's oil and natural gas reserves and anticipated future cash flows from such reserves;

- projections of commodity prices and costs;

- supply and demand for oil and natural gas;

- expectations regarding the ability to raise capital and to continually add to reserves through acquisitions and development; and

- treatment under governmental regulatory regimes.

The material assumptions in making these forward-looking statements include certain assumptions disclosed in the Company's most recent management's discussion and analysis included in the material available on this press release.

The Company's actual results could differ materially from those anticipated in the forward looking statements contained throughout this press release as a result of the material risk factors set forth below, and elsewhere in this press release:

- volatility in market prices for oil and natural gas;

- liabilities inherent in oil and natural gas operations;

- uncertainties associated with estimating oil and natural gas reserves;

- competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel;

- incorrect assessments of the value of acquisitions and exploration and development programs;

- geological, technical, drilling and processing problems;

- fluctuations in foreign exchange or interest rates and stock market volatility;

- failure to realize the anticipated benefits of acquisitions;

- general business and market conditions; and

- changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry.

These factors should not be construed as exhaustive. Unless required by law, Spartan does not undertake any obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet (mcf) of natural gas to one barrel (bbl) of oil is based on an energy conversion method primarily applicable at the burner tip and is not intended to represent a value equivalency at the wellhead. All boe conversions in this press release are derived by converting natural gas to oil in the ratio of six thousand cubic feet of natural gas to one barrel of oil. Certain financial amounts are presented on a per boe basis, such measurements may not be consistent with those used by other companies.

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 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 performance. Spartan'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 defines 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 press release may contain 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.

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