Spartan Exploration Ltd.

Spartan Exploration Ltd.

November 30, 2010 07:00 ET

Spartan Exploration Ltd. Announces 2011 Capital Budget

CALGARY, ALBERTA--(Marketwire - Nov. 30, 2010) - Spartan Exploration Ltd. ("Spartan" or the "Company") (TSX:SPE), is pleased to announce its preliminary 2011 capital program. The Company has set a capital budget in the range of $57 to $71 million. This budget will be reviewed, and potentially revised, on a quarterly basis.

Building on the success we have enjoyed through 2010, the focus of Spartan's 2011 capital program will remain on the Cardium (approx. 90%) with selective deployment of capital in southeast and southwest Saskatchewan. Spartan expects to drill up to 32 (19 net) Cardium horizontal wells in the Pembina area during 2011. Spartan's stated strategy with respect to its Saskatchewan lands has been to allow industry competitors to de-risk Spartan's lands as much as possible. Much of Spartan's lands in both southeast and southwest Saskatchewan are located in areas which are the subject of intense activity by other oil and gas companies. In many cases, competitors are drilling within a mile or two of Company lands. In southwest Saskatchewan, Spartan anticipates drilling 2 (2 net) Upper Shaunavon horizontals during 2011. In southeast Saskatchewan, Spartan expects to be active in its Viewfield core area for Bakken and at its Torquay prospect which is prospective for both Bakken and Mississippian targets. Final well count will depend upon the overall size of the Company's 2011 capital program. At Torquay, our partner is funding 100% of the exploratory phase of the project which includes the recently completed 3-D seismic and the first Midale well which is planned for early in 2011.

We expect our 2011 budget to yield average production of in the range of 2,400 to 2,600 boe/d (81% oil and liquids) and exit production of between 2,500 to 3,000 boe/d (81% oil). Cash flow is anticipated to be between $38 to $42 million. Key budget assumptions include:

  Crude oil = WTI US $80.00 per barrel
  Natural gas = Cdn. $4.00 per mcf
  Exchange rate = US/Cdn. $1.00
  Operating costs = $10.00 per boe
  Royalties = 12.5%
  Net G&A = $1.60 per boe

Spartan expects to finance its 2011 budget entirely from internal cash flow and debt. Under the proposed budget, Spartan will exit 2011 with between $37 to $47 million of net debt (representing 0.96x to 1.11x estimated 2011 cash flow). 


This news release contains certain forward-looking statements, which are based on numerous assumptions including but not limited to (i) drilling success; (ii) production; (iii) future capital expenditures; and (iv) cash flow from operating activities. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect.

With respect to forward-looking statements contained in this document, Spartan has made a number of assumptions. The key assumptions underlying the aforementioned forward-looking statements include assumptions that: (i) commodity prices will be volatile throughout 2011; (ii) capital, undeveloped lands and skilled personnel will continue to be available at the level Spartan has enjoyed to date; (iii) Spartan will be able to obtain equipment in a timely manner to carry out exploration, development and exploitation activities; (iv) production rates in 2011 are expected to show growth; (v) Spartan will have sufficient financial resources with which to conduct the capital program; and (vi) the current tax and regulatory regime will remain substantially unchanged. Certain or all of the foregoing assumptions may prove to be untrue.

Certain information regarding Spartan set forth in this document, including management's assessment of Spartan's future plans and operations, number, type, perceived risk and timing of wells to be drilled, the planning and development of certain prospects, production estimates, treatment under governmental regulatory regimes and expected production growth may constitute forward-looking statements under applicable securities laws and necessarily involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Spartan's control, including without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, environmental risks, inability to obtain drilling rigs or other services, capital expenditure costs, including drilling, completion and facility costs, unexpected decline rates in wells, wells not performing as expected, delays resulting from our inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, and stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof. Readers are cautioned that the foregoing list of factors is not exhaustive. Spartan's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that the Company will derive therefrom. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements.

Additional information on these and other factors that could affect Spartan's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website ( or Spartan's website (

The forward-looking statements contained in this document are made as at the date of this news release and Spartan does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

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.

Contact Information

  • Spartan Exploration Ltd.
    Richard F. McHardy
    President & CEO
    (403) 294-9196
    (403) 294-9126 (FAX)
    Spartan Exploration Ltd.
    Michelle A. Wiggins
    Vice President Finance & CFO
    (403) 294-9196
    (403) 294-9126 (FAX)
    Spartan Exploration Ltd.
    1000, 606 - 4th Street SW
    Calgary, Alberta