Spartan Exploration Ltd.
TSX : SPE

Spartan Exploration Ltd.

September 13, 2010 09:21 ET

Spartan Exploration Ltd. Announces Closing of Financing, Expanded Capital Budget, Updated Guidance and Executive Appointments

CALGARY, ALBERTA--(Marketwire - Sept. 13, 2010) -

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Spartan Exploration Ltd. ("Spartan" or the "Company") (TSX:SPE), is pleased to announce that it has closed its previously announced bought deal financing (the "Offering") of common shares ("Common Shares") through a syndicate of underwriters co-led by Clarus Securities Inc. and GMP Securities L.P., and including Mackie Research Capital Corporation and Stonecap Securities Inc. (collectively, the "Underwriters"). Pursuant to the Offering, Spartan issued 6,052,450 Common Shares at a price of $2.85 per Common Share for gross proceeds of $17.25 million, including 789,450 Common Shares issued on the exercise in full of the over-allotment option granted to the Underwriters. Following the completion of the Offering, Spartan has a total of 34,385,384 common shares outstanding (41,539,115 fully diluted).

Increased Capital Budget and Upward Revision to 2010 Production Guidance

Spartan also announces that it is expanding its capital budget to a total of $51 million for the 2010 calendar year. All of the $20 million increase will be allocated to the continued development of Spartan's Pembina core area and will be partially funded with the net proceeds of Offering. As part of the increased budget, the Company's 2010 drilling program will increase from 8 net Cardium horizontal wells to 13.75 net wells. Approximately 75% of Spartan's Cardium horizontal wells are to be drilled on the Company's northwest Pembina lands. The remaining 25% of the program is to be drilled on the Company's southeast Pembina lands. To date, Spartan has drilled a total of 10 (7.55 net) Cardium horizontal wells, with a 100% success rate. Four (3.47 net) of the wells are currently on production and the remaining six (4.08 net) wells are expected to be on production by the end of the third quarter or early in the fourth quarter.

Spartan also announces that with the expanded capital program and the results that the Company has achieved to date from its drilling program, it is increasing its 2010 production guidance. Spartan now anticipates 2010 fourth quarter average production of 1,500 boe/d and exit production of 1,800 boe/d (81% oil and liquids).

Executive Appointments

Spartan is pleased to announce that Mr. Barry McNamara, formerly Spartan's Exploration Manager, has been promoted to Vice President, Geology. In addition, Mr. Ed Wong, Spartan's Engineering Manager, has been promoted to the position of Vice President, Engineering. Prior to these appointments, both Messrs. McNamara and Wong have served in various capacities with the Company and each has been instrumental in our success to date.

Spartan, 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. Spartan is uniquely positioned with a significant position in three leading oil resource plays in western Canada, being the Cardium light oil play in the Pembina area of central Alberta, the Bakken light oil resource play in southeast Saskatchewan and the Lower Shaunavon medium gravity oil resource play in southwest Saskatchewan.

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.

The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Contact Information

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