Spartan Oil Corp.

June 28, 2011 08:00 ET

Spartan Oil Corp. Announces Disposition of Non-Core Assets

CALGARY, ALBERTA--(Marketwire - June 28, 2011) -Spartan Oil Corp. ("Spartan" or the "Company") (TSX:STO), is pleased to announce that it has signed an agreement to dispose of certain non-core assets in southwest Saskatchewan to a western Canadian oil and gas producer for proceeds of approximately $21 million, subject to normal closing adjustments. The disposed assets represent approximately 190 boe/d of production and 1.26 Mmboe of reserves to Spartan. Following the completion of the sale, Spartan will have approximately 620 boe/d of production and reserves of 3.0 Mmboe. The transaction is expected to close by the end of June.

Spartan's 2011 capital budget, currently set at $33.6 million, will remain unchanged for the time being. The Company is budgeting to drill up to 14 gross (9.1 net) horizontal wells at Keystone in Pembina and is advancing emerging plays in southeast Saskatchewan at Torquay and Ceylon. Last week Spartan successfully completed its first horizontal well at Keystone (50% WI) with a 17 stage oil based frac. The well is expected to be on production in mid August.

The Company is revising its previously announced guidance for 2011 cash flow to $6.2 million and its exit rate production to 1,050 boe/d. Following the completion of the disposition (and assuming all of the outstanding arrangement warrants are exercised), Spartan will have approximately $21 million of cash and an available line of credit of $18.5 million.

Richard McHardy, President & CEO said, "The recent formation of the Company through the Plan of Arrangement among Spartan Exploration Ltd., Penn West Petroleum Ltd. and the Company made this an opportune time to rationalize certain non-core properties that do not figure prominently in the growth plans for the Company. The disposition provides Spartan with significant financial flexibility and permits us to focus our financial and technical resources on our core growth assets in Pembina and southeast Saskatchewan. The 2011 capital program is designed to test a particular geological model for our Keystone properties. With success, we will have the ability to increase our capital program as deemed appropriate."

Spartan has access to 50.5 (42.6) net sections of Cardium rights in the Keystone area of Pembina, consisting of 97.12% of the Keystone Cardium Unit No. 2 (Keystone 2), 25.26% of the Keystone Cardium Unit No. 1 (Keystone 1) and 10.5 (8.4 net) sections of non-Unit lands adjacent to Keystone 1 and 2. Spartan has identified 188 (158 net) Cardium horizontal drilling locations on company lands, based on conventional spacing of 4 wells per section.

In Saskatchewan, the Company has over 71 net sections of land in southeast Saskatchewan that is prospective for Bakken and/or Mississippian targets. Current activity is focused on the Company's plays at Torquay and Ceylon in southeast Saskatchewan.

Arrangement Warrants

Spartan wishes to remind shareholders that the expiry date for the exercise of the outstanding purchase warrants issued as part of the Plan of Arrangement involving the Company, Penn West Petroleum Ltd. and Spartan Exploration Ltd. is July 4, 2011.

Spartan Oil Corp.

The Company was recently formed to participate in the Plan of Arrangement involving Spartan Exploration Ltd. and Penn West Petroleum Ltd. Based in Calgary, Alberta, the Company is 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. Spartan is uniquely positioned with a significant position in two of the leading oil resource plays in western Canada, being the Cardium light oil play in central Alberta and the Bakken light oil resource play in southeast Saskatchewan.


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.

Contact Information

  • Spartan Oil Corp.
    Richard F. McHardy
    President & CEO
    (403) 457-4006
    (403) 457-4028 (FAX)

    Spartan Oil Corp.
    Michelle A. Wiggins
    Vice President Finance & CFO
    (403) 457-4006
    (403) 457-4028 (FAX)