CALGARY, ALBERTA--(Marketwire - March 17, 2011) - 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, 2010 as well as its annual information form ("AIF") for the year ended December 31, 2010. 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

  • Current production is between 2,300 – 2,500 boe/d (85% oil and liquids) based on field estimates; Spartan currently has a total of 22 (15.9 net) Cardium horizontal oil wells producing in Pembina. The success of the Company's Cardium drilling program has resulted in significant per share growth in production, reserves and cash flow;

  • Average 2010 fourth quarter production increased to 1,855 boe per day (85% oil and liquids), representing a year over year increase of 384% from average fourth quarter production of 383 boe per day for 2009; on a per share basis, average fourth quarter production increased by 179%, as compared to the fourth quarter of 2009 using basic weighted average shares outstanding for each period;

  • Emphasizing the quality of the Corporation's production base and the efficiency of our operations, Spartan achieved an operating netback of $47.12 per boe and a corporate netback of $44.75 for the year ended December 31, 2010; for the quarter ended December 31, 2010, Spartan achieved an operating netback of $53.05 per boe and a corporate netback of $52.14;

  • Cash flow from operations for the fourth quarter was $8.9 million, an increase of 641% from cash flow of $1.2 million for the quarter ended December 31, 2009; full year cash flow for 2010 was $15.2 million, an increase of 469% over 2009 cash flow of $2.7 million;

  • On a per share basis, cash flow increased by 149% to $0.52 per share in 2010, as compared to $0.14 per share in 2009 using basic weighted average shares outstanding during the year; over half of the full year cash flow per share amount ($0.29) was realized in the fourth quarter as the Corporation's production reached record levels;

  • The Company recorded its 12th straight quarter of positive earnings; net earnings in the fourth quarter were $3.52 million, as compared to $0.24 million for the fourth quarter of 2009. Net earnings for the year ended 2010 were $4.55 million, an increase of 1009% from net earnings of $0.41 million for 2009;

  • Net capital expenditures were $57,722,932 million during 2010. The majority of this capital (approximately 82%) was spent in the Company's Pembina, Alberta core area. Spartan's 2010 capital program was funded primarily through cash flow, capital raised on the issuance of new equity and available credit facilities.

  • 2010 reserves breakdown is as follows:

Reserve Category MBOE Percentage Increase
Over 2009
Percentage Increase
Per Share (1)
Proved Developed Producing (PDP) 2,891.5 199% 101%
Total Proved 5,685.6 269% 147%
Proved plus Probable (P+P) 10,321.0 396% 230%
  1. Based upon basic average shares outstanding during the year
  • Spartan's 2010 capital program added reserves at a cost of $23.86 (Proved) and $17.25 (P+P) (includes all capital expenditures, the change in future development capital and revisions); based upon an average corporate netback of $44.75 per boe during 2010, this translates into a recycle ratio of 1.9 for Proved reserves and 2.6 for P+P reserves;

  • Spartan's three year F&D cost is $23.89 (Proved) and $17.40 (P+P) (includes all capital expenditures, the change in future development capital, acquisitions and revisions);

  • The cost to add reserves per National Instrument 51-101, which excludes the effect of acquisitions, dispositions and revisions, was $24.09 per boe (Proved) and $17.56 (P+P) for 2010;

  • Spartan replaced reserves at the rate of 25.2 boe (P+P) for each 1.0 boe produced during 2010;

  • Raised approx. $17.25mm in September 2010 at a price of at $2.85 per share; and

  • Spartan's available line of credit has recently been increased to $55 million, giving the Company significant financial flexibility moving forward for the remainder of the year.


  Three Months Ended Year Ended
  December 31, December 31,
  2010 2009 2010 2009
Total revenue $11,639,065 $2,336,272 $22,304,068 $5,009,557
Net earnings $3,523,564 $240,880 $4,549,728 $410,859
  per share - basic $0.12 $0.01 $0.16 $0.02
  per share - diluted $0.11 $0.01 $0.13 $0.02
Cash flow from operations (1) $8,862,656 $1,195,696 $15,170,671 $2,664,499
  per share - basic $0.29 $0.06 $0.52 $0.14
  per share - diluted $0.26 $0.05 $0.45 $0.11
Capital expenditures $26,781,039 $1,861,372 $57,722,932 $12,358,260
Working capital surplus (deficit) $(15,367,161) $(3,567,456) $(15,367,161) $(3,567,456)
Weighted average shares outstanding (2)        
  Basic 33,670,800 19,376,251 28,909,713 19,376,251
  Diluted 38,851,120 23,291,001 33,718,478 23,291,001
Oil equivalent (6:1)        
  Barrels of oil equivalent (000's) 170,679 35,239 339,861 86,433
  Barrels of oil equivalent per day 1,855 383 931 237
  Average selling price ($CDN per boe) $68.11 $66.30 $65.54 $57.65
  Royalties $7.58 10.13 $7.75 5.55
  Transportation costs (per boe) $0.67 $1.59 $1.37 $1.67
  Operating costs (per boe) $6.89 $9.09 $9.39 $9.45
  G&A (cash - per boe) $0.91 $10.30 $2.37 $9.78
Oil production        
  Barrels (000's) 137,396 28,476 275,248 73,346
  Barrels per day 1,493 307 754 237
  Average selling price ($CDN per barrel) $76.42 $73.95 $73.23 $62.43
Gas production        
  Thousand cubic feet (000's) 151,599 28,079 301,729 56,389
  Thousand cubic feet per day 1,648 337 827 154
  Average selling price ($CDN per mcf) $4.39 $5.66 $4.36 $4.42
NGL production        
  Barrels (000's) 8,016 2,121 14,325 3,771
  Barrels per day 87 19.53 39 10.25
  Average selling price ($CDN per barrel) $57.41 $46.42 $56.08 $41.27
(1) Cash flow from operations is a non-GAAP measurement. See MD&A.

(2) Excludes 842,250 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, 2010 audited financial statements.


2010 was a break out year for Spartan. On the back of a successful Cardium drilling program in Pembina, the Company was able to increase average production in 2010 by 293% to 931 boe/d (85% oil and liquids). Much of our production gains were realized in the second half of the year, and the Company finished 2010 on a strong note, with fourth quarter average production of 1,855 boe/d (85% oil and liquids). Spartan drilled a total of 18 (13.8 net) Cardium wells during 2010 with a 100% success rate. First month production rates for these wells ranged from 161 boe/d to 553 boe/d, with an average of 300 boe/d. Our drilling success translated into a significant increase in our reserve bookings. Total proved reserves increased during 2010 by 269% to 5.7 million boe and total proved plus probable reserves increased by 396% to 10.3 million boe. Although our reserve report recognizes the resource potential in our land base, booked undrilled locations in Pembina account for less than one-quarter of what we believe is our large and growing inventory of horizontal drilling locations.

Continued strength in commodity prices helped to propel cash flow and earnings to record levels. WTI crude pricing averaged US $79.48 /bbl during the full year ended December 31, 2010 and US $85.16 during the fourth quarter. Spartan's operating netback was $53.05 in the fourth quarter and our corporate netback was $52.14. On total revenue of $22.3 million, Spartan recorded cash flow of $15.2 million, with $8.9 million of that coming in the fourth quarter. Cash flow represented 76% of total revenue in the fourth quarter and 68% for the full year ended December 31, 2010. The fourth quarter of 2010 represented Spartan's twelfth consecutive quarter of positive earnings. Net earnings for the year ended December 31, 2010 were $4.5 million, with $3.5 million of that coming in the fourth quarter.


Spartan currently has a total of 22 (15.9 net) Cardium horizontal oil wells producing in Pembina. Current production is between 2,300 – 2,500 boe/d (85% oil and liquids) based on field estimates. Individual well results in Pembina have continued to meet or exceed our expectations. Detailed results for wells that have a minimum of thirty days of production are as follows:

  Spartan Average Daily Production(1), (2)  
Producing Days Hi Low Average Number of Wells
  (boe/d) (boe/d) (boe/d) (gross/net)
30 days 589 161 316 18 / 14.3
60 days 259 108 184 13 / 10.67
90 days 202 83 151 11 / 9.67
  1. Producing day average.
  2. After recovery of all frac fluids, except for 3 (1 net) wells which were completed with water fracs. Oil produced during the initial flowback from these latter wells is sales oil and is included in the volumes reported.

Building on the success we have enjoyed through 2010, the focus of Spartan's 2011 capital program will remain on the Cardium (approx. 85% - 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. To date, Spartan has drilled 10 (5.2 net) Cardium horizontal wells in 2011 with a 100% success rate.

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 we expect to spud prior to the end of the first quarter.

We entered 2011 with significant financial flexibility, buoyed by strong commodity prices and a recent increase in our available line of credit to $55 million. This balance sheet will ensure that we can continue to deliver above average returns to our shareholders and will permit us to take advantage of opportunities that arise from time to time.

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


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