(Daily Oil Bulletin) 鈥� In what was likely its final full reporting period as Spartan Energy Corp., the company recorded a first quarter 2018 net loss of $133.75 million as it recognized an impairment charge of $193.92 million related to its properties and equipment.
Spartan had posted net income of $244,000 in the comparable 2017 period. Subsequent to the end of the quarter, Vermilion Energy Inc. announced plans to acquire Spartan in a $1.4 billion stock and debt.
The special shareholder meeting to vote upon the arrangement will be held May 25. All Spartan shareholders entitled to vote are encouraged to vote in person or by proxy at the meeting. Assuming receipt of shareholder approval and the satisfaction of all other conditions to the arrangement, Spartan expects the arrangement to be completed on May 28.
Spartan generated first quarter adjusted funds flow from operations of $65.69 million in the first quarter of 2018 compared to $49.02 million in the comparable period of 2017, an increase of 34 per cent.
The improvement is primarily a result of the increase in oil and gas sales, driven by both higher average production volumes and an increase in the company鈥檚 average realized oil and gas sales price.
Spartan achieved first quarter average production of 22,736 barrels per day (boepd), comprised of 91 per cent oil and liquids, representing an increase of six per cent over the first quarter of 2017.
The company maintained its balance sheet strength during the first quarter, with net debt (exclusive of finance lease obligations) at the end of the period of approximately $199 million, down from $215 million at the end of the first quarter of 2017, and representing only seven-tenths of the annualized first quarter adjusted funds flow from operations. Available liquidity and the end of the first quarter was $151 million.
In the first quarter of 2018, total development capital expenditures were $53.52 million, compared to $42.34 million in the first quarter of 2017.
Operations
Spartan remained active in the field in the first quarter of 2017, drilling 52 (39.6 net) development wells in the quarter.
The company brought 50 (40.9 net) wells on production, including four (3.6 net) wells that were drilled in the fourth quarter of 2017, and had six (2.4 net) wells that were drilled but not yet on production at the end of the quarter.
Spartan鈥檚 southeast Saskatchewan drilling program consisted of 27 (20.1 net) open-hole Mississippian wells, 10 (8.3 net) frac Midale wells and 12 (8.7 net) open-hole Ratcliffe wells. In addition, the company drilled 3 (2.5 net) Detrital wells on its Alberta properties.
Spring breakup conditions have been relatively mild in southeast Saskatchewan to date and Spartan anticipates resuming drilling ahead of schedule in mid to late May.
The company invested $4.7 million in waterflood projects, primarily related to the start of water injection at its Oungre unit waterflood project. Spartan also spent $2.1 million to acquire additional land and seismic and completed a small acquisition of long life light oil assets for consideration of $4 million.
