According to the company’s website press release on March 28, 2023, Spartan Delta Corp. (“Spartan” or the “Company”) (TSX:SDE) is pleased to announce that it has entered into a definitive purchase and sale agreement (the “Agreement”) with Crescent Point Energy Corp. (“Crescent Point”) which provides for the sale of the Company’s Gold Creek and Karr Montney assets (the “Assets”) for cash consideration of $1.7 billion, subject to customary adjustments as provided for in the Agreement (the “Asset Sale”).
Spartan will transfer 4,000 BOE/d(1) of production in the Pouce Coupe and Simonette areas of north-west Alberta, 500 BOE/d(2) of legacy north-east British Columbia production and 55,769 net undeveloped acres in the Flatrock area of north-east British Columbia (the “Logan Assets”) to “Logan Energy Corp.” (“Logan”), a newly-formed subsidiary of Spartan, which will be led by Richard (Rick) McHardy, as President and Chief Executive Officer, Brendan Paton, as Chief Operating Officer, and certain other members of Spartan’s existing executive team (the “Spin-Out”). The Board of Directors of Logan will include certain members of Spartan's existing Board of Directors (the “Spartan Board”). It is anticipated that one or more additional independent board members will be announced in conjunction with the closing.
Spartan will retain and continue to develop its prolific liquids-rich, sustainable production Deep Basin assets, with a focus on returning Free Funds Flow to Spartan Shareholders. The Company will continue to be led by Fotis Kalantzis, as President and Chief Executive Officer, and certain members of the executive team of Spartan. The composition of the Spartan Board will remain unchanged. Spartan intends to return a portion of its Free Funds Flow to Spartan Shareholders through periodic special dividends, while maintaining a strong financial position targeting a leverage ratio of approximately 0.5x debt to cash flow.
“I am pleased to announce the successful conclusion of our strategic repositioning process with our core Montney development asset sale, the creation of a new growth-focused Montney junior company and the retention of our sustainable Free Funds Flow and dividend generating assets in the Deep Basin. We believe this outcome demonstrates the tremendous success and value creation this team has created since our initial recapitalization transaction in December 2019 and the total issuance of $537 million of equity at an average cost of $3.16 per share. I would like to thank our shareholders, our talented employees, our Board, our stakeholders, and other supporters who helped cultivate this successful outcome,” commented Fotis Kalantzis, President & CEO of Spartan.
Spartan will distribute the proceeds of the Asset Sale, the Logan Shares and the Transaction Warrants (each as defined below) as a return of capital and special dividend to its eligible shareholders (“Spartan Shareholders”).
Spartan Shareholders will receive:
• $9.50 (the “Sale Dividend”) per common share of Spartan (each, a “Spartan Share”) (a); • 1.0 common share of Logan (each, a “Logan Share”) per Spartan Share. The Company has applied to list the Logan Shares on the facilities of the TSX Venture Exchange (the “TSXV”); and
• 1.0 Logan Share purchase warrant (each, a “Transaction Warrant”) per Spartan Share. Each Transaction Warrant is non-transferrable and will entitle the holder to acquire one Logan Share at an exercise price equal to Logan’s defined net asset value of $0.35 per Logan Share at any time on or before the close of business on July 17, 2023 (the “Distribution” and, collectively with the Asset Sale and the Spin-Out, the “Transaction”).
In addition, Spartan intends to pay an additional special dividend of $0.10 per Spartan Share to shareholders of record on June 30, 2023, payable on July 17, 2023.
Eligible Spartan Shareholders will receive the Sale Dividend, the Logan Shares and the Transaction Warrants partly as a return of capital and special dividend. See “Meeting and Distribution Details” for guidance and instructions with respect to eligibility to receive the Distribution. Further details regarding the Distribution will be included in an information circular (the “Circular”) to be filed on SEDAR in connection with an upcoming annual general and special meeting of Spartan Shareholders to be held on May 16, 2023 (the “Meeting”).
ABOUT SPARTAN DELTA CORP.
Spartan is committed to creating value for its shareholders, focused on sustainability both in operations and financial performance. The Company’s ESG-focused culture is centered on generating Free Funds Flow through responsible oil and gas exploration and development. The Company has established a portfolio of high-quality production and development opportunities in the Deep Basin. Following completion of the Transaction, Spartan will continue to focus on the execution of the Company’s organic drilling program in the Deep Basin, delivering operational synergies in a respectful and responsible manner to the environment and communities it operates in. The Company is well positioned to continue pursuing immediate production optimization, future growth with organic drilling, opportunistic acquisitions and the delivery of Free Funds Flow and periodic special dividends to shareholders.
Spartan’s corporate presentation as of March 28, 2023 can be accessed on the Company’s website at www.spartandeltacorp.com.
This press release is not an offer of the securities for sale in the United States. The securities offered have not been, and will not be, registered under the U.S. Securities Act or any U.S. state securities laws and may not be offered or sold in the United States absent registration or an available exemption from the registration requirement of the U.S. Securities Act and applicable U.S. state securities laws. 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 these securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful.
