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Highlights

  • In Q1 2024, SDE reported a higher gross margin of 72.2% compared to the industry median of 58%
  • Due to reduced volumes and softening commodity prices, the company’s oil and gas sales declined to CAD 84.1mn compared to CAD 316.2mn in pcp
  • SDE aims for an average production in the range of 39,500 - 41,500boe per day for FY24

Spartan Delta Corp. (TSX: SDE), is an oil and gas exploration and production company. Formerly known as Return Energy Inc., Spartan has established a portfolio of premium production and development opportunities in the Alberta Deep Basin. It has a market capitalization of CAD 727.44mn.

In the first quarter of 2024, SDE reported a higher gross margin of 72.2% compared to the industry median of 58%. Similarly, it had a higher net margin of 16.2% versus 11.8% of the industry median. However, the company’s oil and gas sales during the period declined to CAD 84.1mn compared to CAD 316.2mn in the prior corresponding period. The decline in sales was majorly due to reduced volumes and softening commodity prices.

The board of SDE has agreed upon an initial capital budget totaling CAD 150mn for 2024 for drilling and completing 19.2 net (21 gross) wells. This yields a yearly production of 39,500 barrels of oil equivalent per day (boe/day), representing a 7% increment in corporate production compared to the guidance for the second half of 2023.

Recent business updates

As per the company’s recent update on deep basin drilling activity, SDE has drilled 7 net wells, completed 6 net wells, and has brought 5.2 net wells into production in the deep basin. Further, to advance its stated growth strategy, the company acquired Willesden Green North in West Shale Basin Duvernay.

Company outlook

For the financial year 2024, SDE is aiming for an average production in the range of 39,500 - 41,500 boe/day. Further, the company’s management expects to clock the adjusted funds flow of CAD 176mn and free funds flow of CAD 26mn.

Top 10 shareholders

Top 10 shareholders of SDE together hold ~39.10% of the total stake in the firm. GMT Capital Corp. and Kalatzis (Fotis) are the biggest shareholders in the company, holding ~­­­22.32% and ~4.49%, respectively.

Stock performance

The stock price of SDE has witnessed an uptick of ~2.68% and ~0.47% over the last 1 week and 1 month, respectively. The stock’s 52-week low and 52-week high stand at CAD 2.63 and CAD 15.77, respectively. Currently, it is trading below the average of its 52-week high-low.  

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is May 21, 2024. The reference data in this report has been partly sourced from EODHD/Others.