Calgary – Spartan Energy Corp. plans to continue to deliver per share growth in 2015 organically with a capital expenditure budget of $105 million.
The 2015 budget is expected to generate cash flow of $102 million assuming a West Texas Intermediate oil price of US$65 per barrel in 2015.
“In order to preserve our balance sheet flexibility in a low commodity price environment, our 2015 budget primarily targets high rate of return, low risk
opportunities,” said the company in a Jan. 6 news release.
“Spartan will remain disciplined and flexible with our 2015 capital budget as we monitor commodity prices and results throughout the year.”
The company estimates that a US$5 change to commodity prices will affect their cash flow by approximately $14 million or 14 per cent.
“With our extensive inventory of drilling locations in southeast Saskatchewan, we are well positioned to revise our capital plan in the second half of the year should circumstances warrant,” added the company.
Drilling and completions activity makes up approximately $88 million of the 2015 budget, with the remaining $17 million allocated to facilities, well-site tie-ins, maintenance capital, capitalized general and administrative expense and land and seismic.
The drilling program will be primarily focused on high rate of return, low risk open-hole Mississippian wells in southeast Saskatchewan, with 68.3 net openhole wells currently budgeted.
“These wells are highly economic at a variety of commodity prices, with our internal type curve well generating an initial 30 day production rate (IP30) of 93 barrels per day and delivering a rate of return of approximately 100 per cent at an oil price of US$65 WTI,” said Spartan.
“Open-hole wells drilled on our asset base in 2014 are currently exceeding this type curve, generating average IP30 rates in excess of 120 barrels of oil equivalent per day.”
Spartan has identified over 500 net open-hole drilling locations across its southeast Saskatchewan asset base. In addition to the open-hole drilling program, the company intends to drill 4.9 net frac Midale wells on its Pinto lands in southeast Saskatchewan.
Spartan drilled four (3.7 net) wells at Pinto in 2014, with early results indicating that the wells are outperforming their internal type curve of 120 bpd IP30.
They also plan to drill two (1.9 net) vertical Detrital wells on their Alexander property in central Alberta in 2015.
Remarkably the company grew production from 625 boepd when it commenced operations in December 2013 to an exit rate in 2014 of over 8,700 boepd.
Their December average production was approximately 9,300 boepd, based on field estimates.
“Our production growth has been achieved through an active acquisition program early in 2014, which established our extensive southeast Saskatchewan
focused asset base, followed by the successful execution of our drilling program in the second half of the year,” said the company.
“We also focused on maintaining a strong balance sheet in 2014, with estimated year-end net debt of approximately $92 million, leaving approximately $158 million of available room on our $250 million credit facility.”
