Spartan Delta Corp · TSX:SDE
Spartan Delta — Merger or Acquisition (June 2020)
35 slides from Spartan Delta's merger presentation, Jun 4, 2020
Slide 1: Investor Presentation: Transformational Acquisition
INVESTOR PRESENTATION TRANSFORMATIONAL ACQUISITION Return Energy Inc. (RTN: TSXV) through its wholly-owned subsidiary, Winslow Resources Inc. has acquired substantially all the assets of Bellatrix Exploration Ltd. on June 1, 2020. Concurrently, Return Energy Inc. has been renamed Spartan Delta Corp.
Slide 2: Spartan Delta Corporate Strategy
SPARTAN DELTA CORPORATE STRATEGY Building a Differentiated Energy Company for Global Investors Spartan intends to acquire a diversified portfolio of quality assets that can be restructured, optimized and rebranded, financially or operationally to yield lower payout ratios and generate material free
Slide 3: Pro Forma Company
PRO FORMA COMPANY Spartan Delta Corp. Capitalization (estimated as at June 1, 2020 ) prior to 100:1 cons. post cons. Spartan Delta Corp. TSX-V RTN SDE Basic Shares Outstanding MM 5,811 58.1 Fully Diluted Shares Outstanding MM 7,768 77.7 (1) Peace River Arch Share Price $/sh $0.03 $3.00 • Charlie Lak
Slide 4: Deal Summary
DEAL SUMMARY Acquisition of Substantially all Assets of Bellatrix Exploration Ltd. (“BXE”) from CCAA Asset Summary ▪ ~25,000 boe/d (30% liquids) of Spirit River and Cardium oil and gas production. Drayton ▪ Decline rate of 19%; low maintenance capital required. (1) Valley Pembina ▪ Proved reserves o
Slide 5: Transaction Metrics
TRANSACTION METRICS 2.0x NOI Acquisition Multiple on Strip Pricing Transaction Summary Cash Consideration $87.6 million Liabilities Assumed (est.) $21.2 million Total Net Consideration ("TV") $108.8 million Effective Date June 1, 2020 (1) Production Oil & Condensate 7% 1,758 bbl/d (2) NGLs 23% 5,796
Slide 6: Acquisition Reserves & Inventory
ACQUISITION RESERVES & INVENTORY Identified and Verified Greater than 10 years of Economic Drilling Inventory Reserves Summary (1) Reserve Volumes Reserve Value (BTax) ▪ Bellatrix reserves evaluated by InSite Petroleum Gas NGLs Oil Total Insite Dec 31, 2019 Consultants Ltd. (“InSite”) with the Dec 3
Slide 7: Spirit River Geology
SPIRIT RIVER GEOLOGY Favorable Geologic Conditions with High Certainty and Robust Inventory Notikewin Falher A Falher B • Thick channel sands (>25m) • Stacked channels up to 40m thick • Stacked channels up to 50m thick • 6-18% porosity; 1 – 3mD permeability • 6-18% porosity; 1 – 3mD permeability • 6
Slide 8: Falher B Type Curve & Economics
FALHER B TYPE CURVE & ECONOMICS Crown Land Summary: ▪ Falher B Spirit River Liquids-Rich Gas. ▪ Economics shown for 1.0 mile wells based on drilling to date. Optimization opportunities to drill 2.0 mile location. ▪ Frac optimization opportunities exist and will be further evaluated. ▪ Main developme
Slide 9: Notikewin Type Curve & Economics
NOTIKEWIN TYPE CURVE & ECONOMICS Crown Land Summary: ▪ Notikewin Spirit River Liquids-Rich Gas. ▪ Economics shown for 1.0 mile wells based on drilling to date. Optimization opportunities to drill 2.0 mile location. ▪ Frac optimization opportunities exist and will be further evaluated. ▪ Opportunitie
Slide 10: Indigenous Partnership – O'Chiese First Nation
INDIGENOUS PARTNERSHIP – O’CHIESE FIRST NATION First Nation Joint Venture – Partners in Development and Day to Day Operations ▪ Spartan is pleased to begin what it hopes to be a long and prosperous relationship with the O'Chiese First Nation based on trust and mutual respect. ▪ Spartan is committed
Slide 11: Infrastructure & Marketing
INFRASTRUCTURE & MARKETING Operated and Modern Infrastructure Footprint with Capacity to Grow Volumes Infrastructure in Central Alberta Marketing & Hedging ▪ Working interest in three area gas plants (Alder Flats Plant is operated ▪ Spartan is uniquely positioned with 100% exposure to AECO and a dee
Slide 12: Cardium Consolidation Opportunities
CARDIUM CONSOLIDATION OPPORTUNITIES Low Risk, Repeatable, and Economic Drilling Inventory ▪ Spartan now holds a core operating foothold in close proximity to future oil weighted targets which yields incremental G&A and operational synergies to follow-on deals. ▪ The Cardium is one of the largest oil
Slide 13: Peace River Arch Assets
PEACE RIVER ARCH ASSETS Consolidation Opportunities in the Charlie Lake Oil Play Charlie Lake Light Oil Play Acreage Position ▪ Located in prolific Peace River Arch light oil fairway ▪ The Charlie Lake is a semi-conventional light oil play delivering top-tier well economics (at US$50/bbl WTI or high
Slide 14: Value Proposition
VALUE PROPOSITION Compelling Canadian Energy Equity: Free Cash Flow on Strip, Accretive Valuation and a Strong Balance Sheet (1) (2) ▪ Spartan provides a best in class value proposition for energy equity, in addition the macro opportunity to enter at the bottom of the cycle. ▪ Spartan is positioned
Slide 15: Summary
SUMMARY Platform for Acquisitive Growth with Assets in Two Top-Tier Play Fairways ▪ Experienced management team that has repeatedly created shareholder value across all variations of the commodity cycle. ▪ Sustainable, low decline production base (19%) provides Free Cash Flow at current strip prices
Slide 16: Appendix A: Supplemental Information
Appendix A: Supplemental Information June 4, 2020 16
Slide 17: Management Team & Board of Directors
MANAGEMENT TEAM & BOARD OF DIRECTORS MANAGEMENT TEAM Richard McHardy ➢ Former President, CEO and co-founder of Spartan Energy, Spartan Oil and Spartan Exploration Executive Chairman & Director Fotis Kalantzis ➢ Former SVP and co-founder of Spartan Energy, Spartan Oil and Spartan Exploration Presiden
Slide 18: Historical Performance of Acquired Assets
HISTORICAL PERFORMANCE OF ACQUIRED ASSETS Assets Have Significant Leverage to Gas Price Recovery Bellatrix's Production Volumes Remained Robust Despite a Cyclical Low in Commodity Prices (1) Daily Production (boe/d) Net Operating Income (C$mm) AECO (C$/mcf) $4.27 41,441 $3.78 $3.78 38,065 36,872 $3.
Slide 19: Concentrated Multi-Zone Land Base
CONCENTRATED MULTI-ZONE LAND BASE Key Asset Attributes of the Acquisition ▪ Stacked Liquids-Rich Gas and Light Oil Opportunities ▪ Over 130,000 acres (>200 sections) within the Alberta Deep Basin ▪ Multiple stacked hydrocarbon saturated reservoirs in a concentrated land base SWS ▪ Main target zones
Slide 20: Cardium
CARDIUM Low Risk, Repeatable, and Economic Drilling Inventory ▪ Over 85,000 acres (132 sections) of Cardium rights (~70% WI). ▪ Large resource in place with oil and liquids-rich gas targets: Estimated gross recoverable resource of 507 Bcf with 19 MMboe oil and 45 MMboe of NGLs. Wilson Creek ▪ Variab
Slide 21: Cardium Oil Type Curve & Economics
CARDIUM OIL TYPE CURVE & ECONOMICS Crown Land Summary: ▪ Oil prone Cardium present in Brazeau and Baptiste development areas. ▪ Historical development on Bellatrix lands did not utilize extended reach horizontals with most recent completion techniques. ▪ Executing 2.0mi horizontals with modern compl
Slide 22: Appendix B: Spartan Track Record
Appendix B: Spartan Track Record June 4, 2020 22
Slide 23: Spartan Energy – Spartan Oil – Spartan Exploration
SPARTAN ENERGY – SPARTAN OIL – SPARTAN EXPLORATION Western Canada’s Best-in-Class Performer: Proven Low-Cost Operator ▪ From 2010 through 2018, Spartan assembled and developed multiple high-quality assets throughout Central & Southern Alberta and Southeast Saskatchewan ▪ Through infill horizontal de
Slide 24: The Spartan Domestic Advantage
THE SPARTAN DOMESTIC ADVANTAGE Domestic Operational Track Record From 2014 to its sale to Vermilion Energy, Spartan Energy Management’s ability to acquire and efficiently integrate assets established itself as the lowest cost operator in the Southeast has been proven through past transaction activit
Slide 25: Spartan Energy
SPARTAN ENERGY 263% Total Return and 33% CAGR | December 2013 – May 2018 Overview Relative Performance (Indexed to 100) 300 • Spartan Energy completed the recapitalization of Alexander Energy Spartan in December 2013 and shortly after acquired Renegade Petroleum TSX Energy Post-recapitalization, in
Slide 26: Historical EV/DACF Multiple Comparison
HISTORICAL EV/DACF MULTIPLE COMPARISON Spartan Energy Corp. vs Premium Light Oil Peers (1) 16.0x Spartan Energy Corp. Light Oil Peer Avg. (2) 14.0x The Spartan management team has historically traded at, or above, the premium light oil company average multiple (1). 12.0x Fwd EV/NTM DACF Multiple (x)
Slide 27: Spartan Oil
SPARTAN OIL 268% Total Return and 128% CAGR | June 2011 – January 2013 Overview Relative Performance (Indexed to 100) 250 • Formed through the spin-out of certain Cardium assets and SE Spartan As a public company, Spartan Saskatchewan assets from Spartan Exploration TSX Energy outperformed the TSX E
Slide 28: Spartan Exploration
SPARTAN EXPLORATION 573% Total Return and 80% CAGR | January 2010 – May 2011 Overview Relative Performance (Indexed to 100) 250 • Spartan Exploration was formed in Q1-2008 with a view of Spartan targeting tight oil resources plays in western Canada TSX Energy As a public company, Spartan outperforme
Slide 29: Disclaimer
DISCLAIMER Forward Looking Statements. Certain information included in this presentation constitutes of estimates and projections relating to production, costs and expenses and health, safety and forward-looking information under applicable securities legislation. Forward looking information environ
Slide 30: Disclaimer Cont'd
DISCLAIMER CONT’D Oil and Gas Advisories all unbooked drilling locations and if drilled, there is no certainty that such locations will result in additional oil and gas reserves, resources or production. The drilling locations on which we BOE Disclosure. The term barrels of oil equivalent (“BOE”) ma
Slide 31: Disclaimer Cont'd
DISCLAIMER CONT’D Rights of Action. In certain circumstances, purchasers resident in certain provinces of Canada, are hereto contains a misrepresentation, Spartan hereby grants to such purchasers contractual rights provided with a remedy for rescission or damages, or both, in addition to any other r
Slide 32: Disclaimer Cont'd & Key Performance Indicators
DISCLAIMER CONT’D & KEY PERFORMANCE INDICATORS Non-IFRS Financial Measures and Other Key Performance Indicators Other Key Performance Indicators This Presentation contains certain financial measures, as described below, which do not have standardized meanings prescribed by IFRS. In addition, this Pr
Slide 33: Price Deck Details
PRICE DECK DETAILS Price Scenario Strip (2020-04-14) Strip (2020-05-26) Low Mid "Back to Normal" 12mo fwrd ave 12mo fwrd ave Flat Flat Flat WTI US$/bbl $35.00 $36.33 $35.00 $47.50 $55.00 Edm. Condensate C$/bbl $34.54 $45.08 $44.48 $58.73 $66.00 FX US$/C$ 1.39 1.38 1.39 1.35 1.32 AECO Gas C$/GJ $2.13
Slide 34: Abbreviations
ABBREVIATIONS AECO Alberta Energy Company “C” Meter Station of the NOVA Pipeline System ARO Asset Retirement Obligations b Basic shares outstanding bbl; bbl/d barrel; barrels per day bcf; bcf/d Billion cubic feet of natural gas; billion cubic feet per day of natural gas boe; boe/d Barrels of oil equ
Slide 35: Contact
Info@SpartanDeltaCorp.com www.SpartanDeltaCorp.com