Thank you carswell for posting this on the $PEAK board...


Energy Summary - 4th

Energy Summary for June 4, 2020

2020-06-04 20:24 ET - Market Summary

by Stockwatch Business Reporter

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Over in Alberta, after a bit of a stumble out of the gate, Rick McHardy and Dr. Fotis Kalantzis's Spartan Delta Corp. (SDE) began trading today and lost 16 cents to $3.34 on 104,200 shares. The company was previously known as Return Energy and traded under the symbol RTN. Late last year, Mr. McHardy and his people, who together are behind the Spartan line of promotions -- selling Spartan Exploration to Obsidian Energy Ltd. (OBE: $0.48) in 2011, then Spartan Oil to Bonterra Energy Corp. (BNE: $1.43) in 2013 and then Spartan Energy to Vermilion Energy Inc. (VET: $7.82) in 2018 -- announced their plans to recapitalize Return and (of course) give it a new name, Spartan Delta. The name change did not happen right away; first the newcomers wanted to do a "transformational acquisition." This ended up being the $102-million purchase of the distressed business of Alberta gas producer Bellatrix Exploration (which entered creditor protection last year). Then, because all this activity had sent Return's share count barrelling past 5.8 billion, the group planned a 1-for-100 rollback. The name change and the rollback were both announced effective as of May 29. Then -- oops -- the exchange issued a bulletin saying neither had gone through after all. No reason was provided. The mix-up, whatever it was, was sorted out quickly, and Spartan Delta made its official debut today.

Spartan's initial goal will be to "revitalize [Bellatrix's] high-quality asset base" in west-central Alberta. The assets are currently producing around 25,000 barrels of oil equivalent a day. A new presentation on Spartan's website says the assets are fantastic, with extensive infrastructure and a low decline rate, but they were "fatally burdened" by Bellatrix's own capital and cost structure. Already Spartan claims to have "restructured over $70-million per year out of the cost base." (It provided no details on how it apparently accomplished this feat, but elsewhere in the presentation, it says it has "100-per-cent exposure to AECO pricing [the Alberta gas benchmark] and no economic burden of transport to underperforming markets." Bellatrix, by contrast, sold much of its production through sales contracts. In fact, one point that came up during the creditor-protection-related court proceedings had to do with one such contract with BP, which Bellatrix had sought to disclaim because it reckoned that it would make an extra $14.2-million if it instead sold the gas locally in Alberta. The court sided with BP -- "Is BP to be punished for placing a good bet ... and Bellatrix be rewarded for placing a bad one?" the judge asked rhetorically -- but obviously Spartan has since dumped the contract. The unloading of burdensome delivery commitments, not to mention the steep drop in interest costs as a result of having less debt than Bellatrix, would go a long way toward lowering Spartan's cost base.)

Elsewhere in the presentation, Spartan said its goal is to more than quadruple its production to over 100,000 barrels a day in a mere 24 to 36 months -- not solely from the Bellatrix assets, but also from other acquisition opportunities that may arise. This was not the only lofty ambition set by Spartan: It eventually wants to become a dividend payer, with a targeted yield of 5 per cent. This goal (probably wisely) did not come with a timeline; Spartan merely says it will make this move "when prudent."
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