Spartan Delta Corp. Announces Three Strategic Acquisitions and $80.0 Million Financing

Spartan Delta Corp. Announces Three Strategic Acquisitions and $80

CALGARY, Alberta, Feb. 16, 2021 (GLOBE NEWSWIRE) — Spartan Delta Corp. (“Spartan” or the “Company“) (TSXV:SDE) is pleased to announce three strategic acquisitions, executing on its stated acquisitive growth strategy within western Canada. Total consideration for the three acquisitions (the “Acquisitions“) is approximately $147.9 million, subject to certain closing adjustments. The Acquisitions include the corporate acquisition of Inception Exploration Ltd. (“Inception“), a Montney focused arm’s length private company with operations in the Gold Creek area of north west Alberta (the “Inception Assets“), and the purchase of assets located primarily in the Simonette area of northwest Alberta (the “Simonette Assets“) and Willesden Green area of Alberta (the “Willesden Green Assets” and, collectively with the Inception Assets and the Simonette Assets, the “Acquired Assets“).
Spartan is also pleased to announce a $50.0 million non-brokered private placement and a $30.0 million bought deal equity financing led by National Bank Financial Inc. for total gross proceeds of $80.0 million (together, the “Financings“). All Spartan cornerstone shareholders have committed to participate in the non-brokered private placement.“The Acquisitions add a new core area in the Alberta Montney and complement Spartan’s existing core area in the Cardium and Spirit River in west-central Alberta. The Financings further bolster Spartan’s strong balance sheet and enable further pursuit of our consolidation strategy,” said Fotis Kalantzis, President and Chief Executive Officer of Spartan.Combined Acquisition Highlights
Builds on Spartan’s material position in three of Canada’s most prolific plays, the Montney, Cardium and Spirit River formationsCurrent production of approximately 9,700 boe/d(1)235,393 net acres of land predominantly at Gold Creek, Simonette and Willesden GreenStrategic processing facilities and infrastructure with limited additional capital required to increase production volumes, including:100% WI in a 10,000 bbl/d operated central oil battery in Gold Creek100% WI in a 40 MMcf/d operated natural gas processing facility in Gold Creek50% WI in a 120 MMcf/d natural gas processing facility in SimonetteWater disposal facilitiesAn extensive network of field gathering infrastructure and roads
414 net identified drilling locations (343 net Montney locations)Spartan plans to apply principles consistent with its current operations to improve efficiencies, reduce operating costs and enhance margins within the Acquired AssetsSummary of the AcquisitionsInception AcquisitionOil-weighted Montney focused operations in the Gold Creek area of north west AlbertaAdds a second core development and consolidation fairway in addition to Spartan’s existing west central Alberta core areaIncreases oil-weighted production and drilling inventory, providing further commodity diversification
Spartan has entered into a definitive agreement with Inception to acquire all issued and outstanding common shares of Inception (the “Inception Shares“) in consideration for the issuance of 23,734,384 common shares of Spartan (“Common Shares“) to Inception shareholders at a deemed issuance price of approximately $3.83 per Common Share calculated using the volume weighted average trading price of the Common Shares for the 20 trading days immediately preceding this press release (the “Inception Acquisition“).   In addition, Spartan will issue to one of Inception’s existing debtholders a $50.0 million unsecured non-interest-bearing convertible promissory note (the “Spartan Note“), maturing five years from the closing of the Inception Acquisition, and will be convertible in whole or in part beginning on the day that is two years following the closing of the Inception Acquisition, at Spartan’s election, for such number of Common Shares calculated based on the greater of: (i) the volume weighted average trading price of the Common Shares for the 10 trading days immediately preceding the delivery by Spartan of a notice of conversion to the holder of the Spartan Note; and (ii) $7.67, being two times the deemed issuance price of the Common Shares under the Inception Acquisition.   Upon all of the conditions of the Inception Acquisition having been satisfied or waived, Spartan will take up and pay for the Inception Shares deposited under the Inception Acquisition in accordance with the terms of the definitive agreement in respect thereof.Concurrent with the execution of the definitive agreement, holders of more than 90% of the issued and outstanding Inception Shares have executed irrevocable acceptances and have agreed to tender their Inception Shares under the Inception Acquisition. The definitive agreement provides for, among other things, a non-solicitation covenant on the part of Inception.   Upon completion of the take up by Spartan of the Inception Shares tendered pursuant to the Inception Acquisition, Spartan expects to acquire the Inception Shares not tendered by way of compulsory acquisition pursuant to Section 195 of the Business Corporations Act (Alberta). Closing of the Inception Acquisition is expected to occur on or about March 18, 2021, subject to usual closing conditions and regulatory approvals, including the approval of the TSX Venture Exchange (the “TSXV“), the approval of the shareholders of Spartan required as a result of the creation of a new “Control Person” as defined under the policies of the TSXV (which approval shall be obtained by a written consent executed by the holders of at least 50.1% of the issued and outstanding Common Shares) and the approval of the Commissioner of Competition pursuant to the Competition Act (Canada).“Spartan’s ESG-focused culture and clear consolidation strategy make them the perfect partner for Inception,” said Steve Lowden, chairman of Inception. “We look forward to working with Spartan’s management as we take advantage of all the opportunities these transactions represent.”Simonette & Willesden Green Asset Acquisitions
Spartan has entered into an asset purchase agreement to acquire the Simonette Assets for approximately $22.9 million, comprised of cash in the amount of $17.2 million and the issuance of 1,493,180 Common Shares, including and subject to certain working capital and other customary adjustments (the “Simonette Acquisition“). The Simonette Acquisition has an effective date of January 1, 2021, and closing is expected to occur on or about March 18, 2021, subject to usual closing conditions and regulatory approvals, including the approval of the TSXV and the Commissioner of Competition pursuant to the Competition Act (Canada).Spartan has also entered into an asset purchase agreement to acquire the Willesden Green Assets for approximately $6.025 million, including and subject to certain working capital and other customary adjustments (the “Willesden Green Acquisition“). The Willesden Green Assets are contiguous with Spartan’s existing operating assets in west central Alberta.   The Willesden Green Acquisition has an effective date of November 1, 2020, and closing is expected to occur on or about March 1, 2021, subject to customary closing conditions.Revised and Preliminary Corporate Guidance for 2021
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