SPARTAN DELTA CORP

Descripción

Description Spartan Delta is a highly attractive E&P company with a three year 113% return using strip pricing and a 10% FCF/EV exit multiple, equivalent to a 29% IRR over that time period. My thesis rests on 3 points. - Management is phenomenal, having already made cash distributions to shareholders worth multiples of what they have raised over the last 5 years, using their acquire, develop, and sell approach. - In the past year they have quietly assembled a new oil/condensate land base that 2 other industry players have recently gone all-in on. This will move them from a primarily gas producer to a more balanced liquids weighting of 40% over time, vastly improving netbacks and free cash flow. - While I model everything on forward strip, there is a reasonable case to be made that AECO is grossly mispriced. With Canada’s first LNG facility coming online in the next few months (export capabilities of 11% of western Canads total production), the discount to Henry Hub should narrow back to transportation costs, repricing LT AECO from $3 cad to $4. If this were to occur the upside return is 222% on a 3-year basis . Cap Table and Target Price: History: The Spartan management team…

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