Spartan Delta (TSE: SDE) posted strong fourth-quarter 2021 results. The Canadian oil and gas exploration and production company benefited from higher benchmark crude oil and natural gas prices.
Sales & Earnings
Spartan posted a record average production of 72,428 boe per day (38% liquids) in the quarter ended December 31, 2021.
Average calendar year production of 47,674 boe per day in 2021 reflects Spartan’s growth of 26,010 boe per day (31% liquids) in Q4 2020. Compared to Q3 2021, the increase of 56% of average production is due to a full quarter of operations following the acquisition of Velvet Energy on August 31, 2021, as well as strong results from a capital-intensive fourth quarter, as Spartan focused on executing its Montney and Deep Basin drill programs.
Spartan’s revenue grew more than 500% from C$96 million in 2020 to C$608 million in 2021, driven by C$296 million in oil and gas sales during the fourth quarter.
Net income rose by 939% in Q4 2021 to C$128.46 million year-over-year. Profit per share was C$0.84, four times higher than the prior-year EPS.
The company said that Spartan’s Q4 and year-end results show efficient and highly cost-effective organic development and expansion of its operations and opportunities with nearly C$1 billion in targeted acquisitions.
Outlook
In 2022, global crude oil prices have reached the highest levels since 2014 due to tight supply and a resurgence in demand, accentuated by escalating military tensions in Eastern Europe in the wake of the recent invasion of Ukraine by Russia.
Spartan said it ended the year well positioned to take advantage of the current market environment and strong crude oil and natural gas prices.
The company’s guidance for 2022 average production of between 68,500 and 72,500 boe per day (40% oil and NGLs) and capital expenditures of approximately $330 million is maintained.
Wall Street’s Take
On March 8, Scotiabank analyst Cameron Bean kept a Buy rating on SDE and raised its price target to C$17 (from C$14). This implies 87.9% upside potential.
The rest of the Street is bullish on SDE with a Strong Buy consensus rating based on five Buys one Hold. The average Spartan Delta price target of C$12.67 implies 39.7% upside potential to current levels.
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