Mr. Fotis Kalantzis reports

SPARTAN DELTA CORP. ANNOUNCES STRATEGIC DUVERNAY ACQUISITION, FIRST QUARTER 2024 RESULTS, AND UPDATED GUIDANCE FOR 2024

Spartan Delta Corp. has released its unaudited financial and operating results for the three months ended March 31, 2024, and has completed a strategic acquisition (the Willesden Green North acquisition) in West Shale basin, Duvernay, advancing on its stated growth strategy. Total consideration for the Willesden Green North acquisition is approximately $53.1-million in cash, subject to certain closing adjustments, effective March 1, 2024. As a result of the Willesden Green North acquisition, the company has updated its guidance for 2024.

Selected financial and operational information is set out herein and should be read in conjunction with Spartan Delta's unaudited consolidated interim financial statements and related management's discussion and analysis for the three months ended March 31, 2024, and 2023, which are filed on SEDAR+ and are available on the company's website. The highlights reported in this press release include certain non-generally accepted accounting principle financial measures and ratios. The reader is cautioned that these measures may not be directly comparable with other issuers.

Willesden Green North acquisition highlights

The Willesden Green North acquisition includes approximately 38,000 net acres (59.5 net sections) of Duvernay rights and approximately 1,600 barrels of oil equivalent per day (70 per cent liquids) of production and associated infrastructure. Additionally, it includes more than 50 internally estimated net Duvernay locations in the oil and condensate-rich fairway. Total consideration for the Willesden Green North acquisition is approximately $53.1-million or 2.8 times estimated second quarter 2024 annualized net operating income ($80 (U.S.) per barrel West Texas Intermediate crude oil and $1.75 per gigajoule Alberta Energy Company natural gas). In 2024, Spartan Delta anticipates drilling and completing a minimum of one horizontal well on the newly acquired acreage.

Spartan Delta continues to execute on building an extensive position in the oil and condensate-rich fairway within the Duvernay shale play, and has identified significant growth opportunities on its acreage. To date, the company has established one of the largest positions in the Duvernay, accumulating approximately 240,000 net acres (375 net sections) of Duvernay rights and acquiring approximately 2,000 boe/d of production (68 per cent liquids). Spartan Delta's delineated Duvernay acreage in the Willesden Green and Pembina core development area supports approximately 300 internally estimated net locations at 400-metre well spacing across approximately 162,000 net acres (253 net sections).

Throughout 2024, Spartan Delta anticipates providing additional details on its Duvernay strategy and operating budget as it continues to execute on Duvernay consolidation and begins drilling on its Duvernay acreage. Spartan Delta believes its Duvernay acreage is poised to offer repeatable and economic results presenting the opportunity to generate significant shareholder returns.

First quarter 2024 highlights:

• Spartan Delta reported production of 38,533 boe/d (32 per cent liquids) during the first quarter of 2024, an increase from 37,664 (31 per cent liquids) in the fourth quarter of 2023:
  • During the quarter, the company experienced a loss of approximately 750 boe/d of production as a result of extreme cold weather impacting the month of January, 2024.
  • Despite the impact, Spartan Delta achieved 2-per-cent growth in production and 6-per-cent growth in liquids production as compared with the fourth quarter of 2023.
• First quarter 2024 oil and gas sales totalled $84.1-million, generating adjusted funds flow of $45.7-million (26 cents per share, diluted).
• The company executed a $45.0-million capital program in the first quarter of 2024, continuing to focus on developing liquids-rich targets in the Deep basin.
  • In the Deep basin, Spartan Delta drilled 7.0 net wells, completed 6.0 net wells and brought 5.2 net wells on production.
• Spartan Delta continued to generate positive free funds flow in the first quarter of 2024, exiting the quarter with net debt of $92.7-million resulting in a 0.5 times net debt to annualized AFF ratio.
• Spartan Delta acquired additional undeveloped acreage in the Duvernay totalling greater than 21,000 net acres for aggregate cash consideration of approximately $17.9-million.
• In the first quarter of 2024, Spartan Delta rebalanced its hedging position, increasing the rest of its 2024 AECO 7A hedge position to approximately 50 per cent of net natural gas production at an average price of $2.77 per gigajoule and hedging approximately 20 per cent of its net oil and condensate production at an average price of $101.06 per barrel.
• As at March 31, 2024, Spartan Delta had $659-million in tax pools, of which $375-million is non-capital losses.

The attached table summarizes the company's financial and operating results for the three months ended March 31, 2024, Dec. 31, 2023, and March 31, 2023. As a result of the Montney divestitures, certain metrics in the reported three months ended financials may not be comparable year over year.

Updated 2024 guidance

Spartan Delta is encouraged by the first quarter results of its Deep basin drilling campaign and is eager to begin drilling in the Duvernay. Due to the continued depressed prices of natural gas and the increase in the price of crude oil, the company believes it is prudent to begin allocating capital to the oil and condensate-rich Duvernay shale play. Spartan Delta has therefore strategically decided to increase capital by $25.0-million to $150.0-million, inclusive of Duvernay activity, thereby enhancing the rate of return of its 2024 capital program. Spartan Delta anticipates deploying $25.0-million to $50.0-million in the Duvernay and $100.0-million to $125.0-million in the Deep basin, resulting in a $150.0-million capital program for 2024. The increase in capital provides Spartan Delta the opportunity to continue selectively drilling in the Deep basin to capture the contango forward curve in natural gas prices, while simultaneously initiating the commercialization of its Duvernay acreage.

In the Duvernay, Spartan Delta intends to drill and complete a minimum of one horizontal well, completing a previously drilled and uncompleted well, and a vertical stratigraphic well in 2024. Additionally, Spartan Delta has the optionality to drill and complete an additional two horizontal wells. Spartan Delta maintains the optionality to reallocate capital from the Deep basin to further accelerate the Duvernay drilling program dependent on surface conditions and commodity prices.

In 2024, Spartan Delta anticipates annualized production of 39,500 to 41,500 boe/d, an increase of 1,000 boe/d from the previous guidance, inclusive of approximately 200 boe/d of annualized production loss associated with cold weather impacts in January. Spartan Delta's 2024 development plan includes the continued development of liquids-weighted drilling targets in the Deep basin supplemented by the commencing of activity in the Duvernay, increasing liquids production by approximately 15 per cent from 11,636 boe/d (31 per cent liquids) in the fourth quarter of 2023 to approximately 13,400 boe/d (33 per cent liquids) in 2024. Additionally, Spartan Delta's high-value oil and condensate production is expected to grow by approximately 35 per cent as compared with the fourth quarter of 2023.

Based on forecast average production of 40,500 boe/d, 33 per cent liquids and commodity price assumptions of $80 (U.S.) per bbl for WTI crude oil and $1.75 per gigajoule for AECO natural gas, Spartan Delta expects to generate approximately $176-million of adjusted funds flow in 2024. Free funds flow is forecasted to be $26-million on a capital expenditure budget of $150-million, exiting 2024 with net debt of $127-million resulting in a 0.7 times net debt to 2024 AFF ratio.

Spartan Delta continues to focus on optimizing its foundational Deep basin asset, participating in the consolidation of the Deep basin, and leveraging the company's strong balance sheet and free funds flow to progress its Duvernay strategy. Spartan Delta believes it is well positioned to continue generating for shareholders a significant return on investment through optimization, consolidation and development.

Management retirement and promotions

Spartan Delta announces the retirement of Thanos Natras, vice-president, exploration, effective June 15, 2024. Mr. Natras has been instrumental in the company's success and value creation since inception, and has been a part of the Spartan Delta franchise for a decade. The board and management wish to express their gratitude for his contributions and wish him well in retirement.

Effectively immediately, Spartan Delta announces:

• Rob Day, manager, geoscience exploration, is promoted to the role of director, exploration. Mr. Day has been with Spartan Delta since June, 2020, leading the development of the Deep basin and leading the geotechnical assessment of the Duvernay. Mr. Day brings more than 20 years of geotechnical experience in the Western Canadian sedimentary basin, including foothills exploration, new venture prospecting, greenfield delineation and brownfield development.
• OJay Platt, director, operations, is promoted to the role of vice-president, production. Mr. Platt has been with Spartan Delta since June, 2020, leading the operations in the Deep basin, as well as managing Spartan Delta's previously divested Montney assets. Mr. Platt brings more than 25 years of operational and production experience.
• Martin Malek, vice-president, engineering and business development, is promoted to the role of chief operating officer. Mr. Malek has been with Spartan Delta since June, 2023, leading the optimization of the Deep basin and co-leading the implementation and execution of the Duvernay strategy. Mr. Malek brings more than 16 years of experience in engineering, operations and business development, both in Canada and the United States.

About Spartan Delta Corp.

Spartan Delta is committed to creating value for its shareholders, focused on sustainability both in operations and financial performance. The company's environmental, social and governance focused culture is centred on generating free funds flow through responsible oil and gas exploration and development. The company has established a portfolio of high-quality production and development opportunities in the Deep basin and the Duvernay. Spartan Delta will continue to focus on the execution of the company's organic drilling program in the Deep basin, delivering operational synergies in a respectful and responsible manner to the environment and communities it operates in. The company is well positioned to continue pursuing growth in the Deep basin, participate in the consolidation of the Deep basin fairway, and continue advancing its Duvernay strategy by leveraging Spartan Delta's balance sheet and free funds flow.

Spartan Delta's corporate presentation as of May 7, 2024, can be viewed on the company's website.

We seek Safe Harbor.