Spartan Delta : 2024 Annual Financials
SDE.TO
SPARTAN DELTA CORP.
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS
AS AT AND FOR THE YEARS ENDED
DECEMBER 31, 2024 AND 2023
MANAGEMENT'S REPORT
Calgary, Alberta
February 19, 2025
Management's Responsibility for the Financial Statements
Management is responsible for the preparation of the accompanying consolidated financial statements and for the consistency therewith of all other financial and operating data presented in this annual report. The consolidated financial statements have been prepared in accordance with the accounting policies detailed in the notes thereto. In management's opinion, the consolidated financial statements are in accordance with International Financial Reporting Standards ("IFRS Accounting Standards") as issued by the International Accounting Standards Board, have been prepared within acceptable limits of materiality, and have utilized supportable, reasonable estimates.
To ensure the integrity of our financial statements, we carefully select and train qualified personnel. We also ensure our organizational structure provides appropriate delegation of authority and division of responsibilities. Our policies and procedures are communicated throughout the organization including a written ethics and integrity policy that applies to all employees including the Chief Executive Officer and Chief Financial Officer.
The Board of Directors approves the consolidated financial statements. Their financial statement-related responsibilities are fulfilled primarily through the Audit Committee. The Audit Committee is composed entirely of independent directors, and includes at least one director with financial expertise. The Audit Committee meets regularly with management and the external auditors to discuss reporting and control issues and ensures each party is properly discharging its responsibilities. The Audit Committee also considers the independence of the external auditors and reviews their fees.
The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, Chartered Professional Accountants, in accordance with Canadian generally accepted auditing standards on behalf of the shareholders.
Management's Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining an adequate system of internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance that all assets are safeguarded, transactions are appropriately authorized, and to facilitate the preparation of relevant, reliable, and timely information. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management has assessed the effectiveness of the internal control over financial reporting for Spartan Delta Corp. The assessment was based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management concluded that the Company's internal controls over financial reporting are effective as of December 31, 2024.
[signed] "Fotis Kalantzis"
[signed] "Ronald Williams"
President and Chief Executive Officer
Chief Financial Officer
Independent auditor's report
To the Shareholders of Spartan Delta Corp.
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Spartan Delta Corp. and its subsidiaries (together, the Company) as at December 31, 2024 and 2023, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).
What we have audited
The Company's consolidated financial statements comprise:
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2024. These matters were
PricewaterhouseCoopers LLP
Suncor Energy Centre, 111 5th Avenue South West, Suite 3100, Calgary, Alberta, Canada T2P 5L3 T.: +1 403 509 7500, F.: +1 403 781 1825, Fax to mail: [email protected]
"PwC" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
The impact of crude oil and natural gas reserves on net development and production (D&P) assets
Refer to note 2 - Basis of preparation, note 3 - Material accounting policies and note 7 - Property, plant and equipment to the consolidated financial statements.
The Company had $585 million of net D&P assets as at December 31, 2024. Depletion and depreciation expense for the D&P assets was $100 million for the year then ended. D&P assets are depleted using the unit-of-production method based on total production as a percentage of proved plus probable crude oil and natural gas reserves.
The significant assumptions used by management to determine the proved plus probable reserves of the Company's D&P assets include the production forecasts, production costs, forecast benchmark commodity prices, and the timing and amount of future development costs. The proved plus probable crude oil and natural gas reserves are prepared by independent qualified reserves evaluators (management's experts).
We considered this a key audit matter due to the significant judgment by management, including the use of management's experts, when developing the estimates of proved plus probable crude oil and natural gas reserves, and a high degree of auditor judgment, subjectivity and effort in performing procedures relating to the significant assumptions.
How our audit addressed the key audit matter
Our approach to addressing the matter included the following procedures, among others:
Key audit matter
How our audit addressed the key audit matter
Valuation of property, plant and equipment
Our approach to addressing the matter included the
(PP&E) acquired in the Willesden Green North
following procedures, among others:
Acquisition
∙ Tested how management determined the fair
Refer to note 2 - Basis of preparation, note 3 -
value of the acquired PP&E, which included the
Material accounting policies and note 5 -
following:
Acquisitions and dispositions to the consolidated
- The work of management's experts was
financial statements.
used in performing the procedures to
On May 1, 2024, the Company closed an
evaluate the reasonableness of the
acquired oil and gas reserves used to
acquisition of producing crude oil and natural gas
determine the fair value of the PP&E. As a
properties and undeveloped land in the Duvernay
basis for using this work, the competence,
for cash consideration of $48.6 million after final
capabilities and objectivity of
adjustments. This transaction was accounted for
management's experts were evaluated,
under the acquisition method, which requires that
the work performed was understood and
the assets acquired and liabilities assumed be
the appropriateness of the work as audit
measured at their fair values at the acquisition date.
evidence was evaluated. The procedures
The identifiable assets acquired included $29.7
performed also included evaluation of the
million of PP&E. Management determined the fair
methods and assumptions used by
value of these assets based on a fair value less
management's experts, and an evaluation
cost of disposal methodology, calculating the
of their findings.
present value of the expected future after-tax cash
flows derived from the acquired oil and gas
- Evaluated the appropriateness of the
reserves.
method used by management to
determine the fair value of the acquired
The assumptions and estimates used to determine
PP&E.
the acquired oil and gas reserves and the fair value
- Tested the data.
of the acquired PP&E require significant judgment
by management and include production forecasts,
- Evaluated the reasonableness of the
production costs, forecast benchmark commodity
assumptions by:
prices, timing and amounts of future development
o
Considering whether production
costs, and discount rate. The acquired oil and gas
forecasts, timing and amounts of
reserves are prepared by management's experts.
future development costs, and
production costs were consistent with
the actual performance of the
acquired assets, and whether they
were consistent with evidence
obtained in other areas of the audit.
o
Comparing forecast benchmark
commodity prices to reputable third
party industry forecasts.
Key audit matter
How our audit addressed the key audit matter
We considered this a key audit matter due to the significant judgment applied by management, including the use of management's experts, when determining the acquired oil and gas reserves and the fair value of the acquired PP&E, including development of assumptions. This, in turn, led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to the assumptions used by management. The audit effort involved the use of professionals with specialized skill and knowledge in the field of valuation.
Other information
Management is responsible for the other information. The other information comprises the Management's Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Auditor's responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor's report is Alexandra Arnell.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants
Calgary, Alberta
February 19, 2025
SPARTAN DELTA CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(CA$ thousands)
[Note]
December 31, 2024
December 31, 2023
ASSETS
Current assets
Cash and cash equivalents
924
406
Restricted cash
[11]
150,811
150,864
Accounts receivable
[4]
47,150
50,675
Prepaid expenses and deposits
6,427
8,014
Derivative financial instruments
[4]
5,810
11,889
Total current assets
211,122
221,848
Exploration and evaluation assets
[5,6]
82,039
28,807
Property, plant and equipment
[5,7]
585,805
490,465
Right-of-use assets
[8]
23,238
31,646
Derivative financial instruments
[4]
-
6,171
Deferred income tax asset
[12]
30,940
40,587
Total assets
933,144
819,524
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities
[4]
78,996
86,265
Dividends payable
[11]
150,811
150,864
Derivative financial instruments
[4]
143
-
Lease liabilities
[8]
9,721
9,469
Decommissioning obligations
[9]
2,700
3,650
Total current liabilities
242,371
250,248
Derivative financial instruments
[4]
2,722
-
Long-term debt
[10]
120,912
44,476
Lease liabilities
[8]
16,114
25,763
Decommissioning obligations
[9]
79,598
69,320
Total liabilities
461,717
389,807
SHAREHOLDERS' EQUITY
Share capital
[11]
13,528
11,712
Contributed surplus
6,914
1,303
Retained earnings
450,985
416,702
Total shareholders' equity
471,427
429,717
Total liabilities and shareholders' equity
933,144
819,524
Commitments and contingencies
[18]
Subsequent events
[20]
The accompanying notes are an integral part of these Financial Statements.
Approved on behalf of the Board of Directors:
[signed] "Richard McHardy"
[signed] "Donald Archibald"
Richard McHardy, Director
Donald Archibald, Director
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SPARTAN DELTA CORP.
CONSOLIDATED STATEMENTS OF NET INCOME AND COMPREHENSIVE INCOME
Year ended December 31
(CA$ thousands, except per share amounts)
[Note]
2024
2023
Revenue
Oil and gas sales
[13]
301,640
652,769
Royalties
[13]
(40,086)
(69,560)
Oil and gas sales, net of royalties
261,554
583,209
Processing and other
5,620
9,586
267,174
592,795
Gain on derivative financial instruments
[4]
18,798
53,346
Expenses
Operating
82,483
137,440
Transportation
21,524
45,741
General and administrative
18,360
20,179
Share-based compensation
[11]
7,427
29,668
Financing
[14]
5,555
19,040
Exploration and evaluation
[6]
870
21,210
Depletion, depreciation and impairment
[7,8]
108,709
148,667
244,928
421,945
Other income (expenses)
Gain on sale of assets
[5]
152
543,205
Transaction costs
[5]
-
(18,304)
Other income
[15]
2,673
2,778
Foreign exchange gain (loss)
[4]
61
(576)
2,886
527,103
Net income before income taxes
43,930
751,299
Deferred income tax expense
[12]
9,647
88,192
Net income and comprehensive income
34,283
663,107
Net income per share
Basic
[11]
0.20
3.84
Diluted
[11]
0.20
3.82
The accompanying notes are an integral part of these Financial Statements.
Page 4 of 42
Disclaimer
Spartan Delta Corp. published this content on February 20, 2025, and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on February 20, 2025 at 02:04:05.605.