DALXF - Spartan Delta: Doubling Down On The Liquids Rich Duvernay For Substantial Gains

2024-05-16 08:08:16 ET

Summary

• Spartan Delta is a micro-cap oil producer in Alberta, Canada, with a focus on the oil window of the Duvernay Fairway.
• The company has successfully executed on acquiring and developing unproved assets, resulting in high returns, often exceeding 100% annual returns.
• Despite challenging natural gas prices, Spartan Delta remained profitable in Q1 and has potential for significant returns as it begins developing its Duvernay assets.
• The company will use its Deep Basin assets to generate FCF to fund development of this new opportunity.

Thesis

Spartan Delta ( DALXF ) ( SDE:CA ) is a micro-cap oil producer located in Alberta Canada. I previously covered the company in December with a STRONG BUY rating on the basis that its new acreage in the Duvernay Fairway would significantly increase the company’s profit margin.

The company has since doubled down on the Duvernay by increasing its holding from 130,000 net acres to 240,000 net acres. I am now convinced that the oil window of the Duvernay will be next target for the company to continue its buy, develop, and sell strategy in the fragmented Canadian oil sector. The company has partnered up with fellow producer Journey to accelerate the pace of development in the Duvernay....

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