RTN Return Energy Inc

Return Energy Inc. d.b.a. Spartan Delta Corp. (“Spartan” or the “Company”) (RTN: TSXV) is pleased to announce that it has entered into an asset purchase agreement (the “APA”) with Bellatrix Exploration Ltd. (“Bellatrix”) to acquire substantially all of Bellatrix’s assets (the “Assets”) for cash consideration of $87.4 million plus the assumption of certain liabilities estimated to be approximately $14.8 million, for a total purchase price of $102.2 million (the “Acquisition”). The Assets, located in west-central Alberta, include high-quality, multi-zone, oil and gas operated production alongside a large land base and strategic infrastructure footprint. The Acquisition advances Spartan’s strategy to acquire and develop underexploited and undercapitalized assets that provide material upside and sustainable free cash flow under current commodities prices.

The Acquisition will be funded through cash on hand and a committed senior-secured revolving reserves-based lending facility with a syndicate of lenders in the amount of $100.0 million (the “Credit Facility”). Spartan will also complete a confirmed and committed concurrent equity financing for aggregate gross proceeds of $20.0 million (the “Private Placement”). The details of the Credit Facility and the Private Placement are provided below.

Contemporaneous with the closing of the Acquisition, Spartan will complete: (a) a change of the Company’s name to “Spartan Delta Corp.” (the “Name Change”); and (b) a consolidation of the common shares in the capital of the Company (the “Common Shares”) on the basis of one post-consolidation Common Share for every 100 pre-consolidation Common Shares (the “Consolidation”).

The Acquisition

The Acquisition is transformational for Spartan and will create a strong intermediate exploration and development company, focused on opportunities to grow through a targeted consolidation strategy. Pro forma the Acquisition, Spartan will produce over 25,000 boe/d (30% oil and NGLs). The Assets are characterized by a low base decline of approximately 19% with a deep location inventory that can support over 10 years of economic drilling on current strip pricing from multiple horizons with various product mixes across an extensive land base. The Assets represent stacked rights in the heart of the Alberta Deep Basin at Ferrier and Willesden Green, providing meaningful exposure to the Spirit River, Cardium and other Cretaceous target formations. The Assets also include strategic working interest ownership in three gas plants, including one operated deep cut facility, with excess capacity to allow for immediate production optimization.

The Assets are being acquired for cash consideration of $87.4 million and the assumption of $14.8 million of estimated liabilities.

On October 2, 2019, Bellatrix commenced restructuring proceedings under the Companies’ Creditors Arrangement Act (Canada) (the “CCAA”). As a result, the Acquisition is subject to the granting of an “Approval and Vesting Order” by the Court of Queen’s Bench of Alberta (the “CCAA Court”), providing that the Assets will be acquired free and clear of any security interests and any other encumbrances (subject to certain limited permitted encumbrances). Closing of the Acquisition, which is expected to occur on or about May 29, 2020 (the “Closing Date”), is also subject to certain closing conditions that are customary for a transaction of this nature. As the Acquisition constitutes a “Fundamental Acquisition” under Policy 5.3 of the TSX Venture Exchange (the “TSXV”), it is also subject to TSXV approval. The effective date of the Acquisition will be the Closing Date.

National Bank Financial Inc. is acting as Financial Advisor and TD Securities Inc. is acting as Strategic Advisor to Spartan with respect to the Acquisition.

Strategic Rationale and Benefits

The Acquisition strengthens Spartan’s business model and provides an asset base with strategic infrastructure to facilitate further consolidation in west-central Alberta, an area Spartan’s management team has successfully developed, consolidated and monetized over the course of the past two decades. Spartan is confident that its industry-leading cost model will revitalize this high-quality asset base. The Acquisition will also further Spartan’s strategy of developing an asset base that can deliver repeatable, low-risk growth while generating sustainable free cash flow in a variety of commodity price environments.

The highlights of the Acquisition and the anticipated benefits associated with the Assets include, but are not limited to, the following:

Introduction of Spartan’s Low-Cost Model

• Through the CCAA process and transition of the Assets to Spartan’s ownership, Spartan expects to achieve approximately $70.0 million per year of fixed cost reductions and an approximately $320.0 million reduction in total debt previously associated with Bellatrix and the Assets, corresponding with an approximately $30.0 million per year reduction in debt service costs.
• Spartan’s cost structure will drive further efficiencies as the operation of the Assets will be appropriately sized for the current economic climate.
• The CCAA process has eliminated burdensome take or pay offtake and processing contracts, allowing Spartan the flexibility to utilize various tied-in sales outlets which will further optimize revenue generation.

Consolidation Opportunities in West-Central Alberta

• Following the completion of the Acquisition, Spartan will control approximately 130,000 net acres of concentrated land in key development plays of west-central Alberta, including Spirit River, Cardium and Lower Mannville.
• Spartan’s management team is experienced in west-central Alberta, building two successful Cardium focused companies in the fairway, namely Spartan Exploration Ltd. and Spartan Oil Corp.
• Production from the Assets, which is expected to be approximately 25,000 boe/d as of the Closing Date, sets Spartan on a path of growth in an asset fairway that can yield greater than 100,000 boe/d of high-netback production through consolidation and high quality development drilling.
• The Acquisition positions Spartan with a core operating foothold and an extensive infrastructure network near future consolidation opportunities, yielding both incremental G&A and operational synergies for follow-on transactions.
• The Assets’ industry-leading liability management rating of 7.3 reflects Spartan’s corporate commitment to be a leader in environmental stewardship, responsible development and environmental accountability to our stakeholders. The Company intends to continue this leadership by addressing environmental liabilities head-on as part of its future consolidation strategy.

Significantly Increases Production and Funds Flow

• The Assets have a stable, low decline production base of approximately 19%, which will be maintained throughout the year with field optimization and planned development drilling in the fall.
• The Assets deliver sustainable free cash flow at $1.75/GJ AECO and US$35/bbl WTI prices. At the current 12-month forward strip (as at April 14, 2020) of $2.13/GJ AECO and US$35.00/bbl WTI, Spartan estimates the Assets can deliver $14.0 million of free cash flow per year on a run rate basis (see “Reader Advisory – Non-IFRS Measures”, below).

Includes Strategic Infrastructure and Relationships

• The Assets include working interest ownership in three area gas plants, including operatorship of the 10-9 Alder Flats Gas Plant, which is characterized by nameplate capacity of 230 MMcf/d and 96 MMcf/d of available excess capacity.
• The Assets include interests in seven operated compressor stations with working interest capacity of 208 MMcf/d and 550 kilometres of gas gathering lines that are connected to significant third-party area processing with excess capacity.
• Spartan will assume a successful joint venture with the O’Chiese First Nation, which is entering its ninth year; a leading example of how industry and First Nations can work together for the benefit of all stakeholders.
• The Acquisition includes ownership of 1,496 kilometres of 2D and 681 square kilometres of 3D proprietary seismic data.

Significantly Increases Spartan’s Reserve Base and Drilling Inventory

• Based on the independent reserves report in respect of the Assets prepared by InSite Petroleum Consultants Ltd. (“InSite”) for Bellatrix effective December 31, 2019 (see “Reader Advisory – Reserves Disclosure”), the Acquisition adds material reserves as follows:      º 69.8 MMboe of proved developed producing (“PDP”) reserves;     º 185.5 MMboe of total proved reserves; and     º 268.0 MMboe of total proved plus probable (“TPP”) reserves.
• The Assets are characterized by 296 net booked drilling locations from a total inventory of 637 net identified locations (see “Reader Advisory – Drilling Locations”, below) in the Sprit River and Cardium formations, of which Spartan believes there is greater than 10 years of economic drilling at current strip pricing (in excess of 135 locations).

Strengthening Natural Gas Pricing Environment

• North American natural gas forward pricing fundamentals have improved through the global slowdown as a result of a reduction in drilling activity, specifically in North American shale, setting the stage for a material reduction in supply to the North American gas market.
• Natural gas is a key contributor to creating a cleaner and sustainable energy future and will play an increasing role in helping the world meet clean energy targets.

Asset Acquisition Summary

Total Net Consideration (including assumed liabilities)	$102.2 million
Current production(1)	25,000 boe/d (30% oil and NGLs)
Annual decline rate(2)	19%
Land(3)	130,000 net acres
Net horizontal locations(4)	296 booked (340 unbooked)
Forecast 12 month forward operating netback (strip)(5)	$4.87/boe
Run rate net operating income(6)	$44.4 million
Reserves
PDP reserves(7)	69.8 MMboe
Proved reserves(7)	185.6 MMboe
Total proved + probable reserves(7)	268.0 MMboe
TPP RLI(7)(8)	29 years

Acquisition Metrics

Current production(9)	$4,088 per boe/d
PDP Reserves(7)	$1.46 per boe
Total proved reserves(7)	$0.55 per boe
Total proved + probable reserves(7)	$0.38 per boe
Run rate net operating income multiple(6)	2.3x

Notes:

(1)		25,000 boe/d is the expected production on the Closing Date. The oil and NGLs yield of 30% is comprised of 7% oil and condensate and 23% propane, ethane and butane.
(2)		Decline rate based on 2021 versus 2020 PDP reserves. See “Reader Advisory – Reserves Disclosure”, below.
(3)		130,000 net acres in west-central Alberta, forming part of the Assets. Additional non-core acreage not included.
(4)		296 net booked horizontal locations (220.6 proved undeveloped plus 74.9 probable undeveloped), which excludes 11.38 vertical locations and 2.0 Rock Creek horizontal locations. See “Reader Advisory – Drilling Locations” for additional details.
(5)		The estimated operating netback was derived using estimated go-forward royalties and operating costs utilizing April 14, 2020 strip pricing which averages US$35.00/bbl WTI, $34.54/bbl Edmonton Condensate and $2.13/GJ AECO, all for the forecasted 12-month period from the Closing Date to May 31, 2021, and a US dollar /Canadian exchange rate of 1.39. The operating cost and royalty utilized for the operating netback calculation is $9.19/boe and $1.39/boe (or 9% of oil and gas revenue), respectively. See “Reader Advisory – Non-IFRS Measures” for additional details.
(6)		Run rate net operating income is based on expected production of 25,000 boe/d on the Closing Date and an operating netback in respect of the Assets of $4.87/boe. See Note (5), above, and “Reader Advisory – Non-IFRS Measures” for additional details.
(7)		Working interest before royalty reserves. Per boe metrics are calculated by dividing the Total Net Consideration by the reserves. See “Reader Advisory – Reserves Disclosure”.
(8)		The reserve life index (“RLI”) is calculated by dividing TPP reserves as of December 31, 2019 (267.98 MMboe) by estimated production on the Closing Date of 25,000 boe/d. RLIs are not necessarily comparable between different issuers as there may be variation in calculation methodology. Management views RLI as a useful measure of the length of time the reserves would be produced at the estimated rate of production. See “Reader Advisory – Reserves Disclosure”.
(9)		Calculated by dividing the Total Net Consideration by the estimated production on the Closing Date of 25,000 boe/d.

The Credit Facility

Spartan has executed a commitment letter in respect of the Credit Facility. The revolving period of the Credit Facility will end on May 31, 2021, with an additional one-year term out period thereafter if the revolving period is not extended. The borrowing base on the facility will be redetermined bi-annually in the spring and fall of each year. The syndicate is comprised of National Bank of Canada, ATB Financial and Canadian Western Bank (together, the “Lenders”).

The commitments of the Lenders are subject to the execution of mutually acceptable credit documentation giving effect to the terms provided in the commitment letter, and the satisfaction of the other customary conditions to closing, including the satisfaction of all conditions to the completion of the Acquisition.

On the Closing Date, Spartan’s net debt position is estimated to be approximately $65.0 million.

The Private Placement

Spartan is pleased to announce that certain institutional investors have confirmed and committed to purchase, on a non-brokered private placement basis, 1,000,000,000 subscription receipts of the Company (the “Subscription Receipts”) at a price of $0.02 per Subscription Receipt for aggregate gross proceeds of $20.0 million. The completion of the Private Placement is subject to customary closing conditions, including the receipt of all necessary regulatory approvals, including the approval of the TSXV. Closing of the Private Placement is expected to occur on or about May 8, 2020.

The gross proceeds from the sale of Subscription Receipts pursuant to the Private Placement will be held in escrow pending the completion of the Acquisition.  If the Acquisition is completed on or before 5:00 p.m. (Calgary time) on June 30, 2020, the proceeds from the sale of the Subscription Receipts will be released from escrow to Spartan and each Subscription Receipt will be exchanged for one Common Share for no additional consideration and without any action on the part of the holder. If the Acquisition is not completed on or before 5:00 p.m. (Calgary time) on June 30, 2020, then the purchase price for the Subscription Receipts will be returned pro rata to subscribers, together with a pro rata portion of interest earned on the escrowed funds. The net proceeds from the Private Placement will be used to fund the development of the Assets and for general working capital purposes.

National Bank Financial Inc. and TD Securities Inc. are acting as Co-Financial Advisors to Spartan with respect to the Private Placement.

In connection with the closing of the Acquisition, Spartan will amend the terms of the Common Share purchase warrants (the “Warrants”) issued pursuant to the private placement completed on December 19, 2019, such that the Warrants will vest and become exercisable as to one-third upon the 10-day weighted average trading price of the Common Shares (the “Market Price”) equally or exceeding $0.02, an additional one-third upon the Market Price equally or exceeding $0.025 and a final one-third upon the Market Price equalling or exceeding $0.03 (all shown on a pre-Consolidation basis, an increase from $0.01, $0.015 and $0.02, respectively). All other terms of the Warrants will remain unchanged.

Name Change and Consolidation

On March 4, 2020, the shareholders of Spartan approved, at a special meeting of shareholders, the Name Change and the Consolidation. Contemporaneous with the closing of the Acquisition (subject to TSXV acceptance), the Company will effect the Name Change and complete the Consolidation on the basis of one post-Consolidation Common Share for every 100 pre-Consolidation Common Shares.

The issued and outstanding Common Shares will be reduced from 3,610,551,651 Common Shares (including Common Shares issued pursuant to the Private Placement) to approximately 36,105,517 Common Shares on a post-Consolidation basis. No fractional shares will be issued. Any fractional interest in Common Shares that is less than 0.5 resulting from the Consolidation will be rounded down to the nearest whole Common Share and any fractional interest in Common Shares that is 0.5 or greater will be rounded up to the nearest whole Common Share. 

The Company expects that the trading of its Common Shares on the TSXV under the name “Spartan Delta Corp.” and symbol “SDE” will commence on a consolidated basis at the opening of business two or three trading days after the Closing Date.

The Consolidation will not affect the validity of currently outstanding share certificates of the Company. However, once the Consolidation is implemented, registered shareholders will be required to exchange their share certificates for share certificates evidencing the post-Consolidation Common Share amount. Upon completion of the Consolidation, registered shareholders will be sent a letter of transmittal containing instructions on how to surrender share certificates evidencing the pre-Consolidation Common Share amount to Computershare Investor Services Inc. (the “Depositary”). The Depositary will forward to each registered shareholder who has sent the required documents new share certificates evidencing the new post-Consolidation Common Share amount. Until surrendered, each share certificate representing pre-Consolidation Common Shares will be deemed for all purposes to represent the post-Consolidation Common Shares to which the holder is entitled following the Consolidation. Beneficial shareholders holding Common Shares through an intermediary (a securities broker, dealer, bank or financial institution) should be aware that the intermediary may have different procedures for processing the Consolidation than those that will be put in place by the Company for registered shareholders. If shareholders hold their Common Shares through an intermediary and they have questions in this regard, they are encouraged to contact their intermediaries.

For more information on the Consolidation and the Name Change, shareholders are encouraged to refer to the management information circular of the Company dated February 12, 2020, which is available on the Company’s SEDAR profile at www.sedar.com.

About Spartan

Return Energy Inc. d.b.a. Spartan Delta Corp. is a Calgary, Alberta based company engaged in oil and gas exploration and development. The Common Shares are currently listed on the TSXV under the trading symbol “RTN”.

For additional information please contact:

Fotis KalantzisPresident and Chief Executive Officerfkalantzis@SpartanDeltaCorp.com	Richard F. McHardyExecutive Chairmanrmchardy@SpartanDeltaCorp.com
Return Energy Inc. 202, 1201 – 5th Street S.W. Calgary, Alberta  T2R 0Y6

READER ADVISORY

This press release is not an offer of the securities for sale in the United States. The securities offered have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) or any U.S. state securities laws and may not be offered or sold in the United States absent registration or an available exemption from the registration requirement of the U.S. Securities Act and applicable U.S. state securities laws. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful.

BOE Disclosure

The term barrels of oil equivalent (“boe”) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet per barrel (6 Mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in the report are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.

Reserves Disclosure

All reserves information in this press release was prepared by InSite, for Bellatrix, effective December 31, 2019, using InSite’s December 31, 2019 forecast prices and costs in accordance with National Instrument 51-101 – Standards of Disclosure of Oil and Gas Activities (“NI 51-101”) and the Canadian Oil and Gas Evaluation Handbook (the “COGE Handbook”).

All reserve references in this press release are “Company gross reserves”. Company gross reserves are the Company’s total working interest reserves before the deduction of any royalties payable by the Company and before the consideration of the Company’s royalty interests. It should not be assumed that the present worth of estimated future cash flow of net revenue presented herein represents the fair market value of the reserves. There is no assurance that the forecast prices and costs assumptions will be attained and variances could be material. The recovery and reserve estimates of Spartan’s crude oil, NGLs and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and NGLs reserves may be greater than or less than the estimates provided herein.

Drilling Locations

This press release discloses drilling inventory in three categories: (a) proved locations; (b) probable locations; and (c) unbooked/potential locations. Proved locations and probable locations are derived from the reserves evaluation prepared by InSite for Bellatrix in accordance with NI 51-101 and the COGE Handbook and account for drilling locations that have associated proved and/or probable reserves, as applicable. Unbooked locations are internal estimates based on the prospective acreage of the Assets and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review. Unbooked locations do not have attributed reserves or resources. Of the 637 identified net drilling locations identified within the Assets, 220.6 are net proved locations, 74.9 are net probable locations and 340 are net potential unbooked locations. Vertical locations in the Cardium, Edmonton, McLaren, Rock Creek (including 2.0 net Rock Creek horizontal locations) have been removed from the booked well count due to Spartan having uncertainty of their economic viability. Unbooked locations have been identified by management as an estimation of our multi‐year drilling activities based on evaluation of applicable geologic, seismic, engineering, production and reserves information. There is no certainty that the Company will drill all unbooked drilling locations and if drilled, there is no certainty that such locations will result in additional oil and gas reserves, resources or production. The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs, actual drilling results, additional reservoir information that is obtained and other factors. While certain of the unbooked drilling locations being de‐risked by drilling existing wells in relative close proximity to such unbooked drilling locations, other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir, and therefore, there is more uncertainty whether wells will be drilled in such locations. If these wells are drilled, there is more uncertainty that such wells will result in additional oil and gas reserves, resources or production.

Abbreviations

AECO   Alberta Energy Company’s natural gas storage facility located at Suffield, Albertabbl                          barrels of oilboe                         barrels of oil equivalentboe/d                      barrels of oil equivalent per dayGJ                          gigajouleMcf                         thousand cubic feetMMboe                   million barrels of equivalentMMcf                      million cubic feetMMcf/d                   million cubic feet per dayNGL                        natural gas liquidsWTI                         West Texas Intermediate, the reference price paid in U.S. dollars at Cushing, Oklahoma for crude oil of standard grade

Non-IFRS Measures

This press release provides certain financial measures that do not have a standardized meaning prescribed by IFRS. These non-IFRS financial measures may not be comparable to similar measures presented by other issuers. Operating netback, run rate net operating income, net debt and free cash flow are not recognized measures under IFRS. Management believes that in addition to net income (loss), run rate net operating income, operating netback, net debt and free cash flow are useful supplemental measures that demonstrates the Company’s ability to generate the cash necessary to repay debt or fund future capital investment. Spartan considers operating netback as an important measure to evaluate its operational performance as it demonstrates its field level profitability relative to current commodity prices. Spartan considers run rate net operating income as an important measure to illustrate how the Company would have performed if the Acquisition had been consummated at the start of the period.  Management monitors net debt as part of its capital structure in order to fund current operations and future growth of the Company. Spartan considers free cash flow as an important measure to determine the cash amounts that are available to repay debt or reinvest in the business. Investors are cautioned, however, that these measures should not be construed as an alternative to net income (loss) determined in accordance with IFRS as an indication of Spartan’s performance. Spartan’s method of calculating these measures may differ from other companies and accordingly, they may not be comparable to measures used by other companies. Where a non-IFRS or IFRS measure in this press release is qualified by the words “run rate”, it represents the “pro forma” figure as adjusted to give effect to the Acquisition.  Run rate net operating income is calculated based on annualized production and operating netback figures. Operating netback equals total petroleum and natural gas sales less royalties and operating expenses, divided by production on a boe basis.  Net debt equals bank debt (long term and short term) minus cash and cash equivalents.  Free cash flow is calculated as funds flow less capital investments that occurred within the same period.

Future Oriented Financial Information

Any financial outlook or future oriented financial information in this press release, as defined by applicable securities legislation, including future (but not limited to) operating and fixed costs (and reductions thereto), general and administrative costs, debt levels, free cash flow, revenue and operating income, has been approved by management of Spartan. Readers are cautioned that any such future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein. The Company and its management believe that the prospective financial information has been prepared on a reasonable basis, reflecting management’s best estimates and judgments, and represent, to the best of management’s knowledge and opinion, the Company’s expected course of action. However, because this information is highly subjective, it should not be relied on as necessarily indicative of future activities or results.

Forward-Looking and Cautionary Statements

Certain information included in this press release constitutes forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as “anticipate”, “believe”, “expect”, “plan”, “intend”, “estimate”, “propose”, “project”, “will” or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this press release may include, but is not limited to, statements concerning: timing of the Acquisition; satisfaction or waiver of the closing conditions in the APA; receipt of required legal and regulatory approvals for the completion of the Acquisition (including approval of the TSXV and receipt of the Approval and Vesting Order from the CCAA Court);  funding and payment of the purchase price in respect of the Acquisition; estimated assumed liabilities associated with the Assets; expected production and cash flow related to the Assets; expected number of future drilling locations related to the Assets; the anticipated closing date of the Private Placement; anticipated amendments to the terms of the Warrants; the establishment of the Credit Facility and the terms thereof; the use of proceeds from the Private Placement and the Credit Facility; the completion of the Name Change; the completion of the Consolidation on the terms described herein; reserve estimates; future production levels; decline rates; drilling locations; future operational and technical synergies resulting from the Acquisition; management’s ability to replicate past performance in the Asset fairway; future negotiation of contracts; the ability of the Company to optimize production from the Assets on the timeline provided herein; future consolidation opportunities and acquisition targets; the business plan, cost model and strategy of the Company; future cash flows; and future commodities prices.

The forward-looking statements contained in this press release are based on certain key expectations and assumptions made by Spartan, including expectations and assumptions concerning the receipt of all approvals and satisfaction of all conditions to the completion of the Acquisition, Private Placement, Name Change and Consolidation and establishment of the Credit Facility, the timing of and success of future drilling, development and completion activities, the performance of existing wells, the performance of new wells, the availability and performance of facilities and pipelines, the geological characteristics of Spartan’s properties, the characteristics of the Assets, the successful integration of the Assets into Spartan’s operations, the successful application of drilling, completion and seismic technology, prevailing weather conditions, prevailing legislation affecting the oil and gas industry, commodity prices, royalty regimes and exchange rates, the application of regulatory and licensing requirements, the availability of capital, labour and services, the creditworthiness of industry partners and the ability to source and complete asset acquisitions.

Although Spartan believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Spartan can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), constraint in the availability of services, commodity price and exchange rate fluctuations, the current COVID-19 pandemic, actions of OPEC and OPEC+ members, changes in legislation impacting the oil and gas industry, adverse weather or break-up conditions and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. These and other risks are set out in more detail in Spartan’s Annual Information Form for the year ended December 31, 2019.

Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be incorrect. Although Spartan believes that the expectations reflected in its forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because Spartan can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this press release, assumptions have been made regarding and are implicit in, among other things, the timely receipt of any required regulatory approvals and the satisfaction of all conditions to the completion of the Acquisition, Private Placement, Name Change, Consolidation and establishment of the Credit Facility. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used.

The forward-looking information contained in this press release is made as of the date hereof and Spartan undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. The forward-looking information contained in this press release is expressly qualified by this cautionary statement.

The Acquisition is considered a “Fundamental Acquisition” under the policies of the TSXV and as such the Acquisition is subject to TSXV approval. Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this press release.  In addition, the TSXV has in no way passed upon the merits of the Consolidation and Name Change.

All dollar figures included herein are presented in Canadian dollars, unless otherwise noted.