Spartan announced strong (>1,000Bbls/d of oil) IP₃₀ results from their initial Duvernay well tests at Willesden Green late-2024. These wells have since posted IP₆₀ rates of ~870Bbls/d, and we estimate they’ll see EURs of ~460MBbls. Initial reactions to Spartan’s early-year operations update (with disclosed initial rates) saw the stock +15% through the first ~week of 2025, along with the street moving their target prices, and 2026 CFPS estimates ~15% and 18% higher, respectively. Spartan raised equity following this update, with the stock retreating severely since. Spartan Delta is trading radically mispriced – every hour that HTM has dedicated towards derisking the West Shale Basin has left us more bullish, and we’re certain that we aren’t wrong on the quality of Spartan’s unconventional asset. Today, the equity markets are leaving $1Bn on the table pricing Spartan at, effectively, the PDP value of their Deep Basin asset. 

We are unrelentingly bullish on the Duvernay, including Spartan’s position in the West Shale Basin, and think it’ll be hard to ignore in the coming years. We expect that later this year, Spartan will disclose that they have expanded their position in the Duvernay to ~300,000 gross acres, which would put the company squarely at the top of the emerging West Shale Basin leaderboard (ahead of Paramount, even on a net basis). This, along with continued positive well results on and around their core asset, continue to give us confidence that the market will slowly bring their Duvernay growth into the fold. We continue to believe the Duvernay will be worth >$1Bn, and see >$1.85 in CFPS as achievable in the late ’20s, representing meaningful equity upside.

With incremental well data, we’re now estimating that Spartan's 09-05 pad, the first full-length Spartan drilled and completed wells in the Duvernay, will see economic EURs near ~0.5MMBbls of light oil. Recall, their previous 2 wells on-stream in 2024 were either drilled by Bonavista or not completed to full length due to mechanical issues with the production casing. While these wells are unbounded, Spartan's own development plan contemplates 400m interwell spacing. This is fairly wide compared to Baytex who spaced their 2024 development volatile oil wells at ~265m. Thus, we think that bounded development economics will still be extremely robust, with derisked payout periods of ~9-10 months at US$70/Bbl WTI. All data points from Spartan’s West Shale Basin project have been overwhelmingly positive, and we think there is no reason for the equity to behave as it has this year, especially in light of their constantly expanding inventory footprint (up to ~2.45MM meters of completable lateral length), with offsetting operator activity beginning to ramp meaningfully. We reiterate our view that Spartan’s Duvernay assets are worth >$1Bn. 

We provide a video-format update on the West Shale Basin below. 

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