3200, 500 Centre Street SE Calgary, AB T2G 1A6 Canada Ph.: (403) 355-8920 Fax: (403) 355-2779 SPARTAN ENERGY CORP. ANNOUNCES STRATEGIC BUSINESS COMBINATION WITH VERMILION ENERGY INC. CALGARY, ALBERTA (April 16, 2018) Spartan Energy Crp. ( Spartan r the Cmpany ) (TSX: SPE) is pleased t annunce that it has entered int an arrangement agreement (the Arrangement Agreement ) with Vermilin Energy Inc. ( Vermilin ) (TSX: VET, NYSE: VET) prviding fr the acquisitin by Vermilin f all the issued and utstanding cmmn shares (the Spartan Shares ) f Spartan (the Arrangement ). Under the terms f the Arrangement Agreement, each Spartan Share shall be exchanged fr 0.1476 (the Share Exchange Rati ) cmmn shares f Vermilin (the Vermilin Shares ). The Arrangement implies a value f apprximately $1.4 billin fr Spartan after taking int accunt assumptin f Spartan s net debt and the payment f transactin csts. The Cmpany s current prductin is apprximately 23,000 Be per day and independently evaluated prven plus prbable reserves as f December 31, 2017 were 113.5 MMBe. STRATEGIC RATIONALE Since inceptin in late 2013, Spartan has assembled a quality asset base in sutheast Saskatchewan characterized by a deep inventry f highly ecnmic light il drilling lcatins and waterfld prjects capable f delivering sustainable grwth and free cash flw. Thrugh the Arrangement, Spartan sharehlders will cntinue t benefit frm the Spartan asset base while gaining expsure t Vermilin s high quality, internatinally diversified il and gas prtfli. The highlights f the Arrangement and the anticipated benefits t Spartan sharehlders assciated with the Arrangement include, but are nt limited t, the fllwing: Premium t Existing Share Price the Share Exchange Rati implies a value f $6.50 per Spartan Share based n the clsing price f Vermilin Shares f $44.04 n April 13, 2018, and a premium f apprximately 13% t the 30-day vlume weighted average price f Spartan Shares as at April 13, 2018. Intrductin f a Highly Sustainable Dividend Spartan sharehlders will receive an annualized dividend f $0.41 per Spartan Share based n the Share Exchange Rati ($2.76 per Vermilin Share). Pr frma the Arrangement, Vermilin is expected t have an all-in payut rati f <90% and a decline rate f <19% in 2018. Vermilin's dividend per share has grwn cnsistently since its initiatin in 2003 and has never been reduced.
- 2 - Expsure t High Quality Internatinal Oil and Gas Assets with Access t Premium Pricing Canadian energy is currently facing a number f significant challenges, including material infrastructure cnstraints causing discunted and vlatile pricing fr il and gas. A cmbinatin with Vermilin expses Spartan sharehlders t a well diversified prductin base and a deep inventry f glbally diverse drilling pprtunities, prviding fr sustainable lng-term prductin and cash flw grwth. Attractive Pr Frma Ttal Return Vermilin is expected t achieve strng prductin per share grwth plus yield f ~15% in 2018, exceeding Spartan's existing stand-alne grwth rate. Since its cnversin t a trust in 2003, Vermilin has cnsistently delivered attractive prductin per share grwth plus yield. Imprved Size and Premium Valuatin Fllwing the Arrangement, Vermilin will have prductin in excess f 95,000 Be/d and market capitalizatin f greater than $6.6 billin. Spartan sharehlders will be prvided with wnership in a large, well-capitalized entity at a time when energy investrs favur scale and liquidity and access t capital is uncertain fr smaller Canadian prducers. In additin, access t United States financial markets is enhanced thrugh Vermilin s New Yrk Stck Exchange listing. Vermilin has cnsistently traded at a strng multiple premium t its peers, reflecting the quality f the asset base and management team. In additin, Vermilin's strng balance sheet and lw financial leverage are further enhanced by the cmbinatin with Spartan. Tp Tier Management Team and Bard with a Prven Track Recrd f Success Vermilin's management team have histrically been strng stewards f capital, prviding ne f the mst stable dividends in the Canadian upstream sectr. Vermilin will further benefit frm the technical and peratinal expertise f Spartan persnnel in maximizing the value f its sutheast Saskatchewan asset base. Vermilin has grwn prductin frm <25,000 >70,000 Be/d, increased its share price frm <$13.00 - $44.00, and paid cumulative dividends f ver $34.00 per Vermilin Share since 2003. THE ARRANGEMENT AGREEMENT The Arrangement Agreement prvides fr the implementatin f the Arrangement by means f a plan f arrangement under the Business Crpratins Act (Alberta). The Arrangement Agreement cntains custmary representatins and warranties f each party, nn-slicitatin cvenants by Spartan and right t match prvisins in favur f Vermilin. Pursuant t the Arrangement Agreement, a nn-cmpletin fee f $40 millin will be payable by Spartan in certain circumstances, including if Spartan enters int an agreement with respect t a superir prpsal r if the Bard f Directrs f Spartan withdraws r mdifies its recmmendatin with respect t the Arrangement. The Arrangement Agreement als prvides that a nn-cmpletin fee f $40 millin will be payable by Vermilin in certain circumstances. The Arrangement is subject t custmary cnditins fr a transactin f this nature, which include curt and regulatry apprvals (including Cmpetitin Act apprval and apprval f the Trnt Stck Exchange and New Yrk Stck Exchange fr the issuance f Vermilin Shares), and the apprval f 66 2/3 percent f the vtes cast by Spartan sharehlders represented in persn r by prxy at a meeting f
- 3 - Spartan sharehlders t be called t cnsider the Arrangement (the Meeting ) and a majrity f the vtes cast by Spartan sharehlders, represented in persn r by prxy at the Meeting, after excluding the vtes cast by thse persns whse vtes may nt be included in determining minrity apprval f a business cmbinatin pursuant t Multilateral Instrument 61-101 Prtectin f Minrity Security Hlders in Special Transactin. An infrmatin circular regarding the Arrangement and the annual business f Spartan is expected t be mailed t sharehlders f Spartan in early May 2018 with the Meeting expected t take place in early t mid-june 2018. Clsing f the Arrangement is expected t ccur shrtly thereafter. A cpy f the Arrangement Agreement will be filed n Spartan s SEDAR prfile and will be available fr viewing at www.sedar.cm. FINANCIAL ADVISOR AND FAIRNESS OPINION TD Securities Inc. ( TD ) is acting as financial advisr t the Bard f Directrs f Spartan. TD has prvided its verbal pinin that, subject t their review f the final frm f the dcuments affecting the Arrangement, the cnsideratin t be received by Spartan sharehlders pursuant t the terms f the Arrangement is fair, frm a financial pint f view, t the Spartan sharehlders (the Fairness Opinin ). GMP FirstEnergy and Peters & C. Limited are acting as strategic advisrs t Spartan in respect f the Arrangement. RECOMMENDATION OF THE BOARD OF DIRECTORS After cnsidering, amng ther things, the Fairness Opinin and ther relevant matters, the Bard f Directrs f Spartan has unanimusly determined that the Arrangement is in the best interests f Spartan and unanimusly recmmends that the Spartan sharehlders vte in favur f the Arrangement. All directrs and fficers f Spartan have entered int vting supprt agreements with Vermilin pursuant t which they have agreed, amng ther things, t vte their Spartan Shares in favur f the Agreement, subject t certain permitted exceptins. Spartan is a Calgary, Alberta based cmpany actively engaged in the business f il and gas explratin, develpment, acquisitin and prductin in Alberta and Saskatchewan whse Spartan Shares are traded n the Trnt Stck Exchange under the trading symbl SPE. FURTHER INFORMATION Richard (Rick) McHardy President and Chief Executive Officer OR Tim Sweeney Manager, Business Develpment Spartan Energy Crp. Suite 500, 850-2 nd Street S.W. Calgary, Alberta T2P 0R8 Fax: (403) 355-2779 Email: inf@spartanenergy.ca Frward Lking Statements This press release cntains frward-lking statements within the meaning f applicable securities laws. Mre particularly and withut limitatin, this press release cntains frward-lking statements regarding
- 4 - the prpsed acquisitin f Spartan by Vermilin pursuant t a plan r arrangement, the mailing f the infrmatin circular regarding the Arrangement, the date f the Meeting, the cmpletin f the Arrangement and the expected benefits f the Arrangement t Spartan sharehlders. All statements, ther than statements f histrical facts, that address activities that Spartan assumes, anticipates, plans, expects, believes, prjects, aims, estimates r anticipates (and ther similar expressins) will, shuld r may ccur in the future are frward-lking statements. All f the frward-lking statements in this release are qualified by the assumptins that are stated r inherent in such frward-lking statements. Althugh Spartan believes these assumptins are reasnable, they are nt exhaustive f the factrs that may affect any f the frward-lking statements and the reader shuld nt place undue reliance n these assumptins and such frward-lking statements. The key assumptins that have been made in cnnectin with the frward-lking statements include: that the business f the Meeting cncludes as anticipated; the timing and receipt f the necessary sharehlder, regulatry, curt and ther apprvals; and the timely satisfactin f all ther cnditins t the clsing f the Arrangement. Spartan believes the material factrs, expectatins and assumptins reflected in the frward-lking statements are reasnable, but n assurance can be given that these factrs, expectatins and assumptins will prve t be crrect. The frward-lking statements prvided in this press release are based n management s current belief, based n currently available infrmatin, as t the utcme and timing f future events. Spartan cautins that its intentin t prceed with the Arrangement and ther frward-lking statements relating t Spartan are subject t all f the risks and uncertainties nrmally incident t such endeavrs. These risks relating t Spartan include, but are nt limited t, that the Arrangement is nt cmpleted n the annunced terms r at all. Furthermre, the frward-lking statements cntained herein are made as at the date heref and Spartan des nt undertake any bligatin t update publicly r t revise any f the included frward-lking statements, whether as a result f new infrmatin, future events r therwise, except as may be required by applicable securities laws. Readers are cautined that the freging list f factrs is nt exhaustive. Additinal infrmatin n these and ther factrs that culd affect Spartan s peratins and financial results are included in reprts n file with Canadian securities regulatry authrities and may be accessed thrugh the SEDAR website (www.sedar.cm) r the Cmpany s website (www.spartanenergy.ca). Reserves Data Statements relating t reserves are als deemed t be frward lking statements, as they invlve the implied assessment, based n certain estimates and assumptins, that the reserves described exist in the quantities predicted r estimated and that the reserves can be prfitably prduced in the future. There are numerus uncertainties inherent in estimating quantities f crude il, natural gas and NGL reserves and the future cash flws attributed t such reserves. The reserve infrmatin set frth herein are estimates nly. In general, estimates f ecnmically recverable crude il, natural gas and NGL reserves and the future net cash flws therefrm are based upn a number f variable factrs and assumptins, such as histrical prductin frm the prperties, prductin rates, ultimate reserve recvery, timing and amunt f capital expenditures, marketability f il and natural gas, ryalty rates, the assumed effects f regulatin by gvernmental agencies and future perating csts, all f which may vary materially. Fr these reasns, estimates f the ecnmically recverable crude il, NGL and natural gas reserves attributable t any particular grup f prperties, classificatin f such reserves based n risk f recvery and estimates f future net revenues assciated with reserves prepared by different engineers, r by the same engineers at different times, may vary. Spartan s actual prductin, revenues, taxes and develpment and perating expenditures with respect t its reserves will vary frm estimates theref and such variatins culd be material. Readers shuld refer t Spartan s Annual Infrmatin frm fr the year ended December 31, 2017, which is available under the Cmpany s prfile at www.sedar.cm, fr mre infrmatin.
- 5 - Cautin Respecting Be Be means barrel f il equivalent. All Be cnversins in this reprt are derived by cnverting natural gas t il equivalent at a rati f six thusand cubic feet f natural gas t ne barrel f il equivalent. Be may be misleading, particularly if used in islatin. A Be cnversin rate f 1 Be: 6 Mcf is based n an energy equivalency cnversin methd primarily applicable at the burner tip and des nt represent a value equivalency at the wellhead. Given that the value rati f il cmpared t natural gas based n currently prevailing prices is significantly different than the energy equivalency rati f 1 Be : 6 Mcf, utilizing a cnversin rati f 1 Be : 6 Mcf may be misleading as an indicatin f value.