Business
Surge Energy Inc. announces successful closing of strategic C$430 million asset sale; and determination of new bank line.
CALGARY , June 15, 2015 /CNW/ - Surge Energy Inc. ("Surge" or the "Company") (TSX: S...
About this update from Surge Energy Inc.
[{"type":"text","content":"\n\nCALGARY, June 15, 2015 /CNW/ - Surge Energy Inc. (\"Surge\" or the \"Company\") (TSX: SGY) announces that the Company has successfully closed its previously announced $430 million sale of assets in SE Saskatchewan and Manitoba. Surge also had its bank line confirmed by the Company's bank syndicate at $425 million – post the sale of assets described above – with current net debt of approximately $122 million.\n\nIn the higher crude oil price environment from May, 2013 to October, 2014, Surge management assembled a high quality, low decline, light oil asset and opportunity base focused in four operating areas. Surge grew aggressively and delivered some of the best total rates of return to its shareholders of any growth and dividend paying company in Canada over this period.\n\nWhen oil prices dropped precipitously in the fall of 2014 and early 2015, Surge management took a number of aggressive and proactive steps to successfully protect shareholders capital, and the net asset value of the Company's shares. Given the new lower forward curve for world crude oil prices, in early 2015 Surge management completed a detailed, full scale development business plan and evaluation for each of the Company's four primary assets, and determined that it was most advantageous to sell its SE Saskatchewan/Manitoba assets to reposition Surge's balance sheet for an environment of lower crude oil prices.\n\nAs a result of these aggressive and proactive decisions, Surge is on track to achieve managements stated goal of being one of the best positioned light/medium gravity crude oil growth and dividend paying companies in Canada – uniquely positioned to grow at virtually any reasonable crude oil commodity price assumption.\n\nToday, the Company has three core, high netback, operating areas, which comprise over 1.4 billion barrels of net original oil in place (\"OOIP\"1), with a seven percent recovery factor.\n\nSurge has a forward debt to cash flow ratio of just over one times at strip pricing, with more than $300 million of credit availability on the Company's bank lines. \n\nAt Shaunavon, Valhalla, and in Central Alberta (Sparky), the Company has a 14 year, low risk development drilling inventory, with more than 700 net drilling locations that generate excellent rates of return at strip pricing for crude oil.\n\nWith a 15...