Surge Energy Inc. · TSX:SGY
Surge Energy — Investor Presentation (February 2011)
26 slides from Surge Energy's investor presentation, Feb 14, 2011
Slide 1: Corporate Presentation
/ TSX-V:SGY Corporate Presentation February 14, 2011
Slide 2: Forward-Looking Statements Advisory
/ Forward-Looking Statements Advisory Certain information regarding Surge in this presentation including management's assessment of future plans and operations, timing of drilling and tie-in of wells, productive capacity of the new wells and productive capacity from different wells, expected product
Slide 3: Corporate Profile
/ Corporate Profile Stock Exchange: TSX.V – Symbol SGY (1) Recent Stock Price: $8.96 Recent Trading Price Range:(2) $7.80-$8.96 Capital Structure: Common Stock (Basic): 56.1 MM (basic) Common Stock (Fully Diluted): 61.2 MM (fully diluted) Market Capitalization:(3) ~$500 MM 2011 Year End Net Debt: $7
Slide 4: An Experienced and Proven Management Team
/ An Experienced and Proven Management Team Executive Most Recent Position Dan O’Neil President & CEO, Breaker Energy Ltd. President, Chief Executive Officer & Director Dan Brown Chief Operating Officer, Breaker Energy Ltd. Chief Operating Officer Max Lof Chief Financial Officer, Breaker Energy Ltd.
Slide 5: Surge Energy Inc. Business Plan
/ Surge Energy Inc. Business Plan • Target per share growth by early identification, capture, and cost effective exploitation of high impact oil resource plays • Position Surge in early stage oil resource plays that include the following key criteria: › Significant oil in place per section & low rec
Slide 6: 2011 Operational Profile & Guidance
/ 2011 Operational Profile & Guidance Guidance December 2010 Exit Production: 4,500 boe/d (>60% oil & NGLs) Average 2011 Production: 5,500 boe/d (>65% oil & NGLs) December 2011 Production: 6,500 boe/d (>70% oil & NGLs) Capital Expenditure: $80 MM (net of divestitures in 2011) Year End 2011 Net Debt:
Slide 7: Surge Energy Operating Areas
/ Surge Energy Operating Areas Surge Operating Areas 2010 Exit Production: >4,500 boe/d (>60% oil ) Net Undeveloped Land: >400,000 acres Oil Drilling Locations: >250 gross (>225 net): 100% oil Base Decline on 2010 Exit Production: ~15% South East Alberta Western Alberta Net Undeveloped Land: ~175,00
Slide 8: Western Alberta – Valhalla South Doig
/ Western Alberta – Valhalla South Doig Pool Information Land Position DPIIP (Gross/Net) 115 mmbbls, 99 mmbbls (40⁰API) Average DPIIP/Section 16 mmbbls @ 0.1 mD cutoff Estimated Current Recovery <3.0% Factor Hz Well Information Cost $4.2 MM Initial Production Rate >675 boe/d ($6,204/boe/d) Surge Lan
Slide 9: Western Alberta – Valhalla South Doig Economics
/ Western Alberta – Valhalla South Doig Economics Economic Inputs (per well) Economic Outputs (per well) (1) NPV (BT 10% - $MM) (2) $16.9 Target Project Capital ($MM): PIR (BT 10%)(3) 4.0 Drill $1.9 ROR (%) >200% Complete $1.9 Equip/Tie-In $0.4 Payout (yrs) 0.6 Total $4.2 Production Efficiency ($/bo
Slide 10: Increasing Activity in the Spearfish
/ Increasing Activity in the Spearfish 8000 400 Data Sourced from Accumap 7000 350 6000 300 Oil Rate (Bbls/d) 5000 250 Well Count 4000 200 3000 150 2000 100 1000 50 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 EOG ARC Penn West Others Horizontal Well Count • January 2008 - April 2010,
Slide 11: SW Manitoba – Waskada/Pierson/Goodlands Spearfish
/ SW Manitoba – Waskada/Pierson/Goodlands Spearfish Pool Information (Waskada) Land Position DPIIP (Gross/Net) 76 mmbbls, 76 mmbbls (34⁰API) Surge Land Spearfish Hz Well Average DPIIP/Section 15 mmbbls @ 0.1 mD cutoff Cumulative Spearfish Oil Estimated Current Recovery Surge 2010 Drilled Hz <1.0% Lo
Slide 12: SW Manitoba - Waskada Spearfish Economics
/ SW Manitoba - Waskada Spearfish Economics Economic Inputs (per well) Economic Outputs (per well) (1) Freehold (100% WI) Target Project Capital ($M): Drill $500 NPV (BT 10% - $M) $1,690 Complete $500 PIR 2.0 Equip/Tie-In $200 ROR (%) 135% Total $1,200 Payout (yrs) 0.9 Rate: 1st month average IP 125
Slide 13: Western Alberta – Windfall Bluesky Light Oil Play
/ Western Alberta – Windfall Bluesky Light Oil Play Land Position Pool Information 2010 3D Seismic Survey DPIIP (Gross/Net) 55 mmbbls, 55 mmbbls (36⁰ API) DPIIP/Section 4.4 mmbbls Estimated Current Recovery 1% Factor Hz Well Information Cost $3.4 MM Initial Production Rate >250 boe/d ($13,370/boe/d)
Slide 14: Western Alberta – Windfall Bluesky Economics
/Western Alberta – Windfall Bluesky Economics Economic Inputs (per well) Economic Outputs (per well) (1) Target Project Capital ($M): NPV (BT 10% - $M) (2) $4,030 Drill $1,850 PIR 2.4 Complete $1,250 Equip/Tie-In $300 ROR (%) 67% Total $3,400 Payout (yrs) 1.4 Rate: 1st month average IP >160 bbl/d an
Slide 15: Summary of Unbooked High Impact Light Oil Plays
/ Summary of Unbooked High Impact Light Oil Plays Net Estimated Estimated Unbooked Unbooked Reserves / Capital / BT10NPV / BT10NPV Production Unbooked Rates of Oil Wells(1) Well Well Well(2) Additions(2)(3) Adds(3)(4) Reserve Adds Return mboe $MM $MM $MM boe/d mboe % Valhalla South - 18.3 862 $4.2 $
Slide 16: Surge’s 2011 Corporate Goals
/ Surge’s 2011 Corporate Goals “SURPASS 2010 METRICS IN ALL CATEGORIES” • Meet or exceed 2011 preliminary guidance: >100% increase in cash flow; >80% increase in production; and >50% increase in production per share • Consolidate/extract maximum value from existing land base: >400,000 net acres • Po
Slide 17: Appendix
—S$GRGE ENERGY INC TSX-V:SGY Appendix
Slide 18: Directors and Officers
/ Directors and Officers Executive Most Recent Position Dan O’Neil President & CEO, Breaker Energy Ltd. President, Chief Executive Officer & Director Dan Brown Chief Operating Officer, Breaker Energy Ltd. Chief Operating Officer Max Lof Chief Financial Officer, Breaker Energy Ltd. Chief Financial Of
Slide 19: Surge Energy Inc. – Recent Highlights
/ Surge Energy Inc. – Recent Highlights • March 25th, 2010 – Announced Zapata Energy Corporation recapitalization • April 13th, 2010 – Entered into a reorganization and investment agreement › $17.0 MM Non-brokered private placement completed › New Board and management team › To be re-named Surge Ene
Slide 20: South East Alberta – Silver/Leela/Sounding Lake
/ South East Alberta – Silver/Leela/Sounding Lake Land Position • One of the top end oil plays in the WCSB (1) › ROR> 120%, NPV10 ~$1.0 MM/well › Recent production ~1,500 boe/d ( >85% oil) • Area technical expertise • Attractive new royalty rates and incentives • Reliable, predictable and stable oil
Slide 21: South East Alberta - Silver Lake Lloyd/Cummings
/ South East Alberta - Silver Lake Lloyd/Cummings Q3, 2010 Overview: Silver Lake • Recent production ~ 1,075 boe/d (>90% oil and liquids) • Completed a ten well drilling program in Q3, 2010 (100% working interest in the Silver Lake area) with an overall success rate of 70% (and all-in costs of $3.6
Slide 22: South East Alberta - Long Coulee Glauc/Sunburst Light Oil Play
South East Alberta - Long Coulee Glauc/Sunburst / Light Oil Play Area Characteristics Land Position Recent Production 195 boe/d (83% oil) Light Oil (32⁰ API) Working Interest 50% - 100% Current Net Land Position ~7,800 acres Area Players Zargon/Husky Long Coulee Reserves Summary DPIIP CTD* (As at Ja
Slide 23: Surge’s Oil and Gas Hedge Summary
/ Surge’s Oil and Gas Hedge Summary Oil Hedging Volume in Swap/Price Floor Call Option Period Index bbls/day ($Cdn/bbl) ($Cdn/bbl) Jan 1 to Dec 31, 2011 250 $80.00 $96.55 WTI Jan 1 to Dec 31, 2011 250 $80.00 $91.00 WTI Participation Jan 1 to Dec 31, 2011 250 $78.40 WTI Above Floor: 50% Jan 1 to Dec
Slide 24: Surge’s Tax Pool Proforma Estimate
/ Surge’s Tax Pool Proforma Estimate Estimated Combined Tax Pools at Dec 31, 2009 Rate ($MM) 10% COGPE $102 30% CDE $20 100% CEE $16 20-30% UCC $54 100% Non-Capital Loss $3 10-20% Other $5 Total $200 TSX-V:SGY 24
Slide 25: Surge Analyst Coverage
/ Surge Analyst Coverage Financial Institution Analyst Email Address National Bank Financial Matthew Taylor matthew.taylor@nbfinancial.com GMP Securities L.P. Peter Doig pdoig@gmpsecurities.com Macquarie Securities Group Ray Kwan ray.kwan@macquarie.com FirstEnergy Capital Corp. Cody R. Kwong crkwong
Slide 26: www.surgeenergy.ca
/ www.surgeenergy.ca Advisors Banker: National Bank of Canada Auditor: KPMG LLP Legal Counsel: Heenan Blaikie Evaluation Engineers: Sproule Associates Registrar & Transfer Agent: Olympia Trust Company Dan O’Neil, President & CEO Investor Contacts: Max Lof, CFO 2300, 635 – 8th Ave. SW, Calgary Albert