Surge Energy Inc. · TSX:SGY
Surge Energy — Investor Presentation (February 2025)
27 slides from Surge Energy's investor presentation, February 2025
Slide 1: Premium Oil Assets Driving Free Cash Flow and Shareholder Returns
TSX: SGY Premium Oil Assets Driving Free Cash Flow and Shareholder Returns CORPORATE PRESENTATION February 2025
Slide 2: The Surge Value Proposition
The Surge Value Proposition High quality assets and strategic capital allocation maximize shareholder value and returns $$$ + + = High Quality Disciplined Capital Proven Management Maximize Free Cash Flow Conventional Assets Allocation and Board and Shareholder Returns • Light/medium oil asset base
Slide 3: Proven Business Strategy
Proven Business Strategy Focused on sustainable returns and enhancing free cash flow Surge executes on a simple, DISCIPLINED repeatable business strategy: CAPITAL ALLOCATION Undertake low cost, low risk • Develop high quality conventional oil projects that support sustainability reservoirs with prov
Slide 4: Recent Highlights
Recent Highlights In Q3 of 2024, Surge: • Increased average daily production over Q2/241, and delivered strong adjusted funds flow (“AFF”) of $72.7 million; • Strategically repositioned the Company’s debt capital structure by: • Closing an attractive $175 million unsecured 5 year term (8.5%) note of
Slide 5: Corporate Guidance for 2025
Corporate Guidance for 2025 Key Guidance & Assumptions1 US$70 WTI6 2025 Adjusted Funds Flow2 $275 MM Focused on returns and 2025 Cash Flow From Operating Activities3 $255 MM enhancing free cash 2025 Free Cash Flow2 Before Dividends $85 MM flow while managing risk 2025 Free Cash Flow Margin2 31% 2025
Slide 6: Return of Capital Framework
Return of Capital Framework Surge is well positioned to deliver returns to shareholders through its base dividend and excess Free Cash Flow 2025 Guidance Cash Flow @ US$70 WTI: $255 MM Allocation of Excess Free Cash Flow (After Base Dividend) 2024e Capital $170 MM Excess Free Share Cash Flow Debt Re
Slide 7: Significant Liquidity
Significant Liquidity Debt structure supports return of capital framework Surge’s current drawn debt has long-dated maturities, termed out through late 2028 and 2029, with attractive interest rates. Debt Composition ($MM) Term Debt Maturity Schedule $200 $Millions $175 $160 $175 $250 $120 $48 $80 $4
Slide 8: Positioned To Be A Top Performer
Positioned To Be A Top Performer Surge has been independently recognized as having one of the best FCF margins in its intermediate peer group while trading at a very attractive NAV valuation. Surge’s top tier FCF margin is driven by high crude oil operating netbacks, low declines, and quick well pay
Slide 9: Compelling opportunity for energy investors
Energy will continue to offer investors an attractive value Compelling proposition through 2025 and beyond opportunity for Global Observable Oil Inventories (onshore + oil-on-water) (MM bbls) energy investors While global oil demand is at a record high, global crude inventories currently stand at th
Slide 10: Spotlight: Sparky and SE Saskatchewan
Spotlight: Sparky and SE Saskatchewan Surge offers exposure to two of the top four conventional oil growth plays in Canada
Slide 11: Advantages of Conventional Reservoirs
Advantages of Conventional reservoirs offer lower risk, predictable, repeatable development with Conventional opportunity to improve recovery factors Reservoirs Surge proactively targets low risk conventional reservoirs. The Company currently has >2.3 billion barrels of net OOIP with an 8.9% recover
Slide 12: Core Area Focused
Core Area Focused Sparky and SE Saskatchewan provide exceptional economics and a depth of drilling inventory Sparky SE Saskatchewan Light/medium crude oil production with compelling Highly focused, operated asset base with excellent light returns. Low on-stream costs with extensive drilling oil oper
Slide 13: A One-of-a-Kind Position
Sparky Over 11 Billion Barrel Trend One of Canada’s Largest Accumulations of Oil A One-of-a-Kind Lloydminster Position Edmonton Alberta Surge holds a dominant land position and is drilling ~60km Hope Valley Saskatchewan a mix of horizontal multi-frac and horizontal multi- lateral wells in the Spark
Slide 14: Sparky Long-Term Growth Potential
Sparky Long-Term Growth Potential Pad drilling, advanced horizontal multi-stage fracturing technology, and multi-lateral horizontal success have unlocked the potential of the Sparky play Sparky Core Area Production Growth >1 billion bbls OOIP net to SGY (internally estimated) >520 net >140 Multi-Lat
Slide 15: SE Saskatchewan: A Light Oil Balance
SE Saskatchewan A Light Oil Balance Surge’s operational track record of success in SE Saskatchewan Manitoba Surge Land Saskatchewan makes this an exciting growth area Midale Subcrop Frobisher Subcrop Alida Subcrop Area Benefits Ratcliff Subcrop • Organic growth opportunities • Strategic acquisitions
Slide 16: SE Saskatchewan Key Growth Driver
SE Saskatchewan Key Growth Driver High operating netback light oil production and reserves from low risk, proven conventional reservoirs >400 million bbls OOIP net to SGY (internally estimated) SE Saskatchewan Frobisher Average IP90 By Operator (January 2022 - September 2024) >250 net SE Saskatchewa
Slide 17: Analyst Coverage
Analyst Coverage SGY 12-Month Financial Institution Analyst Email Address Target Price Acumen Capital Partners Trevor Reynolds treynolds@acumencapital.com $11.50 ATB Capital Markets Amir Arif aarif@atb.com $9.25 BMO Capital Markets Jeremy McCrea jeremy.mccrea@bmo.com $9.00 Canaccord Genuity Mike Mue
Slide 18: Leadership
Leadership Paul Colborne Jared Ducs Murray Bye Derek Christie Margaret Elekes President & CEO CFO COO Senior VP, Exploration Senior VP, Land & BD Dan Kelly Grant Cutforth VP, Finance VP, Business Development 18
Slide 19: Board of Directors
Board of Directors Paul Colborne Robert Leach 2,5,6 Board Committees President & CEO Independent Director 1. Chair of the Board 2. Member of the Compensation, Nominating and Allison Maher 2,4,5 Corporate Governance Committee. Ms. Jim Pasieka1 Burnyeat serves as Chair. Independent Director Chairman 3
Slide 20: Corporate Information
Corporate Information TSX First Lien Lending Syndicate SGY.TO National Bank of Canada ATB Financial Bank of Montreal BDC Capital Canadian Western Bank Auditor Registrar & Transfer Agent Surge Energy KPMG LLP Odyssey Trust Centennial Place, East Tower 1200 520 3rd Ave SW Legal Counsel Investor Contac
Slide 21: Appendix
Appendix
Slide 22: WTI Hedging Summary
WTI Hedging Summary 12,000 WTI Crude Oil Derivative Contracts 10,000 Swaps Collars Bought Put Sold Put Average Avg. Average Avg. Avg. 8,000 Period Volumes Volumes Bought Volumes Volumes Price Sold Call Price Price Volumes per day Put 6,000 Q1 2025 5,622 $75.72 947 $65.00 $82.73 4,204 $65.00 - $- Q2
Slide 23: Hedging Detail
Hedging Detail WCS and MSW Derivative Contracts Natural Gas Derivative Contracts WCS: Swaps MSW: Swaps Swaps Collars Average Average Period Volumes Avg. Price Volumes Avg. Price Period Vol. Avg. Price Vol. Bought Put Sold Call Q1 2025 4,500 -$14.09 3,000 -$3.65 Q1 2025 2,000 $4.16 3,000 $3.50 $5.60
Slide 24: Advisories - Forward-Looking Statements
Advisories - Forward-Looking Statements This presentation contains forward- This presentation contains forward-looking statements. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “should”, “believe”, impact of completed facilities on operating co
Slide 25: Advisories - Oil and Gas Advisories
Advisories - Oil and Gas Advisories The term “boe” means barrel of oil equivalent on the basis of 1 boe to 6,000 cubic feet of drill any or all unbooked drilling locations and if drilled, there is no certainty that such locations net) Hope Valley area drilling locations identified herein; of these,
Slide 26: Advisories - Non-GAAP & Other Financial Measures
Advisories - Non-GAAP & Other Financial Measures This presentation includes references to non-GAAP and other financial measures used by comparability between periods. Management views decommissioning expenditures decommissioning expenditures and cash settled transaction and other costs are not the C
Slide 27: Advisories - Non-GAAP & Other Financial Measures
Advisories - Non-GAAP & Other Financial Measures Net Debt and Net Debt to Cash Flow from Operating Activities Operating Netback, Operating Netback per boe, and Adjusted Funds Flow per boe Net debt is a non-GAAP financial measure, calculated as bank debt, senior unsecured notes, term debt, plus the l