Surge Energy Inc. · TSX:SGY
Surge Energy — Investor Presentation (May 2021)
25 slides from Surge Energy's investor presentation, May 2021
Slide 1: A Compelling Value Proposition
A COMPELLING VALUE PROPOSITION TSX: SGY MAY, 2021
Slide 2: Five Key Reasons to Own Surge
FIVE KEY REASONS TO OWN SURGE Surge has industry leading positive cash flow ‘torque’ to both rising oil prices and tightening Canadian oil price differentials; as well as a very high quality, low cost, low risk, conventional crude oil asset base. 1. Crude oil is up >450% in the last 13 months(1), wi
Slide 3: Recent Developments
RECENT DEVELOPMENTS(1) Increased 2H/2021 capital expenditure program drives strong free cash flow growth ▪ Completed an oversubscribed, upsized flow-through share offering for total gross proceeds of over $23 million. ▪ During the first quarter, Surge completed a successful 32 well winter drilling p
Slide 4: 2H 2021 and Preliminary 2022 Guidance
2H 2021 AND PRELIMINARY 2022 GUIDANCE Maintaining production within cash flow US $WTI per bbl $65 WTI(1) $60 WTI(1) Total 2021(e) Exploration & $89 million Development Capital Exit 2021(e) Production 16,500 boepd (85% liquids) Total 2022(e) Exploration & $83 million Development Capital Average & Exi
Slide 5: Strategic Focus
STRATEGIC FOCUS Top-tier production efficiencies leading to sustainable asset development, strengthening of the balance sheet, and continued emphasis on ESG initiatives Disciplined Financial ESG Capital Positioning Initiatives Allocation Undertake low cost, high Focus on high return Continued focus
Slide 6: Environmental, Social, and Governance
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE ▪ Surge has received more than $14 million in funding through the Government of Alberta’s Site Rehabilitation Program (“SRP”), accelerating the Company’s ability to execute its ongoing well abandonment programs. ▪ Since January 1st 2020, the Company has abandone
Slide 7: Operations Focused in Core Areas
OPERATIONS FOCUSED IN 4 CORE AREAS Large OOIP pools in established conventional reservoir trends Greater Sawn: 93% Oil & NGL’s Average Valhalla: 85% Oil & NGL’s 65% Oil & NGL’s Sparky: 93% Oil & NGL’s Shaunavon: 100% Oil & NGL’s Minors: 50% Oil & NGL’s 7 FOOTNOTES INCLUDED IN THE BACK AS ENDNOTES
Slide 8: Net OOIP of >2.4 Billion Barrels
NET OOIP OF >2.4 BILLION BARRELS Large OOIP, with low recovery factors - focused in conventional reservoirs SGY Net CTD(3) Total Booked Net Total Net drilling Estimated Net Oil Independent Recovery Core Area Formations Locations Avg. WI OOIP (1) Recovery Factor P+P (MMbbls) (Booked)(2) Factor (% OOI
Slide 9: Targeting Conventional Oil Reservoirs
TARGETING CONVENTIONAL OIL RESERVOIRS Surge focuses on high quality reservoirs at the conventional end of the permeability spectrum Recovery factors, internal rates of return (IRR), decline rate, and profit to investment ratio (PIR)(1) improve as reservoir quality improves. Ultimate Oil Recovery PIR
Slide 10: Sparky: A Dominant Position
SPARKY: A DOMINANT POSITION Low on-stream costs, year-round access = a premier Canadian medium/light oil growth play ▪ The Sparky is a large, well established, oil producing AB SK formation in Western Canada. >11 Billion Barrel ▪ Surge holds a dominant land position in the medium / Trend light gravi
Slide 11: Valhalla – Stacked Pay Multi-Zone Potential
VALHALLA – STACKED PAY MULTI-ZONE POTENTIAL Multiple large OOIP light oil reservoirs provide a sustainable drilling inventory and production base ▪ ~200MMbbls of net combined OOIP. ▪ Doig and Montney turbidite wells among the most prolific oil producers in Western Canada. ▪ A previously drilled hori
Slide 12: Greater Sawn - Concentrated Light Oil
GREATER SAWN - CONCENTRATED LIGHT OIL >600 MMbbls net OOIP in concentrated Slave Point reservoirs ▪ Net OOIP of >600 MMbbls of light oil (35-42° API). Sawn OOIP: >200 MMbbl net ▪ Development inventory of 100 net locations Red Earth (62 net booked). OOIP: >250 MMbbl net ▪ Key Slave Point attributes:
Slide 13: Shaunavon
SHAUNAVON >400 MMbbl net OOIP on Surge lands in the stacked Upper and Lower Shaunavon formations ▪ Shaunavon produces 100% low decline medium gravity crude oil with high operating netbacks. ▪ Upper Shaunavon net OOIP is estimated to be >200MMbbl. • >65 net locations – (29 net booked). • 10 horizonta
Slide 14: Appendix
APPENDIX 14 FOOTNOTES INCLUDED IN THE BACK AS ENDNOTES
Slide 15: 2020 Year End Reserves Pro Forma Disposition
2020 YEAR END RESERVES PRO FORMA DISPOSITION >$850 million of Total Proved plus Probable Reserves Value (NPVBT10) 2020 Year End Reserves – Pro Forma Disposition(1)(2) Oil & NGLs Gas Total NPVBT10 Reserve Category (3) (Mbbl) (MMcf)(4) (Mboe) ($MM)(5)(6) Proved Producing 22,111 21,301 25,662 $286 Prov
Slide 16: Net Asset Value
NET ASSET VALUE High quality conventional reservoirs continue to deliver value to shareholders 2020 YE Pro-Forma NAV per Share TP TPP Reserve Value NPV10 BT ($MM) $521 $851 Undeveloped Land and Seismic ($MM)(1) $103 $103 Net Debt ($MM)(2)(3) $(279) $(279) Total Net Assets ($MM) $345 $675 Basic Share
Slide 17: Oil Hedging
OIL HEDGING Qtr. 1 2021 Qtr. 2 2021 Qtr. 3 2021 Qtr. 4 2021 Qtr. 1 2022 Qtr. 2 2022 Avg. Floor Price(1) $ 51.89 $ 53.06 $ 54.62 $ 54.82 $ 59.56 $ 67.87 (1) All USD-denominated WTI hedges have been converted to CAD at a rate of $0.80 USD/CAD in the above table. 17 FOOTNOTES INCLUDED IN THE BACK AS EN
Slide 18: Risk Management / Hedging Strategy
RISK MANAGEMENT / HEDGING STRATEGY The Company has an on-going, risk management / hedging program. Below is a list of Surge’s current WTI, WCS differential, and MSW differential hedges: WTI Crude Oil Derivative Contracts(1) (2) WCS Oil Differential Hedges(1) MSW Oil Differential Hedges(1) (1) All US
Slide 19: Risk Management / Hedging Strategy
RISK MANAGEMENT / HEDGING STRATEGY The Company has an on-going, risk management / hedging program. Below is a list of Surge’s current AECO & Chicago natural gas hedges and interest rate hedges(1): Chicago & AECO Natural Gas Hedges Interest Rate Hedge Notional Amount Surge Surge Type Term Fixed Rate
Slide 20: Analyst Coverage
ANALYST COVERAGE Financial Institution Analyst Email Address Acumen Capital Partners Trevor Reynolds treynolds@acumencapital.com BMO Capital Markets Ray Kwan ray.kwan@bmo.com Canaccord Genuity Anthony Petrucci apetrucci@canaccordgenuity.com Clarus Securities Inc. Robert Pare rpare@clarussecurities.c
Slide 21: Corporate Partners
CORPORATE PARTNERS Advisors National Bank of Canada ATB Financial Bank of Nova Scotia Bank of Montreal BDC Capital Lending Syndicate: Canadian Imperial Bank of Commerce Export Development Canada Goldman Sachs HSBC Bank Canada Toronto-Dominion Bank Auditor: KPMG LLP Legal Counsel: McCarthy Tétrault E
Slide 22: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “should”, “believe” and similar expressions are intended to identify forward-looking stat
Slide 23: Oil and Gas 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 natural gas. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 1 boe for 6,000 cubic feet of natural gas is based on an energy equivalency conversion me
Slide 24: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES Certain secondary financial measures in this press release – namely, "adjusted funds flow", “free cash flow” and "net operating expenses" are not prescribed by GAAP. These non-GAAP financial measures are included because management uses the information to analyze business
Slide 25: Additional Metrics
ADDITIONAL METRICS Additional Metrics This presentation contains additional metrics commonly used in the oil and natural gas industry. These terms have been calculated by Management and do not have a standardized meaning. Management uses these oil and gas metrics to further analyze the performance o