Surge Energy Inc. · TSX:SGY
Surge Energy — Investor Presentation (June 2011)
28 slides from Surge Energy's investor presentation, Jun 16, 2011
Slide 1: Uniquely Positioned to Deliver Top Tier Performance
/ TSX-V:SGY “Uniquely Positioned to Deliver Top Tier Performance” June 16, 2011
Slide 2: Forward-Looking Statements Advisory
/ Forward-Looking Statements Advisory This presentation contains forward-looking statements. More particularly, this presentation contains statements concerning anticipated: (i) capital expenditures for the remainder 2011, (ii) exploration, development, and acquisition activities, (iii) average and
Slide 3: An Experienced and Successful Leadership Team
/ An Experienced and Successful Leadership 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
Slide 4: Surge Energy Inc. Business Plan
/ Surge Energy Inc. Business Plan • Evolve into a top tier intermediate oil and gas producer with a focus on oil • Continually position Surge in early stage oil resource plays that include the following key criteria: › Significant oil in place per section & low recovery factor to date › Vertical wel
Slide 5: Surge's Definition of Top Tier Performance
/ Surge’s Definition of Top Tier Performance 2010 2011 Guidance % Growth Operational: Average Production (boe/d): 3,026 6,000 % light/medium oil & NGLs >60% >65% +98% Exit Production (boe/d): >4,500 7,500 % light/medium oil & NGLs >60% >70% +67% Capital Expenditure ($ MM): $42 $98* (Net of Acquisiti
Slide 6: Key Ingredients for Reaching Top Tier Intermediate Status
/ Key Ingredients for Reaching Top Tier Intermediate Status >30 technical professionals Organization in place to grow well A Proven beyond 10,000 boe/d Execution Exploration team and Corporate Team Development team dedicated to >300 net unbooked oil locations >33 mmboe unbooked reserves* generating
Slide 7: Recent Accomplishments
/ Recent Accomplishments Increased 2P reserves by 114% from 9.9 mmboe at December 31 2009 to 21.2 mmboe at December 31, 2010 Successfully commenced drilling programs in all core areas Announced third successful horizontal multi-frac well at Valhalla South (5 day flow test rate of 1,450 boe/d; 77% li
Slide 8: Surge Energy Operating Areas
/ Surge Energy Operating Areas Surge Operating Areas 2010 Exit Production >4,500 boe/d (>60% light/medium oil and NGLs) Base Decline on 2010 Exit Production: ~15% 2011 Exit Production Guidance: 7,500 boe/d (>70 % light /medium oil and NGLs) Net Undeveloped Land: >500,000 acres Oil Drilling Locations
Slide 9: South East Alberta – Stable, Low Decline Oil Production
/ South East Alberta – Stable, Low Decline Oil Production Land Position South East Alberta Overview: • Surge’s cornerstone asset that provides reliable base cash flow • Recent production ~1,600 boe/d ( >90% oil) • Formations of interest are shallow (<1,000m TVD) with multiple stacked potential oil r
Slide 10: Highly Economic Light Oil Resource Play Type Curves
/ Highly Economic Light Oil Resource Play Type Curves Valhalla South Waskada 800.0 800 140 80 Hz Type Well - Total Boe/d Hz Type Well – Oil Rate 700.0 120 0 700 Production Rate (boe/d) Vert Type Well - Total Boe/d Vertical Type Well – Oil Rate 600.0 100 Oil Rate (bbl/d) 600 500.0 500 80 Rate of Retu
Slide 11: Detailed Economics of Key Light Oil Resource Plays
/ Detailed Economics of Key Light Oil Resource Plays Economic Inputs/Outputs: Valhalla South Windfall SW Manitoba North Dakota (Doig) (1) (2) (Bluesky) (1) (2) (Spearfish) (1) (Spearfish) (1) Drill $1.9 MM $1.85 MM $500,000 $500,000 Complete $1.9 MM $1.25 MM $500,000 $500,000 Equip/Tie-In $0.4 MM $3
Slide 12: 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: Target Cost $4.2 MM Initial Production Rate >675 boe/d ($6,204/boe/d)
Slide 13: Western Alberta – Windfall Bluesky Light Oil Play
/ Western Alberta – Windfall Bluesky Light Oil Play Land Position Pool Information: DPIIP (Gross/Net) 60 mmbbls, 57 mmbbls (36⁰ API) DPIIP/Section 5.0 mmbbls Estimated Current Recovery 1% Factor Hz Well Information: Target Cost $3.4 MM Initial Production Rate >250 boe/d ($13,370/boe/d) Reserves 260
Slide 14: Manitoba/North Dakota Spearfish Development Lands
/ Manitoba/North Dakota Spearfish Development Lands Pool Information: Land Position 202 mmbbls, 150 mmbbls DPIIP (Gross/Net) (36⁰API) Pierson 12.5 – 15.0 mmbbls @ 0.1 mD Average DPIIP/Section cutoff Waskada Estimated Cumulative <1.0% mmbbls Recovered Oil Goodlands Hz Well Information: Canada/US Bord
Slide 15: Spearfish Light Oil Acquisitions in North Dakota
/ Spearfish Light Oil Acquisitions in North Dakota Summary of Acquisitions: Pierson • $21.5 million in cash subject to closing adjustments Waskada • 100 bbls/d high quality, high netback light oil (36 degree API) production Goodlands • 6,000 acres of highly prospective Spearfish lands Canada/US Bord
Slide 16: Summary of Unbooked High Impact Light Oil Plays
/ Summary of Unbooked High Impact Light Oil Plays Estimated Estimated Unbooked Unbooked Rates Net Unbooked Reserves / Capital / NPV10 BT/ NPV10 BT Per FD Production Reserve of Oil Hz Wells(1) Well Well Well(2) Additions(2)(3) Share(4) Adds(3)(5) Adds Return mboe $MM $MM $MM $/share boe/d mboe % Valh
Slide 17: Potential Net Upside from Secondary Recovery
/ Potential Net Upside from Secondary Recovery Area Net DPIIP Cumulative Oil Estimated Primary Estimated Potential (mmbbls) Recovered Recovery (mmbbls/%) Incremental Secondary To-Date (%) Recovery (mmbbls/%)(1) Valhalla South 99 2.4% 9.9/10% 9.9/10% (Doig) Windfall 55 1.0% 5.5/10% 8.3/15% (Bluesky)
Slide 18: 2011 Strategic Objectives
/ 2011 Strategic Objectives Meet or exceed recently increased 2011 guidance Position Surge in additional high impact oil resource plays Raise Surge’s profile, increase liquidity, and graduate from TSX Venture to TSX in the fourth quarter 2011 Evaluate secondary recovery pilot programs in all core ar
Slide 19: Appendix
—S$GRGE ENERGY INC TSX-V:SGY Appendix
Slide 20: 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 21: Surge Energy Inc. – Summary of Highlights
/ Surge Energy Inc. – Summary of Highlights • April 13th, 2010 – Entered into a reorganization and investment agreement . • May 5th, 2010 – Closed equity offering for $50,004,000. • June 22nd, 2010 – Announced the acquisition of a private company (Corinthian Energy Corporation). • June 25th, 2010 –
Slide 22: 2011 Revised Guidance & Cash Flow Sensitivities
/ 2011 Revised Guidance & Cash Flow Sensitivities Previous 2011 Guidance Revised 2011 Guidance Average 2011 Production: 5,500 boe/d (>65% light/medium oil & NGLs) 6,000 boe/d (>65% light/medium oil & NGLs) 2011 Exit Production: 6,500 boe/d (>70% light/medium oil & NGLs) 7,500 boe/d (>70% light/mediu
Slide 23: Corporate & Operational Profile
/ Corporate & Operational Profile TSX-V Trading Symbol: SGY Basic Shares Outstanding:(1) 56.1 million Fully Diluted Shares Outstanding:(1) 61.5 million Recent Share Price:(2) $9.65 Fully Diluted Market Capitalization:(3) ~$590 million Proved Plus Probable Reserves:(4) 21.2 mmboe Proved Plus Probable
Slide 24: Surge's Oil and Gas Hedge Summary
/ Surge’s Oil and Gas Hedge Summary Oil Hedging Swap/Price Floor Period Volume in bbls/day Call Option ($Cdn/bbl) Index ($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 Above Jan 1 to Dec 31, 2011 250 $78.40 WTI Floor: 50% Jan 1 to Dec
Slide 25: Net Asset Value (NAV) as at December 31, 2010
/ Net Asset Value (NAV) as at December 31, 2010 Proved Plus Probable Reserve Value $411.9 (Including Future Development Capital)(2) Undeveloped Land (435,413 acres @ $100/acre)(3) $43.5 Estimated Net Debt ($46.0) Option & Performance Warrant Proceeds $27.5 Total Net Assets (basic) $409.5 Total Net A
Slide 26: Surge's Tax Pool Estimate
/ Surge’s Tax Pool Estimate Estimated Combined Tax Pools at Dec 31, 2010 Rate ($MM) 10% COGPE $127 30% CDE $50 100% CEE $14 20-30% UCC $44 100% Non-Capital Loss $16 10-20% Other $4 Total $255 TSX-V:SGY 26
Slide 27: Surge Analyst Coverage
/ Surge Analyst Coverage Financial Institution Analyst Email Address AltaCorp. Capital Don Rawson drawson@altacorpcapital.com BMO Capital Markets Jim Byrne jim.byrne@bmo.com CIBC World Markets Inc. Arthur Grayfer arthur.grayfer@cibc.com Cormark Securities Inc. Jonathan Fleming jfleming@cormark.com D
Slide 28: www.surgeenergy.ca
/ www.surgeenergy.ca Advisors National Bank of Canada Bank of Nova Scotia Bankers: Canadian Imperial Bank of Commerce ATB Financial Auditor: KPMG LLP Legal Counsel: Heenan Blaikie Evaluation Engineers: Sproule Associates Registrar & Transfer Agent: Olympia Trust Company Dan O’Neil, President & CEO I