Surge Energy Inc. · TSX:SGY
Surge Energy — Investor Presentation (January 2015)
24 slides from Surge Energy's investor presentation, January 2015
Slide 1: Positioned for Long Term Sustainability
POSITIONED FOR LONG TERM SUSTAINABILITY TSX: SGY JANUARY, 2015
Slide 2: Recent Developments
RECENT DEVELOPMENTS Exited 2014 at record production levels Record Results in Q4 2014: • Drilled 11.3 net wells in Q4 2014 with 100 percent success rate • Exceeded targeted production exit rate of 21,350 boepd (84% oil) – up 78% over Q4/13 • Re-invested proceeds from Q3 miscellaneous asset disposi
Slide 3: Reasons to Own Surge
REASONS TO OWN SURGE Well managed, operated, high quality, low decline asset base High quality light/medium crude oil asset base; low decline <22% >2.0 Billion barrels of OOIP under management; low RF<8% Low “all-in” sustainability ratio of 65% (US$58 WTI) ($0.30 annual dividend) High netbac
Slide 4: First Half 2015 Capital Program @ US$58 WTI
FIRST HALF 2015 CAPITAL PROGRAM @ US$58 WTI Protecting NAV and balance sheet through conservative capital spending OPERATIONAL Average Production (boe/d) for 1H 2015 >20,000 (83% Oil/NGLs) Capital Spending for 1H 2015 $22 million Wells Drilled in 1H 2015 5/3.8 gross/net wells • 2 Shaunavon • 1 Spark
Slide 5: Elite Assets Focused in Three Core Areas
ELITE ASSETS FOCUSED IN THREE CORE AREAS Large OOIP pools located in established oil charged trends Surge 2014 Exit Production: Total: 21,350 (84% Oil & NGL’s) Western Alberta Production: Total: ~6,700 (67% Oil & NGL’s) SE AB/SW SK Production: Total: ~9,450 (88% Oil & NGL’s) Williston Basin Producti
Slide 6: Core Area Details
CORE AREA DETAILS >2 Billion bbl’s OOIP with potential to recover an additional ~285 Million bbl’s net to Surge OOIP (MMbbls) Drilling Locations Avg. Cum Oil Total Booked Independent (1) Internally Estimated Ultimate Core Area Formations WI Recovery Recovery Factor P+P Recovery Net (Waterflood Facto
Slide 7: Top Tier Capital Efficiencies and Replacement Metrics
TOP TIER CAPITAL EFFICIENCIES AND REPLACEMENT METRICS Vast opportunity base allows for selective and efficient capital allocation Areas/Formations Rates of Return % (1) Capital Drill/ Complete/ Mboe/well Core Area 180 day IP Efficiency Equip (2) (on primary) Locations $55 WTI $58 WTI $65 WTI $75 WTI
Slide 8: Quality Waterflood Projects
QUALITY WATERFLOOD PROJECTS Increasing reserves / flattening declines through waterflood implementation Current Properties Under Full Commercial Waterflood Area Formation Start Date 2014 Decline Current RF Booked RF Expected RF Lloyd/ Silver 1996 18% 12.6% 35.7% 39.0% Cummings Wainwright Sparky 1962
Slide 9: Southwest Saskatchewan - Shaunavon
SOUTHWEST SASKATCHEWAN - SHAUNAVON >400MM barrels of Net OOIP in the Upper and Lower Shaunavon combined >400 MMbbls of Net OOIP in the Lower and Upper Shaunavon formations (medium gravity oil) Current recovery factor ~0.9% Rates of return in excess of 87%(1) for the Upper Shaunavon 369 gross
Slide 10: Upper Shaunavon
UPPER SHAUNAVON Large contiguous undeveloped land position in the Upper Shaunavon trend R21W3 R19W3 T10 Instow Leitchville Area/Pool Well Count Depth OOIP Cum Oil Peak Rate Current Rate Vt Hz (m) (MMbbl) (MMbbl) (bbl/d) (bbl/d) Instow 118 2 1372 152.4 69.6 9420 2530 T8 Leon Lake Leitchville 68 209 1
Slide 11: Upper Shaunavon Activity
UPPER SHAUNAVON ACTIVITY >150MMbbl OOIP on Surge lands in the Upper Shaunavon B Sand R20W3 R19W3 R18W3 CPG U. Shvn Hz T7 191/13-20-006-19W3 On Prd Mar 2011 IP(90) = 109 BOPD Cum(YTD) = 24.5 mbbl Upper Shaunavon A Sand SGY Q4 ‘14 U.Shvn Hz Upper Shaunavon B Sand SGY Q4 ‘14 U. Shvn Hz 191/04-34-005-19
Slide 12: Upper Shaunavon Performance
UPPER SHAUNAVON PERFORMANCE Surge results in the Upper Shaunavon have exceeded expectations Upper Shaunavon - SGY Results vs 2013YE McDaniel Type Curve 300 Production Rate (bopd), Cumulative Oil Production (mbbls) 250 SGY Wells Normalized Rate 200 (bopd) SGY Wells Avg. Cum (mbbls) 150 McDaniel YE201
Slide 13: Southeast Saskatchewan - Williston Basin
SOUTHEAST SASKATCHEWAN - WILLISTON BASIN Midale, Macoun and Pinto Areas – Large Fee and Crown position in Midale Carbonate trend 211 MMbbls of Net OOIP (35-37 degree API) Midale Weyburn Current recovery factor ~5% of OOIP Rates of return >57% (1) 38,400 acres (60 sections) of Surge Fee land
Slide 14: Southeast Alberta
SOUTHEAST ALBERTA Provost / Eyehill / Wainwright Area’s – Oil saturated Cretaceous Sands Wainwright >400 MMbbls of Net OOIP (23-31 degree API oil) Current recovery factor of ~14% Eyehill Sparky waterflood started in Q4 2014 and Provost waterflood pilot expected to start in 2015 Control of ke
Slide 15: Western Alberta
WESTERN ALBERTA >195MMbbls OOIP in Oil rich Doig and Doe Creek Formations Valhalla Doig >130 MMbbls of Net combined OOIP at Valhalla and Doe Creek Wembley (40 degree API light oil) Oil Pool Rates of return of 62% (1) Current recovery factor ~2.8% 40 gross/34 net drilling locations at both Va
Slide 16: Risk Management / Hedging Strategy
RISK MANAGEMENT / HEDGING STRATEGY Oil Hedges The Company has an orderly, on-going, 7,000 40% risk management / hedging program 34% 34% designed to lock in future cash flows to 6,000 35% protect the Company’s capex program Percentage of After Royalty Production Hedged Oil Volume Currently Hedged a
Slide 17: Positioned for Long Term Sustainability
POSITIONED FOR LONG TERM SUSTAINABILITY Low base decline <22%, high netbacks, excellent capital efficiencies Very low “all-in” sustainability ratio of 65%; NO DRIP! Over $170 million availability on bank line(1) Ongoing risk management/hedging program protects cash flow FOOTNOTES INCLUDED IN
Slide 18: High Quality Crude Oil Asset Base
HIGH QUALITY CRUDE OIL ASSET BASE Focused, high quality, crude oil asset and opportunity base; core properties are 100% operated with working interests of ~90% Elite, large OOIP crude oil reservoirs – with low recovery factors; >15 year RLI (only 2 years of FDC/cash flow) Over 1,000 gross low
Slide 19: Analyst Coverage
ANALYST COVERAGE Financial Institution Analyst Email Address BMO Capital Markets Jim Byrne jim.byrne@bmo.com Canaccord Genuity Anthony Petrucci apetrucci@canaccordgenuity.com CIBC World Markets Inc. Jeremy Kaliel jeremy.kaliel@cibc.ca Cormark Securities Inc. Garett Ursu gursu@cormark.com Dundee Secu
Slide 20: Corporate Partners
CORPORATE PARTNERS Advisors National Bank of Canada Bank of Nova Scotia Canadian Imperial Bank of Commerce Toronto-Dominion Bank Bankers: Bank of Montreal JPMorgan Chase Bank, N.A. ATB Financial HSBC Bank Canada Auditor: KPMG LLP Legal Counsel: McCarthy Tétrault Sproule Associates Ltd. Evaluation En
Slide 21: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements. More particularly, this presentation contains statements concerning anticipated: business strategies, plans and objectives; potential development opportunities and drilling locations, expecta
Slide 22: Endnotes
ENDNOTES Slide 3: (1) Estimated net debt as at June 30, 2015. Slide 4: (1) Based on 2015 WTI oil pricing of US$58/bbl; AECO gas $3.50/gj and a CAD/USD exchange rate of $0.83. Slide 6: (1) December 31, 2013 reserves. Slide 7: (1) Assumes CAD/USD exchange rate of $0.83 for 2015 and Sproule January 201
Slide 23: Oil and Gas Advisory
OIL AND GAS ADVISORY "In this presentation, "Boe" means barrel of oil equivalent on the basis of 6 mcf of natural gas to 1 bbl of oil. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 6mcf: 1 bbl is based on an energy equivalency conversion method primarily appli
Slide 24: Non-GAAP Measures
NON-GAAP MEASURES NON-GAAP MEASURES This presentation includes non-GAAP measures as further described herein. These non-GAAP measures do not have a standardized meaning prescribed by International Financial Reporting Standards (“IFRS or, alternatively, “GAAP”) and, therefore, may not be comparable w