Surge Energy Inc. · TSX:SGY
Surge Energy — Investor Presentation (February 2015)
25 slides from Surge Energy's investor presentation, February 2015
Slide 1: Positioned for Long Term Sustainability
POSITIONED FOR LONG TERM SUSTAINABILITY TSX: SGY FEBRUARY, 2015
Slide 2: Recent Developments
RECENT DEVELOPMENTS Strong 2014 Reserves, Record Production Levels and Debt Reduction 2014 Year End Reserve Highlights • New NAV of $7.36 per share (December 31, 2014) • “All in” FD&A costs for 2014 of $19.55 per boe and recycle ratio of > 2.2 times • Increased YOY 2P reserves by 52% from 73.5MMbo
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 ~261 Million bbl’s net to Surge without the Viking OOIP (MMbbls) Drilling Locations Avg. CTD Oil Total Booked Independent (1) Internally Estimated Ultimate Core Area Formations WI Recovery Recovery Factor P+P Recovery Ne
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 Silver Lloyd/ Cummings 1996 18% 12.6% 35.7% 39.0% 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 362 gross
Slide 10: Upper Shaunavon
UPPER SHAUNAVON Large contiguous undeveloped land position in the Upper Shaunavon trend R21W3 R19W3 Area/Pool Well Count Depth OOIP Cum Oil Peak Rate Current Rate T10 Instow Vt Hz (m) (MMbbl) (MMbbl) (bbl/d) (bbl/d) Leitchville Instow 118 2 1372 152.4 69.6 9420 2530 Leitchville 68 209 1371 98.9 14.5
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 exceeding expectations Upper Shaunavon - SGY Results vs Type Curve 300 Production Rate (bopd), Cumulative Oil Production (mbbls) 250 SGY Wells Normalized Rate (bopd) SGY Wells Avg. Cum (mbbls) 200 McDaniel YE2014 Type Curve Rate (bopd)
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% 39 gross/31 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, risk management / hedging program $85.00 designed to lock in future cash flows to 6,500 protect the Company’s capex program and fund dividends. $80.00 Surge has 5,500 barrels per day of WTI 5,500 hedged (~ 41% 1H
Slide 17: 2014 Year End Reserves
2014 YEAR END RESERVES ~$2.0 Billion of Total Proved plus Probable Reserves Value (NPVBT10) 2014 Year End Reserves Oil& NGLs Gas Total Reserve Category NPVBT10 ($MM) (1) (Mbbl) (MMcf) (Mboe) Proved Producing 36,834 51,587 45,431 $1,038 Proved Non-Producing 733 2,424 1,137 $25 Proved Undeveloped 16,6
Slide 18: Positioned for Long Term Sustainability
POSITIONED FOR LONG TERM SUSTAINABILITY Low base decline <22%, high netbacks, excellent capital efficiencies Very low “all-in” sustainability ratio of 65%; NO DRIP! Ongoing risk management/hedging program protects cash flow FOOTNOTES INCLUDED IN THE BACK AS ENDNOTES 18
Slide 19: High Quality Crude Oil Asset Base
HIGH QUALITY CRUDE OIL ASSET BASE Focused, high quality, crude oil asset and opportunity base; core properties are 100% operated with working interests of ~90% Elite, large OOIP crude oil reservoirs – with low recovery factors; >15 year RLI (only ~2 years of FDC/cash flow) Over 900 gross low r
Slide 20: Analyst Coverage
ANALYST COVERAGE Financial Institution Analyst Email Address BMO Capital Markets Jim Byrne jim.byrne@bmo.com Canaccord Genuity Anthony Petrucci apetrucci@canaccordgenuity.com CIBC World Markets Inc. Jeremy Kaliel jeremy.kaliel@cibc.ca Cormark Securities Inc. Garett Ursu gursu@cormark.com Dundee Secu
Slide 21: Corporate Partners
CORPORATE PARTNERS Advisors National Bank of Canada Bank of Nova Scotia Canadian Imperial Bank of Commerce Toronto-Dominion Bank Bankers: Bank of Montreal JPMorgan Chase Bank, N.A. ATB Financial HSBC Bank Canada Auditor: KPMG LLP Legal Counsel: McCarthy Tétrault Sproule Associates Ltd. Evaluation En
Slide 22: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements. More particularly, this presentation contains statements concerning anticipated: business strategies, plans and objectives; potential development opportunities and drilling locations, expecta
Slide 23: Endnotes
ENDNOTES Slide 2: (1) USD$ WTI hedges have been converted to $CAD, based on Feb-9-2015 strip rate. 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 $
Slide 24: 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 25: 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