Energy Summary comment on SGYEnergy Summary for Feb. 12, 2015 by Stockwatch Business Reporter
Surge Energy Inc. (SGY) added 10 cents to $3.33 on 8.66 million shares, after posting 2P reserves of 112 million barrels of oil equivalent at year-end 2014, up from 73.5 million at year-end 2013. It also noted full-year 2014 production of 18,070 barrels a day, up from 12,014 in 2013. The increases reflect drilling success and the June acquisition of Longview Oil (which was producing about 5,600 barrels a day at the time). Surge said its production in late January was a record 22,700 barrels a day. That figure will have dropped now, because the company just sold $35.6-million of assets in Saskatchewan, likely to Raging River Exploration Corp. (RRX: $8.40) (based on similarities in their press releases). Those assets are producing 600 barrels a day. Despite the sale and the relative lack of drilling planned for the first half of 2015 (just 3.8 net wells), Surge still looks to be in good shape to achieve its first-half production target of 20,000 barrels a day. It is also taking steps toward an important first-half goal: "pay debt down aggressively." Bank debt was $453-million as of Sept. 30. The proceeds from the asset sale, as well as another $35-million in profits from rejigging hedges, will go toward that debt. Surge will also have a bit of extra money (about $5.5-million every month) because of its decision to halve its dividend in early January. The new payout of 2.5 cents a month yields a still generous 9 per cent.