SGY mentioned in Stockwatch
Energy Summary for Aug. 6, 2015 by Stockwatch Business Reporter Paul Colborne's Surge Energy Inc. (SGY) added 40 cents to $2.59 on 8.04 million shares. Investors liked its second quarter financials, which showed a higher net loss than analysts had predicted -- four cents a share rather than two cents a share -- but good cash flow and production. Analysts had predicted cash flow of 13 cents a share, but Surge achieved 16 cents a share. It also came close to hitting its first-half production target despite a large asset sale and infrastructure shutdowns. In January, Surge set itself a target of producing an average of 20,000 barrels of oil equivalent a day in the first half of 2015. Things changed after Surge agreed to sell assets producing 4,750 barrels a day to TORC Oil & Gas Ltd. (TOG: $6.94) for $430-million, which it used to reduce debt. The sale closed in mid-June and had the effect of lowering Surge's second quarter production by an average of 800 barrels a day. A further 1,100-barrel-a-day decrease weighed on the second quarter because of infrastructure constraints in Alberta. Despite all this, Surge's total first-half production came to 19,110 barrels a day, not far below its original target. Surge is now looking forward to the rest of the year. It already released a second-half budget in June, but today's update contains a few new plans, including the start of a share buyback program. This will have two main benefits, says Surge: It will return value to shareholders, and it will lead to less cash being given out in the form of dividends (Surge's 2.5-cent monthly dividend, though cut from five cents in January, still yields a generous 11.6 per cent). It will also clear some of those pesky offers out of the way, making it easier for the stock to go up. Surge also dangled the possibility of acquisitions. It expects "excellent growth opportunities [to] present themselves in the fall of 2015, particularly from those companies who were not pro-active in preparing for lower world crude oil prices." One update Surge did not provide was whether it has a new CFO. The previous one, Max Lof, left abruptly in late June, unnerving investors, who sent the stock down 21 cents to $3.56 on the day of the announcement. The stock went on to reach a low of $2.13 at the end of July. Today's rise to $2.59 is a good rally, but there is still a long way to go.