Surge Energy Inc (Alberta) T.SGY

Golden Cross finally

[PUNJABI]

XEG created a golden cross about 12 months ago. Oil stocks did that about 12 months to about 3 months ago. But SGY which has been a huge laggard has very recently created a golden cross. That confirms that this stock is finally in an upward trend.  One has to understand why this stock is underperforming. This is an important lesson for the future.


The chart tells the entire story of the stock. On Oct 21 the stock was flat after the runup to about $5.40 area from lows of $4.00 RS price. Then the massive dilution took the stock down to $3.80 area and that was the time when all the other oil stocks took off. Really horrible timing by the management for massive dilution and then reverse split. These things matter in the performance of the stock. In future, you should take them into account when you are selecting a stock.


In Jan the stock did move up but has been range-bound from over $6.00 to under $7.00. anytime the stock wants to break out there is a continuous barrage of shares that are dropped on the bids. On down days like today, the selling continues. Most of the shares are coming out of Anonymous.


Yesterday any time any bids were building up Anonymous would fill them. The seller (s) had the stock pinned Today there was a race to hit the bids in the early part of the day that tanked the stock very fast.


There are posters that keep posting that the stock is being manipulated. THAT IS TOTAL GARABGE> There are owners that want to get rid of the cheap shares they hold. There are not that many buyers out there that are taking out those shares at these prices. Once the cheap shares are absorbed then the stock will move higher.

The float has reduced to $83m has a decent volume, still not enough buying to move the stock. Buyers are not in a hurry. Why buy on the offers when your bids will be filled.

Security Type	Equity
Shares Issued	83,357,221
Market Cap	550,991,000
Year High	6.92
Year Low	2.89
Annual Earnings/Share	6.46 CAD
P/E Ratio	1.02322
Annual Dividend/Share
Annual Dividend Yield
Ex-Dividend Date	2020-03-30
Sector	10102010 - Integrated Oil & Gas

Let's see how cheap this stock is based on the price per beopd.  The market cap of only $550 is screaming cheap but when you add the debt of $310m the EV jumps to $860 then it is not that inexpensive. EV of $860m prices 21500 boepd productions at amounts of$40000 beopd.  Recently SGY bought 1500 beopd  for $58m i.e $38666 beopd. All productions and reserves are not the same. But that transaction was accretive to surge.  This average gives you an idea.

Their FCF projection  @ WTI 70 is only $106. With that rate, it will take the company about 3 years to just pay off the debt only, without dividends and buyback. Their debt is expensive too and with the cost of interest, they may take longer than 3 years. This is the reality of this stock at lower oil prices. The last quarterly report was bad because of horrible hedges. With a higher average WTI for the year, and improved hedges the valuation of the stock improves sunstanltly.  Currently, WTI is trading around $90 but the surge has some lower hedges too.



Both SGY dentures are trading at the full face value. No more discounts.  DB has 5.75 % & DB.a 6.75% interest rates which are less than their recent loan interest rate of 8.85%.

These days investors are at looking at FCF and debt. As long as this company carries big and expensive debt it will underperform. After a really painful last few years in the oil sector, the risk tolerance for investors is not there anymore.

The short position of SGY is non-exostant. 582873 shares are shorted. This will have an insignificant impact on the share price. But in the last 4 reports, there are very small increases.



Short Positions for SGY

Symbol	Report Date	Volume	Change	Shares Issued	% Float
T : SGY	2022-01-31	582,873	51,501	83,357,221	0.70
T : SGY	2022-01-15	531,372	188,391	83,357,221	0.64
T : SGY	2021-12-31	342,981	19,947	83,357,221	0.41
T : SGY	2021-12-15	323,034	32,213	83,357,221	0.39
T : SGY	2021-11-30	290,821	-51,137	83,357,221	0.35
T : SGY	2021-11-15	341,958	64,673	83,355,987	0.41
T : SGY	2021-10-31	277,285	188,187	83,355,987	0.33
T : SGY	2021-10-15	89,098	-10,163	71,599,338	0.12
T : SGY	2021-09-30	99,261	-39,191	71,599,338	0.14
T : SGY	2021-09-15	138,452	17,807	71,599,338	0.19
T : SGY	2021-08-31	120,645	-434,487	71,599,338	0.17
T : SGY	2021-08-15	555,132	-112,237	608,594,375	0.09
T : SGY	2021-07-31	667,369	302,135	379,594,375	0.18
T : SGY	2021-07-15	365,234	68,049	379,194,375	0.10
T : SGY	2021-06-30	297,185	34,842	379,194,375	0.08
T : SGY	2021-06-15	262,343	-291,676	379,194,375	0.07
T : SGY	2021-05-31	554,019	77,384	379,194,375	0.15
T : SGY	2021-05-15	476,635	-4,184,489	378,769,739	0.13
T : SGY	2021-04-30	4,661,124	573,333	339,784,739	1.37

[PUNJABI]

Omission : There was a golden cross before the dilution. But that upward reversal trend failed because of the dilution.  

[Rockyboy2015]

Great Post as usual. We need more posters like you. Thank you