Thoughts on Surge...While Surge has not been flying sky-high in terms of stock price, things are looking skyward for this company.
Recent earnings are pretty well what was forecasted and we knew:
* there was going to be a hedging loss
* there would be no immediate dividend increase
* they were spending a lot of capital, so the production was going to ramp up slowly
Patience... and I for one have had a lot... has to the key with SGY. I've been sitting and waiting. Now it appears that SGY is about to make a move.
A couple of things to keep in mind:
* it looks like we'll see dividend increases over the year, possibly a double by 12/22.
* the company is going to deliniate more multiple horizontal legs in the Sparky area.
* they have drilled an awesome well in Vahalla.
* they are capitalizing Mount Bastion
* many of the hedges have rolled off with more to follow.
* more funds and retail want in if/when the dividend increases.
* continue to buy up land acreage
* looking at bolt-on acquisitions and potentially funding it by selling some of the Sparky acreage that isn't needed.
Once they get to $200MM debt, 25% will be used for share buybacks and acquisitions... that's roughly $60-80MM a year... that hopefully translates into 500 barrels here and 1000 barrels there. It's not really a bad time to buying assets at 2x-3x FCF.
Seems like a good time going into this cycle... the opportunity may never present itself again. I'll continue to sit and wait for a bit yet.