Energy Summary 10th Surge EnergyEnergy Summary by Stockwatch Business Reporter courtesy Carswell $Peak IV
Surge Energy Inc. (SGY), one of the juniors that hopped on the dividend bandwagon in mid-2013, lost two cents to $2.82 on 1.33 million shares, after releasing relatively unsurprising third quarter financials and repeating its preliminary 2017 guidance. Production during the third quarter came to 13,120 barrels of oil equivalent a day, slightly higher than analysts' predictions of 13,000 barrels a day. Cash flow of nine cents a share was ahead of predictions of eight cents a share. Surge attributed its results to the 13 wells it drilled during the quarter (of which 12 were on production by quarter-end) and their steadily decreasing costs. Operating costs were just $11.27 a barrel during the quarter, boasted Surge, compared with $13.35 a barrel in the same period last year. Of course, as SEDAR filings reveal, the most recent operating costs benefited from a favourable 13-month adjustment recorded during the quarter. Without this adjustment, Surge's operating costs were $11.93 a barrel. That is still in line with this year's guidance of $11.95 to $12.45 a barrel. In addition, the costs to drill and complete wells in two of Surge's three core areas, the Saskatchewan Shaunavon and the Alberta Sparky, reached lows of $1-million and $850,000, respectively, nicely below the budgeted costs of $1.6-million and $1.5-million. Speaking of budgets, Surge repeated its September statements that it would spend $87-million in 2017, which is expected to enable average production of 13,650 barrels a day. It had not said in September how many wells it would drill to achieve its production goal, but now it says it will drill seven Shaunavon wells in the fourth quarter of 2016, six Sparky wells in late 2016 and early 2017, and, in its third core area, the Valhalla Doig asset in Alberta, one well in the fourth quarter and four to five wells in 2017. At current 2017 pricing, says Surge, the company expects to be able to boost production "aggressively," generate "substantial" free cash flow and maintain its 0.625-cent monthly dividend, which yields 2.6 per cent.
Updated Canuck energy targets * Surge Energy Inc : Scotiabank maintains C$3.00 target; buy
* Surge Energy Inc : TD restates C$3.50 price target; buy