Energy Summary 13th Surge EnergyBy Stockwatch Business Reporter Courtesy carswell $peak Energy board Investor Village
Elsewhere in Western Canada, Paul Colborne's Alberta- and Saskatchewan-focused Surge Energy Inc. (SGY) added five cents to $1.06 on 2.58 million shares, after touting its "defensive and sustainable" guidance for 2020. It plans to produce 21,000 barrels of oil equivalent a day (down from this year's target of 22,000) on a budget of $98.5-million (nearly one-third lower than this year's budget of $135-million). Surge said this level of spending will allow it to maximize cash flow, pay down debt and even maintain the 0.8333-cent monthly dividend, with its generous yield of 9.4 per cent. The guidance also allows for "flexibility" to respond to changing commodity prices. In some investors' eyes, this could suggest that the guidance will be hiked at some point, particularly in light of the fact that analysts had been forecasting bolder numbers: namely, a budget of around $124-million and production of around 21,600 barrels a day. In a research note this morning, Scotia Capital analyst Cameron Bean said he sees Surge's guidance as "restrained" and more or less "neutral." He praised Surge's focus on dividend sustainability and pegged the company's all-in payout ratio for 2020 at just 85 per cent. Mr. Bean has a "sector perform" rating on Surge and a price target of $1.25.
Surge also announced that it has hired Derek Christie as senior vice-president of geosciences. It hailed his 28 years of experience in various energy roles across North America. Few specifics were provided, but some investors may have recognized the name anyway. Mr. Christie was most recently the senior vice-president of exploration and corporate development at Crescent Point Energy Corp. (CPG: $5.06), where he worked for about 12 years until his departure nine months ago (perhaps as part of the "streamlining [of the] team" that Crescent Point has been carrying out since September of last year). During Mr. Christie's time with Crescent Point, its production rose to over 175,000 barrels a day from 35,000. One of the co-founders of Crescent Point is the above-mentioned Mr. Colborne, Surge's president and CEO. He was a director of Crescent Point until 2013. The two men also have another connection: They worked together at StarPoint Energy, a private company that was founded in 2003 with an initial private placement of $6-million and merged with another company two years later in a deal worth $5-billion. Mr. Colborne appears to have fond memories of their time together, popping up in Surge's press release to welcome Mr. Christie aboard and praise him as a surefire "huge asset for the company."