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Surge Energy Inc (Alberta) T.SGY

Alternate Symbol(s):  ZPTAF | T.SGY.DB.B

Surge Energy Inc. is a Canada-based oil focused exploration and production (E&P) company. The Company's business consists of the exploration, development and production of oil and gas from properties in Western Canada. It holds focused and operated light and medium gravity crude oil properties in Alberta, Saskatchewan and Manitoba, characterized by large oil in place crude oil reservoirs with low recovery factors. It offers exposure to two of the five conventional oil growth plays in Canada: the Sparky and SE Saskatchewan. It holds a dominant land position and is drilling a mix of horizontal multi-frac and horizontal multi-lateral wells in the Sparky area. Sparky is a large, well established oil producing fairway in Western Canada. SE Saskatchewan is a focused operated asset base with light oil operating netbacks. SE Saskatchewan operates low-cost wells with short payouts and offers potential for continued area consolidation.


TSX:SGY - Post by User

Post by mrmomoon Nov 02, 2020 4:43pm
275 Views
Post# 31826725

Interesting asset sale....

Interesting asset sale....Just to give some more insight into Surge's situation and what s/h could possibly expect. Take Journey energy, who's in the same difficulties like Surge and has been forced to resolve their issues. Though Journey is a more gassy producer than Surge, oil still produces constitues 40% of production. It just recently announced an asset sale which Surge investors might find very interesting. It sold a power generation station along with some producing assets of ~9mcfpd of gas and 90 bopd of ngl's for ~$15M and the assumption of certain obigations that came along with those asstes. If we takeout the value of the power station from the equation, it seems that Journey got about $25000 per flowing barrel for those properties. Even though these are gassy assets, this is quite important because this sets a ballbark figure of what acquirers are willing to pay for assets in this environment. With these metrics it gives Surge investors a value of about 0.16 (WITHOUT extra liabilites included) for the shares. Another thing to note is that natural gas assets are in demand and oil assets are out of favor.....

Please note the following paragraph from their press release below.........

"Production from all assets being sold is approximately 8,900 million cubic feet per day and 90 barrels per day of liquids (oil and natural gas liquids). In addition to the power project, the sold assets include 455 gross (439 net) wells and have associated asset retirement obligations of approximately $30-million (uninflated and undiscounted). The closing of each asset sale is expected to occur on or before Dec. 15, 2020, and is not subject to any government approvals. "

It seems that suitors are taking carefull note of ALL LIABILITIES that come with any asset purchase they make. This is NOT good news for holders should Surge's opt for an asset sale OR sellout completely as they have humungous liabilites on this end. LIke i stated they would.

Hopefully for Surge holders, they will be bailed out with Gov't loans like Bonterra was and it might buy them time to figure out how to refinance their upcoming debt obligations. My bet is still on creditor protection soon.


Good luck to all..........
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