Surge NOI Growth... The following information was contained in a recent Investor Presentation in March and received from the Commnications Analyst at Surge Energy. Charts are depicted in the info sheet but for some reason they will not copy!
CASH FLOW PER SHARE IS SOARING!
Surge is uniquely positioned in the Canadian intermediate space: Surge Energy Inc. (“Surge” or “SGY”) is a successful, 11 year, TSX listed, public oil company with a proven management team. Surge produces ~16,000 boepd (85% medium/light oil), has a low corporate decline (~21%), high netbacks, and a very large, 750 location (~14yr) development drilling inventory.
Numerous positive signals that the physical market is short of oil:
• Oil prices (WTI +/- US$60/bbl) are breaking out (up +375% since April/20);
• Differentials (US$11/bbl) are significantly below the long term average (US$17/bbl); RBC is now calling for WCS differentials to be as tight as US$10 per barrel in 2022; 60% of Surge’s production (i.e. Sparky) is correlated to WCS;
• Chinese oil imports were up 32 percent in January/21 over December/20 (China is now the largest importer of crude oil in the world); and
• Recent forecasts show that world oil supply will be in deficit much earlier than expected:
OPEC+, Goldman Sachs, JP Morgan, Citibank, Raymond James, etc. are now projecting large, structural, daily supply deficits of +/- 2.0MM bopd for the balance of 2021.
Surge is now bringing on over 3,200 boepd of very high netback, medium/light oil production in its Sparky and Montney core areas - from its exciting 32 well Q1/21 drilling program (on capex of only $39MM) - just as crude oil prices are climbing, and differentials are dropping!
Surge’s key operational edge is its Sparky play: Surge’s core Sparky play has become one of the top medium/light oil growth playsin Canada and makes up ~8,000 boepd or ~50% of current production. Over the last 5 years, Surge has grown production in the Sparky play by over 500% from 1,200 boepd to ~8,000 boepd today:
• Top Tier PE’s ~ $10,000 per boepd – all-in drilling, complete, equip & tie-in costs of ~$1.1MM;
• Low Risk – shallow, conventional, large OOIP, high porosity (up to 30%),sandstone reservoirs; and
• Large inventory of > 425 Sparky Core drilling locationsin inventory (i.e. ~12 years of drilling), with average IRR’s of 112% per Sparky location @ US$55 WTI flat pricing.
As a result of Surge’s explosive NOI growth, independent research has NOW confirmed Surge as having PEER-LEADING GROWTH in cashflow per share!!
POSITIVE OIL PRICE FUNDAMENTALS + SGY’s LOW PRODUCTION DECLINE (21%) + LARGE Q1/21 DRILLING ADDS = EXPLOSIVE NOI GROWTH!!
Surge provides shareholders with: 1) EXPLOSIVE GROWTH IN CF PER SHARE; and 2) a deep value opportunity to invest in a low risk, conventional, medium/light gravity, public crude oil company that is widely held. Further, Surge’s Sparky play is turning out to be one of the top medium/light oil growth plays in Canada, and is completely unique within Surge’s Canadian peer group!!