Corp outlook... upward revision to preliminary 2022 guidance Surge anticipates significant free cash flow1 generation (at current strip pricing) in 2022, through consistent and disciplined development of its high quality, conventional crude oil asset base, including Surge's premier Sparky play in Alberta, complemented by its high operating netback1, light oil Southeast Saskatchewan assets.
Following the completion by Surge and Fire Sky of their respective drilling programs to date in 2021, Surge anticipates achieving its previously announced guidance for the Company's 2021 exit production rate of 21,500 boepd.
Surge confirms the Company's upwardly revised financial and operational guidance for 2022, as detailed below:
| Guidance | @ US $75 WTI* | @ US $80 WTI* | @ US $85 WTI* |
| Exit 2021 production | 21,500 boepd (86% liquids) |
| Average 2022 production | 21,500 boepd (86% liquids) |
| 2022 Exploration and Development Capital Expenditures | $120 million |
| 2022 Adjusted funds flow1 ($MM) | $270 | $295 | $315 |
| 2022 Adjusted funds flow per share1 | $3.23 | $3.53 | $3.77 |
| 2022 Cash flow from operating activities ($MM) | $255 | $280 | $300 |
| 2022 Free cash flow ($MM) | $135 | $160 | $180 |
| 2022 Free cash flow per share | $1.62 | $1.92 | $2.16 |
| 2022 All-in payout ratio1 | 47% | 43% | 40% |
| 2022 Exit Net debt to annualized Q4/22 adjusted funds flow1 | 0.6x | 0.5x | 0.4x |
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| *All additional pricing assumptions (WCS: US$13.50, EDM US$5.00), Fx of $0.80 and AECO of $2.50 per mcf) remain constant. Adjusted funds flow and cash flow from operating activities assume $nil change in non-cash working capital. |
Following the completion of the Transaction, Surge has the following operational indicia and financial attributes:
- Over 2.6 billion barrels of net combined, internally estimated, conventional OOIP2 - with a recovery factor to date of 6 percent;
- Combined proven plus probable year end 2020 reserves of over 100 million boe (86 percent liquids), generating a 13 year reserve life index;
- Exit 2021 production forecast of 21,500 boepd (86 percent liquids weighted);
- Estimated base corporate decline of 26 percent;
- A development drilling inventory of over 975 net locations (internally estimated)3; providing a development drilling inventory of more than 13 years;
- Production efficiencies2 of ~$15,600 per boepd (IP 180);
- Shares outstanding (basic): 83.4 million; and
- An estimated exit 2022 net debt to annualized Q4/22 adjusted funds flow of approximately 0.6 times at US$75 WTI.