Not all production is the same
The SKS 5800 boe a day acquired by the "dilution" is very prime stuff. The private equity owners who owned these assets were making lots of money from them and were starting to pay income taxes -- can you believe it? - on their profits from these assets even back last year in 2021. Which is why they agreed to the deal with Surge.And why Surge sold them on the deal. These acquired assets enabled Surge to get financing going forward. So why do the deal at all? So what does Surge have that these private equity guys might want? Somewhere between $600 million and 1 billion in NOL tax loss carryforwards which will not expire for another 10 years.
So - pay 22% income taxes on profits right now and for years to come - OR - become major shareholder in Surge - and not pay taxes at all for 10 or so years....just get sheltered $$$ dividends from Surge.
This is why Surge was the acquiring company....to preserve and shelter the NOLS.....and I think it is likely these NOLS are going to be fully used up over the next 10 years. The NOLS are worth $100 million - and are a hidden asset of Surge