G & M - Analyst upgrade... Coming off research restriction following its upsized $70-million equity offering to fund its a $200-million asset acquisition from Enerplus Corp., National Bank’s Dan Payne bumped his target for Surge Energy Inc. shares to $15 from $14, reaffirming an “outperform” rating. The average is $14.69.
“Pro-forma the transaction, the company’s corporate strategy & orientation remain intact to maximize free cash in support of long-term sustainable cash dividend growth through its augmented scale at 25 mboe/d (87-per-cent liquids) and increased orientation to high-quality assets, with complements of a moderated decline (23 per vcent), augmented netback and expanded inventory of low capital efficiency opportunities, the company expects to maintain production under a 50-per-cent payout in support of a 20-per-cent FCF yield,” said Mr. Payne. “That excess cash will continue to be directed towards de-leveraging and sustainable dividend increases, immediately expanded by 14 per cent (5-per-cent cash yield, 13-per-cent payout), while its return of capital framework remains intact for a potential doubling of its payout & dividend through mid-2023 (implications towards $18 per share at a 5-per-cent yield).”