Surge Energy Inc (Alberta) T.SGY

RE:The SGY advantage.

[zack50]

Tradestay wrote: I know some here did  not like the recent share dilution but I was ok, we are still under 100M shares and have more production that is super accretive to cash flow.

The SGY advantage is this low share count, when they hit that debt target which is by Q3 this year, they can quickly move the dial on the share and put a bottom in for shareholder, but honestly if oil keeps above $75 this will go up without that. 

When it comes to Surge, there are a few things that the market is not giving attention to just yet. I've been a shareholder for sometime now, and there are a number of reasons I like Surge going forward...

** FCF + NAV + TAX POOLS + the upside on the drilling locations (very significant) **

Personally, I feel that the recent land acquisition was quite a good play on Surge's part. Initally, the market did not appear to like the asset purchase, but then Surge came out and drilled 4 or 5 of the top wells, which are some of the best ever drilled in Saskatchewan. These wells pay out in 4 - 5 weeks at $80 WTI and they pay out 4 - 5x in the course of 1-year, so they have done really well on the acquisitions.

Surge has exceptional torque to higher oil pricing and the NAV is multiples of today's current share price. They have ~4 years of tax pools and they have an abundance of undeveloped land acreage, which so far, has just not been capitalized. Now that oil prices are rising, some of these properties can compete for capital and because of the inherent torque, Surge can increase production in these properties which will serve to reduce operating costs.

The generation of exceptional netbacks can be attained from the massive land packages that are outside the Blueberry First Nations. As well, Surge has optionality on more gassy Montney acreage, liquid rich Montney acreage and the ultra-high condensate Montney acreage... some of which is non-core and can be sold for 100's  of M$$, as they just did with a recent land sale, for ~$130M.

We're almost back to $80 WTi... if we can stay there for a prolonged period of time, SGY will trade much, much higher than its present share price.

One day, the market will get it... and present shareholders will be the beneficiaries.