RE:RE:RE:The SGY advantage.unc12345 wrote: uwebb429 wrote: 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.
Here is the SGY advantage that got me excited.
https://youtu.be/WD9MPjalF5A?t=1010 If you only have 2 minutes, that link will take you directly to the 16:50 minute mark of Surge's recent presentation. Listen until the 18:30 mark and let that information sink in.
Surge is sitting on a mountain of light or medium oil that can be easily recovered at low cost with very little risk. The horizontal drilling and water flood technology to recover a higher percentage of oil from these pools is already avaiable and is being successfully used throughout Alberta today. No fracking required.
A single 1% increase in oil recovery can add a billion dollars of shareholder value (+$10 per share). That is based on WTI pricing that is far below what Surge is getting for their oil today.
The land they acquired in SE Saskatchewan allows them to drill and tie in new wells in under two weeks. Drilling costs are fully recovered within eight weeks after that. SGY significantly under paid for what they are already getting out of their new assets. Any share dilution has been money well spent.
I see these things, I'm convinced - but why don't more people see it? Share price continues to languish. Is the next leg up after the Q4 report?
Surge is still a relatively small company so they seem to be flying under the radar. If they ever move up to the TSX30 then maybe more people will notice them and analysts will begin to promote them more. At some point in the near future, I can see them fitting into the TSX30 list quite nicely amongst their peers.
https://money.tmx.com/en/tsx30 Surge got slaughtered during Covid like everyone else. They ended up with high debt from the Canadian banking industry that was really not interested in financing the Canadian oil and gas industry. This forced them into some terrible hedges that cost them a lot of money.
They have shaken off the punitive hedges for 2023. Their previous debt issues are not going to be a problem when you look at the expected cash flow this year at current WTI pricing. The dark clouds that were once hanging over SGY for so long are coming to an end early this year.
They have already given hints about share buybacks and increasing the dividend again as soon as this spring. They can easily afford to do this. Their ultimate goal is to become an industry leader in converting their long life assets into cash flow and then giving that cash back to shareholders. I like that.
Shubham Garg definitely likes what he sees. His analysis of companies tend to go on and on which for many is probably "too much information". At the 2:10:20 mark, he starts talking about Sparky and a whole lot more.
https://youtu.be/CJjvn9svCHg?t=7820 I wish companies could produce their own information like this but for publicly traded companies, everything is a big secret. It is great when Shubham can go behind the scenes and dive deeper into what a company is up to.