Post by
CaptainBigDaddy on Feb 09, 2022 8:24pm
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
Comment by
fortunefavorsus on Feb 09, 2022 9:40pm
If you look at investor presentation they say Sask is the most economic play (2X well payout in less than 2 years) behind Clearwater. Does appear they got those assets at a steal price particularly considering current oil prices. A Differentiated Oil Company Driving Sustainable Growth (surgeenergy.ca)
Comment by
pennydredful on Feb 10, 2022 3:04pm
in other words we should expect to see more tax driven similar deals coming down the pipe. After all we know Paul is the consummate deal maker .
Comment by
ppp on Feb 10, 2022 6:40pm
Paul did enough for a while. All he needs to do is pay down debt and maybe drill a few more holes. Show the market how good the last deals are.