CALGARY - Surge Energy Inc. ('Surge' or the 'Company') (TSX: SGY) is pleased to announce: 1) the intent to reinstitute the Company's base dividend on July 15, 2022; 2) the successful acquisition of strategic, core area lands in SE Saskatchewan at a recent Crown sale; 3) the receipt of an additional $30 million of term debt financing under the same terms and conditions as its existing 5-year term debt facility (the 'Term Debt Facility'); 4) the intent to redeem the Company's $44.5 million of 5.75% convertible debentures for cash; 5) the reconfirmation and extension of Surge's $150 million first lien credit facility (the 'First Lien Credit Facility'); 6) the Company's financial and operating results for the quarter ended March 31, 2022 and 7) Surge's 2022 Outlook.

INTENT TO REINSTITUTE BASE DIVIDEND ON JULY 15, 2022

With crude oil prices now in excess of US$100 WTI per barrel, which is significantly above the Company's US$85 WTI guidance price for crude oil in 2022, Surge is pleased to announce its intention to resume its base cash dividend distribution, payable on a monthly basis.

At current strip commodity prices for crude oil and natural gas, Management projects that Surge's net debt target range will be achieved during Q3/22. On this basis, the Company anticipates reinstating its base annual cash dividend expected to be $0.42 per share (3.5 cents per month), payable on July 15, 2022 to holders of the Company's common shares ('Common Shares') of record at the close of business on June 30, 2022. Any anticipated dividend payment will be subject to the approval of Surge's Board of Directors at the time of declaration.

On an annualized basis, this base cash dividend is equal to approximately 20 percent of Surge's previously guided annual 2022 free cash flow1 utilizing a US$85 WTI per bbl crude oil pricing assumption2.

With the majority of the Company's mandated fixed price crude oil hedges for 2022 expiring in less than two months, Surge has resumed its regular, ongoing risk management program. This orderly program is designed to set price floors that protect Surge's dividend and capital programs, while also providing participation in a rising commodity price environment.

The monthly cash dividend is expected to be designated as an 'eligible dividend' for Canadian federal and provincial income tax purposes. Dividends paid to shareholders who are non-residents of Canada will be subject to Canadian non-resident withholding taxes.

NEW LIGHT OIL POOL EXTENSION AND LAND ACQUISITION AT STEELMAN IN SE SASKATCHEWAN

Surge is pleased to announce that drilling on its operated, light oil, core area assets at Steelman in SE Saskatchewan has delivered better than anticipated results. The Company has been actively drilling in SE Saskatchewan since its acquisition of Astra Oil Corp. and Fire Sky Energy Inc. in 2H, 2021.

The Company's most recent 4.0 gross (2.5 net) wells drilled at Steelman in Q1/22 have continued to deliver strong results, producing at an average IP30 rate of more than 2503 boepd. These four wells have been independently evaluated as some of the best wells drilled in Saskatchewan to date this year4, and at current oil prices these wells are anticipated to pay out in less than 50 days5.

In addition to these excellent drilling results, Surge was also successful at a recent, highly competitive, Saskatchewan Crown land sale at Steelman. As a result, the Company is pleased to announce that it has acquired the majority of the targeted prospective acreage on this exciting new light oil Frobisher pool extension. With Surge's success at the Crown land sale, the Company now estimates it has added up to 40 gross (40.0 net) incremental, highly economic, light oil Frobisher drilling locations on the newly acquired Crown lands - directly offsetting the recent successful drilling results noted above.

Furthermore, Surge's integrated geotechnical modeling on the new pool extension has added internally estimated original oil in place ('OOIP6') of over 20 million barrels (15 million barrels net) on the new lands. The Company now internally estimates combined OOIP of over 72 million barrels (53 million net) at its Steelman Frobisher pool.

TERM DEBT UPDATE, INTENTION TO REDEEM 5.75% CONVERTIBLE DEBENTURES FOR CASH, AND CREDIT FACILITY UPDATE

The Company's Term Debt Facility provider has exercised their previously announced right to deliver an additional $30 million of term debt financing (under the same terms and conditions as its existing five-year Term Debt Facility) to Surge, providing the Company with significant incremental liquidity. Management anticipates that, at current commodity prices, the $30 million in gross proceeds, combined with a portion of Surge's forecasted free cash flow, will be used to settle the Company's $44.5 million of 5.75% convertible debentures for cash prior to their maturity on December 31, 2022.

Concurrently, Surge has reconfirmed and extended its existing $150 million First Lien Credit Facility, which was drawn only $96.8 million at March 31, 2022. The maturity of the newly reconfirmed First Lien Credit Facility is now extended through to May 31, 2024.

The addition of the incremental Term Debt Facility proceeds, combined with the intention to redeem the 5.75% convertible debentures for cash, will provide Surge with a simplified debt capital structure, significant liquidity, and no debt capital maturities through to mid-2024.

OPERATIONS UPDATE: SUCCESSFUL Q1/22 DRILLING PROGRAM AT SPARKY AND SE SASKATCHEWAN

Surge completed its Q1/22 capital program drilling 23 (21.5 net) wells, with three rigs active in the quarter. This program was comprised of 14.0 net wells in the Company's Sparky core area, and 7.5 net wells in Surge's SE Saskatchewan core area for total expenditures on property, plant, and equipment of $43.0 million. Furthermore, the Company completed an additional 6.0 net wells in Q1/22 that were drilled in Q4/21.

In recent months, Management has been successful in adding significant organic growth opportunities across its core areas. On this basis, the Company has added more than 10 net sections of highly prospective land. These strategic core area land acquisitions have added an incremental 79 gross (70.0 net) drilling locations7 to Surge's deep 13 year drilling inventory at a total cost of $9.9 million, including the exciting SE Saskatchewan land sale at Steelman discussed above.

The Company is currently monitoring the impact of cost inflation, labour shortages, and global supply chain challenges on its 2022 capital and operating expense guidance. Surge's Q1/22 capital program tracked the Company's 2022 budget, and the Company will continue to monitor the impact of these inflationary pressures over the second half of 2022 and into 2023.

Contact:

Paul Colborne

Tel: (403) 930-1507

Fax: (403) 930-1011

Email: pcolborne@surgeenergy.ca

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