SURGE ENERGY INC.
Surge is also pleased to announce that its first lien credit facilities have been extended through to
EQUITY FINANCING CLOSED
Surge has completed the upsized, over-subscribed Offering, and is pleased to announce the underwriters have elected to exercise in full their option to purchase additional Flow-Through Shares, equal to 15% of the number of Flow-Through Shares sold pursuant to the Offering. On this basis, the Company has issued 38,985,000 Flow-Through Shares at a price of
EXTENSION OF CREDIT FACILITIES INTO THE SECOND HALF OF 2022
The Company is also pleased to announce that, concurrent with the closing of the Offering, the maturity of its first lien credit facilities has been extended from
2H 2021 AND PRELMINARY 2022 GUIDANCE
Proceeds from the Offering, combined with free cash flow, will be used for an expanded 2H/21 development program, building upon the Company's successful 1H/21 drilling program, which targeted the Sparky and
The 2H/21 capital program involves drilling up to 23 gross (23.0 net) wells in four distinct, large original oil in place ('OOIP')1, shallow, conventional Sparky sandstone reservoirs. This targeted drilling program is expected to result in production additions of more than 2,400 boe per day for total drilling and completions expenditures of
The expanded 2H/21 capital program is anticipated to deliver over 6 percent of cash flow per share growth for Surge's shareholders in the current year (ie. in Q4/21), when compared to the Company's previously planned 2H/21 maintenance-only capital program.
The Company's preliminary 2022 capital expenditure budget will continue to focus on production maintenance and free cash flow generation. Surge anticipates generating approximately
On this basis, Surge anticipates generating
OUTLOOK: EXCITING 1H/21 DRILLING RESULTS
The Company will bring on an estimated 3,400 boepd of production from its 32 well 1H/21 drilling program, with results to date meeting or exceeding budgeted expectations. This production was added for 'all-in' drilling and completion expenditures of
Over the last six years, Surge has amassed a dominant position in its core Sparky crude oil play, which is proving to be one of the premier, conventional, medium/light oil growth plays in
With crude oil prices now up over 450%8 in the last 13 months, combined with the Company's 85% oil and natural gas liquids weighting, Surge believes it is well-positioned to deliver continued cash flow per share growth and a free cash flow yield in 2022.
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements. The use of any of the words 'anticipate', 'continue', 'estimate', 'expect', 'may', 'will', 'project', 'should', 'believe' and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements.
More particularly, this press release contains statements concerning: Management's expectations and plans with respect to the development of its assets and the timing thereof; Surge's declared focus and primary goals; Surge's planned drilling program for 2H/21 and the potential for revisions thereto; Surge's drilling inventory and locations; management's expectations regarding commodity prices; the expected impact of the Sale on Surge's bank indebtedness and liquidity; management's expectations regarding 2021 production and management's expectations regarding DCET costs and the anticipated terms and benefits of the re-determination of Surge's credit facilities and the timing thereof.
The forward-looking statements are based on certain key expectations and assumptions made by Surge, including expectations and assumptions the performance of existing wells and success obtained in drilling new wells; anticipated expenses, cash flow and capital expenditures; the application of regulatory and royalty regimes; prevailing commodity prices and economic conditions; development and completion activities; the performance of new wells; the successful implementation of waterflood programs; the availability of and performance of facilities and pipelines; the geological characteristics of Surge's properties; the successful application of drilling, completion and seismic technology; the determination of decommissioning liabilities; prevailing weather conditions; exchange rates; licensing requirements; the impact of completed facilities on operating costs; the availability and costs of capital, labour and services and the creditworthiness of industry partners.
Although Surge believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Surge can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the condition of the global economy, including trade, public health (including the impact of COVID-19) and other geopolitical risks; risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks); commodity price and exchange rate fluctuations and constraint in the availability of services, adverse weather or break-up conditions; uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures and failure to obtain the continued support of the lenders under Surge's bank line. Certain of these risks are set out in more detail in Surge's AIF dated
The forward-looking statements contained in this press release are made as of the date hereof and Surge undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Non-GAAP Financial Measures
Certain secondary financial measures in this press release - namely, 'adjusted funds flow' and 'net operating expenses' are not prescribed by GAAP. These non-GAAP financial measures are included because management uses the information to analyze business performance, cash flow generated from the business, leverage and liquidity, resulting from the Company's principal business activities and it may be useful to investors on the same basis. None of these measures are used to enhance the Company's reported financial performance or position. The non-GAAP measures do not have a standardized meaning prescribed by IFRS and therefore are unlikely to be comparable to similar measures presented by other issuers. They are common in the reports of other companies but may differ by definition and application.
Contact:
Tel: (403) 930-1507
Fax: (403) 930-1011
Email: pcolborne@surgeenergy.ca
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