CALGARY - Surge Energy Inc. ('Surge' or the 'Company') (TSX: SGY) and Astra Oil Corp. ('Astra') announce that they have entered into an arrangement agreement, pursuant to which Surge has agreed to acquire all of the issued and outstanding common shares of Astra by way of a statutory arrangement for total consideration of approximately $160 million.

The Transaction is to be funded by the issuance of Surge common shares ('Surge Shares'), and the assumption of approximately $15 million of net debt1.

The Astra assets ('Astra Assets') include more than 4,100 boepd (90 percent liquids) of operated, light oil production, focused primarily in SE Saskatchewan with an operating netback1 of more than $42 per boe at US $65 WTI pricing. The Transaction is accretive to Surge's forecast debt-adjusted 2022 cash flow per share1 and free cash flow1 per share, and adds highly concentrated light oil reserves, production, land, and operations. The Astra Assets are forecast to generate $58.1 million of net operating income1 over the next 12 months at US $65 WTI (less than current strip pricing), and the Company now estimates that its exit 2022 net debt to annualized Q4 2022 adjusted funds flow1 ratio will be approximately 1.0 times.

The Astra Assets will also contribute significantly to Surge's ongoing ESG initiatives of reducing the impact of its operations on the environment. Astra is in the process of constructing a 45-kilometer gas gathering infrastructure system to conserve gas at critical facilities in SE Saskatchewan, reducing emissions from several operating fields. The project is estimated to cost approximately $12 million and will be partially funded by Natural Resources Canada's Emissions Reduction Fund. Additionally, the Astra Assets have a very attractive corporate liability management rating ('LMR') of 5.4, with a very low total undiscounted decommissioning liability of only $12.9 million.

The Transaction will result in a high quality, well-positioned 20,200 boepd (85 percent oil and liquids weighted), light and medium gravity, intermediate public oil company. The Astra Assets represent an exciting re-entry into southeast Saskatchewan for the Surge team. Surge management strategically targeted SE Saskatchewan as a new core area based on its high light oil netbacks, low cost production efficiencies and quick drilling payouts. Surge's operational track record of execution in southeast Saskatchewan, combined with proven in-house technical expertise, positions the Company for both organic and acquisitive growth in this new core area.

Pro forma the Transaction, Surge's two core growth areas rank in the top echelon for drilling economics2 in the entire Western Canadian Sedimentary Basin. Surge's dominant position in the medium gravity Sparky crude oil play, and Astra's SE Saskatchewan light oil assets, independently3 rank by rate of return (i.e. with the Clearwater and Lower Charlie Lake oil plays) as two of the top five crude oil plays in Canada.

In conjunction with the Transaction, Surge is pleased to announce that it has reached an agreement in principle with its lending syndicate, confirming the Company's pro forma first lien revolving credit facility at $215 million, and extending the maturity from July 1, 2022 to November 30, 2022.

Andrew Greenslade, President and CEO of Astra, stated: 'We are very excited about the Transaction with Surge. With Surge's high quality, low decline, crude oil asset base, their dominant Sparky play, and their exciting financial free cash flow 'torque' to rising oil prices, we feel that pro forma Surge/Astra will prove to be one of the best positioned intermediate crude oil public companies in Canada as the recovery in energy continues. Astra's high netback, SE Saskatchewan light oil asset base, low debt leverage, and its large 10 year drilling inventory, nicely complements Surge's existing, low cost, conventional crude oil assets.'

PRO FORMA HIGHLIGHTS - AN EXCITING, SUSTAINABLE, INTERMEDIATE OIL PRODUCER

The Transaction is consistent with Surge's defined business model of acquiring high quality, operated, light and medium gravity crude oil reservoirs with large OOIP9 with low recovery factors. The combined Company will have over 850 internally estimated net development drilling locations10, providing a 13 year drilling inventory. The combined entity possesses a high quality, operated, light and medium gravity crude oil asset base, with extensive infrastructure in place to facilitate years of future development drilling and waterflood.

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 assumptions concerning the anticipated benefits of the Transaction and the transaction metrics related thereto; the anticipated terms of the amendments to Surge's first lien credit facility, the timing thereof and the anticipated benefits to Surge thereof; the timing of various matters in connection with the Transaction and the conditions to completion of the Transaction, Surge's revised guidance for the remainder of 2021 and preliminary guidance for 2022. 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.

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 March 9, 2021 and in Surge's MD&A for the year ended December 31, 2020, both of which have been filed on SEDAR and can be accessed at www.sedar.com.

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 - including, 'cash flow', 'adjusted funds flow', 'free cash flow', 'net debt', and 'net operating income', 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. All non-GAAP financial measures used in this document are defined below:

Contact:

Paul Colborne

Tel: (403) 930-1507

Fax: (403) 930-1011

Email: pcolborne@surgeenergy.ca

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