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1. Company Snapshot

1.a. Company Description

Surge Energy Inc.explores for, develops, and produces oil and gas in western Canada.The company holds interest in the Greater Sawn Lake assets located in Northern Alberta; Valhalla/Wembley property located in northwestern Alberta; Sparky assets located between Provost and Wainwright in eastern Alberta and western Saskatchewan; and Shaunavon properties located to the southwest of Swift Current, Saskatchewan.


It holds an average working interest of approximately 84% in approximately 123,884 net developed acres and approximately 83% in approximately 68,031 net undeveloped acres in Greater Sawn area; approximately 70% in approximately 22,920 net developed acres and approximately 72% in approximately 10,680 net undeveloped acres in Valhalla area; and approximately 90 % in approximately 59,655 net developed acres and 98% in approximately 47,398 net undeveloped acres in Sparky area.As of December 31, 2021, it held interests in 362 net oil and 20 net gas wells in Greater Sawn area; 100 net oil and 9 net gas wells in Valhalla area; 424 net oil and 6 net gas wells in Sparky area; and 185 net oil wells, as well as an average working interest of approximately 100% in approximately 24,249 net developed acres and 12,021 net undeveloped acres in the Shaunavon properties.The company was formerly known as Zapata Energy Corporation and changed its name to Surge Energy Inc.


in June 2010.Surge Energy Inc.was incorporated in 1998 and is headquartered in Calgary, Canada.

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1.b. Last Insights on SGY

Surge Energy's recent performance has been negatively impacted by the sale of non-core assets in the Valhalla area of Alberta, which may have led to a decrease in production and revenue. Additionally, the company's dividend payments, while consistent, may not be enough to offset the potential decline in operating cash flows. The company's revised 2025 capital and operating budget may also indicate a more cautious approach to spending, which could impact growth prospects.

1.c. Company Highlights

2. Transcript Summary

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3. NewsRoom

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SURGE ENERGY INC. CONFIRMS DECEMBER 2025 DIVIDEND

Nov -17

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Surge Energy's (TSE:SGY) Shareholders May Want To Dig Deeper Than Statutory Profit

Nov -13

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SURGE ENERGY INC. ANNOUNCES THIRD QUARTER FINANCIAL & OPERATING RESULTS; OPERATIONS UPDATE; 2026 CAPITAL AND OPERATING BUDGET; APPOINTMENT TO THE BOARD OF DIRECTORS

Nov -05

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Surge Energy America Achieves Industry-Leading Balance Sheet Milestones with Less Than 0.2x Net Leverage and $1.5 Billion Liquidity

Oct -31

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Surge Energy America Publishes 2025 Corporate Sustainability Report

Oct -28

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SURGE ENERGY INC. CONFIRMS NOVEMBER 2025 DIVIDEND

Oct -15

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Surge Energy America Announces Completion of Seventeen Well Farm-In Development

Sep -09

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Surge Energy Sets New Standard for Water Reuse in Oil and Gas

Aug -29

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.46%)

6. Segments

Oil

Expected Growth: 4.37%

Surge Energy Inc.'s 4.37% growth in oil production is driven by successful drilling programs in its Sparky and Valhalla North areas, increased well optimization, and improved operational efficiencies. Additionally, the company's strategic acquisitions and focus on high-netback, light oil assets have contributed to its growth.

Royalties

Expected Growth: 4.83%

Surge Energy Inc.'s 4.83% royalty growth is driven by increased oil production, improved well optimization, and successful drilling programs. Additionally, the company's focus on cost reduction and efficient operations has led to higher margins, contributing to the growth in royalties.

Natural Gas

Expected Growth: 4.83%

Surge Energy Inc.'s 4.83% growth in Natural Gas is driven by increased production from its core operating areas, improved well performance, and successful drilling programs. Additionally, the company's focus on cost reduction and operational efficiencies has contributed to the growth. Furthermore, favorable market conditions, including higher natural gas prices, have also supported the segment's expansion.

Natural Gas Liquids

Expected Growth: 4.65%

Surge Energy Inc.'s 4.65% growth in Natural Gas Liquids is driven by increased production from its Sparky and Valhalla areas, improved well performance, and enhanced oil recovery techniques. Additionally, strategic acquisitions and a favorable commodity price environment have contributed to this growth.

Processing

Expected Growth: 4.73%

Surge Energy Inc.'s 4.73% growth is driven by increased oil production, improved operational efficiency, and strategic acquisitions. Additionally, a favorable commodity price environment, disciplined cost management, and a strong balance sheet have contributed to the company's growth momentum.

7. Detailed Products

Crude Oil

Surge Energy Inc. is a leading producer of high-quality crude oil, extracted from its oil-rich assets in Western Canada.

Natural Gas

Surge Energy Inc. produces natural gas, a clean-burning fuel, from its extensive natural gas reserves in Western Canada.

Natural Gas Liquids (NGLs)

Surge Energy Inc. extracts NGLs, a group of hydrocarbons, from its natural gas production, which are used as a feedstock for petrochemicals and fuels.

Condensate

Surge Energy Inc. produces condensate, a light, sweet oil, from its natural gas production, which is used as a diluent for heavy oil transportation.

8. Surge Energy Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Surge Energy Inc. operates in the oil and gas industry, which has few substitutes, but the increasing trend of renewable energy sources poses a moderate threat.

Bargaining Power Of Customers

Surge Energy Inc. sells its products to a diverse range of customers, reducing the bargaining power of individual customers.

Bargaining Power Of Suppliers

Surge Energy Inc. relies on a few key suppliers for its operations, giving them some bargaining power, but the company's size and diversification mitigate this threat.

Threat Of New Entrants

The oil and gas industry has high barriers to entry, including significant capital requirements and regulatory hurdles, making it difficult for new entrants to compete with Surge Energy Inc.

Intensity Of Rivalry

The oil and gas industry is highly competitive, with many established players competing for market share, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 23.97%
Debt Cost 17.20%
Equity Weight 76.03%
Equity Cost 17.20%
WACC 17.20%
Leverage 31.53%

11. Quality Control: Surge Energy Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

7.48$

Current Price

7.48$

Potential

-0.00%

Expected Cash-Flows