CALGARY,
AB, Dec. 19, 2022 /CNW/ - Surge Energy Inc.
("Surge", or the "Company") (TSX: SGY) is pleased to announce today
that it has closed the previously announced acquisition (the
"Acquisition") of long life, low decline, crude
oil assets in Surge's Sparky and SE
Saskatchewan core areas (the "Assets"), for a net purchase
price of $202 million ("the Purchase
Price").
The Assets are currently producing more than 3,850 boepd (99
percent liquids) of predominantly light and medium gravity crude
oil. The Acquisition is 15 percent accretive to Surge's 2023 free
cash flow per share[1]. Furthermore, Surge management has
identified a development drilling inventory of over 45 net unbooked
locations, which can hold production flat for an estimated seven
years.
Surge is reconfirming its upwardly revised 2022 production exit
rate of more than 25,000 boepd
(approximately 87 percent liquids).
As previously announced, with the completion of the
Acquisition, Surge anticipates declaring an increase
to the Company's annual base
cash dividend by 14 percent,
from $0.42 to $0.48 per share per annum
($0.04 per share per month), payable
on February 15,
2023. Any dividend increase remains subject
to the approval of Surge's Board of Directors with
consideration given to the business environment at the time.
SURGE ENERGY: A PREMIER CANADIAN CRUDE OIL DIVCO
Management's primary corporate goal is for Surge to rank as the
top total rate of return, growth plus dividend paying crude oil
company in the Canadian energy sector. Management firmly believes
that Surge's premium asset quality will drive operational
outperformance, and ultimately, superior financial returns.
Surge's focused operating strategy is to direct growth and
development capital towards high quality, large original oil in
place ("OOIP[2]"), conventional crude oil reservoirs in order to
generate free cash flow1. On this basis, more than 75
percent of the Company's exit 2022 production comes from Surge's
SE Saskatchewan and Sparky core
areas, which have been independently ranked[3] as two of the top
four oil plays in Canada.
In addition to Surge's operating strategy, the Company's
increasing shareholder returns business model focuses on returning
free cash flow to shareholders through disciplined capital
allocation, together with modest growth in production per share.
Independent research has ranked the growth, plus increasing
compounding dividend business model, as one of the best investing
strategies over the last 75 years[4].
"The strategic core area Acquisition that closed today further
solidifies Surge's disciplined operating strategy by lowering the
Company's corporate decline and increasing free cash flow per
share," said Paul Colborne,
President & CEO, Surge Energy. "This aligns exceptionally well
with the Company's modest growth (6 percent accretive to production
per share), plus increasing compounding dividend business model
(anticipated 14 percent increase to Surge's annual dividend)."
Accordingly, following the Acquisition, Surge has the following key
corporate characteristics:
OOIP / Recovery
Factor
|
- 3.1 billiona of net OOIP; 7.5 % RF
to datea
|
Reserve Base
|
- 120 mm boe (87% oil) of independently audited
Proven plus Probable reserves as at year end 2021 on a combined
basis
- 12.4 year RLI on Proven plus Probable
reservesb
|
Production Base &
Decline Profile
|
- 25,000 boepd of current production (87%
light/medium gravity oil)
- 23% annual decline
|
Operating
Netbacks
|
- Surge's forecasted operating
netbackc is $44.50 per boe (@ US $80 WTI flat
pricing)
|
Development Drilling
Inventory
|
- > 1,000 net development drilling locations
in inventoryd
- > 12 year
drilling inventoryd
|
Cash Flow
Base
|
- 2023(e) cash flow from operating activities
is $335 million (@ US $80 WTI flat oil prices) or $3.47 per
share
|
Free Cash
Flow
|
- 2023(e) free cash flow before
dividendsc is $160 million or $1.66 per share (@ US $80
WTI flat oil prices)
|
Dividend Yield / Payout
Ratio
|
- 2023(e) dividend yielde is
currently 5.6%
- 2023(e) all-in payout ratioc is
estimated at 66%
|
Balance
Sheet
|
- Surge's estimated exit 2023 net debt to cash
flow from operating activitiesc is 0.6 times (@ US $80
WTI flat oil prices)
|
Tax Pools
|
- Surge estimates approximately $1.4 billion of
tax pools at year end 2022
- Surge's tax horizon is estimated to be
approximately four years (@ US $80 WTI flat oil prices)
|
Shares
Outstanding
|
- Surge has 96.5 million common shares issued
and outstanding (basic)
|
a: Internally generated
estimate as of Dec 31, 2021, see Oil and Gas Advisories.
|
b: Jan 2022 P+PDP
production rate: 26,452 boe/d.
|
c:
This is a non-GAAP
and other financial measure which is defined in the Non-GAAP
and Other Financial Measures section of this document.
|
d: See the
Drilling Inventory section of this document.
|
e: Calculated as
$0.48 per share anticipated annual dividend, divided by a share
price of $8.50 per share.
|
ANTICIPATED DIVIDEND INCREASE
Surge anticipates increasing the Company's annual base cash
dividend by 14 percent, from $0.42 per share
to $0.48 per share ($0.04 per share per month), on February 15, 2023. This upwardly revised
base dividend is consistent with Phase 1 of the Company's return of
capital framework set forth below.
Any dividend increase will be subject to the approval of Surge's
Board of Directors with consideration given to the business
environment at the time.
2023 CAPITAL AND OPERATING BUDGET
GUIDANCE
Surge's financial and operating
estimates for 2023 have been approved by the Board
of Directors, and are detailed below:
Guidance
|
@ US $80 WTIa
|
Exit 2022
Production
|
25,000 boepd (87%
liquids)
|
Average 2023(e)
Production
|
25,000 boepd (87%
liquids)
|
2023(e) Expenditures on
Property, Plant and
Equipment
|
$175
million
|
2023(e) Cash Flow from
Operating Activities
|
$335
million
|
Per shareb
|
$3.47/sh
|
2023(e) Free Cash Flow
Before Dividendsc
|
$160
million
|
Per shareb
|
$1.66/sh
|
2023(e)
Dividend
|
$46 million
|
Per shareb
|
$0.48/sh
|
2023(e) All-in Payout
Ratioc
|
66 %
|
2023(e) Royalties as a
% of Petroleum and Natural Gas Revenue
|
18.5 %
|
2023(e) Net Operating
Expensesc
|
$19.50 - $19.95 per
boe
|
2023(e) Transportation
Expenses
|
$1.25 - $1.50 per
boe
|
2023(e) General & Administrative Expenses
|
$1.95 - $2.25 per
boe
|
a: Based on the following pricing assumptions: US$80.00WTI/bbl; CAD$110.34WTI/bbl; EDM CAD$104.83/bbl; WCS CAD$83.45/bbl; AECO $4.95/mcf.
|
b: Based on 96.5
million Common Shares outstanding.
|
c: This is a non-GAAP
and other financial measure which is defined in the Non-GAAP
and Other Financial Measures section of this document.
|
UPDATED RETURN OF CAPITAL FRAMEWORK
Today, Surge's crude oil assets are internally estimated to have
more than three billion of net OOIP, an approximate 7.5 percent
recovery factor to date, and a dominant operational position in two
top tier light and medium gravity crude oil growth plays in the
Company's Sparky and SE Saskatchewan core
areas. Further, with over $1.4 billion in tax pools,
Surge is well positioned to deliver its shareholders a tax
efficient combination of:
- Continued net debt repayment - systematically increasing
Surge's net asset value ("NAV")2 per share;
- A sustainable base monthly cash dividend;
- Strategic share buybacks;
- Potential for variable or special dividends; and
- A modest production growth wedge.
On this basis, Surge's Board and Management are pleased to
announce an update to the Company's return of capital framework,
incorporating the impact of the Acquisition. Return of free cash
flow to shareholders will continue to follow a phased approach,
based on achieving certain net debt targets, as set forth
below:
![Surge Energy Inc. (CNW Group/Surge Energy Inc.) Surge Energy Inc. (CNW Group/Surge Energy Inc.)](https://mma.prnewswire.com/media/1971668/Surge_Energy_Inc__SURGE_ENERGY_INC__ANNOUNCES_CLOSING_OF_THE_PRE.jpg)
- Phase 1: Return approximately 25 percent of free cash
flow to shareholders through the Company's anticipated, increased
base dividend of $0.48 per share per
annum. The remainder of free cash flow will be allocated to debt
reduction until net debt is reduced to $250
million;
- Phase 2: Return approximately 50 percent of free cash
flow to shareholders, with 25 percent allocated to the base
dividend, and 25 percent allocated to strategic share buybacks,
acquisitions, and/or variable or special dividends, until net debt
is reduced below $175 million;
and
- Phase 3: Return approximately 75 percent of free cash
flow to shareholders once net debt is reduced below $175 million. 25 percent of free cash flow will
be allocated to the base dividend, 50 percent allocated to
strategic share buybacks, a modest growth wedge, and/or variable or
special dividends, and 25 percent will be allocated to strategic
acquisitions and/or further net debt repayment.
Based on the Company's US $80 WTI
budget price deck, Surge anticipates reaching Phase 2 of the return
of capital framework in the second half of 2023.
ANNUAL SUSTAINABILITY REPORT RELEASED
Surge has released its second annual Sustainability Report,
outlining the Company's advancement of its environmental, social
and governance practices, and their impact on Surge's business and
operating strategy.
The Company's second annual Sustainability Report reaffirms
Surge's commitment to be a leader in reducing the impact of oil and
gas operations on the environment. The report covers
performance metrics for the 2019, 2020, and 2021 calendar years and
aligns with guidance set forth by the Task Force on Climate-Related
Financial Disclosure.
The Sustainability Report was approved by Surge's management
team, as well as the Company's Board of Directors, and is intended
to allow all Surge stakeholders to better understand the Company's
commitment to sustainable, responsible oil and gas operations.
The new annual Sustainability Report can be accessed through the
Company's website.
OUTLOOK – POSITIONING FOR 2023 AND BEYOND
Surge's Board and management continue to be optimistic regarding
the outlook for crude oil prices, based on a tight physical market,
ongoing geopolitical issues, and the significant underinvestment
that has occurred in the energy industry over the past several
years.
The closing of the strategic, core area Acquisition today
further solidifies Surge's disciplined operating strategy by
lowering the Company's corporate declines and increasing free cash
flow. This aligns well with the Company's modest growth (6 percent
accretive to production per share), plus increasing compounding
dividend business model (anticipated 14 percent increase to Surge's
annual dividend).
Based on the strong foundation from Surge's key corporate
characteristics, as set forth above, the Company is well positioned
for success in 2023.
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 Surge's declared focus and primary goals; management's
expectations and plans with respect to the development of its
assets and the timing thereof; management's expectations and
assumptions concerning the anticipated benefits of the Acquisition
and the transaction metrics related thereto; the Company's
anticipated dividend increase and the timing thereof; Surge's key
corporate characteristics following completion of the Acquisition,
including Surge's financial and operating estimates for 2023,
including Surge's internally estimated oil in place and reserve
base; decline rates; forecasted operating netback; drilling
inventory; 2023(e) cash flow from operating activities; 2023(e)
free cash flow before dividends; 2023(e) dividend yield and 2023(e)
all-in payout ratio; 2023(e) net debt to cash flow from operating
activities; estimated tax pools and tax horizon; drilling locations
exit 2022 production; average 2023(e) production; 2023(e)
expenditures on property, plant, and equipment; 2023(e) cash flow
from operating activities (and per share); 2023(e) free cash flow
before dividends (and per share); 2023(e) dividend; 2023(e) all-in
payout ratio; 2023(e) royalties as a % of petroleum and natural gas
revenue; 2023(e) net operating expenses; 2023(e) transportation
expenses; and 2023(e) general & administrative expenses; the
Company's return of capital framework, including its expectation
that it will be positioned to deliver to its stakeholders a
combination of: continued net debt repayment; a sustainable, base
monthly dividend; strategic share buybacks; potential variable
special dividends; and a modest production growth wedge, and the
anticipated timing thereof and conditions thereto; management's
expectations regarding the outlook for crude oil prices; the
Company's belief that it well positioned for 2023 and beyond..
The forward-looking statements are based on certain key
expectations and assumptions made by Surge, including
the Acquisition and Offering being
completed on the timelines and on the terms currently anticipated; all necessary
regulatory approvals being obtained on the timelines and in the
manner currently anticipated; the business and
operations of both the Company
and the Assets,
including that the Assets will continue to operate and produce in a
manner consistent with past results;
the anticipated benefits
of the Acquisition and the Assets acquired
in connection
therewith; the expansion of the Company's
syndicated first lien credit facility
and any consents or approvals required in
connection therewith; expectations and assumptions around 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 and the Assets; 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, the risks associated
with the Acquisition and Offering,
including timing of closing, if closing is completed, that the benefits
thereof will not be as anticipated, the conditions to closing
are not satisfied or waived and receipt of any regulatory
approvals; 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 Annual Information Form
dated March 9, 2022 and in Surge's
Management Discussion & Analysis for the year ended
December 31, 2021, 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 law.
Oil and Gas Advisories
The term "boe" means barrel of oil equivalent on the
basis of 1 boe to 6,000 cubic feet of natural gas.
Boe may be misleading, particularly if used in isolation. A
boe conversion ratio of 1 boe for 6,000 cubic feet of natural gas
is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a
value equivalency at the wellhead.
"Boe/d" and "boepd"
mean barrel of oil equivalent per day. Bbl means barrel of
oil and "bopd" means barrels of oil per day. NGLs means natural gas
liquids.
This press release contains
certain oil and gas metrics
and defined terms, which do not have standardized meanings
or standard methods of calculation, and therefore such measures may
not be comparable to similar metrics/terms presented by other
issuers and may differ by definition and application. All oil and
gas metrics/terms used in this document are defined below:
OOIP means Discovered Petroleum Initially In Place ("DPIIP").
DPIIP is derived by Surge's internal Qualified Reserve Evaluators
("QRE") and prepared in accordance with National Instrument 51-101
and the Canadian Oil and Gas Evaluations Handbook ("COGEH"). DPIIP,
as defined in COGEH, is that quantity of petroleum that is
estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion
of DPIIP includes production, reserves and Resources Other Than
Reserves (ROTR). OOIP/DPIIP and potential
recovery rate estimates are based on current
recovery technologies. There is significant uncertainty as to the ultimate
recoverability and commercial viability
of any of the resource
associated with OOIP/DPIIP, and as such a recovery
project cannot be defined for a volume of OOIP/DPIIP at this time.
"Internally estimated" means an estimate that is derived by Surge's
internal QRE's and prepared in accordance with National Instrument
51-101 - Standards of Disclosure for Oil and Gas Activities.
All internal estimates contained in this news release have been
prepared effective as of Jan 1,
2022.
Large OOIP is defined as a reservoir containing 10 million
barrels of original oil in place or greater.
Recovery factor is calculated by dividing the total amount
of produced barrels
of oil from a particular reservoir at a
certain date by the original oil in place in the reservoir.
After giving effect to the Acquisition, the Company will have 2021YE
TPP reserves of 120.4 mmboe. The reserves
associated with the Acquisition have been evaluated by McDaniel &
Associates Consultants Ltd. ("McDaniel") for
2021YE (vs. Surge's 2021YE reserves evaluated by Sproule).
Surge's total internal OOIP estimate of 3.1 billion barrels,
which has a cumulative production to Dec 31, 2021 of
approximately 233 mmbbls (i.e. 7.5 percent recovery
factor to date).
Net asset value is calculated as the total discounted (10%)
value of reserves plus undeveloped land and seismic value, less net
debt, divided by the number of basic shares outstanding.
Drilling Inventory
This press release discloses drilling locations in two
categories: (i) booked locations; and (ii) unbooked locations.
Booked locations are proved locations and probable locations
derived from an internal evaluation using standard practices as
prescribed in the Canadian Oil and Gas Evaluations Handbook and
account for drilling locations that have associated proved and/or
probable reserves, as applicable.
Unbooked locations are internal
estimates based on prospective acreage
and assumptions as to the number of wells
that can be drilled per section based on industry practice and
internal review. Unbooked locations do not have attributed reserves
or resources. Unbooked locations have been identified by Surge's
internal certified Engineers and Geologists (who are also Qualified
Reserve Evaluators) as an estimation of our multi-year drilling
activities
based on evaluation of applicable geologic,
seismic, engineering, production and reserves information. There is no
certainty that the Company will drill all unbooked drilling
locations, and if drilled there is no certainty that such locations
will result in additional oil and
gas reserves, resources or production. The
drilling locations on which the Company actually
drills wells will ultimately depend upon the availability of capital, regulatory approvals, seasonal
restrictions, oil and natural gas prices, costs,
actual drilling results,
additional reservoir information that is obtained
and other factors. While certain that the unbooked drilling
locations have been de-risked by drilling existing wells
in relative close proximity to such unbooked
drilling locations, the majority of other unbooked
drilling locations are farther away from existing wells
where management has less information about the
characteristics of the reservoir and therefore there is more
uncertainty whether wells will be drilled in such locations, and if
drilled there is more uncertainty that such wells will result in
additional oil and gas reserves, resources or production.
Surge's review of the Acquisition's inventory supports ~60 gross
(>45 net) internally estimated drilling locations. The
Acquisition's 2021 Year End reserves has 13.0 net booked locations
(no SPKY locations booked). Of the 13
booked, 9.0 net are Proved
locations and 4.0 net are Probable locations based on McDaniel's evaluation. Assuming
an average number of net wells drilled per year of 6.0, the
Acquisition has more than 45 net locations, providing approximately
7 years of drilling.
Assuming a January 1, 2022
reference date, and after taking into account the Acquisition, the
Company will have over >1,125 gross (>1,025 net) drilling
locations identified herein, of these >600 gross (>550 net)
are unbooked locations. Of the 469 net booked locations identified
herein, 371 net are Proved locations and 99 net are Probable
locations based on Sproule's 2021YE reserves. Assuming an average
number of net wells drilled per year of 80, Surge's >1,025 net
locations provide over 12 years of drilling.
Assuming a January 1, 2022 reference
date, and after taking into account the Acquisition, the Company's Sparky
core area will have >450 net locations (165 net booked), 121 net
are Proved locations and 44 net are Probable locations based on
2021YE reserves. Assuming an average number of net SPKY Core wells
drilled per year of 40, Surge's >450 net locations provide
approximately 11 years of drilling.
Surge's internally developed type curves (for both Surge and the
Acquisition assets) were constructed using a
representative, factual and balanced analog
data set, as of January
1, 2022 for Surge type curves and the Acquisition
type curves. All locations were risked appropriately, and estimated ultimate
recoveries were measured against OOIP estimates to
ensure a reasonable recovery factor was being achieved based on the
respective spacing assumption.
Other assumptions, such as capital,
operating expenses, wellhead
offsets, land encumbrances, working interests and
NGL yields were all reviewed, updated and accounted for on a well
by well basis by Surge's Qualified Reserve Evaluators. All type
curves fully comply with Part 5.8 of the Companion Policy 51 –
101CP.
Non-GAAP and Other Financial Measures
Certain secondary financial measures in this press release
– including, "free cash flow", "free cash flow per share",
"free cash flow yield", "free cash flow before dividends", "net
debt to cash flow from operating activities", "operating netback",
"operating netback per boe", "all- in payout ratio" and "net
operating expenses" are not prescribed by GAAP. These specified
financial measures
include non-GAAP financial measures and non-GAAP
ratios, are not defined by IFRS and therefore are referred to
as non-GAAP and other financial measures. These non-GAAP and other
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 and other financial
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 and other financial measures used in
this document are defined below:
Free Cash Flow and Free Cash Flow Before
Dividends
Free cash flow is a non-GAAP
financial measure, calculated as cash flow from operating activities, before changes
in non-cash working capital, less expenditures on property, plant,
equipment, and dividends paid. Free cash flow before dividends is a
non-GAAP financial measure, calculated as cash flow from operating
activities, before changes in non-cash working capital, less
expenditures on property, plant, equipment. Management uses free
cash flow to determine the amount of
funds available to the Company
for future capital
allocation decisions. Free cash flow per
share
is a non-GAAP ratio, calculated using the same weighted average
basic and diluted
shares used in calculating income per share. Free
cash flow yield is a non-GAAP ratio, calculated as free cash flow
per share divided by the current share price.
Net Debt and Net Debt to Cash Flow from Operating
Activities
Net debt is a non-GAAP financial measure, calculated as bank
debt, term debt, plus the liability component of the convertible
debentures, plus current assets, less current liabilities, however,
excluding the fair value of financial contracts,
decommissioning obligations, and lease and other obligations. There
is no comparable measure in accordance with IFRS for net debt. This
metric is used by management to analyze the level of debt in the
Company including the impact of working capital, which varies with
the timing of settlement of these balances.
Net debt to cash flow from operating activities is a non-GAAP
ratio, calculated as exit net debt divided by cash flow from
operating activities. Management uses this ratio to measure the
Company's overall debt position and to measure the strength of the
Company's balance sheet. Surge monitors this ratio and uses this as
a key measure in making decisions regarding financing, capital
expenditures and dividend levels.
Operating Netback
Operating netback is a non-GAAP financial measure, calculated as
petroleum and natural gas revenue and
processing and other income, less royalties, realized
gain (loss) on commodity and FX contracts, operating expenses,
and transportation expenses. Operating netback per boe is a
non-GAAP ratio, calculated as operating netback
divided by total barrels of oil equivalent produced during a specific period of time. There is no comparable measure
in accordance with IFRS. This metric is used by management to
evaluate the Company's ability to generate cash margin on a unit of
production basis.
All-in payout ratio
All-in payout ratio is a non-GAAP ratio, calculated as
exploration and development expenditures, plus dividends paid,
divided by cash flow from operations. This capital management
measure is used by management to analyze allocated capital in
comparison to the cash being generated by the principal business
activities.
Net Operating Expenses
Net operating expenses is a non-GAAP financial measure,
determined by deducting processing and other revenue
primarily generated by processing third party volumes
at processing facilities where the Company
has an ownership interest. It is common in the industry
to earn third party processing revenue on facilities where the
entity has a working interest in the infrastructure asset. Under
IFRS this source of funds is required to be reported as revenue.
However, the Company's principal business is not that of a
midstream entity whose activities are dedicated to
earning processing and other infrastructure payments. Where the Company has excess capacity
at one of its facilities, it
will look to process third party
volumes as a means to reduce the cost of
operating/owning the facility. As such, third party
processing revenue is netted against operating costs when analyzed
by management.
Additional information relating to non-IFRS measures can be
found in the Company's most recent Management Discussion and
Analysis, which may be accessed through the SEDAR website
(www.sedar.com).
Neither the TSX nor its Regulation Services Provider (as that term
is
defined in the policies of the TSX)
accepts responsibility for the adequacy or accuracy of this
release.
For more information about Surge, visit our website at
www.surgeenergy.ca
____________________
|
1 This is a
non-GAAP and other financial measure which is defined in the
Non-GAAP and Other Financial Measures section of this
document.
|
2 See Oil
and Gas Advisories section of this document.
|
3 From
CDN Oil Play Economics: When 2x Payout is Reached at $50
WTI, Raymond James Energy Research, January 25, 2022; From
Crude Oil & Natural Gas Plays: Table 7.2, Peters &
Co. Research – September 6, 2022.
|
4 From
Quantifying the Power of Dividends, Ned Davis Research Inc. – May
9, 2017; From The Power of Dividends, RBC Global Asset Management –
March 8, 2022.
|
SOURCE Surge Energy Inc.