Surge Energy (SGY-TSX) Q1 Results - May 8

[dan_s]

Q1 2024 FINANCIAL AND OPERATING HIGHLIGHTS

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 in the energy industry over the past several years.

During Q1/24, Western Canadian oil producers were significantly impacted by wide crude oil differentials. The Western Canadian Select ("WCS") differential (a discount to US WTI per barrel) averaged US$19 per barrel in Q1/24, however, has now tightened to approximately US$12 per barrel on the spot market. Additionally, the Mixed Sweet Blend ("MSW") light oil differential, which averaged a discount to WTI of US$9 per barrel in Q1/24, is now currently trading at a US$3 per barrel discount to WTI.

Surge's forecasted 2024 annual cash flow from operating activities increases by approximately $9 million for every US$1 per barrel increase in the WTI price1. Furthermore, every US$1 per barrel decrease in either the WCS or MSW differential increases the Company's forecasted 2024 annual cash flow from operating activities by approximately $4.5 million1. A US$1 per barrel decrease in both differentials increases Surge's forecast 2024 annual cash flow by $9 million. < All of our Canadian companies are going to get much higher realized oil prices after Q1 thanks to the completion of the Trans Mountain Pipeline.

Surge is pleased to report the Company reduced its Scope 1 greenhouse gas emissions intensity by 18 percent in 2023 as compared to 2022. Surge has now reduced its Scope 1 emissions intensity by 28 percent since 2021. These results demonstrate the Company's continued commitment to reducing the emissions intensity of its operations.

In Q1/24, Surge achieved average daily production of 24,903 boepd (86 percent liquids). < Beat my Q1 forecast of 24,000 Boepd.
These strong quarterly production levels were achieved with Surge having drilled four less (net) wells than originally budgeted for Q1/24, as the Company reacted to earlier than anticipated spring break up conditions in both SE Saskatchewan and Sparky core areas.

Highlights from the Company's Q1 2024 financial and operating results include:

Delivered cash flow from operating activities of $66.8 million, and generated adjusted funds flow2 ("AFF") of $62.5 million; < Lower than my forecast of $68.7 operating cash flow due to the large oil price differentials.

Achieved average daily production of 24,903 boepd (86 percent liquids);

Returned over $12 million of cash dividends to shareholders; and

Drilled 24 gross (21.4 net) wells, with activity focused in the Company's Sparky and SE Saskatchewan core areas.

Read more here: https://finance.yahoo.com/news/surge-energy-inc-announces-first-221200896.html

[Fraser921]

Looks very very good