Surge Energy (SGY.TO and ZPTAF) Update - Jan 20

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dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Surge Energy (SGY.TO and ZPTAF) Update - Jan 20

Post by dan_s »

Surge is a recent addition to our Small-Cap Growth Portfolio. I have followed it for many years and I have a high level of confidence in my forecast model.
My valuation of SGY.TO is $15.00Cdn, which translates to about $11.25USD per share for ZPTAF. < Just 4X annualized operating cash flow for 2022-2023
First Call's price target is $14.69Cdn per share.

Surge pays monthly dividends.

CALGARY, AB, Jan. 16, 2023 /CNW/ - Surge Energy Inc. ("Surge" or the "Company") (TSX: SGY) confirms that a cash dividend to be paid on February 15, 2023, in respect of January 2023 production, for the shareholders of record on January 31, 2023 will be $0.04 per share.

The $0.04 per share dividend represents a 14 percent increase in the Company's dividend, from $0.42 per share per year ($0.035 per share per month) to $0.48 per share per year ($0.04 per share per month).

The dividend is an eligible dividend for the purposes of the Income Tax Act (Canada).

Surge is an intermediate, publicly traded oil company focused on enhancing shareholder returns through free cash flow generation. The Company's defined operating strategy is based on acquiring and developing high-quality, conventional oil reservoirs using proven technology to enhance ultimate oil recoveries.
Last edited by dan_s on Fri Jan 20, 2023 10:14 am, edited 1 time in total.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: Surge Energy (SGY.TO and ZPTAF) Update - Jan 20

Post by dan_s »

From TipRanks on January 16, 2023

"In a report released today, Jeremy Mccrea from Raymond James maintained a Buy rating on Surge Energy, with a price target of C$14.00.

Mccrea covers the Utilities sector, focusing on stocks such as Vermilion Energy, Kelt Exploration, and Spartan Delta. According to TipRanks, Mccrea has an average return of 20.0% and a 56.06% success rate on recommended stocks.

Currently, the analyst consensus on Surge Energy is a Strong Buy with an average price target of $10.38USD for ZPTAF."
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: Surge Energy (SGY.TO and ZPTAF) Update - Jan 20

Post by dan_s »

This is why I added Surge to our "Growth Portfolio".

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. 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 flow. 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 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.

"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)."
Dan Steffens
Energy Prospectus Group
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