Surge Energy (SGY.TO and ZPTAF) Price Target - Mar 9

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Surge Energy (SGY.TO and ZPTAF) Price Target - Mar 9

Post by dan_s »

Note from Raymond James by Jeremy McCrea,CFA (RJL)

Surge Energy Inc.
PDP Reserve Volume Growth of 27% - While Still Showing Strong Return Metrics
SGY-TSX | Current share price $8.88Cdn
Outperform 2 | $14.00Cdn target

When we look back at why companies were the best performers, they typically have a
few common key attributes: 1) A material change in underlying asset performance (new
exploration play, new technology); 2) asset high-grading has been occurring while the
company has been ‘out-of-favour’ / ‘off-the-radar’ and thus the shift has gone unnoticed;
and, 3) low sentiment has driven an inexpensive valuation, setting up a favourable entry
The strong reserve report, especially in context of top tier reserve volume growth (of
27%) shows the potential value creation that can be obtained on SGY’s undrilled acreage.
The timing of when the market will appreciate and properly value the +1,050 undrilled
locations is always hard to know but continued success should ultimately drive multiple
expansion. But when? Perhaps when SGY is added to the TSX Composite Index, or new
shareholder friendly items are announced, but it does seem that SGY is beginning to show
up more on investors’ radar screens.
CFPS: 2023E C$3.11 2024E C$2.86 | MC(M): C$857 | Debt: C$358 | Yield: 5.4% < Dividend recently raised to $0.48Cdn/Year.
MY TAKE: Based on my rough forecast for 2023, this stock appears to be trading at a deep discount to Fair Value. I still have some things to adjust on the model but my valuation will be close to Raymond James' price target of $14.00Cdn or ~$10.50US per share.

Surge is hosting a Houston luncheon for us on April 11.
Dan Steffens
Energy Prospectus Group
Posts: 2055
Joined: Mon Mar 22, 2021 11:48 am

Re: Surge Energy (SGY.TO and ZPTAF) Price Target - Mar 9

Post by Fraser921 »

I like the CEO and how can you go wrong with a CFO named Ducs
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