Surge Energy (SGY and ZPTAF) Q4 Results - Mar 7

[dan_s]

In Q4/23 Surge achieved an average production rate of 25,050 boepd (86 percent liquids), exceeding the Company's 2023 public guidance production exit rate of 25,000 boepd. < Beat my Q4 forecast of 24,600 Boepd.
Additionally, Surge achieved record annual production in 2023 of 24,438 boe/d (86 percent liquids), an increase of 15 percent over 2022 average production of 21,262 boepd.

FINANCIAL AND OPERATIONAL HIGHLIGHTS

Surge's Board and Management are pleased to report that the Company organically generated free cash flow before dividends ("FCF") of $94 million in 2023, representing 35 percent of 2023 cash flow from operating activities.

Additional financial and operating highlights for the quarter and year ended December 31, 2023 include:

Generated cash flow from operating activities of $79.7 million in Q4/23; < Beat my forecast of $77.6 million.

Reduced net debt by over $62 million in 2023 to $290.1 million, a decrease of 18 percent;
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Distributed cash dividends to shareholders in the amount of $46.8 million in 2023;

Reduced net operating expenses by $2.36 per boe over the course of 2023, from $22.26 per boe in Q1/23 to $19.90 per boe in Q4/23. This represents an 11 percent decrease in net operating expenses over the year;

Repaid in full Surge's $47.9 million first lien term loan facility that was set to mature in December 2024; < Good news. Surge has no near-term debt problems.

Completed a new, oversubscribed, $48.3 million unsecured convertible debenture financing, with an attractive 8.50% interest rate;

Finalized the early redemption of $34.5 million of previously issued unsecured convertible debentures that were set to mature on June 30, 2024 with no pre-payment penalty;

Executed a successful 2023 drilling program of 70 gross (64.5 net) wells, strategically focused on light and medium gravity crude oil in the Company's conventional SE Saskatchewan and Sparky core areas; and

Continued the Company's focus on ESG efforts, highlighted by spending a total of $15.6 million on abandonment activities during the year. This resulted in Surge abandoning 132 gross wells during 2023, representing 1.9 wells abandoned for each new gross well drilled in 2023.

[dan_s]

The stock price is down 5% today, but everything in their Q4 results looks good to me. I will take a hard look at it next week.