Surge Energy is a 22,500 boepd medium and light oil producer in two of the most economic plays in NA; their traditional Sparky play, new Hope Valley multi leg Sparky discovery and the Frobisher in SE Saskatchewan. They will have three rigs running for most of the year. The company has the best leverage to oil price of any of its Canadian peers at 91% oil exposure. The company just reported a record Q4 and Q1 is trending well above estimates, which should equate to more cashflow for buybacks. 

📌 Not only does Surge have an enviable asset base they have one of the top management teams which are extremely adept at M&A, building four of the most successful companies in Canada.  The result of a combination of building great asset packages, top technical teams and capital markets prowess.

📌 In 2025 Surge plans to maintain production at 22,500 boepd spending $170M offering at free cash flow of $85M. The company currently pays a dividend of $0.52/share or $0.0433/month offering a 9% yield, in addition to an aggressive buyback as they are trading close to their PDP NAV. The Company RECENTLY locked in 7,000 bopd in Q1/25 at US$75.65 WTI per bbl.  They also locked in 6,000 bopd at US$74.25 WTI per bbl for Q2/25 and 4,000 bopd in Q3/25 at US$72.75 WTI a bbl. They also have 60% of their diff's for the year locked in before they blew out; not only that, they have put collars on the CAD for all of 2025 @ $0.69 x $0.71 while using $0.725 in their budget.  Every $0.01change equals $6.6MM in cashflow and every $1.00 change equals $8MM in cashflow. This also allows the dividend to be safe for a year if oil goes down to $63.75. Which also allows for minimal impact from U.S. Tariffs.

📌 Recent reserve report has the Company’s PDP NAV@ 5.42/share, Total Proved NAV of $9.33/share and Total Proved Producing of $14.39/share.

📌 Hope Valley: three years ago, this was just an exploration play. The company has now drilled 8 wells in 2024 testing different multi-leg completions from 6 to 12 legs and is producing 3000boepd. They have pretty much delineated the play and currently control 32 sections. Each section contains 8-10MMBOIP. These wells continue to perform above the type curve with 100 potential locations and only 22 were booked into the 2024 reserve report. This play could add $4.00/share of upside.

📌 The company has multiple drilling catalysts with their multi leg horizontals at Hope Valley and continue to deliver the top Frobisher wells in SE Saskatchewan. The company currently has 900 internal drilling locations with 60% considered top tier (less than 1.5-year payout). They also offer a very low decline of 24% providing stability with the ability to pivot with changing oil prices.  

💡 Surge offers the best value proposition of their peers, with multiple catalysts and the biggest beneficiary of oil price increases.  The stock is trading close to PDP value at ~3.5x EV/EBITDA and has one of the highest free cashflow yields in the Canadian E&P space, offering 15% return with just the buyback and the dividend making it definitely due for a rerate.