Join Adelaide Capital for a webinar featuring Surge Energy!
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 multileg leg Sparky discovery and the Frobisher in SE Saskatchewan. The company has the best leverage to oil price of any of its Canadian peers at 91% oil exposure.
Not only does Surge have an enviable asset base they have one of the top management teams 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 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 on collars on the CAD for all of 2025 @ $0.69 x $0.71 while using $0.725 in their budget. Every penny change 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 $63.75. Which also allows for minimal impact from U.S. Tariffs.
The company has multiple drilling catalysts with their multi leg horizontals at Hope Valley and continue to deliver the top wells in SE Saskatchewan. The company currently has 900 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 ~3.0x EV/EBITDA and has one of the highest free cashflow yields in the Canadian E&P space, making it definitely due for a rerate.