CALGARY, Oct. 25, 2018 /CNW/ - Surge Energy Inc. ("Surge"
or the "Company") (TSX: SGY) is pleased to announce that it has
successfully completed the previously announced acquisition (the
"Acquisition") of Mount Bastion Oil & Gas Corp. ("MBOG")
pursuant to an arrangement (the "Arrangement") under the provisions
of the Business Corporations Act (Alberta).
SPECIAL MEETING RESULTS; GREATER THAN 99% VOTE
IN FAVOR
All of the issued and outstanding common shares of MBOG were
acquired by Surge for aggregate consideration consisting of
$145 million in cash and
approximately 75.4 million common shares of Surge ("Surge Shares").
At the special meeting of Surge shareholders to approve the
issuance of the Surge Shares pursuant to the Acquisition, held on
October 24, 2018, 42.79% of the outstanding Surge Shares were
represented and the issuance was approved by 99.31% of the Surge
Shares voted at the meeting.
INCREASE TO CREDIT FACILITY
Effective today, Surge's revolving credit facility was increased
by 57 percent from $350 million to
$550 million. As of the close of the
Acquisition, approximately $400
million is currently drawn on the credit facility, providing
Surge with approximately $150 million
in available liquidity.
DIVIDEND INCREASE
As previously announced, Surge anticipates increasing its
dividend by 25 percent, from $0.10
per share annually ($0.008333 per
month) to $0.125 per share annually
($0.0104166 per month). The proposed
increase is expected to be effective for Surge's regular monthly
dividend to be paid in December 2018.
Any dividend increase will be subject to the approval of Surge's
Board of Directors.
Q3/18 AVERAGE PRODUCTION EXCEEDS 2018 EXIT RATE
Based on continued successful development drilling results in
Surge's Sparky, Valhalla, and
Shaunavon core areas, together
with consistent waterflood results at Shaunavon and Sparky, the Company's Q3/18
production averaged 18,029 boepd (79 percent oil and liquids).
The Company's Q3/18 production exceeded Surge's previously
released 2018 production exit rate guidance of 17,175 boepd by five
percent, and exceeded analyst consensus production estimates of
16,880 boepd1 for Q3/18 by seven percent.
Over the last nine financial quarters Surge has now grown the
Company's production per share by 41 percent. The Company has
upwardly revised production five times over the 27 month period
(i.e. prior to the MBOG Acquisition) – two times organically, and
three times relating to accretive core area acquisitions.
Surge's continued quarterly operational outperformance has been
accomplished within the Company's existing capital expenditure
budget guidance of $107 million for
2018.
The Company's Q3/18 results are expected to be released on
November 6, 2018, and do not include
any operational or financial contribution from the Arrangement.
For further details regarding the Company's 2019 guidance,
please see Surge's Press Release dated September 5, 2018.
ADVISORS
Macquarie Capital Markets Canada Ltd. is acting as exclusive
financial advisor to Surge with respect to the
Acquisition. McCarthy Tétrault LLP is acting as legal advisor
to Surge with respect to the Acquisition. GMP FirstEnergy and BMO
Capital Markets have also been appointed strategic advisors to
Surge.
National Bank Financial Inc. acted as financial advisor to MBOG
on the Acquisition.
FORWARD LOOKING STATEMENTS:
This press release contains forward-looking statements.
The use of any of the words "anticipate", "continue", "estimate",
"expect", "may", "will", "project", "should", "believe" and similar
expressions are intended to identify forward-looking statements.
These statements involve known and unknown risks, uncertainties and
other factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
statements.
More particularly, this press release contains statements
concerning: management's expectations with respect to 2018 exit and
2019 production volumes, Surge's oil and liquids weighting, Surge's
2019 exploration and development capital expenditures and Surge's
2019 corporate base decline; the timing of the release of Surge's
Q3/18 results; the potential increase in Surge's dividend; and the
availability of Surge's bank line to fund provide the Company with
liquidity.
The forward-looking statements are based on certain key
expectations and assumptions made by Surge, including expectations
and assumptions concerning the performance of existing wells and
success obtained in drilling new wells, anticipated expenses,
adjusted funds flow and capital expenditures, the application of
regulatory and royalty regimes, prevailing commodity prices and
economic conditions, development and completion activities, the
performance of new wells, the successful implementation of
waterflood programs, the availability of and performance of
facilities and pipelines, the geological characteristics of Surge's
properties, the successful application of drilling, completion and
seismic technology, the availability of capital, the determination
of decommissioning liabilities, prevailing weather conditions,
exchange rates, licensing requirements, the impact of completed
facilities on operating costs, the availability and cost of
capital, labour and services, the credit worthiness of industry
partners and the impact of transactions on Surge's bank line.
Although Surge believes that the expectations and assumptions on
which the forward-looking statements are based are reasonable,
undue reliance should not be placed on the forward-looking
statements because Surge can give no assurance that they will prove
to be correct. Since forward-looking statements address future
events and conditions, by their very nature they involve inherent
risks and uncertainties. Actual results could differ materially
from those currently anticipated due to a number of factors and
risks. These include, but are not limited to, risks associated with
the oil and gas industry in general (e.g., operational risks in
development, exploration and production; delays or changes in plans
with respect to exploration or development projects or capital
expenditures; the uncertainty of reserve estimates; the uncertainty
of estimates and projections relating to production, costs and
expenses, and health, safety and environmental risks), commodity
price and exchange rate fluctuations and constraint in the
availability of services, adverse weather or break-up conditions,
uncertainties resulting from potential delays or changes in plans
with respect to exploration or development projects or capital
expenditures and failure to obtain the continued support of the
lenders under Surge's current bank line. Certain of these risks are
set out in more detail in Surge's Annual Information Form dated
March 15, 2018 and in Surge's
MD&A for the period ended June 30,
2018, both of which have been filed on SEDAR and can be
accessed at www.sedar.com.
The forward-looking statements contained in this press release
are made as of the date hereof and Surge undertakes no obligation
to update publicly or revise any forward-looking statements or
information, whether as a result of new information, future events
or otherwise, unless so required by applicable securities laws.
Oil Metrics
Boe means barrel of oil equivalent on the basis of 1 boe to
6,000 cubic feet of natural gas. Boe may be misleading,
particularly if used in isolation. A boe conversion ratio of 1 boe
for 6,000 cubic feet of natural gas is based on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead.
Boe/d and boepd means barrel of oil equivalent per day.]
Neither the TSX nor its Regulation Services Provider (as that
term is defined in the policies of the TSX) accepts responsibility
for the adequacy or accuracy of this release.
____________________________
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1 Consensus average production of
16,880 boepd as per Thomson Reuters as at October 23rd,
2018.
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SOURCE Surge Energy Inc.