CALGARY, Nov. 4, 2013 /CNW/ - Surge Energy Inc. ("Surge"
or the "Company") is pleased to announce its financial and
operating results for the three and nine month periods ended
September 30, 2013.
FINANCIAL AND OPERATING SUMMARY |
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($000s except per share amounts) |
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Three months ended
September 30, |
Nine months ended
September 30, |
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2013 |
2012 |
% change |
2013 |
2012 |
% change |
Financial highlights |
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Oil and NGL sales |
83,146 |
39,481 |
111% |
183,987 |
132,457 |
39% |
Natural gas sales |
3,674 |
3,733 |
(2%) |
14,371 |
10,719 |
34% |
Other revenue |
8 |
29 |
(72%) |
56 |
54 |
4% |
Total oil, natural gas, and NGL revenue |
86,828 |
43,243 |
101% |
198,414 |
143,230 |
39% |
Funds from Operations1 |
44,454 |
19,849 |
124% |
96,504 |
68,171 |
42% |
Per share basic ($) |
0.37 |
0.28 |
32% |
1.10 |
0.96 |
15% |
Per share diluted ($) |
0.37 |
0.28 |
32% |
1.10 |
0.95 |
16% |
Net income (loss) |
9,319 |
(986) |
nm4 |
(7,039) |
14,944 |
nm |
Per share basic ($) |
0.08 |
(0.01) |
nm |
(0.08) |
0.21 |
nm |
Per share diluted ($) |
0.08 |
(0.01) |
nm |
(0.08) |
0.21 |
nm |
Capital expenditures - petroleum & gas
properties2 |
19,997 |
53,133 |
(62%) |
85,228 |
135,739 |
(37%) |
Capital expenditures - acquisitions &
dispositions2 |
218,439 |
1,354 |
nm |
202,255 |
112,391 |
80% |
Total capital expenditures2 |
238,436 |
54,487 |
338% |
287,483 |
248,130 |
16% |
Net debt at end of period3 |
188,179 |
202,746 |
(7%) |
188,179 |
202,746 |
(7%) |
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Operating highlights |
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Production: |
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Oil and NGL (bbls per day) |
9,725 |
5,651 |
72% |
7,861 |
6,108 |
29% |
Natural gas (mcf per day) |
13,696 |
15,846 |
(14%) |
14,933 |
16,494 |
(9%) |
Total (boe per day) (6:1) |
12,008 |
8,292 |
45% |
10,350 |
8,857 |
17% |
Average realized price (excluding hedges): |
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Oil and NGL ($per bbl) |
92.93 |
75.94 |
22% |
85.73 |
79.15 |
8% |
Natural gas ($ per mcf) |
2.92 |
2.56 |
14% |
3.53 |
2.37 |
49% |
Realized loss on financial contracts ($ per
boe) |
(4.32) |
(0.06) |
nm |
(2.47) |
(0.44) |
nm |
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Net back (excluding hedges) ($ per
boe) |
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Oil, natural gas and NGL sales |
78.60 |
56.70 |
39% |
70.22 |
59.02 |
19% |
Royalties |
(14.55) |
(9.96) |
46% |
(12.83) |
(10.63) |
21% |
Operating expenses |
(12.94) |
(11.48) |
13% |
(12.54) |
(11.25) |
11% |
Transportation expenses |
(2.01) |
(2.07) |
(3%) |
(2.22) |
(2.15) |
3% |
Operating netback |
49.10 |
33.19 |
48% |
42.63 |
34.99 |
22% |
G&A expenses |
(2.56) |
(3.12) |
(18%) |
(3.46) |
(3.42) |
1% |
Interest expense |
(2.04) |
(2.23) |
(9%) |
(2.43) |
(1.94) |
25% |
Corporate netback |
44.50 |
27.84 |
60% |
36.74 |
29.63 |
24% |
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Common shares (000s) |
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Common shares outstanding, end of period |
121,864 |
71,143 |
71% |
121,864 |
71,143 |
71% |
Weighted average basic shares outstanding |
119,878 |
71,117 |
69% |
87,663 |
70,884 |
24% |
Stock option dilution (treasury method) |
248 |
- |
100% |
- |
1,249 |
(100%) |
Weighted average diluted shares outstanding |
120,126 |
71,117 |
69% |
87,663 |
72,133 |
22% |
1 |
Management uses funds from operations (cash flow from operating
activities before changes in non-cash working capital, legal
settlement expenses,
transaction costs and current tax on disposition) to analyze
operating performance and leverage. Funds from operations as
presented does not have any
standardized meaning prescribed by IFRS and, therefore, may not be
comparable with the calculation of similar measures for other
entities. |
2 |
Please see capital expenditures note. |
3 |
The Corporation defines net debt as outstanding bank debt plus
or minus working capital and dividends payable, and excluding the
fair value of
financial contracts, accrued share appreciation rights within
accounts payable and other current obligations. |
4 |
The Corporation views this change calculation as not
meaningful, or "nm". |
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FINANCIAL ACHIEVEMENTS & HIGHLIGHTS:
Highlights for the quarter include:
- Increased production by 45 percent to 12,008 boe per day
for the third quarter of 2013 as compared to 8,292 in the third
quarter of 2012. This third quarter 2013 production level exceeded
Surge's previously announced 2013 exit rate of 12,000 boe per
day.
- Increased oil & NGL production by 72 percent in the
third quarter of 2013 as compared to the third quarter of 2012.
- Revenue more than doubled in the third quarter of 2013
as compared to the third quarter of 2012.
- Increased operating netback by 48 percent to
$49.10 per boe for the third quarter
of 2013 as compared to $33.19 in the
third quarter of 2012 (excluding risk management activity).
- Increased corporate netback by 60 percent to
$44.50 per boe for the third quarter
of 2013 as compared to $27.84 in the
third quarter of 2012 (excluding risk management activity).
- Funds from operations increased 124 percent to
$44.5 million during the third
quarter of 2013 from $19.8 million
during the same period of 2012.
- Funds from operations per fully diluted share increased 32
percent during the third quarter of 2013 to $0.37 compared to $0.28 the same period in 2012.
- Net income per fully diluted share increased to
$0.08 compared to a loss of
$0.01 the same period in 2012.
- Reduced general and administrative expenses per boe by 18
percent in the third quarter of 2013 as compared to the third
quarter of 2012.
- Maintained an excellent balance sheet with debt to
annualized third quarter funds from operations of less than 1.1
times.
- Achieved a 100 percent drilling success rate investing a
total of $20.0 million of capital in
the third quarter, $14.0 million of
which was allocated to drilling 5 gross (5 net) oil wells.
- Surge realized an 81 percent oil and natural gas liquids
production weighting in the third quarter of 2013.
- 96 percent of Surge's revenue resulted from oil and natural
gas liquids production, in the third quarter of 2013 with four
percent derived from natural gas production.
- Maintained consistent risk management program which
protects Surge's balance sheet. The Corporation has 52
percent of its third quarter average oil and NGL (after royalties)
production hedged for the remainder of 2013, with an average WTI
floor price of approximately $95.79
CAD per barrel and approximately 45 percent of its current oil and
NGL (after royalties) production hedged for 2014, at an average WTI
floor price of more than $95.37 CAD
per barrel.
CORPORATE ACHIEVEMENTS AND HIGHLIGHTS
Acquisition of Elite, Large OOIP, Crude Oil
Asset and $247.5 Million Equity
Financing
On July 3, 2013,
Surge closed the accretive acquisition of an operated, medium
gravity crude oil producing asset in the Southwest area of
Saskatchewan (the "Acquisition")
with internally estimated original oil in place
("OOIP")5 of more than 250 million barrels and a
recovery factor of less than 1.5 percent, for net consideration of
$242.4 million. In conjunction
with the Acquisition, Surge entered into a $247.5 million bought deal equity financing.
At this time Surge's board of directors also
announced an increase in the Company's anticipated dividend from
$0.30 per share to $0.40 per share per year.
Operational Success Leads to Five percent
Dividend Increase
On August 7, 2013
Surge's board of directors (the "Board") approved an increase in
the Company's annual dividend by five percent from $0.40 per share ($0.0333 per share per month) to $0.42 per share ($0.035 per share per month).
This dividend increase was based upon: 1) better
than anticipated drilling results at Valhalla, Silver and Nipisi South; 2) better
than anticipated early waterflood response at Nipisi; 3)
significantly better than forecasted North American crude oil
prices; and 4) continued execution of Surge's ongoing hedging/risk
management program.
First Dividend Payment
A milestone event for Surge shareholders
occurred on September 16, 2013 when
Surge paid the Company's first monthly dividend of $0.035 per share ($0.42 per share per year) in respect of
August 2013 production.
Subsequent Event - Surge Announced Two High
Quality, Light Oil Acquisitions, an Upward Revision to 2013/14
Guidance, and a 19 percent Increase in Dividend
Subsequent to the third quarter, on October 22, 2013 Surge announced two strategic,
high quality light oil acquisitions. The first acquisition involved
the $147 million purchase of all of
the shares of a Calgary based
private oil and gas company (the "Privateco"), with high
netback, operated, producing light oil assets focused in the
Steelman area of SE Saskatchewan, and the Dodsland area of SW
Saskatchewan (the "Privateco Assets"). The consideration to
be paid to the shareholders of Privateco is comprised of between
15.7 and 20.7 million shares of Surge, subject to the cash
consideration elected by Privateco shareholders to a maximum of
$30 million, plus the assumption of
$23 million of debt (the "Privateco
Acquisition").
Additionally, Surge announced that it has
entered into an agreement to acquire high quality, high netback,
operated, producing light oil assets primarily located in the SW
area of Manitoba. Total
consideration of $135 million to be
paid to the vendor of the Manitoba
Assets is comprised of 14.2 million shares of Surge, and
$50 million of cash (the "Asset
Acquisition").
Based upon the Privateco Acquisition and the
Asset Acquisition (collectively the "Acquisitions"), Surge again
upwardly revised the Company's 2013 exit guidance, and its 2014
full year guidance ( Please see below under "Upward Revision to
2013/14 Guidance").
__________________________
5 Original Oil in Place (OOIP) is the equivalent to
Discovered Petroleum Initially In Place (DPIIP) for the purposes of
this
press release. DPIIP is defined as quantity of hydrocarbons that
are estimated to be in place within a known accumulation,
plus those estimated quantities in accumulations yet to be
discovered. There is no certainty that it will be commercially
viable to produce any portion of the resources. A recovery project
cannot be defined for this volume of DPIIP at this time,
and as such it cannot be further sub-categorized. |
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Furthermore, as a result of these highly
accretive Acquisitions, together with better than anticipated
operational and drilling results, Surge announced that the Company
will now be increasing the annual dividend 19 percent from
$0.42 per year ($0.035 per share per month), to $0.50 per share per year ($0.04166 per share per month) commencing
November 2013 .
The closing of the Acquisitions is expected to
occur on or about November
13th, 2013 (the "Closing").
As a result of the structure of the
Acquisitions, post Closing Surge will maintain the Company's
excellent balance sheet and debt to forward cash flow ratio, with
over $120 million of credit
availability on the Company's bank line. In addition, pro-forma the
Acquisitions, there is no change in Surge's very low, "all-in"
sustainability ratio of 93 percent.
The Acquisitions fit squarely within Surge's
defined business strategy of investing growth capital to acquire
elite, operated, light and medium gravity crude oil reservoirs,
with large OOIP and low recovery factors.
The Privateco Acquisition provides a strategic
entry point for Surge into the prolific Midale Marly, light oil
play trend in SE Saskatchewan, and
the Viking light oil play in SW
Saskatchewan. The Manitoba Assets provide Surge shareholders
with exposure to one of the highest quality, highest netback light
oil plays in Canada, focused in
the Bakken/Three Forks formation located in SW Manitoba.
The Acquisitions are highly accretive to Surge
shareholders and provide Surge with exposure to three of the top
light oil plays in Canada
(collectively the "Assets"). They also provide an excellent
operational platform for additional growth on these proven
trends.
The Acquisitions comprise and possess large OOIP
reservoirs, together with low recovery factors, operatorship and
high working interests. They also possess significant upside from
low risk development drilling and waterfloods. Furthermore, the
Acquisitions include key producing infrastructure, including
batteries, pipelines and waterflood facilities.
Corporately, the light oil Acquisitions
significantly increase Surge's operating netback by over 11
percent, and increase the Company's oil weighting to over 84
percent.
Post Closing Surge will have over 1 Billion
barrels of light and medium gravity OOIP under the Company's
ownership and management - with a recovery factor of less than 3
percent, based on internal estimates.
OPERATIONS OVERVIEW
Surge delivered a 28 percent increase in
production as compared to the second quarter of 2013. The Company
also increased its oil and NGL weighting to 81 percent in the third
quarter of 2013 from 74 percent in the previous quarter. This is
the result of the successful integration of the Shaunavon asset in early July, and additional
operational success across the Company's asset base.
Third quarter production exceeded Surge's
previously announced 2013 exit rate of 12,000 boe per day. This
execution creates a solid foundation for the operational activity
planned in the fourth quarter, which includes the drilling of four
Sparky wells at Silver, three wells at Shaunavon, one well at Valhalla, 2.5 net wells on the newly acquired
SE Saskatchewan and Manitoba assets, and one well at Windfall.
Shaunavon
Surge took operatorship of the Shaunavon assets on July 3, 2013 and immediately initiated a 30 well
pump optimization program. During the third quarter 20
optimizations were executed, adding approximately 385 barrels of
oil per day of production for the quarter. To date Surge has
executed 26 optimizations with similar results.
Surge has received water flood approvals for two
sections and will commence pilots in the fourth quarter of 2013;
one at 200 meter inter well spacing, and one at 400 meter inter
well spacing (eight and four wells per section respectively). The
pilots involve five injector conversions, which are complete, with
water injection expected to commence in November. Surge expects
waterflood response in three to six months and is encouraged by the
success of other Lower Shaunavon water flood pilots in the
area.
Surge plans to drill three Lower Shaunavon wells
in the fourth quarter of 2013, with drilling commencing in
November.
Silver Area
At Eye Hill, four Cretaceous horizontal wells
were brought on production during the quarter. The wells have
performed significantly above the type curve expectations. In
addition, a fifth well has been drilled completed and brought on
production subsequent to quarter end. A multi-well battery has been
constructed which will significantly reduce the operating costs for
these wells and conserve the solution gas.
Surge has negotiated a multi-section farm in
agreement which captures another estimated 30 to 45 million barrels
of OOIP within this significant oil accumulation. Surge has
conducted a 16 section 3D seismic program over the pool and will
drill two additional wells by year end.
In the Silver area, one Cretaceous horizontal
well was brought on production during the quarter. It has performed
above type curve expectation and is currently producing above 100
barrels of oil per day after three months on production.
Surge executed a 4.75 section farm in within the
established pool, capturing an additional estimated 25 million
barrels of OOIP. An earning well has been drilled and placed on
production in October.
Nipisi
The water flood initiated in the second quarter
of 2013 has responded after approximately eight weeks of injection
into a single well, and added over 100 barrels of oil per day above
budget expectations for the quarter. Surge commenced injection into
a second well in September. Approval was received for an additional
two injectors during the quarter and a third well has been
converted with operations underway to commence injection in
December.
Windfall
Surge is currently drilling a development well
at Windfall which will add to fourth quarter production and
continue multiple, prospective sections within the pool. The
Company is also continuing waterflood operations on this 60 million
OOIP light oil asset.
Valhalla
At Valhalla,
Surge drilled and placed a 100 percent working interest Doig well
on production in September (14-07-075-08 W6). The well result
continued to expand and confirm the significant potential for new
reserve adds in Surge's northernmost, 100 percent working interest
lands. The well also established a record low total "on production"
cost of under $4.0 million. Surge
plans to drill one more Doig well in the fourth quarter of
2013.
Surges' first Montney horizontal oil well was drilled and
successfully completed at 01-31-074-08 W6 (100 percent WI) during
the quarter. The well encountered over 800 horizontal meters of
Montney pay. The well flowed back
at significant fluid rates with reasonable oil cuts. As a result of
the high H2S content of the solution gas, the well will need to be
tied in to facilities to evaluate further and optimize the
artificial lift required. This will not likely occur prior to year
end.
During September the solution gas production at
Valhalla was restricted as a
result of a gas plant turnaround at a third party facility, which
turnaround has lasted longer than forecast (i.e. Surge had
anticipated a two week restriction). This reduced the monthly gas
production in September by two mmcfd and approximately 100 barrels
of oil and NGLs per day for the month, which impacted third quarter
production by approximately 135 boe per day. This gas plant
turnaround has continued through October, with full Valhalla production expected to return to
normal levels in early November. The impact to fourth quarter
production is estimated to be approximately 800 boed (71 percent
natural gas and NGL's), which is estimated to impact fourth quarter
cash flow by only $2 million. This
turnaround will not affect Surge's 2013 exit rate of 14,200 boe per
day.
UPWARD REVSION TO 2013/14 GUIDANCE
The following sets forth Surge's upwardly
revised guidance for exit 2013 estimates, and for full year 2014
estimates.
Operational:
|
Surge 2014E Guidance
(prior to new
Acquisitions)6 |
Surge 2014E Guidance
(after the new Acquisitions)6 |
2013E Exit Production (boe/d) |
12,000 (78 percent Oil/NGLs) |
14,200 (82 percent Oil/NGLs) |
2014E Average Production (boe/d) |
12,100 (78 percent Oil/NGLs) |
14,450 (82 percent Oil/NGLs) |
2014E Exit Production (boe/d) |
12,500 (78 percent Oil/NGLs) |
14,750 (82 percent Oil/NGLs) |
2P Reserves7 |
54.6 mmboe |
64.3 mmboe |
RLI (based on 2013E exit
production) |
> 12 years |
> 12.4 years |
2014E Capital Spending |
$85 million |
$109 million |
2014E Wells Drilled |
30 wells |
46.5 wells |
2014 Decline |
24 percent |
25 percent |
Financial:
|
Surge 2014E Guidance
(prior to new
Acquisitions)6 |
Surge 2014E Guidance
(after the new Acquisitions)6 |
2014E Funds from Operations
("FFO")8,9 |
$146 million ($1.20 per share) |
$203 million ($1.30 per share) |
2014E Operational Netback |
$38.33/boe |
$42.88/boe |
2014E Cash Flow Netback |
$33.94/boe |
$38.56/boe |
Shares Outstanding9 |
121 million |
157 million |
Annual Dividend9 |
$51 million |
$78 million |
Yield10 |
6.3 percent |
7.5 percent |
Basic Payout Ratio 2014E |
35 percent |
39 percent |
"All-in" Payout Ratio |
93 percent |
93 percent |
2014E Exit Net Debt9 |
$205 million |
$268 million |
2014E Net debt / 2014
FFO9 |
1.4x |
1.3x |
Bank Line |
$350 million |
Estimated at $430 million |
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__________________________
6 Based on 2014 Edmonton Par $90.45/bbl; 2014 AECO
gas $3.69/mcf and a 2014 CAD/USD exchange rate of $0.985. |
7 Based on independent engineering reports as of
December 31, 2012 or later. |
8 Management uses funds from operations (cash flow
from operations before changes in non-cash working capital,
legal
settlement expenses, transaction costs and current tax on
disposition) to analyze operating performance and leverage.
Funds
from operations as presented does not have any standardized meaning
prescribed by IFRS and, therefore, may not be
comparable with the calculation of similar measures for other
entities. |
9 Assumes that 20.7 million shares of Surge are
issued pursuant to the privateco acquisition announced on October
22, 2013. |
10 Based on a Surge share price of $6.70. |
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FINANCIAL STATEMENTS AND ACCOMPANYING MDA:
Surge will be filed with Canadian securities
regulatory authorities its financial statements and accompanying
MD&A for the three and nine month periods ended September 30, 2013. These filings are available
for review at www.sedar.com or www.surgeenergy.ca.
Non-IFRS Measures
The terms "funds from operations", "funds from
operations per share", and "netback" used in this discussion are
not recognized measures under International Financial Reporting
Standards (IFRS). Management believes that in addition to net
income, funds from operations and netback are useful supplemental
measures as they provide an indication of the results generated by
the Corporation's principal business activities before the
consideration of how those activities are financed or how the
results are taxed. Investors are cautioned, however, that
these measures should not be construed as alternatives to net
income determined in accordance with IFRS, as an indication of
Surge's performance.
Surge's method of calculating funds from
operations may differ from that of other companies, and,
accordingly, may not be comparable to measures used by other
companies. Surge determines funds from operations as cash
flow from operating activities before changes in non-cash working
capital, legal settlement expense, transaction costs, and current
tax on disposition as follows:
Funds from Operations |
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($000s) |
|
Q3 2013 |
|
Q2 2013 |
|
Q1 2013 |
|
Q4 2012 |
|
Q3 2012 |
Cash flow from operating activities |
|
$ |
17,106 |
|
|
$ |
24,703 |
|
|
$ |
24,987 |
|
|
$ |
23,116 |
|
|
$ |
24,483 |
|
Change in non-cash working capital |
|
22,597 |
|
|
(3,019 |
) |
|
250 |
|
|
945 |
|
|
(4,634 |
) |
Legal settlement expense |
|
— |
|
|
3,550 |
|
|
— |
|
|
— |
|
|
— |
|
Transaction costs |
|
4,751 |
|
|
139 |
|
|
— |
|
|
— |
|
|
— |
|
Current tax on disposition |
|
— |
|
|
1,439 |
|
|
— |
|
|
— |
|
|
— |
|
Funds from operations |
|
$ |
44,454 |
|
|
$ |
26,812 |
|
|
$ |
25,237 |
|
|
$ |
24,061 |
|
|
$ |
19,849 |
|
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Funds from operations per share are calculated
using the same weighted average basic and diluted shares used in
calculating income per share. Operating and corporate
netbacks are also presented. Operating netbacks excluding
hedging activity represent Surge's revenue, excluding realized and
unrealized gains or losses on financial contracts, less royalties
and operating and transportation expenses. Operating netbacks
including hedging activity represent Surge's operating netback
adjusted for realized gains or losses on financial contracts.
Corporate netbacks represent Surge's operating netback, less
general and administrative and interest expenses, in order to
determine the amount of funds generated by production.
Operating and corporate netbacks have been presented on a per
barrels of oil equivalent ("boe") basis. This reconciliation
is shown within the MD&A.
Forward looking statements:
This press release contains forward-looking statements. More
particularly, it contains forward-looking statements concerning:
(i) timing and completion of the Acquisitions, expectations and
assumptions concerning timing of receipt of required regulatory
approvals and the satisfaction of other conditions to the
completion of the Acquisitions, (ii) potential development
opportunities and drilling locations associated with the
Acquisitions, expectations and assumptions concerning the success
of future drilling and development activities, the performance of
existing wells, the performance of new wells, the successful
application of technology and the geological characteristics of the
Acquisitions, (iii) the timing and amount of future dividend
payments and the sustainability of dividends, (iv) oil &
natural gas production growth during 2013 and 2014, (v) debt and
bank facilities, (vi) capital expenditures, (vii) primary and
secondary recovery potentials and implementation thereof, (viii)
estimated 2013 exit rate of production, (ix) estimated 2014 average
and exit rates of production, * estimated 2014 capital
expenditures, wells drilled, decline rates, funds from operations,
operating netback, cash flow netback, payout ratio, bank facility,
year-end net debt and net debt to funds from operations ratio; and
(xi) the anticipated exceeding by Surge of the previously estimated
2013 exit rate of production.
The forward-looking statements contained in this
press release are based on certain key expectations and assumptions
made by Surge, including expectations and assumptions concerning
the success of future drilling, development and completion
activities, the performance of existing wells, the performance of
new wells, the viability of waterflood projects, the availability
and performance of facilities and pipelines, the geological
characteristics of Surge's properties, the successful application
of drilling, completion and seismic technology, prevailing weather
conditions, commodity prices, royalty regimes and exchange rates,
the application of regulatory and licensing requirements and the
availability of capital, labour and services.
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 uncertainties resulting from potential delays or
changes in plans with respect to exploration or development
projects or capital expenditures. Certain of these risks are set
out in more detail in Surge's Annual Information Form which has
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.
Financial Outlooks:
The estimates of 2014 year end net debt, 2014
funds from operations and 2014 operating netback and cash flow
netback contained in this press release are financial outlooks
within the meaning of applicable securities laws. These financial
outlooks have been prepared by management of Surge to provide an
outlook of Surge's anticipated funds from operations and netbacks
for a full year of operations with its current assets and based on
management's expectations and assumptions as to a number of
factors, including commodity pricing, production, operating
expenses and royalties. Readers are cautioned that this information
may not be appropriate for any other purpose. Management does not
have firm commitments for all of the costs, expenditures, prices or
other financial assumptions used to prepare the financial outlooks
or assurance that such results will be achieved. The actual results
of Surge will likely vary from the amounts set forth in the
financial outlooks and such variation may be material.
Surge and its management believe that the
financial outlooks have been prepared on a reasonable basis,
reflecting the best estimates and judgments, and represent, to the
best of management's knowledge and opinion, Surge's expected
expenditures and results of operations following completion of the
Acquisitions. However, because this information is highly
subjective and subject to numerous risks, including the risks
discussed under the note regarding Forward Looking Statements, it
should not be relied on as necessarily indicative of future
results. Except as required by applicable securities laws, Surge
undertakes no obligation to update this information.
Note: 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 means barrel of oil equivalent per day.
In this press release: (i) mcf means thousand
cubic feet; (ii) mcf/d means thousand cubic feet per day (iii) mmcf
means million cubic feet; (iv) mmcf/d means million cubic feet per
day; (v) bbls means barrels; (vi) mbbls means thousand barrels;
(vii) million barrels means million barrels; (viii) bbls/d means
barrels per day; (ix) bcf means billion cubic feet; * mboe means
thousand barrels of oil equivalent; and (xi) mmboe means million
barrels of oil equivalent
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.
SOURCE Surge Energy Inc.