CALGARY, Feb. 20, 2018 /CNW/ – Surge Energy Inc. (“Surge” or the “Company“) (TSX: SGY) is pleased to announce that the Toronto Stock Exchange (the “TSX“) has accepted Surge's notice of intention to make a normal course issuer bid for its outstanding common shares in accordance with the rules and policies of the TSX.
Surge believes that the market price of its common shares, in today's current oil price environment, does not accurately reflect their underlying value, making the purchase of common shares an attractive investment and an advantageous use of Surge's capital spending. Surge's new independently engineered total proved (“1P”) net asset value (“NAV”) is $3.671 per share, utilizing Sproule's 2017 year end engineering price deck, and the Company's new proved developed producing (“PDP”) NAV is $2.011 per share.
Surge's common shares are presently trading at a price of $1.88 per share on the TSX. As such, the repurchase of the Company's common shares at these levels represents a return of more than 195 percent, based on Surge's 1P NAV.
The Company is currently generating significant annualized free funds flow, based on budget pricing assumptions and current strip WTI pricing. Surge has approximately $100 million of credit availability on its bank line.
Surge expects that the purchase of its common shares will benefit remaining shareholders by increasing their equity ownership interest in Surge's high quality, light and medium, crude oil assets. Further, Surge does not have to pay a dividend on common shares that it acquires pursuant to the NCIB – thereby improving the Company's sustainability.
As of February 9, 2018 and February 20, 2018, there were 233,069,499 common shares issued and outstanding. As approved by the TSX, Surge is authorized to purchase up to 11,653,475 common shares under the normal course issuer bid, representing approximately 5 percent of Surge's current issued and outstanding common shares. On any trading day, Surge will not purchase more than 25 percent of the average daily trading volume (average daily trading volume being 713,870 of the common shares for the past six calendar months calculated in accordance with the rules of the TSX, being 178,467 common shares per trading day, except where such purchases are made in accordance with the block purchase exemptions under the TSX rules. The normal course issuer bid will commence on February 23, 2018, and will terminate on February 22, 2019. Any common shares acquired will be cancelled.
All purchases under the bid will be purchased on the open market through the facilities of the TSX and alternative Canadian trading platforms at the prevailing market price at the time of such transaction. National Bank Financial Inc. will conduct the bid on behalf of Surge pursuant to a non-automatic purchase plan to be entered into between Surge and National Bank Financial Inc.
Surge is an oil-weighted production and development company with high quality, large OOIP, crude oil reservoirs. Management is focused on delivering to its shareholders solid per share organic growth, sustainable monthly dividends, and further growth through accretive acquisitions of additional elite oil reservoirs. For further information visit our website at www.surgeenergy.ca.