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SURGE ENERGY (TSX: SGY| OTC:ZTPAF)
📌 Shares O/S 99.1MM
📌 Market Cap ~$655
📌 .79X debt to cashflow
📌 Average daily trading volume ~585k shares/day
✅ Surge Energy is 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.
✅ 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.
✅ Surge’s Q1 & 2 in 2025 both provided record breaking corporate performance. As a result, the company has increased its’ production 23000 boepd to maintain production while reducing spending to $155M from $170MM offering at free cash flow of $85M and gross cash flow of $260.MM. The company currently pays a dividend of $0.52/share or $0.0433/month offering a 6.5 yield% (10% payout ratio)t in addition to an aggressive buyback as they are trading well below their 1P NAV of $9.33.
✅ Very competitive netbacks of $35.00/bbl. Thus far in 2025 , they have offered a 44% return. Due to well outperformance and peer leading team.
✅ 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.