Surge Energy earns $40.25M in 2025, appoints director

Executive Summary

• Surge Energy Inc. reported its fourth quarter and full-year 2025 financial results, highlighting strong operational performance despite a decline in WTI crude oil prices. The company exceeded its 2025 production guidance by approximately 1,000 boepd, averaging 23,491 boepd, while reducing capital expenditures by 18% year-over-year.
• The company generated significant free cash flow of $119.5 million in 2025 (a 21% increase from 2024) and returned $86.9 million to shareholders through dividends, share buybacks, and net debt reduction.
• Independent reserve evaluations by GLJ Ltd. reported a 136% TPP reserves replacement ratio, with total proved and probable reserves increasing 6% to 95.7 million boe. The company also announced the appointment of Ryan Gritzfeldt to its Board of Directors.

Key Details

• Production: 2025 average production was 23,491 boepd (88% liquids), exceeding the initial guidance of 22,500 boepd. Q4 2025 production averaged 23,186 boepd.
• Capital Expenditures: Total 2025 capital expenditures were $159.7 million, representing an 18% reduction from 2024 ($195.1 million) and $10.3 million below the initial 2025 guidance of $170 million.
• Operating Costs: Net operating costs decreased 11% year-over-year from $20.02/boe in 2024 to $17.91/boe in 2025.
• Financial Performance:
  • Adjusted Funds Flow (AFF): $279.2 million ($2.81/share).
  • Cash Flow from Operating Activities: $266.0 million ($2.68/share).
  • Free Cash Flow (FCF): $119.5 million (43% of AFF), up from $99.0 million in 2024.
  • Net Debt: Reduced by $26.5 million to $220.6 million as of Dec. 31, 2025.
• Shareholder Returns (2025): Total returns of $86.9 million, comprising:
  • $51.7 million in base dividends (52 cents/share annually).
  • $8.7 million in share buybacks (1,504,700 shares repurchased).
  • $26.5 million reduction in net debt.
• Reserves (GLJ Ltd. Evaluation effective Dec. 31, 2025):
  • TPP Reserves: 95.7 million boe (up 6% from 90.2 million boe in 2024).
  • TPP Reserves Replacement Ratio: 136% (organic).
  • TPP Reserve Life Index: 11.4 years.
  • TPP Net Asset Value (NAV): $13.06 per share.
  • Finding & Development (F&D) Costs: $14.87/boe (TPP), resulting in a 2.4x recycle ratio based on a $36.23/boe operating netback.
  • Booked Locations: 392 gross (360.6 net) TPP drilling locations.
• 2026 Outlook & Guidance:
  • Estimated Production: 23,000 boepd (88% liquids).
  • Estimated AFF: $265 million ($2.68/share).
  • Estimated Cash Flow from Operations: $245 million ($2.47/share).
  • Capital Program: 60 gross (54.5 net) wells planned (31 in Sparky, 29 in Southeastern Saskatchewan).
  • Dividend: Maintained at $51.5 million annually (52 cents/share).
• Operational Updates:
  • Drilled 58 gross (48.8 net) wells in 2025.
  • Hope Valley OHML wells averaged 197 bopd IP90, outperforming type curve expectations by 22%.
  • Implemented high-density frac technology in Sparky core, doubling frac stages per well and increasing IP90 production by 50%.
  • Maintained undrawn $250 million first lien credit facility.

Notable Quotes

• Note: No direct quotes from the CEO or President were included in the provided text.