SURGE ENERGY INC. ANNOUNCES THIRD QUARTER FINANCIAL & OPERATING RESULTS; OPERATIONS UPDATE; 2026 CAPITAL AND OPERATING BUDGET; APPOINTMENT TO THE BOARD OF DIRECTORS

Executive Summary

• Surge Energy reported Q3 2025 adjusted funds flow of $70.1 M, free cash flow of $37.2 M and production of 23,622 boe/d – over 1,100 boe/d above the 2H‑2025 budget.
• Net debt was reduced by $11.7 M to $217.4 M; total shareholder returns (dividends, NCIB repurchases) amounted to $25.3 M for the quarter.
• The Company released its 2026 capital and operating budget targeting $150 M of capex, $265 M AFF, $95 M free cash flow and an average production of ~23,000 boe/d at a $65 WTI price assumption; also announced appointment of Myles Bosman to the Board.

Key Details

• Production: Q3 2025 averaged 23,622 boe/d (88% liquids), >1,100 boe/d above budgeted 22,500 boe/d.
• Adjusted Funds Flow (AFF): $70.1 M for the quarter; $265 M projected for full‑year 2026.
• Free Cash Flow (FCF): $37.2 M in Q3 2025; $95 M forecast for 2026.
• Net Operating Expenses: $17.69 per boe, down $1.12 (‑6%) YoY.
• Capital Expenditures: $32.8 M spent on PP&E in Q3 2025; 2026 capex budget set at $150 M (≈95% directed to Sparky and SE Saskatchewan core areas).
• Shareholder Returns: $12.9 M dividend paid (base dividend $0.52 per share annually, paid monthly); $0.7 M NCIB repurchase of 108,000 shares; total cash returned $25.3 M (36% of AFF).
• Net Debt Reduction: Decreased by $11.7 M to $217.4 M as of Sept‑30‑2025.
• Strategic Land Acquisition: Closed acquisition of Mannville (Sparky) lands for $5.7 M; >25 drilling locations identified on the acquired land.
• Drilling Performance: 13 gross wells drilled in Q3 2025 (10.8 net); OHML program at Hope Valley delivered average IP90 216 bopd (34% above auditor type‑curve of 162 bopd).
• High‑Density Frac Technology: 20 single‑lateral multi‑frac wells drilled in past 12 months; stage count increased from 26 to 52 per well, raising IP90 rates by ~50%.
• Waterflood Program: First waterflood injector at Hope Valley brought on production (cleanup) in Q3 2025; conversion to injection planned for early Q1‑2026.
• 2026 Outlook Assumptions: WTI $65/bbl, NGL differential $12.00, EDM differential $4.00, FX 0.715 CAD/USD, AECO $2.95.
• 2026 Financial Guidance: AFF $265 M ($2.68 per share), cash flow from operations >$245 M ($2.47 per share), free cash flow $95 M ($0.96 per share).
• 2026 Production Guidance: Average 23,000 boe/d (88% liquids).
• Dividend Policy 2026: Base dividend $51.5 M annually ($0.52 per share).
• Credit Facility: $250 M first‑lien facility remains undrawn as of Sept‑30‑2025.
• Board Appointment: Myles Bosman, veteran geologist and former senior executive at Birchcliff Energy, appointed to the Board effective 2025‑11‑05.

Notable Quotes

“Our disciplined capital allocation strategy continues to deliver superior cash flow generation while returning meaningful value to shareholders,” – Paul Colborne, President & CEO.