Surge Energy Inc (SGY-T)

Well run. But it's a small cap, and that's just not where investor focus is, so sentiment is not behind it. Good exposure to heavy oil, phenomenally profitable now. Great yield of 6.9%. Strong balance sheet. Trades inexpensively.

Not a lot of interest in such a small cap. Very inexpensive, trades at significant discount. Gobs of free cashflow. A challenge to get on investors' radar screen. There needs to be a reason for investors to care. Should merge to gain economies of scale and relevance. Yield is 6.9%, very defendable. Buying back stock.

EPS missed estimates of 16c coming in at a loss of 4c. Revenue beat estimates of $157.1M coming in at $158.17M declining 2% year-over-year. Because of depletion and other charges, cash flow is a better metric than earnings for energy producers. SGY had per share cash flow of 62c, down from 64c but certainly better than what the net loss implies. The company also confirmed 2024 production guidance. We think management is fine, however the stock will need commodity prices to pick back up in efforts for a turnaround. Mr. Colborne (CEO) has built and sold several companies within the sector. We would say HOLD for income. The debt reduction is still ontrack to finish by the end of this year while it is cheap and has an attractive yield. Management also seemed positive for on oil prices. But mostly it is valuation: the stock is very cheap on all metrics. 
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Nothing to do with balance sheet or management, but it remains too small to be relevant to larger investors. Scale isn't there.

The Canadian energy space will do well over time. He isn't long SGY, but likes it.

Levered to oil price. Changed asset base toward profitability and scalability. Needs to improve drilling efficiencies and margins. Good job reducing debt. Probably by early 2024, can move return of free cashflow to shareholders from 25% to 50%. Yields just over 5%. He's focused on bigger players with more consistent dividend payments.

Trading at discount to NAV. Out of favor small cap name. TMX completion will benefit company. Benefiting from fish bone drilling technique. New wells paying out in months. At $80 oil, company trading at 3x cash flow yield. Expecting a 40% upside from current share price. 

Generating good cash flow that will feed the dividend, share buybacks and production growth. Good managers and positioning. They've had good drilling results. SGY can make money if oil is above $75.

Owns ~9% of company.
Quality company.
Good exposure to "Fish bone" drilling.
Not on institutional investor radar.
Expecting share price to rise to ~$16. 

Good exposure to multi-lateral drilling. So you get better productivity for a slightly higher cost. Excellent results. Assets are very good. Dividend is safe. A patient hold. Upside once mid-caps are in favour again. See his Top Picks.

EPS of $0.15 missed estimates of $0.1733 and revenues of $152.66M missed estimates of $158.8M. SGY delivered an increase in production of more than 22% over the prior year, and despite a drop in the price of oil, Surge's cash flow from operations increased by 4%. Management noted for its outlook it intends to continue to pay down debts, conduct share buybacks, and the possibility of a special dividend. The results were OK, it has traded sideways for roughly a year, but it is paying a ~6.0% dividend. Like most oil and gas stocks right now, it is trading at a cheap valuation, paying a good dividend, and has a strong balance sheet. We like the company's potential for a special dividend, and it is well-capitalized. If an investor has a positive outlook on the price of oil, we would be comfortable buying here.
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Owns 9.9% of company.
Having success on new drilling technique.
Lots of land for future drilling.
Expecting return of capital to shareholders.