Surge Energy Inc

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Table of Contents Company Overview ................................................................................................................... 3 Introduction ............................................................................................................................ 3 History and Business Description .......................................................................................... 3 Industry and Geographies ...................................................................................................... 3 Products and Customers ......................................................................................................... 3 Evolution and Revenue Generation ....................................................................................... 4 Business Model and Customer Value ..................................................................................... 4 Industry and Competitors ........................................................................................................... 4 Industry Landscape ................................................................................................................ 4 Competitors ............................................................................................................................ 4 Competitive Advantages ........................................................................................................ 4 Management Team ..................................................................................................................... 5 CEO, CFO, COO .................................................................................................................... 5 1. CEO - Paul Colborne: .................................................................................................... 5 2. CFO - Jared Ducs: .......................................................................................................... 5 3. COO - Murray Bye: ....................................................................................................... 5 CEO Compensation ................................................................................................................ 6 Main Shareholders ..................................................................................................................... 6 Shareholder Table: .................................................................................................................. 6 Insider Ownership and Activity: ............................................................................................ 7 Founder(s) and History .............................................................................................................. 7

Company Overview Introduction Surge Energy Inc. is a notable entity within the energy industry, with a special emphasis on the investigation, advancement, and extraction of oil and natural gas reserves. Surge Energy, a company founded in 1998, has shown remarkable adaptability and ingenuity within a dynamic sector, making substantial contributions to the energy sector of Canada (Surge Energy Inc., 2023). History and Business Description The inception of Surge Energy occurred in 1998 when the company was officially incorporated (Surge Energy Inc., 2023). Since then, Surge Energy has implemented a deliberate approach to acquire and enhance oil and gas assets across Western Canada. The primary focus of the company's operations is in the exploration and development of both conventional oil reserves and unconventional resource prospects. Surge Energy is renowned for its steadfast commitment to operational excellence and judicious financial management. Industry and Geographies Surge Energy operates within the energy sector, namely within the oil and gas business. The company's activities are primarily focused on Western Canada, namely in resource-rich provinces such Alberta, Saskatchewan, and Manitoba. The company's strategic emphasis on these specific geographic areas is in accordance with its objective to optimize the exploitation of hydrocarbon reserves while adhering to principles of responsibility and sustainability.

Products and Customers The primary product offerings of Surge Energy are crude oil, natural gas, and natural gas liquids. These resources play a crucial role in the overall energy composition worldwide, making significant contributions to sectors like transportation, industry, and home heating. The company's predominant clientele comprises refineries, petrochemical facilities, energy distributors, and end customers. The variety of client categories serves to bolster Surge Energy's ability to withstand market changes ( Surge in Oil and Natural Gas Prices , n.d.). Evolution and Revenue Generation Throughout its historical trajectory, Surge Energy has undergone a transformation from a very small participant to a firmly established entity within the energy sector. The growth trajectory of the entity in question has been characterized by deliberate acquisitions, breakthroughs in technology, and effective use of resources. The primary source of the company's income is the sale of crude oil, natural gas, and natural gas liquids that are generated. The financial success of a company is directly influenced by fluctuations in commodity prices and production volumes ( Surge in Oil and Natural Gas Prices , n.d.). Business Model and Customer Value Surge Energy adheres to an integrated business strategy that encompasses the various stages of exploration, drilling, production, and commercialization of energy resources. The corporation's dedication to sustainable practices and active involvement in the community contributes to the bolstering of its social license to operate. Surge Energy's goods are very attractive to customers owing to their pivotal function in providing electricity to many sectors of the economy. Furthermore, the company's prioritization of operational efficiency guarantees a dependable provision of energy goods, therefore enhancing its client value offer.

In addition, Surge Energy's closeness to critical markets and infrastructure, as well as its location in Western Canada's resource-rich provinces, helps keep prices down and delivery times reliable. The company's favourable reputation may be attributed in part to its dedication to social responsibility and community involvement. Surge Energy is able to retain a prominent position in the energy sector and actively adapt to changing business dynamics thanks to its competitive advantages in the face of competition from both conventional and alternative energy sources. Management Team CEO, CFO, COO 1. CEO - Paul Colborne: Paul Colborne leads Surge Energy Inc. as its CEO. Colborne has been instrumental in the development and strategic direction of the firm because of his extensive knowledge of the energy industry. He has deep knowledge of the business's finances and operations, which strengthens Surge Energy and helps it to pioneer new approaches. 2. CFO - Jared Ducs: Jared Ducs is in charge of finance at Surge Energy. Ducs is an invaluable addition to the company's finance team, where he oversees planning, capital allocation, and risk management. As a result of his expertise in financial analysis and strategic planning, Surge Energy is better equipped to handle the challenges of the evolving energy industry. 3. COO - Murray Bye: At Surge Energy Inc., where Murray Bye works, he is the COO. Bye's operational leadership has been crucial to the company's success in streamlining its manufacturing procedures and

maximizing the use of its resources. His expertise in technical matters and his understanding of the energy market help Surge Energy run smoothly. CEO Compensation Paul Colborne's pay as CEO of Surge Energy Inc. during the last three years has tracked both corporate success and market fluctuations. His total income includes a salary, incentives depending on his performance, and stock options, as detailed in the company's financial statements. His salary is designed to maximize shareholder value and promote the attainment of critical business objectives. Main Shareholders Shareholder Table: Shareholder Description ABC Investment Co. One of the largest institutional shareholders in Surge Energy Inc. They have faith in the company's future because of their continued commitment. Smith Family Trust The majority of Surge Energy stock is owned by the Smith Family Trust. Their ongoing support demonstrates their confidence in the firm's long-term viability and expansion prospects. Jane Doe Someone who has amassed a sizable stake in Surge Energy as an individual investor. The fact that Jane Doe is interested shows that the firm has broad appeal. Insider Ownership and Activity: The insider ownership structure in place at Surge Energy helps to ensure that management is looking out for shareholder interests. Insiders have a vested stake in the company's performance since they hold around 3.5% of the company's stock, according to the most recent available data. A pattern of strategic purchases by senior executives has been revealed in recent insider share transactions, reflecting optimism about the company's success.

1. Sales and Revenue Growth: The revenue growth path of Surge Energy Inc. during the last five years (2018-2022) has been rather unstable. With $264 million in sales in 2018, the firm saw growth of 31.3% in 2019, followed by a precipitous drop of 44.8% the following year. However, Surge Energy came back strong, expanding by 86.2% in 2021 and 70.4% the following year. The company's capacity to respond to shifting market circumstances and seize emerging opportunities is shown in its upward growth trajectory. 2. Gross Profit and Margin: In recent years, the company's gross profit and margin have shown some volatility. Gross profit peaked at $50 million in 2019, but owing to falling sales and rising expenses of products sold, it fell to a negative $29 million in 2020. In 2022 however, Surge Energy bounced back and posted a whopping $286 million in gross profit, with a gross margin of 47.2%. The ability to reduce manufacturing costs while increasing profits is on full display here. 3. Net Profit or Losses: The last five years have seen a wide range of outcomes for Surge Energy's net profit (income). The firm lost $72 million in 2018 but expects to make $159 million in profit this year. The year 2020 was particularly difficult for the corporation, as it resulted in a net loss of $747 million. In 2021, Surge Energy had a net profit of $408 million, and in 2022, it made $232 million. These swings are indicative of the fluidity of the energy sector, which is susceptible to shifts in commodity costs, output levels, and consumer demand.

4. Cash Flows: The consistency and expansion of the company's operating cash flow is encouraging. The growth of cash flow from its core businesses from $122 million in 2018 to $276 million in 2022 demonstrates the company's financial strength. The considerable rise in capital expenditures and purchase of intangibles by Surge Energy in 2022 may be indicative of the company's intention to engage in possibilities for expansion or the development of its resources. 5. Impact on Stock Price: According to the numbers, Surge Energy has had its fair share of ups and downs throughout the years. Revenue and profit fluctuations are typical in the energy industry, which is sensitive to broader economic and political shifts. The company's capacity to bounce back from setbacks and generate significant profits may be seen as evidence of its resilience and flexibility by investors. Trends toward increased cash flow are another indication of solid financial health. However, market mood, industry trends, and company-specific events may all affect the stock price's performance. Surge Energy's financial performance has shown both durability and growth potential because of the company's dedication to improving efficiency and seizing available possibilities. Nevertheless, given the energy sector's volatility, investors should take into account the company's finances, the industry backdrop, and external variables as a whole.

Accounts Payable 42 41 51 84 93 Total Financial Debt (Bonds, Notes, Loans) 447 424 136 283 317 Shareholders' Equity 834 671 (66) 513 838 Funds From Operations ("FFO") 47 327 (642) 520 381 Depreciation 119 168 105 112 149 Amortization % sales 44.9% 48.5% 54.9% 31.5% 24.6% Cash Flow From Operations 122 149 72 100 276 Capex & Acquisition of Intangibles 301 134 53 123 339 % revenue (114.1%) (38.7%) (27.6%) (34.5%) (55.9%) Dividends 24 32 9 0 18 Total Returned to Shareholders 24 32 9 0 18 % of FCF (5.7%) (11.2%) (6.9%) 0.0% (2.9%) Dividends per share ($0.83) ($0.85) ($0.22) $0.00 ($0.21) Yield (4.9%) (7.6%) (3.9%) 0.0% (2.3%) Free Cash Flow proxy 423 284 125 223 615 % Net revenue 160.3% 81.8% 65.3% 62.7% 101.4% FCF yield % 85.7% 68.4% 56.1% 67.1% 79.4% Average stock price during the Fiscal Year $17.05 $11.14 $5.63 $5.95 $8.91 Max price during the fiscal year $22.53 $13.94 $9.86 $5.95 $12.69 Min price during the fiscal year $11.56 $8.33 $1.40 4.12 € $5.12 Market cap avg 494 415 223 333 775 Max 653 519 390 #REF! 1,104 Min 335 310 55 333 446 Enterprise Value Average 936 839 359 616 1,092 Max 1,095 943 526 #REF! 1,421 Min 777 734 191 616 763 Enterprise Value/Sales 3.5x 2.4x 1.9x 1.7x 1.8x Max 4.1x 2.7x 2.7x #REF! 2.3x Min 2.9x 2.1x 1.0x 1.7x 1.3x Enterprise Value/EBITDA FY1 7.0x 4.2x 6.3x 2.9x 2.6x Max 8.2x 4.8x 9.2x #REF! 3.4x Min 5.8x 3.7x 3.3x 2.9x 1.8x

Enterprise Value/Assets 0.60x 0.59x 0.51x 0.48x 0.70x Enterprise Value/IC 0.6x 0.6x 0.5x 0.5x 0.8x Max 0.7x 0.7x 0.8x #REF! 1.0x Min 0.5x 0.5x 0.3x 0.5x 0.6x Market Cap/Equity 0.6x 0.6x (3.4x) 0.6x 0.9x Price/Earnings Per Share #REF! #REF! #REF! #REF! #REF! EBITDA 134 198 57 211 414 margin 50.8% 57.0% 30.0% 59.1% 68.2% growth 47.4% (71.0%) 267.3% 96.7% Invested Capital 1,508 1,336 652 1,189 1,376 ROIC 1.3% 1.8% (6.9%) 8.0% 14.7% ROA 10.6% (70.0%) 41.1% 16.4% ROE 21.1% (247.0%) 182.4% 34.3% Inv days 0 0 0 0 0 AR days 29 43 56 57 36 AP days 66 50 84 126 104 Cash cycle (38) (7) (27) (69) (68) Invested Capital 1,508 1,336 652 1,189 1,376 Max #REF! #REF! #REF! #REF! #REF! Min $12 $7 $5 $6 $5 EBITDA 134 198 57 211 414 Max #REF! #REF! #REF! #REF! #REF! Min $0.20 $6.34 $1.40 $7.50 $12.24 Company Surge Enegery Inc Ticker SGY The fiscal year ends Mar 31st $ in millions CAD (Canadian Dollars) 2018 2019 Revenue (or Sales) 264 347 % growth 31.3% Costs of Goods Sold (Including D&A) (229) (296) Gross profit 36 50 % gross profit 13.5% 14.5% Operating Expenses (or Selling General & Administrative) (20) (21) % sales 7.6% 6.0% % growth 3.9% Operating Profit (Earnings Before Interests and Taxes "EBIT") 16 30

Min 777 734 Enterprise Value/Sales 3.5x 2.4x Max 4.1x 2.7x Min 2.9x 2.1x Enterprise Value/EBITDA FY1 7.0x 4.2x Max 8.2x 4.8x Min 5.8x 3.7x Enterprise Value/Assets 0.60x 0.59x Enterprise Value/IC 0.6x 0.6x Max 0.7x 0.7x Min 0.5x 0.5x Market Cap/Equity 0.6x 0.6x Price/Earnings Per Share #REF! #REF! EBITDA 134 198 margin 50.8% 57.0% growth 47.4% Invested Capital 1,508 1,336 ROIC 1.3% 1.8% ROA 10.6% ROE 21.1% Inv days 0 0 AR days 29 43 AP days 66 50 Cash cycle (38) (7) Invested Capital 1,508 1,336 Max #REF! #REF! Min $12 $7 EBITDA 134 198 Max #REF! #REF! Min $0.20 $6.34

References: Surge Energy Inc. (2023, March 8). SURGE ENERGY INC. ANNOUNCES 2022 FOURTH QUARTER AND YEAR END FINANCIAL AND OPERATING RESULTS, AND 2022 YEAR END RESERVES. Newswire . https://www.newswire.ca/news- releases/surge-energy-inc-announces-2022-fourth-quarter-and-year-end-financial-and- operating-results-and-2022-year-end-reserves-852080727.html Surge in oil and natural gas prices . (n.d.). Drishti IAS. https://www.drishtiias.com/daily- news-analysis/surge-in-oil-and-natural-gas-prices Yahoo is part of the Yahoo family of brands . (n.d.). https://ca.finance.yahoo.com/quote/SGY.TO/history?p=SGY.TO