Surge Closes Core Area Acquisition For $76.8 Million

Acquired an operated crude oil producing asset located near its core area in Central Alberta.

Surge Energy Inc. (TO: SGY) closed the previously announced acquisition of a high quality, low decline, operated, crude oil producing asset strategically located near Wainwright in its core area of Central Alberta, the company announced Dec. 3.

The assets include over 980 barrels per day of primarily medium gravity crude oil production with a historical 9% annual decline, producing from the Sparky Formation. The purchase price for the assets was $76.8 million.

The acquisition comprises an elite, operated, low decline crude oil property strategically located within Surge's core operating area of Central Alberta. The production is focused in a large, medium gravity crude oil Sparky reservoir - with over 210 million barrels of estimated original oil in place.

The assets are under waterflood and currently possess a very low annual decline of nine percent, which is expected to provide significant annual free cash flow to Surge. The acquisition fits with the company's focused business strategy and with Surge's modest growth/dividend business model.

Surge management has identified significant upside with respect to the assets, primarily from waterflood optimization and infill drilling.

As a result of the closing of the acquisition, Surge now has over 1.3 billion barrels estimated of light and medium gravity original oil in place under the company's ownership and management.

Surge Energy Inc. explores for, develops, produces, and markets petroleum and natural gas reserves primarily in Western Canada and the Northern U.S. The company is headquartered in Calgary.