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Opinions John O'Connell, CFA
Surge Energy IncSGY.TOCOMMENTJan 28, 2015
John O'Connell, CFAStock price when the opinion was issued
As of Jun 19, 2026. Market Open.
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The Canadian energy space will do well over time. He isn't long SGY, but likes it.
Rick RuleLevered 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.
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.
(Analysts’ price target is $12.80)
Michael DecterOwns ~9% of company.
Quality company.
Good exposure to "Fish bone" drilling.
Not on institutional investor radar.
Expecting share price to rise to ~$16.
Eric NuttallGood 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.
Eric NuttallEPS 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.
Eric NuttallEric NuttallEric Nuttall
Josef SchachterBilly Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The results were positive. Production was up 22%. Cash flow more than doubled on a per share basis. The dividend should be reinstated this year. Results were ahead of estimates and the stock has taken off. Unlock Premium - Try 5i Free
Stockchase InsightsEric Nuttall
Recently cut their dividend, which should have been done a long time ago. This is one of the companies that have been promising a free lunch of increasing dividends and increasing production. What they have actually done is gone out and bought production and financed it through issuing equity. They held on paying out a dividend longer than they should have. The company is going to survive, but it has really damaged their balance sheet. If you are holding it for yield, you have to be very careful because the dividend could go, but that could be a good thing.