Surge Energy reenters southeast Saskatchewan with Astra acquisition

Surge Energy Inc., Calgary, closed the acquisition of Astra Oil Corp., combining the company’s existing conventional crude oil asset base, including its Sparky play in Alberta, with light oil assets primarily in southeast Saskatchewan from Astra.

Surge said it targeted southeastern Saskatchewan as a new core area based on its high light oil netbacks, low-cost production efficiencies, and quick drilling payouts. With the deal, Surge gained more than 4,100 boe/d (90% liquids) of operated, light oil production.

The assets also include in-progress construction of a 45-km gas gathering infrastructure system to conserve gas at area facilities, reducing emissions from several operating fields. The project is estimated to cost $12 million and will be partially funded by Natural Resources Canada's Emissions Reduction Fund.

The combine is expected to exit 2021 with production over 20,200 boe/d (85% liquids weighted), while the deal results in over 2.5 billion bbl of net combined, internally estimated, conventional OOIP1 - with a 6% recovery factor to date; combined proven plus probable yearend 2020 reserves of over 95 MMboe (85% liquids); a development drilling inventory of over 850 net locations (internally estimated); and development drilling inventory of more than 13 years, Surge said.

All the issued and outstanding common shares of Astra were acquired for 229 million common shares of Surge and about $13.5 million in assumed debt.