Mr. Paul Colborne reports

SURGE ENERGY INC. ANNOUNCES $42 MILLION CONVERTIBLE DEBENTURE BOUGHT DEAL FINANCING AND INTENTION TO REDEEM EXISTING CONVERTIBLE DEBENTURES DUE JUNE 30, 2024

Surge Energy Inc. has arranged a public offering, on a bought deal basis, of $42-million principal amount of convertible unsecured subordinated debentures, at a price of $1,000 per debenture, with an interest rate of 8.50 per cent per annum, payable semi-annually in arrears on the last day of June and December commencing on June 30, 2024. The debentures will mature on Dec. 31, 2028. The completion of the offering is subject to normal regulatory approvals, including approval of the Toronto Stock Exchange, and is expected to close on or about Oct. 19, 2023.

The net proceeds of the offering are intended to be used to finance the redemption of the company's 6.75 per cent convertible unsecured subordinated debentures due June 30, 2024, as well as for general corporate purposes. Pending any such use, the net proceeds of the offering may temporarily be used to reduce general corporate indebtedness.

New debenture offering

The offering is being made through a syndicate of underwriters led by National Bank Financial Inc. The company has also granted the underwriters the option to purchase up to $6.3-million principal amount of additional debentures at a price of $1,000 per debenture to cover overallotments, exercisable in whole or in part any time up to 30 days following closing of the offering.

The debentures will be convertible at the holder's option into fully paid and non-assessable freely tradable shares at a conversion price of $13.25 per share. The debentures will not be redeemable before Dec. 31, 2026. On or after Dec. 31, 2026, and prior to Dec. 31, 2027, the debentures may be redeemed in whole or in part from time to time at the option of the company at par plus accrued and unpaid interest, if any, to but excluding the date of redemption, provided that the volume-weighted average trading price of the shares on the TSX for the 20 consecutive trading days ending five trading days preceding the date on which notice of redemption is given is not less than 125 per cent of the conversion price. On or after Dec. 31, 2027, the debentures may be redeemed at the option of the company at any time at par plus accrued and unpaid interest, if any, to but excluding the date of redemption.

The debentures will be offered in each of the provinces of Canada, except for Quebec, by way of a short form prospectus and by way of private placement in the United States to qualified institutional buyers pursuant to Rule 144A. Closing of the offering is expected to occur on or about Oct. 19, 2023. The offering is subject to normal regulatory approvals, including approval of the TSX of the listing of the debentures and the common shares issuable upon conversion of the debentures.

Intention to redeem 2019 debentures

Surge intends to redeem the $34.5-million principal amount of Surge's 2019 debentures no later than 60 days after the closing of the offering. The 2019 debentures are redeemable prior to maturity at the option of the company for an amount equal to $1,000 for each $1,000 principal amount of the 2019 debentures plus accrued and unpaid interest up to but excluding the redemption date. Surge intends to provide a formal notice of redemption to the holders of the 2019 debentures in accordance with the terms and conditions of the trust indenture governing the 2019 debentures, which will set out the price at which the 2019 debentures shall be redeemed as well as the redemption date.

About Surge Energy Inc.

Surge is an intermediate, publicly traded oil company focused on enhancing shareholder returns through free cash flow generation. The company's defined operating strategy is based on acquiring and developing high-quality, conventional oil reservoirs using proven technology to enhance ultimate oil recoveries.

We seek Safe Harbor.