Mr. Paul Colborne reports

SURGE ENERGY INC. ANNOUNCES 2024 CAPITAL AND OPERATING BUDGET; RELEASE OF ANNUAL SUSTAINABILITY REPORT; APPOINTMENT OF VICE PRESIDENTS

Surge Energy Inc. has released its 2024 capital and operating budget as approved by the company's board of directors, has released the company's third annual sustainability report, and has appointed two vice-presidents.

2024 budget guidance: continued focus on free cash flow generation and shareholder returns

Surge's focus in 2024 will continue to be on disciplined capital allocation, with cash flow strategically allocated between high rate of return capital projects, net debt repayment and further increases to shareholder returns. Surge is currently returning over $48-million annually to shareholders through the company's existing base dividend of 48 cents per share, per annum (paid monthly).

Surge's 2024 capital budget will see approximately 95 per cent of its development expenditures directed toward two of the top four crude oil plays in Canada in its Sparky (greater than 11,000 boepd (barrels of oil equivalent per day); 85per cent liquids) and southeast (SE) Saskatchewan (approximately 8,000 boepd; 90 per cent liquids) core areas, as independently evaluated by a leading brokerage firm, which now comprise over 80 per cent of the company's current production.

Based on Surge's 2024 capital budget, the company can deliver production of 25,000 boepd (87 per cent liquids), while concurrently generating an anticipated $105-million of free cash flow (before dividends) at $75 (U.S.) WTI (West Texas Intermediate) crude oil pricing -- providing investors with an estimated free cash flow yield of 15 per cent.

Surge management closely monitors market conditions for commodity prices, Canadian oil price differentials, as well as interest and foreign exchange rates. The pace of the company's capital expenditures budget is strategically adjusted, based on market conditions.

2024 budget highlights

Surge's disciplined 2024 capital and operating budget:

• Maximizes free cash flow, through a focused, $190-million exploration and development capital program;
• Generates forecast annual cash flow from operating activities of more than $295-million ($2.95 per share) at $75 WTI (U.S.) crude oil pricing;
• Results in forecast free cash flow (before dividends) of $105-million ($1.05 per share1) at $75 WTI (U.S.) crude oil pricing;
• Substantially increases the company's waterflood budget, with approximately $10-million of capital expenditures directed toward expanding the company's waterflood program;
• Targets the drilling of 70 (net) of the company's most capital efficient drilling locations; focused predominately in the Sparky and SE Saskatchewan core areas;
• Uses less than seven per cent of the company's internally estimated drilling locations (in example, over 1,050 net total estimated locations currently in inventory).

Further details relating to the 2024 budget are set forth in the attached table.

2024 drilling program: focused on the Sparky (Mannville) and SE Saskatchewan (Frobisher)

Surge's 2024 capital program is focused in the company's Sparky and SE Saskatchewan core areas, with approximately 95 per cent of 2024 development budget in these two areas. A total of 70 net wells are planned across all core areas, with 37 net wells planned in the Sparky, 32 net wells planned in SE Saskatchewan and one well targeting the prolific Doig formation in Surge's Valhalla core area.

Sparky (Mannville)

Surge's 2024 capital program in the Sparky core area (greater than 85 per cent liquids; 23-degree API average crude oil gravity) is focused on development drilling, with 37 net wells budgeted to be drilled in the company's large original oil in place (OOIP) pools at Cadogan, Sounding Lake, Betty Lake -- as well as the company's emerging multilateral Sparky/Mannville play in the Hope Valley/Giltedge area.

This capital program will consist of 25 net single-leg frac'ed Sparky horizontal wells, eight net multileg Sparky wells and four net horizontal wells in the Lloydminster formation. In 2024, management is focused on the continued growth of Surge's multilateral well footprint in the Mannville, with approximately 30 per cent of drilling capital directed to multilateral development.

SE Saskatchewan

In the company's SE Saskatchewan core area, Surge is currently budgeting the drilling of 32 (net) conventional Mississippian horizontal wells, with 25 of these wells targeting the Frobisher formation, and seven wells targeting the Midale and Lodgepole formations.

Over the past number of years, the company has endeavored to optimize reservoir contact by drilling two- and three-leg stacked multilateral wells within the Frobisher. In 2024, 19 (75 per cent) of Surge's planned Frobisher wells will be drilled as multilateral horizontal wells.

Annual sustainability report released

Surge has released its third annual sustainability report, outlining the company's advancement of its environmental, social and governance practices, and their impact on Surge's business and operating strategy.

The company's third annual sustainability report reaffirms Surge's commitment to be a leader in reducing the impact of oil and gas operations on the environment. The report covers performance metrics for the 2020, 2021 and 2022 calendar years and aligns with guidance set forth by the Task Force on Climate-Related Financial Disclosure.

The sustainability report was approved by Surge's management team, as well as the company's board of directors, and is intended to allow all Surge stakeholders to better understand the company's commitment to sustainable, responsible oil and gas operations.

Surge's latest annual sustainability report can be accessed through the company's website.

Appointment of vice-presidents

Surge's board and management is pleased to announce the addition of two new vice-presidents to the leadership team of the company.

Dan Kelly, CA, CPA, has been promoted to vice-president, finance and controller. Mr. Kelly is an experienced energy finance professional with over 15 years of industry experience, and has been with Surge for over nine years.

Grant Cutforth, PGeol, has been promoted to vice-president, business development. Mr. Cutforth is a seasoned professional geologist and business development professional with over 24 years of industry experience, and has been with the company for over nine years.

We seek Safe Harbor.