The Globe and Mail reports in its Thursday edition that Eight Capital analyst Phil Skolnick rates Surge Energy "buy" in new coverage. The Globe's David Leeder writes that Mr. Skolnick targets the shares at $13, which is 25 cents ahead of the consensus. Mr. Skolnick thinks Surge Energy's recent $245-million acquisition of crude oil assets from Enerplus has given it "a dominant position in its conventional Sparky and SE Saskatchewan core oil plays and increasing the stock's investor awareness potential."
The Globe says Mr. Skolnick thinks Surge is not being appreciated by the market. Mr. Skolnick says in a note: "We see Surge as one of the best ways to get exposure to conventional oil plays, including the multilateral drilling evolution, our bullish view on heavy oil differentials, and a recovery in oil prices. The company has assets in both Alberta and Saskatchewan, with a focus on its Sparky and Frobisher assets. ... Both of these asset bases make up about 65 per cent of current total company production and 85 per cent of total combined capex spending. Specifically, Surge plans to spend $175-million this year to drill 67 net wells, of which 37 are earmarked for Sparky and the remaining 30 for SE Saskatchewan."
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