CALGARY,
AB, Oct. 19, 2023 /CNW/ - Surge Energy Inc.
("Surge" or the "Company") (TSX: SGY) is pleased to announce that
it has closed the previously announced convertible debenture
financing with a syndicate of underwriters (the "Underwriters"),
led by National Bank Financial Inc., pursuant to which the
Underwriters purchased an aggregate principal amount of
$48.3 million of convertible
unsecured subordinated debentures of the Company (the
"Debentures"), including exercise in full of the over-allotment
option granted to the Underwriters (the "Over-Allotment Option") on
a "bought-deal" basis (the "Financing").
The net proceeds of the Financing will be used to fund the
redemption of the Company's currently outstanding $34,500,000 6.75% Convertible Unsecured
Subordinated Debentures due June 30,
2024 (the "2019 Debentures"), as well as for general
corporate purposes. Pending the repayment of the 2019 Debentures,
the net proceeds of the Financing may temporarily be used to reduce
general corporate indebtedness.
The Debentures are listed on the Toronto Stock Exchange (the
"TSX") under the symbol "SGY.DB.B" (CUSIP 86880YAC3).
The Debentures offered, and the common shares in the capital of
the Company issuable on conversion or redemption thereof, have not
and will not be registered under the U.S. Securities Act of 1933,
as amended (the "Act"), and may not be offered or sold in
the United States absent
registration or an applicable exemption from the registration
requirements under the Act. This press release does not constitute
an offer to sell or a solicitation of any offer to buy the common
shares in the United States.
NOTICE OF REDEMPTION OF 6.75% CONVERTIBLE DEBENTURES
Surge is also pleased to announce that it has issued a notice of
redemption to holders of the 2019 Debentures. The 2019 Debentures
are not subject to a pre-payment penalty.
As set out in the notice of redemption, Surge will redeem, as of
November 18, 2023 ("Redemption
Date"), all of the aggregate principal amount of the 2019
Debentures for cash. On the Redemption Date, Surge will pay the
aggregate principal amount of the 2019 Debentures (being
$1,000 for each 2019 Debenture) plus
all accrued and unpaid interest thereon to but excluding the
Redemption Date (less any tax required to be deducted)
(collectively, the "Redemption Price").
The 2019 Debentures are listed on the TSX under the symbol
"SGY.DB.A" (CUSIP 86880YAB5).
In accordance with the terms of the indenture governing the 2019
Debentures, holders of the 2019 Debentures have the right to
convert their 2019 Debentures, at their option, into common shares
of Surge ("Surge Shares") at a conversion price of approximately
$19.12 per Surge Share, at any time
prior to 5:00 p.m. Calgary time on November 17, 2023. A holder electing to convert
the principal amount of their 2019 Debentures will receive
approximately 52 Surge Shares per $1,000 principal amount of 2019 Debentures
converted, plus a cash payment for accrued unpaid interest up to,
but excluding, the date of conversion (less any tax required to be
deducted). No fractional shares will be issued on conversion but,
in lieu thereof, the Company will pay the cash equivalent thereof
determined on the basis of the Current Market Price (as defined in
the indenture governing the 2019 Debentures) of the Surge Shares on
the date of conversion.
All holders of 2019 Debentures who
fail to deliver a notice of
conversion on or prior to 5:00
p.m. Calgary time on November 17, 2023 (or such other earlier time as
may be indicated by their broker, dealer, bank, trust company or
other nominee), will have their 2019 Debentures redeemed on the
Redemption Date for a cash payment equal to the Redemption
Price.
As all of the 2019 Debentures were issued in "book-entry only"
form and are held by CDS Clearing and Depository Services Inc.,
beneficial holders of the 2019 Debentures must contact their
broker, dealer, bank, trust company or other nominee to exercise
their right to convert their 2019 Debentures.
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.
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements. The use
of any of the words "anticipate", "continue", "estimate", "expect",
"may", "will", "project", "should", "believe" and similar
expressions are intended to identify forward-looking
statements. These statements involve known and unknown risks, uncertainties and other factors
that may cause actual results or events to
differ materially from those anticipated in such forward-looking
statements.
More particularly, this press release contains statements
concerning: the anticipated terms of, use of net proceeds from and
closing date of, the Offering; and Surge's intention to redeem the
2019 Debentures and the anticipated timing thereof.
The forward-looking statements are based on certain key
expectations and assumptions made by Surge, including expectations
and assumptions around the performance of existing wells and
success obtained in drilling new wells; anticipated expenses, cash
flow and capital expenditures; the application of regulatory and
royalty regimes; prevailing commodity prices and economic
conditions; development and completion activities; the performance
of new wells; the successful implementation of waterflood programs;
the availability of and performance of facilities and pipelines;
the geological characteristics of Surge's properties; the
successful application of drilling, completion and seismic
technology; the determination of decommissioning liabilities;
prevailing weather conditions; exchange rates; licensing
requirements; the impact of completed facilities on operating
costs; the availability and costs of capital, labour and services;
and the creditworthiness of industry partners.
Although Surge believes that the expectations and assumptions on
which the forward-looking statements are based are reasonable,
undue reliance should not be placed on the forward-looking
statements because Surge can give no assurance that they will prove
to be correct. Since forward-looking statements address future
events and conditions, by their very nature they involve inherent
risks and uncertainties. Actual results could differ materially
from those currently anticipated due to a number of
factors and risks. These include, but are not
limited to, risks associated with the condition
of the global economy, including trade, public health
(including the impact of COVID-19) and other geopolitical risks;
risks associated
with the oil and gas industry in general (e.g.,
operational risks in development, exploration and production; delays
or changes in plans with respect to exploration or development
projects or capital expenditures; the uncertainty of reserve
estimates;
the uncertainty of estimates and projections relating
to production, costs and expenses, and health, safety and environmental
risks); commodity price and exchange rate fluctuations and
constraint in the availability of services, adverse weather or
break-up conditions; uncertainties resulting from potential delays
or changes in plans with respect to exploration or
development projects
or capital expenditures; and failure to obtain the continued support
of the lenders under Surge's bank line. Certain
of these risks are set out in more detail in Surge's AIF dated
March 8, 2023 and in Surge's MD&A
for the period ended December 31,
2022, both of which have been filed on SEDAR and can be
accessed at www.sedar.com.
The forward-looking statements contained in this press release
are made as of the date hereof and Surge undertakes no obligation
to update publicly or revise any forward-looking statements or
information, whether as a result of new information, future events
or otherwise, unless so required by applicable securities laws.
For more information about Surge, please
visit our website
at www.surgeenergy.ca
Neither the TSX nor its Regulation Services Provider (as that term is defined
in the policies of the TSX) accepts
responsibility of the accuracy of this release.
SOURCE Surge Energy Inc.