Quarterly / Earnings Reports | Second Quarter (2Q) Update | Drilling Program - Wells | Drilling Increase

Surge IDs Q2 Output of 17.1 MBOEPD; Up +13% YOY

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Surge Energy reported its Q2 2018 results.

Based on excellent development drilling results in all three of Surge's core areas, together with successful waterflood results at Shaunavon and Eyehill, the Company's Q2/18 production significantly exceeded management's budgeted expectations.

• In Q2/18 Surge's production averaged 17,072 boepd (81 percent oil and liquids) - up +13% YOY. This exciting operational result was 10% above Surge's budgeted expectations, and was accomplished during spring break-up where the Company had a reduced drilling program.

• Surge has now revised upward the Company's production guidance five times in the last 23 months – two times organically, and three times relating to accretive Sparky core area acquisitions. In the last eight financial quarters Surge has now grown the Company's production per share by over 34 percent.

Ops Update - Adding Three Wells to Sparky Plans

During the spring break-up quarter in Q2/18, Surge implemented a reduced drilling program, with all-in capital expenditures of $23.3 million. Surge's Q2/18 program included the drilling of 5 wells (5 net), together with associated capex for infrastructure, land and seismic. The Company experienced a 100 percent success rate for the Q2/18 drilling program.

In early June, the Company began its 2H/18 drilling program where Surge plans to drill and complete a total of 25 wells in its three core areas, including 16 Sparky area wells, 6 Shaunavon wells, and 3 Valhalla wells.

As part of the Sparky core area program, Surge will be drilling four, 100 percent working interest wells at the Company's exciting, new, 80 million net barrel internally estimated original oil in place ("OOIP"²), Sparky discovery at Betty Lake. The Company internally estimates more than 35 follow-up locations at Betty Lake.

In addition, Surge will also be drilling 3 more wells at its large 75 million net barrel internally estimated OOIP, Sparky pool at Provost, to follow up on Surge's last 5 Provost wells - which are averaging 165 percent of type curve. The Company internally estimates more than 40 follow-up locations at Provost.

Management attributes the Company's continued quarterly operational outperformance to be a direct result of applying growth capital to Surge's high quality, operated, large OOIP, light and medium gravity crude oil, sandstone reservoirs at the Company's three core areas of Sparky, Valhalla, and Shaunavon.