DALLAS ENERCOM

CONFERENCE PRESENTATION

FEBRUARY 21 – 22

1

$-

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$-

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

$35.0

$40.0

Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 ConsensusQ4/17 est.

Un

he

dg

ed

CF

/Sh

are

($/S

ha

re)

Un

he

dg

ed

Ca

sh

flo

w($

MM

)58% Cashflow Per Share Growth in 18 Months

(Unhedged)

Unhedged FFO ($MM) Unhedged CF/Share

**CAD Fx increased by 7% from

US$0.74 to US$0.79.

2

58% UNHEDGED CASHFLOW PER SHARE GROWTH

3

STABLE PRODUCTION GROWTH

45.0

50.0

55.0

60.0

65.0

10,000

11,000

12,000

13,000

14,000

15,000

16,000

Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 ConsensusQ4/17 est.

Pro

du

cti

on

per

Sh

are

(bo

ep

d/M

M S

hare

s)

Pro

du

cti

on

(b

oe

pd

)

Over 28% Production Growth in 18 Months (22% Per Share)

Production (mboe/day) Prod/MM Shares (mmboe/day)

**6 week Alliance pipeline

outage negatively

impacting Valhalla

volumes.

4

GROWING DIVIDEND AND MAINTAINING PAYOUT RATIO

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

$-

$0.010

$0.020

$0.030

$0.040

$0.050

$0.060

$0.070

$0.080

$0.090

$0.100

$0.075 $0.085 $0.095

Sim

ple

Payo

ut

Rati

o(%

)

An

nu

al

Div

iden

d($

/Sh

are

)27% Dividend Growth over 18 Months - Maintaining a

Simple Payout of ~20%

Dividend Simple Payout

ELITE ASSETS FOCUSED IN THREE CORE AREASLarge OOIP pools in established conventional reservoir trends

5

Valhalla Core Area:

Total: ~6,150 boe/d

(65% Oil & NGL’s)

Sparky Core Area:

Total: ~7,000 boe/d

(90% Oil & NGL’s)

Shaunavon Core Area:

Total: ~3,000 boe/d

(100% Oil & NGL’s)

Surge 2018(e) Avg Est. Production:

Total: 16,150 boe/d

(82% Oil & NGL’s)

LARGE OOIP, LOW RECOVERY FACTORS>1.77 Billion bbl’s net OOIP with up to >235 Million net barrels remaining recoverable

Core Area Formations

Estimated OOIP

(MMbbls)

Drilling Locations

Gross/NetAvg.

WI

CTD Oil

Recovery

Factor(1)

Total Booked Independent

Recovery Factor P+P(1)

Internally Estimated Ultimate

Recovery Net

(Waterflood with

Development Drilling)Gross/Net (Booked) (2) (% OOIP)

Valhalla

Doig/ Montney/

Slave Point/ Banff/

Doe Creek/

Wabamun

727/595153/140

(107/96)82% 6.0% 10.2% 23%

Sparky Mannville Group 805/707316/309

(100/97)88% 12.8% 16.9% 25%

ShaunavonShaunavon

(Upper & Lower)483/472

243/230

(85/83)98% 1.7% 5.4% 15%

TOTALS: 2,016/1,774712/679

(292/276)88% 7.6% 11.6% 21%

6

>2.0B (>1.77B net) barrels of estimated OOIP under management;

Current RF 7.6%

7

TARGETING CONVENTIONAL RESERVOIRSSurge focuses on reservoirs in the conventional end of the permeability spectrum

0.0001 0.001 0.01 0.1 1 10 100

Extremely

Tight

Very Tight Tight Low Moderate High

Permeability (mD)

Unconventional

ReservoirsConventional Reservoirs

Ult

ima

te O

il

Rec

ove

ry

*Modified from US Department of Energy Study

PIR

&

IRR

DuvernayMontney

ResourceViking-Cardium

Halo

Valhalla Doig

Shaunavon

Sparky

Capital expenditures decrease,

while recovery factors, rates of

return, and profit to investment

ratio increase, as reservoir

quality improves.

Average Surge Permeability

Wolfcamp Bone Spring

Sands

Spraberry

Sands

8

SURGE 5 YEAR PLANSurge can grow organically to 20,000 boe/d in 5 years while generating FCF of $36 MM to $380 MM above its current dividend

Inflation/year FxWCS Diff EDMN Diff AECO

2018 2022 2018 2022 2018 2022

$55 WTI 1.50% $0.780 $14.00 $14.86 $3.00 $3.18 $1.95 $2.07

$65 WTI 1.50% $0.800 $16.50 $17.51 $3.50 $3.71 $1.95 $2.07

$75 WTI 1.50% $0.820 $19.00 $20.17 $4.00 $4.25 $1.95 $2.07

Price

Assumptions:

* 5 year plan uses

only 47% of current

drilling inventory.

9

“FULL CYCLE” ECONOMIC DRILLING INVENTORY

✓ Strong balance sheet: 2017 Debt/CF = 1.25x

✓ Ample liquidity: ~60% drawn on bank line

✓ 7-8% production growth

✓ 2-3% dividend yield

✓ 2-3% free cash flow yield

8 years of drilling locations with an average 53% risked IRR @ $45 WTI & $3 Henry Hub

IRR

*: 5

3%

IRR

*: 7

8%

IRR

*: 8

9%

IRR

*: 9

4%

10

SHAUNAVON OIL FAIRWAY

Initial Waterflood Pilot:

Flood initiated Sept 2015

Play Attributes:

▪ Upper Shaunavon is a 65 foot thick sandstone/shale

sequence (net pay up to 42 feet)

▪ Shallow marine shoreface sandstone

▪ Depth 4,200 feet (8 hz wells per sq mile)

▪ Porosity: 12-18%, Perm Ave 10-12 md

▪ Upper and Lower Shaunavon are developed

separately (>10 year inventory)

▪ Lower Shaunavon deposited in as a shallow marine

carbonate bank, up to 50 feet thick

▪ Frac: Cemented Liner, 24 stages, 10 tons/stage

Upper Shaunavon A Sand

Upper Shaunavon B Sand

Upper Shaunavon C Sand

Lower Shaunavon

65 ft

Upper Shaunavon Oil Well

Upper Shaunavon Injector

Lower Shaunavon Oil Well

South Waterflood Pilot:

3 injector conversions Sept 2017

12 miles

450 MM BBLS OOIP, over 200 drilling locations (8 year inventory)

Shaunavon Type Log

UPPER SHAUNAVON WELL TYPES AND ECONOMICS

11

0

20

40

60

80

100

120

140

160

180

200

0 12 24 36 48

Pro

duction R

ate

(bopd)

Months

U. Shaunavon Primary Type Curve vs Waterflood Production

Waterflood Producers (9 Wells) Rate

Sproule YE 2017 Type Curve Rate

Type Curve Rate

* SGY Guidance pricing:

2018 - US$57.50/bbl WTI, US$42.00/bbl WCS, US$54.50/bbl EDMN,

AECO: C$1.85/MMBtu; a 1.5% per year inflation rate was applied.

An inflating CAD/USD exchange rate of $0.77 (to max of $0.90 by

2034) was assumed.

2018 Type curve and economics (CAD$)

Primary

• Well cost - $1.35M

• EUR = 105 MBOE (100% Oil)

• 12% RF

• NPV8/well = $1.7M

• IRR = 106%

• PIR0 = 2.2x

Waterflood

• Conversion cost - $450K

• EUR = 353 MBOE (well pair)

• 100% Oil

20% RF Case:

• NPV8/well = $2.3M

• IRR = 85%

• PIR0 = 3.6x

30% RF Case:

• NPV8/well = $2.7M

• IRR = 86%

• PIR0 = 6.2x

12

SPARKY: CRETACEOUS UPPER MANNVILLE (11 BBOE IN PLACE)

Shallow, Conventional Marine Sandstone Reservoir

Sparky Formation

Prograding Shorefaces & Wave Dominated Deltas

~105 Million Years Old at a Depth of ~2400 ft

~65 ft

160 miles

Sp

ark

y F

m

150 miles

AB SK

Sparky

Heavy Oil

<20° API

Pembina

Cardium

Dodsland

Viking

CR

ETA

CE

OU

S84 million

Years

125 million

Years

SGY Sparky

Core

▪ Surge’s Sparky core area is

dominated by conventional

shallow marine sandstone

reservoirs and resides in the light

to medium oil window

Sparky

Medium Oil

20-30° API

Edmonton

Calgary

SOUTHEAST ALBERTA650 MMBBLS NET OOIP (23-31° API), over 300 drilling locations, 10 year inventory

Surge Land

Surge Wells

13

Lakeview

Wainwright

Silver

Macklin

Eye Hill

SK

Betty

Lake

Provost

AB

Sounding

Lk

Sounding

Lk East

75 miles

Play Attributes:

▪ Sparky: Delta and Shoreface Sands with pay up to 60 feet

▪ Depth: 2,400 feet (8 hz wells per sq mile)

▪ Porosity: 18-30%, Perm Ave 20-40 md

▪ Over 10 year drilling Inventory

▪ Frac: Cemented Liner, 24 stages, 12 tons/stage

Sparky Type Log

50 ft

SPARKY WELL TYPES AND ECONOMICS

14

2018 Type curve and economics (CAD$)

Primary

• Well cost - $1.15M

• EUR = 140 MBOE (85% Oil)

• 9.5% RF

• NPV8/well = $2.5M

• IRR = 154%

• PIR0 = 3.2x

Waterflood

• Conversion cost - $750K

• EUR = 450 MBOE (well pair)

• 85% Oil

18% RF Case:

• NPV8/well = $4.0M

• IRR = 133%

• PIR0 = 5.7x0

20

40

60

80

100

120

140

160

0 6 12 18 24 30 36 42 48

Pro

duction R

ate

(bopd)

Month

Eyehill SPKY - SGY Results vs Type Curve

100/12-10-037-03W4/00 Rate

102/13-10-037-03W4/00 Rate

Type Curve Rate

Sproule YE2017 Type Curve Rate

* SGY Guidance pricing:

2018 - US$57.50/bbl WTI, US$42.00/bbl WCS, US$54.50/bbl EDMN,

AECO: C$1.85/MMBtu; a 1.5% per year inflation rate was applied.

An inflating CAD/USD exchange rate of $0.77 (to max of $0.90 by

2034) was assumed.

30% RF Case:

• NPV8/well = $5.8M

• IRR = 137%

• PIR0 = 10.3x

STACKED LIGHT OIL PAY - VALHALLAMulti Zone, Light Oil Prone Area: Doe Creek, Charlie Lake, Doig and Montney: >258 mmbbls ooip,

10 year drilling inventory

▪ Triassic Near Shore, Shelf Margin and Turbidite

Deposits

▪ Doig: Porosity 5-9%, Perm: 0.1 -100 md

Net pay up to 165 feet

Coquina and Dolomitic Sandstones

Frac: Ball drop, 24 stages, 35 tons/stage

▪ Montney: Porosity: 9-14%, Perm: 0.1 to 10 md

Net Pay up to 60 feet

Valhalla Area Attributes

15

Stacked OOIP:

Doe Creek Oil

Pool >57 MMbbls

Doig Oil Pool

150 MMbbls

Montney B Oil Pool

32 MMbbls OOIPFormation

Depth

(ft)

Net OOIP

(MMbbl)

Current

Recovery

Doe Creek 2,300 57 26.9%

Charlie Lk. 6,200 >20 0%

Doig (Shelf Margin) 6,700 150 3.6%

Montney (Turbidite) 7,200 32 8.8%

Totals - >258 9.1%

Doig Type Log

150 ft

26 miles

DOIG WELL TYPES AND ECONOMICS

16

2018 Type curve and economics (CAD$)

Primary

• Well cost - $3.8M

• EUR = 577 MBOE

• 45% Oil (55% Oil & NGL)

• 16.3% RF

• IRR = 139%

• PIR0 = 2.4x

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

0 12 24 36 48 60

CU

M (

bo

e)

Months

SGY Doig: 2015 - 2017

2017 Doig Type Curve

Avg 2015 (3 wells)

Avg 2016 (3 wells)

Avg 2017 (5 wells)

104/05-07

* SGY Guidance pricing:

2018 - US$57.50/bbl WTI, US$42.00/bbl WCS, US$54.50/bbl EDMN,

AECO: C$1.85/MMBtu; a 1.5% per year inflation rate was applied.

An inflating CAD/USD exchange rate of $0.77 (to max of $0.90 by

2034) was assumed.