Permit Numbers Cancelled By Surge; It's Not About The Nail -- The Video -- For Guys Everywhere

The other day it was mentioned that Surge was canceling a number of permits. These are the permit numbers and the names of the wells. These are all in Bottineau County and would have been Spearfish wells, I believe:

• 24893, Haram 00 NWSE 31, 31-164-77
• 23899, Scandia 2S NWNW 35 02 SWNE 34H, 35-164-78
• 23898, Scandia 1S NWNW 35 00 SWNE 34H, 35-164-78
• 23897, Scandia 1N NWNW 35 02 NWNE 34H, 35-164-78
• 23896, Scandia 2N NWNW 35 00 NWNE 34H, 35-164-78
• 24876, Haram 00 NWSE 20, 20-163-77
• 24875, Scandia 00 SESE 11, 11-163-78
• 24950, Haram 00 SENE 23, 23-163-77

Some, if not all, are located in/near the Souris oil field, along the Canadian border in Bottineau County.

On May 9, 2013, Surge announced it was selling its non-core assets in North Dakota:

The company is pleased to announce certain senior management changes, effective immediately, a private placement of up to $2.5 million, and the sale of certain non-core, non-operated assets for proceeds of approximately US$42.75 million.

From the press release:

Surge has executed a formal purchase and sale agreement with a Canadian oil and gas producer to sell its non-core, primarily non-operated assets in North Dakota for a purchase price of approximately US$42.75 million.  Closing of this transaction is anticipated to occur on or around May 31, 2013.  The non-core assets being sold comprise production of approximately 650 barrels of oil per day, with independently engineered P+P reserves of 2.2 million boe, and a net present value of $36.8 million (discounted at ten percent before tax as of December 31, 2012).  The Company expects a reduction in its borrowing base of $13 million as a result of the sale, resulting in a bank line of $277 million.

The sale of Surge's assets in North Dakota is the first step in implementing changes in the Company's business plan to maximize shareholder value, strengthen the Company's financial flexibility and support a sustainable business model.

Back-of-the-envelope:

• 650 x $50/bbl x 365 days = $12 million/year
• at 5% interesting, $42 million costs about $2 million in interest

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For  guys everywhere, it's not about the nail...


It's Not About the Nail from Jason Headley on Vimeo