Surge Energy stock is rising: Is SGY a buy?

Highlights

  • Surge Energy Inc (TSX:SGY) saw its stocks move up on Friday, August 20.
  • The company recently acquired private oil producer Astra Oil Corp, which could be the factor driving the investor attention.
  • On Wednesday, August 18, Surge Energy said that it has purchased Astra Oil in an all-stock deal that was valued at C$ 160 million.

Surge Energy Inc (TSX:SGY), a Canada-based company that explores and produced oil, saw its stocks move up on Friday, August 20.

Investors appear to be showing interest in this oil stock, which recorded a growth of about two per cent at the time of writing this (11.22AM EST).

Based in Calgary, Alberta, like most energy plants in Canada, Surge Energy claims to hold high-quality crude oil reserve base. The company recently acquired private oil producer Astra Oil Corp, which could be the factor driving the investor attention.

Also read: 5 best TSX oil & gas stocks to buy under $50

Surge Energy-Astra Oil Deal

On Wednesday, August 18, Surge Energy said that it has purchased Astra Oil in an all-stock deal that was valued at C$ 160 million, which is said to have included C$ 13.5 million in debt.

With Astra’s assets being mainly situated in the southeastern part Saskatchewan, reports have noted that this could mean Surge Energy’s re-entry in the province’s market.

The merged entity will include a total of about 850 net development drilling sites, Surge Energy pointed.

Also read: Petroteq Energy (TSXV:PQE): Why is this oil & gas company trending?

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Surge Energy Inc (TSX:SGY) stock and financial performance

Stocks of Surge Energy have grown by more than 40 per cent in the past one year. Although the oil stock notes a decline of nearly 13 per cent for the last six months, it has surged by about 47 per cent this year.

SGY scrip is up by almost 210 per cent from its 52-week low of C$ 1.21, which was recorded on October 20, 2020.

Surge Energy records a low price-to-earnings (P/E) ratio of 5.9, for which it is ranked among the top ‘undervalued’ stocks on the Toronto Stock Exchange (TSX).

On the financial front, the oil company posted a petroleum and natural gas revenue of C$ 58.74 per barrel of oil equivalent (BOE) in the second quarter of 2021. This noted an increase of 200 per cent year-over-year (YoY) from that of C$ 19.58 per BOE in Q2 2020.

Bottomline

Surge Energy has noted the purchase of Astra Oil is in line with its business plan of acquiring “high quality, light and medium gravity crude oil reservoirs”.

Investors interested in SGY stock could explore it further and take an investment call based on thorough research.

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