Surge Energy has approved an expanded second half 2026 capital program, including increased waterflood spending and incremental production growth. Additionally, the Company has increased its 2026 exit production rate guidance from 23,000 boepd to 24,000 boepd.

2026 PRODUCTION GUIDANCE INCREASE AND CAPITAL PROGRAM EXPANSION

The conflict between the United States and Iran continues in the Middle East, restricting oil flows through the Strait of Hormuz and contributing to significant drawdowns in global crude inventories. These macro events, combined with the ongoing Russia/Ukraine conflict, are driving a "higher for longer" crude oil price scenario than many market participants were projecting.

As a result of Surge's significant financial exposure to rising crude oil prices, together with the Company's strong balance sheet, the Company is generating much higher free cash flow ("FCF") in 2026 as compared to Management's budgeted crude oil price assumption of US$65 WTI per barrel. Further, based on Surge's independent reserve report for the year ended December 31, 2025, prepared by GLJ Ltd. ("GLJ"), the Company's net asset value ("NAV")1, when run at US$75 WTI flat pricing, is $11.04 per share for total proved reserves, and $17.10 per share for proven and probable reserves. On this basis, Management is currently allocating up to $5 million per month towards share buybacks under the Company's existing Normal Course Issuer Bid ("NCIB").

In addition, given the significant increase in forward crude oil prices, together with Surge's deep (>12 year) inventory of more than 900 internally identified drilling locations2, Surge's Board of Directors and Management have now approved an expansion of the Company's 2026 capital program to add incremental production per share growth in the second half of the year. This expansion of Surge's 2H/26 capital program is comprised of additional drilling in the Sparky and SE Saskatchewan core areas, together with additional waterflood capital, as compared to the current 2026 budget.

Accordingly, Management forecasts that the Company's 2026 exit production guidance will increase by over four percent, to 24,000 boepd (89 percent liquids), an increase of 1,000 boepd as compared to the Company's previous 2026 production guidance of 23,000 boepd (88 percent liquids).

In this regard, Surge's Board of Directors has approved an increase to the Company's 2026 capital program, from $150 million to $175 million. This $25 million increase in the 2026 capital budget will be allocated as follows:

Additional drilling capital of $16 million:

• The Company plans to drill an additional 8 gross (8.0 net) wells, comprised of four single leg frac'ed and two open hole multi-lateral ("OHML") wells in the Sparky core area, and two OHML wells in the SE Saskatchewan core area; and
• Acceleration of $9 million in additional waterflood projects.

The 1,000 boepd increase to Surge's 2026 production guidance, from the previously budgeted 23,000 boepd, provides incremental production efficiencies on the expanded second half 2026 capital program of approximately $16,000 per flowing boe, based on the $16 million of incremental drilling capital. With internally estimated six month well payouts associated with the 8.0 gross (8.0 net) incremental drills in the second half of 2026, the Company expects that this drilling program will pay out by year-end 2026, based on current strip WTI crude oil prices, while providing incremental FCF to Surge in 2027 and beyond.

The $9 million expansion in waterflood capital represents a 75 percent increase in the Company's 2026 waterflood capital (from the initial budget of $12 million) to $21 million. Incremental waterflood capital will be allocated to the further expansion of Surge's proven horizontal frac'ed waterflood program in the Provost region of the Sparky core area. Additionally, the Company is increasing the number of dedicated injectors drilled in Surge's OHML waterflood pilot at its Hope Valley Sparky discovery from five to 10.

KeyFacts Energy: Surge Energy Canada country profile