Mr. Paul Colborne reports

SURGE ENERGY INC. ANNOUNCES FOURTH QUARTER AND YEAR END FINANCIAL RESULTS FOR 2025; STRONG 2025 YEAR END RESERVE ADDITIONS; OPERATIONAL UPDATES; AND APPOINTMENT TO THE BOARD OF DIRECTORS

Surge Energy Inc. has released its financial and operating results for the quarter and year ended Dec. 31, 2025, and its year-end 2025 reserves as independently evaluated by GLJ Ltd. Furthermore, Surge has appointed Ryan Gritzfeldt to the board of directors, effective March 4, 2026.

Select financial and operating information is outlined in this news release, and should be read in conjunction with the company's audited financial statements and management's discussion and analysis for the three months and the year ended Dec. 31, 2025, available on SEDAR+ and on Surge's website.

2025 highlights

Based on the company's disciplined capital allocation model, combined with continued strong drilling and waterflood results in Surge's Sparky and southeastern Saskatchewan core operating areas, the company exceeded its budgeted production estimates for 2025 by approximately 1,000 barrels of oil equivalent per day (boepd), with production averaging 23,491 boepd in 2025 (88 per cent liquids), as compared with Surge's initial 2025 production guidance of 22,500 boepd (91 per cent liquids). The company exceeded production estimates while spending approximately $10-million less than originally forecasted, with 2025 capital expenditures totalling $159.7-million, compared with initial 2025 capital guidance of $170-million.

In 2025, capital expenditures were reduced by more than $35-million as compared with 2024. This significant improvement in capital efficiencies represents an 18-per-cent reduction in capital spending year over year, with expenditures on property, plant and equipment of $159.7-million in 2025, decreasing materially from $195.1-million in 2024. Additionally, Surge reduced net operating costs from $20.02 per barrel of oil equivalent (boe) in 2024 to $17.91 per boe in 2025, an 11-per-cent improvement year over year.

During 2025, West Texas Intermediate (WTI) crude oil prices decreased by nearly $11 (U.S.) per barrel, from an average of $75.72 (U.S.) in 2024 to $64.77 (U.S.) per barrel in 2025. Despite this significant decrease in oil prices, Surge generated adjusted funds flow (AFF) of $279.2-million in 2025 ($2.81 per share) and cash flow from operating activities of $266.0-million ($2.68 per share).

As a result of much lower capital spending in 2025, together with lower net operating expenses, Surge generated meaningfully higher free cash flow (FCF) in 2025 as compared with 2024, despite WTI crude oil prices declining 14 per cent (approximately $11 (U.S.) per barrel). On this basis, the company generated FCF of $119.5-million in 2025, representing 43 per cent of the company's 2025 AFF of $279.2-million. This compares with FCF of $99-million in 2024, which represented 34 per cent of Surge's 2024 AFF of $294.1-million.

In 2025, the company returned a total of $86.9-million, more than 31 per cent of 2025 AFF, to shareholders pursuant to the following:

• $51.7-million from Surge's monthly base dividend (52 cents per share per annum);
• $8.7-million in share buybacks under the company's normal course issuer bid (NCIB), repurchasing 1,504,700 shares;
• $26.5-million reduction in net debt, from $247.1-million as at Dec. 31, 2024, to $220.6-million as at Dec. 31, 2025.

Surge strategically allocated the majority of remaining FCF to a combination of decommissioning expenditures, cash settlement of dilutive instruments and small core area tuck-in acquisitions.

In 2025, the company generated its strongest finding and development (F&D) costs, including changes in future development costs (FDC), in the past three years. Surge delivered a 2025 total proved and probable (TPP) F&D of $14.87 per boe, which provided a recycle ratio of 2.4 times based on a 2025 operating netback (before realized gains on commodity and FX (foreign exchange) contracts) of $36.23 per boe. These results illustrate the strength of Surge's continuing drilling and waterflood programs.

In 2025, the company achieved a 136-per-cent TPP reserves replacement ratio and reported a TPP reserve life index of 11.4 years. Furthermore, the company reported a TPP net asset value (NAV) of $13.06 per share, based on Surge's Dec. 31, 2025, independent reserve report.

Fourth quarter and year end 2025 financial and operational highlights:

• Exceeded budgeted 2025 production estimates by nearly 1,000 boepd, producing an average of 23,491 boepd in 2025, compared with initially budgeted production of 22,500 boepd;
• Generated $119.5-million in FCF in 2025 (WTI: $64.77 (U.S.) per bbl), a 21-per-cent increase from $99.0-million in 2024 (WTI: $75.72 per barrel (bbl));
• Distributed cash dividends to shareholders in the amount of $51.7-million in 2025, representing less than 19 per cent of 2025 AFF of $279.2-million;
• Returned an additional $8.7-million to shareholders through the company's continuing NCIB, repurchasing over 1.5 million shares in 2025;
• Reduced net debt by $26.5-million in 2025 to $220.6-million as at Dec. 31, 2025, a decrease of over 10 per cent as compared with $247.1-million as at Dec. 31, 2024;
• On a combined basis, Surge provided total returns of approximately $86.9-million to shareholders in 2025 through the base dividend, share repurchases and net debt reductions. This represents more than 31 per cent of 2025 AFF returned to shareholders;
• Reduced net operating expenses by $2.11 per boe during 2025, to $17.91 per boe in 2025, from $20.02 per boe in 2024. This represents a decrease in net operating expenses of 11 per cent year over year;
• Maintained an undrawn $250-million first lien credit facility;
• Replaced 136 per cent of 2025 production on a TPP reserves replacement basis (excluding A&D);
• Reported a year-end 2025 TPP F&D, inclusive of changes in FDC, of $14.87 per boe and a recycle ratio of 2.4 times;
• Exceeded the company's budgeted 2025 H2 (second half) 2025 production guidance of 22,500 boepd, with Q4 (fourth quarter) 2025 production averaging 23,186 boepd;
• Generated Q4 2025 cash flow from operating activities of $59.7-million and AFF of $56.2-million;
• Annualized Q4 2025 AFF represented 0.98 times net debt as at Dec. 31, 2025;
• Paid $12.9-million in dividends to shareholders in Q4 2025, representing only 23 per cent of Q4 2025 AFF of $56.2-million;
• Returned an additional $800,000 to shareholders in Q4 2025 through Surge's continuing NCIB, repurchasing 106,800 shares.

Operations update

2025 operations overview

In 2025, Surge successfully drilled a total of 58 gross (48.8 net) wells, spending a total of $159.7-million, including expenditures on facilities, equipment, land, and capitalized general and administrative (G&A) expenses. Drilling operations were focused on the company's premium medium and light gravity crude oil assets in the Sparky and southeastern Saskatchewan core areas, where 29 gross (29 net) and 28 gross (18.8 net) wells were drilled, respectively.

In 2025, Surge drilled 17 gross (17 net) multilateral wells utilizing the application of modern open hole drilling technology in its Sparky core area, all of which were drilled at the company's Hope Valley property.

At Surge's 100-per-cent-owned-and-operated Hope Valley play, the company continues to experience better-than-anticipated well results from its modern open hole multilateral (OHML) drilling techniques. Surge drilled 17 gross (17 net) OHML wells at Hope Valley in 2025, with average IP90 production rates of 197 barrels of oil per day (bopd). These results are 22 per cent better than the company's independent reserve auditor IP90 proved undeveloped type curve expectations of 162 bopd. Surge successfully drilled and brought on production six gross (6.0 net) wells in Hope Valley in Q4 2025.

As at Dec. 31, 2025, 53 per cent of the company's current production is supported by legacy vertical waterfloods, horizontal waterfloods and natural aquifer support, which help to maintain Surge's low (internally estimated) 25 per cent corporate decline. Surge has significantly increased the company's horizontal waterflood program, from seven injector conversions in 2024, to 14 conversions in 2025, based on the continued success of its Sparky, Lloyd, Ratcliffe, Slave Point and Midale waterfloods. In H2 2025, Surge drilled the company's first waterflood injector to initiate secondary recovery at Surge's Hope Valley discovery, with the goal of increasing estimated ultimate recoveries from this large Sparky (Mannville) crude oil discovery. The company has five more dedicated injectors planned for Hope Valley in 2026.

Additionally, over the past 15 months, the company has drilled 20 gross (20 net) single lateral multifrac wells in the Sparky core area where Surge has successfully implemented high-density frac technology. This approach has doubled the number of frac stages per 1,400 metres (m) lateral; increasing from 26 stages per well, to 52 stages per well. This strategic modification to Surge's frac design has resulted in a 50-per-cent increase in IP90 average production rates as compared with Surge's previous single lateral Sparky wells, for a modest additional cost increase of approximately 15 per cent ($300,000 per well).

Surge's 2025 southeastern Saskatchewan drilling program focused primarily on the Frobisher formation, with a total of 28 gross (18.8 net) wells drilled. This included the use of modern OHML drilling techniques, with nine gross (7.5 net) wells drilled as stacked multilateral wells, each consisting of two to three open-hole legs. Additionally, the program included one gross (one net) single-leg Frobisher well and one gross (0.5 net) Frobisher re-entry. Over the last three years, Surge has achieved industry-leading results with average 90 day production rates of 195 bopd for all Frobisher wells drilled in the province of Saskatchewan between Jan. 1, 2022, and Dec. 31, 2025.

In 2025, Surge drilled two (1.8 net) eight-leg OHML wells in the Frobisher State A formation. The second of these drills had an average 90-day production rate of 175 bopd. Surge internally estimates 23 gross (17.2 net) future State A drilling locations and nine gross (8.5 net) of these were booked by GLJ in the year-end (YE) 2025 reserve report.

A four-leg multilateral well (0.8 net) was drilled in the Oungre/Ratcliffe formation at Surge's Freda waterflooded Lake property. This well came on production in late December and had a 30-day peak production rate of 325 bopd. Surge internally estimates nine gross (8.5 net) offsetting drilling locations, with four gross (four net) of these booked by GLJ in the YE 2025 reserve report.

2026 operations update

Surge's 2026 capital program remains focused in the company's Sparky and southeastern Saskatchewan core areas, with over 95 per cent of the 2025 drilling budget allocated to these two areas. A total of 60 gross (54.5 net) wells are planned in 2026, with 31 gross (31.0 net) wells planned in Sparky and 29 gross (23.5 net) wells planned in southeastern Saskatchewan.

Sparky (Mannville)

Surge's 2026 capital program in the Sparky core area (more than 85 per cent liquids; 22-degree API average crude oil gravity) is focused on development drilling, consisting of 10 gross (10.0 net) single-leg fracked Sparky horizontal wells, 16 gross (16.0 net) multileg Mannville stack wells and five gross (5.0 net) dedicated single-leg injectors. In 2026, Management will be focused on the continued growth of Surge's multilateral well footprint in the Mannville stack of formations, with approximately two-thirds of drilling capital directed to multilateral development.

Surge views the Nipisi Clearwater development as a strong technical analog for its Hope Valley Sparky development. With the success of the waterflood in the Clearwater development, Surge plans to accelerate the waterflood at Hope Valley with the drilling of five gross (5.0 net) dedicated single-lateral injectors in 2026.

Southeastern Saskatchewan

In the company's southeastern Saskatchewan core area, Surge is currently budgeting the drilling of 29 gross (23.5 net) conventional Mississippian horizontal wells, with 25 gross (19.5 net) of these wells targeting the Frobisher light oil formation, and 4.0 gross (4.0 net) targeting the Midale and Lodgepole formations.

Over the past four years, the company has strategically endeavoured to optimize reservoir contact by drilling two- and three-leg vertically stacked multilateral wells within the Frobisher formation. In 2026, 20 gross (15.0 net wells) of Surge's planned 25 gross (19.5 net) Frobisher wells (77 per cent) will be drilled as multilateral horizontal wells.

2025 year-end reserves highlights

Surge is pleased to announce the results of the independent reserves evaluation of the company's crude oil and natural gas assets, dated Feb. 20, 2026, and effective Dec. 31, 2025, in compliance with National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities, and in accordance with the Canadian Oil and Gas Evaluation Handbook.

Building on the successful 2025 drilling program in the Sparky and southeastern Saskatchewan core areas, Surge continued to delineate and improve the company's reserve base through infill drilling, pool extensions, incremental waterflood bookings and new exploration/appraisal drilling throughout the year. Surge delivered its strongest F&D costs in three years, despite a significant decrease in the WTI price used in the reserves report.

With Surge's Dec. 31, 2025, reserve report, the company delivered the following:

• Reported the company's strongest F&D costs, including changes in FDC in the past three years:
  • $14.87 per boe for TPP reserves;
  • $19.11 per boe for total proved (TP) reserves;
  • $19.77 per boe for proved developed producing (PDP) reserves;
• Generated the following F&D recycle ratios based on a 2025 operating netback of $36.23 pepr boe (before realized gains on commodity and FX contracts), illustrating the strength of the company's drilling and waterflood activity in 2025:
  • TPP recycle ratio of 2.4 times;
  • TP recycle ratio of 1.9 times;
  • PDP recycle ratio of 1.8 times;
• Increased TPP reserves by 6 per cent or 5.5 million boe, from 90.2 million boe at Dec. 31, 2024, to 95.7 million boe as at Dec. 31, 2025;
• Organically achieved a 136-per-cent TPP reserves replacement ratio (excluding acquisitions and divestitures), a 102-per-cent TP reserves replacement ratio and a 94-per-cent PDP replacement ratio;
• Reported a NAV per basic share, inclusive of net debt, of $13.06 per share TPP, $7.62 per share TP and $3.97 per share PDP;
• 392 gross (360.6 net) booked TPP drilling locations and 309 gross (282.3 net) TP drilling locations; over 90 per cent of these booked drilling locations are located in the company's Sparky and southeastern Saskatchewan core areas;
• Liquids weighting of 90 per cent (oil and natural gas liquids) in all reserve categories;
• Reported a strong reserve life index of 11.4 years on TPP reserves and 8.0 years on TP reserves.

2025 year-end reserves details

The company's reserves were independently evaluated by GLJ in accordance with National Instrument 51-101, effective Dec. 31, 2025. Surge's annual information form (AIF) for the year ended Dec. 31, 2025, contains Surge's reserves data and other oil and natural gas information as mandated by NI 51-101.

The attached tables summarize Surge's working interest in oil, natural gas liquids and natural gas reserves, and the net present values (NPVs) of future net revenue for these reserves (before taxes) using forecast prices and costs as evaluated in the reserves report. The evaluation is based on the three consultant's average (GLJ, McDaniel & Associates Consultants Ltd., and Sproule Associates Ltd.) forecast pricing and exchange rates at Dec. 31, 2025, which is available on the GLJ website. All references to reserves in this news release are to gross company reserves, meaning Surge's working interest reserves before deductions of royalties and before consideration of the company's royalty interests. The amounts in the tables may not add due to rounding.

Appointment of board member

Surge is pleased to announce the appointment of Ryan Gritzfeldt to the board of directors, effective March 4, 2025.

Mr. Gritzfeldt is a professional engineer and senior energy executive with over 27 years of experience in the Canadian oil and gas industry. Mr. Gritzfeldt most recently served as chief operating officer of Veren Inc. (formerly Crescent Point Energy) until its combination with another Canadian energy company in May, 2025. Prior to this role, he held progressively senior leadership positions across the organization, including vice-president, marketing and innovation, and vice-president, engineering and business development.

Mr. Gritzfeldt received his bachelor of applied science in industrial systems engineering with a petroleum systems option from the University of Regina in 1998. He is a member of both the Association of Professional Engineers and Geoscientists of Alberta and the Association of Professional Engineers and Geoscientists of Saskatchewan, and is a graduate of the Institute of Corporate Directors.

Surge welcomes Mr. Gritzfeldt to its board of directors.

Outlook: premium asset quality drives superior returns

Surge's premium, conventional crude oil asset base is now more than 92 per cent focused in two of the top four crude oil plays in Canada based on per well payout economics in its Sparky (approximately 14,000 boepd; 85 per cent medium gravity oil and liquids) and southeastern Saskatchewan (approximately 7,200 boepd; 90 per cent light oil and liquids) core areas.

In light of continuing geopolitical uncertainty, pursuant to the company's continuing, systematic, hedging program, Surge has been strategically locking in crude oil hedge positions for the balance of 2026 at progressively higher crude oil prices, to protect the company's 2026 capital program and dividend.

Surge intends to continue to deliver attractive shareholder returns in 2026 and beyond based on the key corporate fundamentals set forth below:

• Estimated 2026 average production of 23,000 boepd (88 per cent liquids);
• Estimated 2026 AFF of $265-million ($2.68 per share);
• Estimated 2026 cash flow from operating activities of $245-million ($2.47 per share);
• A $51.5-million annual base cash dividend (52 cents per share annual dividend, paid monthly), which represents less than 20 per cent of the company's forecasted 2026 AFF of $265-million;
• A TPP NAV per share of $13.06;
• An undrawn $250-million first lien credit facility as at Dec. 31, 2025;
• An internally estimated 25-per-cent annual corporate decline;
• More than 900 (net) internally estimated drilling locations, providing a 12-year drilling inventory;
• $1.2-billion in tax pools (representing an estimated six-year tax horizon).

We seek Safe Harbor.