Surge to Take Stake in Western Alberta

Surge has entered into an agreement with a major independent Canadian corporation to acquire a high working interest, operated property currently producing 726 boe/d in the Valhalla South area located in western Alberta (the Property) for a total consideration of $75 million (the Acquisition). The current production consists of vertical oil wells producing from an extensive tight sand with up to 50 meters of gross light oil pay in the Triassic Doig Formation. Management has a proven track record of optimizing value in the tight, compartmentalized Doig Formation (Fireweed) and plans to drill the Property using horizontal multi-frac technology. The Acquisition adds a fourth early stage, high impact, light oil resource play to Surge's portfolio.

Surge also announced a $40 million bought deal financing of 7,620,000 Subscription Receipts at a price of $5.25 per Subscription Receipt (the Financing), increased 2010 guidance, and preliminary 2011 guidance.

ACQUISITION HIGHLIGHTS & STRATEGIC RATIONALE

Through the Acquisition, Surge is acquiring a low decline asset (<15%) with all season access that has significant light oil (40 degree API) upside with internal company estimates of more than 100 million barrels of Total Petroleum Initially In Place 1(“TPIIP”), and cumulative oil recovery to date of less than three percent of TPIIP. The Doig field is approximately 12 kilometers long by two kilometers wide and up to 50 meters thick. Using existing vertical well control and complete 3D seismic coverage, management has identified up to 24 horizontal multi-frac infill drilling locations, which have the potential to more than quadruple production on the Property to over 3000 boe/d (>60% oil and NGL's) over the next three years. The Property is a light oil analogue to the Fireweed Doig gas asset which management successfully developed in 2009 at a previous entity. Production in the Fireweed Doig was increased from approximately 800 boe/d to greater than 2,500 boe/d by drilling three infill horizontal multi-frac wells.

To date, the Property has only been drilled with vertical wells and has recovered less than three percent of TPIIP. The company plans to significantly increase recovery utilizing horizontal multi-frac technology. Surge plans to drill, complete, and tie-in infill horizontal multi-frac wells at a cost of approximately $4.2 million with internally estimated rates of return in excess of 200% and approximate recoveries between 600,000 and 800,000 boe per well. Management forecasts full cycle finding, development and acquisition (FD&A) costs of less than $10.00/boe resulting in a recycle ratio of greater than three times. Surge plans to drill its first horizontal multi-frac well on the Property before year end with production coming on stream by the end of the first quarter in 2011.

As a result of the Acquisition, Surge is increasing its guidance for 2010 exit production to 4,500 Boe/d (>60% oil and NGL's) from 3,800 boe/d (>60% oil and NGL's) and forecasting a 2011 exit production rate of 6,500 boe/d (>70% oil and NGL's).

The Acquisition is forecast to be accretive to Surge in 2011 on several key metrics, including cash flow per share (fully diluted) and production per share (fully diluted).

INCREASED 2010 GUIDANCE

Surge's revised 2010 guidance below includes the addition of the Property's forecast production volumes with capital included to drill one infill horizontal multi-frac well on the Property, which is scheduled to commence production by the end of the first quarter in 2011.

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