Surge Energy Inc. Inc. Announces 1,200 bbl/d Private Company Acquisition of Focused Slave Point/Gilwood Light Oil Assets; Reaffirms FY 2011 Production Guidance; Issues FY 2012 Production Guidance

Surge Energy Inc. announced that it has entered into an agreement (the Agreement) to acquire a 1,200 bbl/d (100% light oil) private oil and gas company (PrivateCo) with focused Slave Point/Gilwood light oil assets in the Gift/Nipisi area of Western Alberta. Total consideration is approximately $106 million, consisting of $18.5 million in cash, 7.9 million Surge common shares and assumed net debt at closing of approximately $14.5 million (the Acquisition). The Acquisition adds a new high impact light oil resource play to Surge's portfolio. The Acquisition is expected to close on or before January 6, 2012. Holders of approximately 67% of the common shares of PrivateCo have agreed to enter into lock-up agreements with Surge, pursuant to which they have agreed to tender their shares to Surge. The Board of Directors of PrivateCo has unanimously approved the Acquisition and recommended that the shareholders of PrivateCo tender their shares to Surge. Surge announced that it is on track to meet or exceed fiscal 2011 exit guidance of 7,800 boe/d. For fiscal 2012, Surge expects average production of 9,750 boe/d (~74% oil & NGLs) and exit production of 11,000 boe/d (~77% oil & NGLs).