Surge Energy Inc. (SGY) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Annual General Meeting of the Holders of Common Shares of Surge Energy, Inc. I would now like to introduce the Chairman, Mr. Pasieka. Please go ahead, sir.

Thank you very much. Good afternoon, ladies and gentlemen. Welcome to the Annual General Meeting of the Holders of Common Shares of Surge Energy, Inc. My name is James Pasieka, and I'm Chair of the Board of Directors of Surge. Joining us online are other officers of the corporation, including Paul Colborne, President, CEO and Director; Murray Bye, Chief Operating Officer; Jared Ducs, Chief Financial Officer; Margaret Elekes, Senior Vice President, Land and Business Development; Derek Christie, Senior Vice President, Geosciences; Rod Monden, Controller. Before we begin this year, in light of concerns regarding the COVID-19 outbreak, Surge has opted for a virtual-only annual meeting in order to reduce the risk of spread of infection to our employees, shareholders, Directors and other stakeholders. This virtual-only format also permits us to comply with the Alberta government directives restricting large gatherings. Although we're disappointed that we can't see each other today, our thoughts are with you, your families and the communities you serve. We want to thank you for your patience as we navigate through this unprecedented situation and hope you agree that we did the right thing with this virtual meeting. In making the decision to move to a virtual meeting, it was paramount to ensure shareholder rights were protected. So we've ensured that this meeting offers shareholders the same opportunities to participate as in past in-person meetings. There will be opportunities for shareholders to ask questions specific to each resolution on the webcast. If you have a question click on the messaging icon at the top right of the webcast page. Please read the instructions in the textbook before submitting your question. Once you have finished typing out your question, click Submit, and we will address questions that directly relate to a particular motion at the appropriate time of the meeting. For questions of a more general nature and not relating to the proposed amendments or objections, we request that you e-mail Paul Colborne, our Chief Executive Officer, with your question, and we'll endeavor to answer it as soon as possible following the conclusion of the meeting. Voting during this meeting can only be done through the virtual voting platform on the webcast. Click the Vote tab at the top right of the webcast page and a separate browser window will open. If prompted to do so, you can register to vote by entering your control number, which you would have previously received as your user and -- as your user name and entering surge2020, all lower case, no spaces, as your password. Please note that the password is case sensitive. The polls will now be open, and the polls will be open for all resolutions at the same time. Voting can be completed at any time from now until the end of the formal business of the meeting. Thank you to those of you who have already voted. If you've already voted in advance of the meeting and do not wish to change your vote, then you don't need to do anything. For those who have not yet voted, we encourage you to vote now. In order to have the meeting proceed efficiently, certain individuals have been asked to move and second the motions, which are to be called for in the Notice of Meeting. It's not intended to limit in any way your right to participate in the meeting. Any proposed amendments or objections to motion will need to be submitted as questions. All proposed amendments or objections will be addressed during the meeting, provided that they are submitted during the period when polls are open. So let me begin, please. And let me begin with the appointment of Secretary and scrutineers. I will now declare the meeting to come to order. And if there's no objections, I'll request Michael Bennett, the Corporate Secretary of Surge Energy, Inc., to act as Secretary of the meeting; and Laura Stone and [ Reimer Esbenes ] of Computershare Trust Company of Canada to act as scrutineers. Please note that the only holders of shares of the corporation of record at the close of business April 9, 2020, or their duly appointed proxies are entitled to participate and vote at this meeting. Proof of mailing of the Notice of Meeting, Information Circular and form of proxy to the registered shareholders of the corporation has been filed with me -- has been filed with me by the Secretary. Unless there are any objections, I'll dispense with the reading of the notice of motion and direct that a copy of the proof of mailing be appended to the minutes of the meeting. The bylaws of the company provide that a quorum exists if at least 2 persons are present holding or representing at least 5% of the shares entitled to be voted at the meeting. Further, the bylaws of the corporation also allow for the meeting to held by virtual means. The preliminary scrutineer's report has been received and it shows the required threshold for a quorum at the meeting has been met. Accordingly, I declare a quorum is present and the meeting is regularly called and properly constituted for the transaction of business. I direct that a copy of the scrutineers' report be kept with the minutes of the meeting. Now there are 4 items of business to consider at today's meeting: The fixing of the number of Directors to be elected; the election of Directors; the amendment to the stock incentive plan of the corporation and the approval of the common shares underlying the incentives they're under; and lastly, fourthly, the appointment of auditors. We'll conduct the votes on the matters before us via poll. On a poll, every shareholder or proxy holder entitled to vote on the matter has 1 vote in respect of each share entitled to be voted at the matter and held or represented by that shareholder or proxy holder. As I mentioned earlier, only shareholders and proxy holders present at the meeting are entitled to move motions, speak to them and vote on them. We'll now proceed with the formal business of the meeting. The first item of business is the presentation of the financial statements of the corporation for the fiscal period ended December 31, 2019, and the report of the auditors thereon. The financial statements and auditors' report were mailed to each shareholder of the corporation who is entitled to receive them and have been posted on the corporation's website and filed on SEDAR. Shareholders have, therefore, had an opportunity to review these documents. As a result, we'll dispense with the reading of the financial statements and the auditor's report. As no action is required to be taken by the shareholders on the financial statements, I now declare that the financial statements of the company for the fiscal period ending December 31, 2019, and the report of the auditors thereon have been received by the shareholders as submitted at -- to this meeting. The first item of business is the fixing of the number of Directors for election at the meeting. In the Information Circular, it was proposed that 9 individuals be nominated for election to the Board. I would request a motion, please, that the number of directors for the ensuing year be set at 9.

Mr. Chair, my name is [ Stephanie McNeil ], and I am a shareholder. I move that the number of Directors for the ensuing year be set at 9.

Mr. Chair, my name is [ Nicole Loka ], and I am a shareholder. I second the motion.

Thank you very much. So all in attendance have heard the motion. I'd ask Mr. Michael Bennett, our Corporate Secretary, to advise if there's any questions on that motion.

Mr. Chair, no questions specific to this motion have been submitted.

All right. Thank you. As there's been no comments or questions, we'll proceed with the vote. Now please record your vote if you haven't done so already. Remembering that if you have already voted and don't want to change your vote, no action is needed. [Voting]

It is now in order to proceed with the election of the Directors of the corporation. The Information Circular contains the names of management's proposed nominees to the Board, which are: myself, James Pasieka; Marion Burnyeat; Paul Colborne; Daryl Gilbert; Michelle Gramatke, Robert Leach; Allison Maher; Dan O'Neil; and Murray Smith. The nominations, which have been made in order and as there's no other nominations, I declare the nominations closed. Since the number of nominees does not exceed the number of Directors to be elected by the shareholders, I request a motion that the nominees be elected as Directors of the company to hold office until the next Annual Meeting of the Shareholders or until their successors are elected or appointed.

Mr. Chair, my name is [ Stephanie McNeil ], and I am a shareholder. I move that the nominees be elected as Directors of the corporation to hold office until the next Annual Meeting of Shareholders or until their successors are elected or appointed.

Mr. Chair, my name is [ Nicole Loka ], and I am a shareholder. I second the motion.

Thank you. Now Mike -- Michael Bennett, I will ask you as Corporate Secretary, were there any questions specific to that motion that were submitted?

Mr. Chair, no questions specific to this motion have been submitted.

All right. Thanks. So we've had no questions or comments. We'll proceed with the vote. Please record your vote now. Remembering that if you have already voted in advance and do not wish to change your vote, you need take no further action. [Voting]

So now let's proceed to the amendments to the stock incentive plan and the approval of the unallocated awards under that plan. Further information concerning the matter is set forth under Item 4, Approval of Amendment to Unallocated Awards under the Stock Incentive Plan in the Information Circular. In order to be effective, this resolution must be approved by a majority of the votes cast at the meeting. The full text of the resolution is set out on Page 12 of the Information Circular. So unless there's any objections, I'll dispense with the reading of that particular resolution. May I have a motion, please, with regards to that -- to this matter?

Mr. Chair, my name is [ Stephanie McNeil ], and I am a shareholder. I move that the ordinary resolution set forth on Page 12 of the Corporation's Information Circular dated on -- sorry, dated March 31, 2020, respecting the increase to the number of shares reserved for issuance pursuant to our stock incentive plan and the approval of the shares issuable pursuant to unallocated awards under our stock incentive plan be approved.

Mr. Chair, my name is [ Nicole Loka ], and I am a shareholder. I second the motion.

Thanks, Steph and Nicole. So all have heard the motion. I'll ask our Corporate Secretary, Mr. Michael Bennett, to advise if any questions specific to this motion were submitted.

Mr. Chair, no questions specific to this motion have been submitted.

Thank you. And unless we receive any objections otherwise, we'll proceed with the vote. Please record your vote now. Remembering, again, that if you have already voted in advance and are not going to change your vote, no further action is required. [Voting]

So let's move on to the last of the items on our agenda, which is the appointment of the auditors. May I have a motion with regards to the appointment of the auditors, please?

Mr. Chair, my name is [ Stephanie McNeil ], and I'm a shareholder. I move that KPMG LLP Chartered Accountants be appointed as the auditors of the corporation until the next annual meeting or until a successor is appointed and that their remuneration be fixed by the Board of Directors.

Mr. Chair, my name is [ Nicole Loka ], and I am a shareholder. I second the motion.

You've heard the motion. I'll ask the Secretary, were there any questions specific to that motion that were submitted?

Mr. Chair, once again, no questions specific to this motion have been submitted.

All right. Thanks, Mike. So unless we receive any objections otherwise, let's proceed with the vote. Please record your vote now. And as we've said before, if you've already voted in advance and are not going to change your vote, a person needs -- a shareholder needs to take no further action. [Voting]

So with all that, I'm going to now declare the polls are closed. So let me provide the preliminary voting results. I received confirmation from the scrutineers, the motion to fix the number of Directors at 9 has been approved by approximately 99% of the shareholders. Each of the 9 Directors nominated has been elected for by at least 90% or more of the votes cast for the election of Directors. The motion to approve the ordinary incentive resolution to approve the amendments to the stock incentive plan of the corporation and the approval of shares issuable pursuant to unallocated awards under the stock incentive plan has been approved by approximately 96% of the votes cast. And lastly, the appointment of officers -- I'm sorry, appointment of auditors has been approved, and that's to appoint KPMG LLP as the auditors of Surge has been approved by 99% of the votes cast. So there we have it. And accordingly, I declare each of the resolutions considered at today's meeting in respect to the matters as carried. The exact number of votes cast in respect of each matter will be filed on SEDAR and made available on our website. So that's it. Thanks very much, everyone, and thank you to all shareholders and proxy holders for your attendance today. As there's no further business in this formal part of the meeting, may I have a motion to terminate the formal part of the meeting, please?

Mr. Chair, my name is [ Stephanie McNeil ], and I'm a shareholder. I move that the meeting be terminated.

Mr. Chair, my name is [ Nicole Loka ], and I am a shareholder. I second the motion.

Excellent. Thank you. So I'll ask Mr. Michael Bennett, one more time if there's no -- if there -- are there any questions related to that particular motion, please?

And Mr. Chair, one more time, no questions specific to this motion have been submitted.

Great. Thanks. So I declare all the motions carried and this meeting to be concluded. Now before getting off the call in the meeting, if you have any questions, we do encourage you to e-mail Paul Colborne, our Chief Executive Officer, and his e-mail address is [email protected]. And we will endeavor to answer your question as soon as possible following the conclusion of the meeting. Thanks, everyone, and thanks for participating in Surge Energy, Inc.'s very first virtual Annual General Meeting. Thank you so much. Bye for now.

Thank you. And this concludes the call. You may all have a great day.