Mr. Dan O'Neil reports

SURGE ENERGY INC. ANNOUNCES SIGNIFICANT INCREASE IN 2011 YEAR-END RESERVES AND PROVIDES OPERATIONAL UPDATE

Surge Energy Inc. is providing its 2011 year-end reserves evaluation (compliant with NI-51-101) and an update on current operations.

The following highlights and reserves information does not include the recent private company acquisition that closed on Jan. 6, 2012.

2011 year-end reserves highlights

Surge is reporting the following 2011 year-end reserves highlights based on the Sproule Associates Ltd. independent assessment of the company's reserves dated effective Dec. 31, 2011, using forecast prices and costs. The results used the following unaudited estimated values: total capital expenditures for 2011 of approximately $165.6-million, 2011 average production of approximately 5,960 barrels of oil equivalent per day and estimated 2011 exit production of approximately 7,800 boe per day.

In 2011, Surge:

• Increased proved plus probable reserves by 52 per cent to 32.2 million boe over Dec. 31, 2010, reserves of 21.2 million boe;
• Increased proved plus probable reserves per share by 32 per cent (fully diluted);
• Increased proved plus probable oil and natural gas liquids reserves by 55 per cent to 19.2 million barrels over Dec. 31, 2010, reserves of 12.4 million barrels;
• Achieved proved plus probable finding and development costs of $14.02 per boe, including the change in future development capital;
• Achieved proved plus probable finding, development and acquisition costs of $16.65 per boe, including the change in future development capital;
• Achieved a recycle ratio of 2.7 with finding and development costs of $14.02 per boe, including the change in future development capital and based on Surge's estimated fourth quarter 2011 netback;
• Increased Surge's estimated fourth quarter 2011 netback by 41 per cent to $38.55 per boe over the fourth quarter 2010 netback of $27.31 per boe;
• Increased net present value discounted at 10 per cent before tax of proved plus probable reserves by 43 per cent to $587.6-million, compared with $411.9-million as at Dec. 31, 2010;
• Achieved a proved plus probable reserve life index of 11.7 years based on the company's 2011 fourth quarter average production rate of approximately 7,500 boe per day;
• Achieved a proved plus probable reserves replacement ratio of 6.1 based on the company's estimated 2011 average production for the year of 5,960 boe per day;
• Increased Surge's estimated net asset value by 20 per cent to $8.75 per basic share at Dec. 31, 2011, based on the net present value discounted at 10 per cent before tax of its proved plus probable reserves.

An attached table summarizes the company's reserves prepared by Sproule at Dec. 31, 2011, and does not include the recent private company acquisition. The Surge Sproule report was prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook and NI 51-101, standards of disclosure for oil and gas activities. Additional reserve information as required under NI-51-101 will be included in the company's annual information form, which will be filed on SEDAR by March 30, 2012.

                                       SUMMARY OF RESERVES
                                                                                           
                                Oil and NGLs     Gas  Combined  Future development capital ($000s)
                                      (mbbl)  (mmcf)    (mboe)  Discounted at 10%     Undiscounted   

Proved developed producing             6,721  25,924    11,042                  -                -        
Proved developed non-producing           587   2,965     1,081               $1.5             $1.7       
Proved undeveloped                     5,126  19,641     8,400             $104.0           $113.7      
Total proved                          12,434  48,530    20,523             $105.6           $115.4      
Probable additional                    6,760  29,548    11,684              $22.0            $24.7      
Total proved plus probable            19,194  78,078    32,207             $127.6           $140.1

  BEFORE-TAX NET PRESENT VALUE SUMMARY
   (at a 10% discount rate, in $000s)
                
Proved developed producing      $269,838    
Proved developed non-producing   $23,134     
Proved undeveloped              $131,284    
Total proved                    $424,256    
Probable additional             $163,365    
Total proved plus probable      $587,621    

Exciting operational update

Valhalla South (Doig) -- western Alberta

Surge is reporting a material well result from its ninth horizontal multifrac well drilled at Valhalla South in the Doig light oil pool (40-degree API), which has 115 million barrels of internally estimated gross discovered petroleum initially in place (99 million barrels net).

The well (10-7-74-8W6, 100-per-cent working interest) came on production on Feb. 21, 2012, and has flowed up the 4.5-inch tie-back string at an average rate of 2,300 boe per day (81 per cent light oil and NGLs) over the last seven days. On the ninth day of production, the well had improved to over 2,600 boe per day (78 per cent light oil and NGLs). The well was completed with 12 frac stages with over 1,070 metres of horizontal section.

Surge is currently drilling its 10th well at Valhalla South and has at least five more wells planned for the remainder of 2012. With the completion of the new Surge Sproule report, Surge has at least 19 gross (14.3 net) unbooked horizontal multifrac wells in inventory at Valhalla.

Nipisi (Slavepoint/Gilwood) -- western Alberta

Successful operations are under way at Nipisi, which was acquired on Jan. 6, 2012. Surge has drilled, completed and brought on production two vertical Gilwood wells with combined initial production rates of over 300 barrels per day of light oil (42-degree API). These exploratory wells will ultimately be used as water source wells for future water flood development in the Slave Point formation.

The first of two horizontal multifrac Slave Point wells planned for the first quarter of 2012 has been drilled. The well encountered 1,325 metres of horizontal section and will be fractured with up to 13 stages. The second Slave Point well is currently drilling from the same pad. Completions on these wells are anticipated before the end of March, 2012. At least three more horizontal multifrac Slave Point wells are planned for 2012.

Waskada (Spearfish) -- Williston basin

Surge drilled and completed seven horizontal multifrac Spearfish light oil (36-degree API) wells during the first quarter of 2012. Four of these wells were brought on production in February, with the remaining three wells anticipated to be on production in early March. With these three wells on in March, Surge will have a total of 21 gross (21 net) Spearfish oil wells producing to the recently completed battery.

Outlook and guidance

As a result of the company's very successful first quarter 2012 drilling program and the Jan. 6, 2012, closing of the private company acquisition, Surge is on track to meet or exceed management's 2012 production exit rate of 11,000 boe per day (77 per cent oil and NGLs).

We seek Safe Harbor.