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[Audio Gap] and results. Search trades under the ticker symbol SGY on the TSC and ZTAPF on the OTC. The company has had a record year of paying down debt, reinstating and increasing the dividend to $0.48 per share per year, a fantastic low decline acquisition of 3,850 BOEs a day from Henner Plus and a new Frobisher discovery at Steelman. In addition to that, their [ P3 ] NAV came in at [ $22.37 ]. And their PDP NAV doubling, increasing from [ 3.51 ] to [ 7.28 ], proving the strength of their asset base with a 24% free cash flow yield. With us today from the company are Paul Colborne, CEO; and Jared Ducs, CFO. Hi, guys. Nice to see you again.
Thanks for having us.
I'm going to turn it over to you to discuss that any more highlights you want to touch on the quarter and the year-end results. As well, there will be time for Q&A. So if the audience wants to enter those in the Q&A question box, that would be great. And as always, the presentation may contain forward-looking statements.
Okay. Well, thanks, Jess. I appreciate the invite, and we have a new presentation on Paul. This is Jared. And our presentation highlights our Q1 -- our Q4 results last night, which I think are proving to be industry-leading. Basically, you guys know the movie, The Matrix. The whole movie goes on. And at the end of the movie, Keanu Reaves goes up. It's a realization. I'm the one, he's the one. And there is going to be 1 top performer in the country for oil amongst the oil depots in Canada, companies that are oil-based production with dividends. Last year, it was a company called Surge Energy, our TSR shareholder -- total return shareholder return, it's up 112%, and that's both share price plus dividend. But I believe we're better positioned this year to be the top performer in the country and will show you why.
First point here is key. This is -- the market has become a risk-adjusted, don't let me down, don't want to be wrong market. So everything is trading of PDP. I think Surge just put out last night, the best PDP NAV per share growth of any oil company in our difficult peer group in Canada, the best. Think of any other business. Think of Adelaide Capital's business, [indiscernible]. Your cash flow just went from $100 million -- $100.4 million in a year to $293.6 million. And we had a $98 million hedge loss. It really would have been close to $400 million. And the Enerplus deal is not in there. The Enerplus deal closed -- so a 4,000 barrel a day beautiful long line core area acquisition, it closed on December 19. So in those cash flow numbers and production numbers, the Enerplus deal is not in there. And really a big 1 for us in addition to the beautiful accretion on that deal, which is 15% accretion, which shows up in 2023. And as we closed late last year, is a big new discovery. We have lateral discovery down and dealing with Saskatchewan. We had a pool, and there's been a big discovery on the southwest corner of the pool where we locked up all the land. We've been drilling a number of the best wells in Saskatchewan. Jared, over to you.
Yes. So in addition to putting out some of those great numbers as it relates to 2022, we also updated our 2022 year-end reserves, had some fabulous growth here. We've seen a significant increase in our PDP, up to nearly 45 million barrels of proved developed producing reserves. And so really, what does that mean for Surge and its shareholders and investors, really show the backbone to our company. You can see here in the first column on the right side, the left column shows that the pure developed producing reserves are with $7.28 a share. That just means take existing production, turn off the lights, no value for Paul, myself, the management team here simply produce out the wells that exist. That's $7.28 a share. We're trading into [ about ] $9.40 today. So pretty much a PDP number there. Well, then let's book just a couple of years of drilling inventory, and that's the proved case. Well, that's worth nearly $14 a share, $13.72 a share. And then if we take just about 490 of our over or nearly 1,100 drilling locations we have to go after in Surge, just say 490 of those, not the 1,100. What are those work? Well, you put those in with the pro developed producing reserves that exist. Surge's worth is just gee over $22 a share, $22.37 a share based on our independent reaudited [indiscernible]. This is a process that's done externally. It takes several months. We started in September.
Many, many rigs as the external engineers. So we're really pleased to be able to present these independently evaluated numbers. From Surge's perspective here, our corporate guidance for 2023 continues to focus on maximizing our free cash flow generation and providing that to our shareholders. in sponsored with that acquisition, as Paul mentioned, nearly 15% free cash flow per share accretion. We increased the dividend nearly 15%, up 14% from $0.42 a share per year to $0.48 now. We're 25,000 barrels a day because we have that low corporate decline of 23% normally takes us $175 million to maintain that production base for the year. We're going to generate $335 million of cash flow off that production. So when you take out $175 million of capital, it's about $160 million of free cash available for our shareholders for the corporation this year. The dividend only represents about $45 million of that. So there's an incredible amount of free cash flow here that we're continuing towards the balance sheet for a few more quarters, and really pay our bank debt down to zero. What are we going to do in short are there are a couple of quarters later when we reach Phase 2, again, our net debt to $250 million. Well, we're going to double the distribution bucket for our shareholders from 25%, which is what the base dividend represents as a percentage of our free cash flow to 50%.
That's going to come out in things like increases to that base dividend, just like what we announced for the Enerplus deal, the potential for share buybacks. You can see sort of back in the market with an NCIB, a normal course issuer bid, buying back our shares when there's times of dislocation in the market, particularly, being there defending the share price. And then there's also the potential for special and variable dividends as commodity prices improve. Ultimately, targeting $175 million of net debt as we get towards our core terminal debt levels early next year in Phase III. It probably is worth noting here again that Surge is in the enviable position of having $1.4 billion in tax pools. What that means here in Canada is that we can shelter all of the great cash flows and free cash flow I just talked about from tax cash backs for another 4-plus years at current pricing. So it can really distribute a very tax efficient amount of free cash into our shareholders' hands over the coming years. This is it. I've done 4x for the most successful oil companies in Canada, and I'm just the lawyer. So I can tell you how simple this is, but it's difficult. So it's simple to say but difficult to get your assets -- hands on the kind of assets that we talk about here. What's our advantage?
Why is Surge the top performer and probably got a good chance to be the top performer in 2023 again? I'd love to say it's Jared and I. It's a lead conventional large on place, shallow, low-cost assets of waterflood while they outperform deep expensive type rock. That's it. So you'll see the Enerplus deal we just did. We chased those assets 7 years. Their beautiful long life water plugs that don't decline. What do they deliver? Free cash flow. Right. I'll go ahead slides. So as Jared showed you, there's 2 ways we know to value all company net asset value. Ours is $22.47 a share, and that's putting only less than half of the locations we have in inventory or in our engineering report. The other way is free cash flow yield. Surge is 1 of the top free cash flow yields in the country, around 22%, 24% free cash flow yield, 1 of the best in Canada. The macro is -- I'm going to change this slide soon. Investment in [indiscernible] sounds kind of, oh, yes, no big deal. That's going to stay at the top soon today. Massive oil supply shortage and it might a massive worldwide oil supply shortage. The data is zero putable crude. You see some of the top burns in Canada. Jeff Curry, earlier in the week, reiterated his call for $100 oil this year. Well, it's already almost mid-March. So it's only 9 months away. We agree on Raymond James call for $120 oil before the end of the year. We agree.
So all I'm saying is we've got 8 years of massive underinvestment, spending [ $400 ] billion when we used to spend USD750 billion a year as an industry. We've used up the strategic reserve. There is no excess oil into the ground in OPEC and the exciting thing is prudent -- Surge is 87% light medium gravity crude oil. We have no heavy oil and very little gas. What does well in inflationary and stalationary times, high interest rates and high inflation, oil. I changed the word at the top here. I know it sounds someone's slide, i.e., no National Bank, but Natural gas looks murky in Canada. I love it longer term. But right now, it looks like it's going to below $1 this summer again. Oil looks ridiculous. It looks like we have a worldwide shortage. I bragged about our asset quality. It's our secret sauce. It's our Kernel Sanders recipe. We have it and a lot of other people don't have it. And it's what -- and it makes sense, elite quality assets drive top financial results. This chart along the bottom there is permeability, tightness of rock to the left, deep expense of tight rock with huge tracks needed to -- and huge declines that doesn't waterflood. Well, why do I want those? With Surge get shallow conventional reservoirs, low-cost drilling, low declines and assets waterflood.
We'll look at the profit to investment ratio. PIR goes through the roof. The internal rate of return goes through the roof. And that's what Jared and I can point to, neither of us to an engineer, geologist, we can point to the asset quality is the real reason for Surge's outperformance. This is a great slide. And empirically, we created. jared is going to try and say empirically what I just told you with that other slide. Jared? Yes. So a lot of numbers on this slide. So really, what I'd point you to is the bottom well, which is the grand sum of the OIP that's original oil in place, meaning oil under the ground under surgeons control. After that Enerplus deal, as we spoke about in the past, we have over 3 billion barrels of net original oil in place under our control. Well, to date, we've only taken 7.7% of that oil out of the ground. Well, the big prize here is Paul spoke of when you get these larger OIT pools and you go after them in this conventional rock, you get more and more oil out. Well, what can you expect? Many of these conventional reservoirs under primary, meaning just going in and drilling a well, you can get upwards of 20% of that IP out of the ground.
Then we go in and do things like waterflood in areas like the Sparky. We've got fabulous [indiscernible] water flood, we have analog reservoirs that have seen 30%, 35% of the original oil in place produced out. So it's a huge prize here, going from 7.7% pulled out of the ground to date to upwards of 30% on waterflood. But let's step back and think about just a 1% change. So if we go from the 7.7% we pulled out to date to 8.7%. Simple math, that's 30 million more barrels out of the ground with a $40 net back of those barrels. That would be at a lower price, a little conservative day, but that's about $1.2 billion undiscounted cash flow that's equal to service enterprise value today. A 1% change in the recovery factor is the entire value of Surge today. So a huge prize for getting just small changes in those recoveries. So how are we doing that? Well, we're going after 2 of the top 4 plays in Canada, and we're spending nearly all of our capital here. South Saskatchewan and Sparky, we'll show you how those ranks here in a moment. Those are seeing over 90% of our capital this year and will average about 75% of our production from those areas this year, exiting this year at over 80% of our production from Southeast Saskatchewan and Sparky. So why are we so focused there?
What you can see here some new recent research from Peters & Co that came out a few weeks ago, continues to, as we presented in the past, Dr. Raymond James Research and a bank research continues to highlight surgeons plays as some of the best in Canada. You can see here that our Frobisher wells, which is sole Saskatchewan and the general conventional Southeast Saskatchewan are in the top 2 or 3 plays. Rounding up the top 4 is Surge's [indiscernible]. So we have exposure not only exposure to dominant operational positions in 2 of the top 4 plays in Canada. So the other 2, of course, are the Clearwater and the [indiscernible] like you may have heard of. It's Surge as 75% of our drilling inventory of those near 1,100 locations, 75% of those are sitting in the Sparky Saskatchewan. So Sparky play 8 years ago, it was 1,000 barrels a day for us. Today, it's tickling 11,000 barrels. It's a dominant position. See Edmonton to the north there Calgary to the south Highway 2 connecting them north, south. So for Edmonton, Southeastern lead to the Saskatchewan border, you have 11 billion-barrel plate trend. We found out 8 years ago, there's 4 billion barrels in the medium and light window. So that chart that we showed you, it says heavy oil. Ours is not heavy. Ours is about 25 API average. So it's definitely medium-gravity crude, and it gets a premium to WCS heavy differentials or pricing.
So we've been able -- we've got a field in here over the last 8 years, drilled 200 -- and this will be changed into 235 good wells in a row, growing it from 1,000 to 8,000 shallow conventional reservoirs of the 4 billion barrels in the medium and light window of the Sparky, Surge now controls 1 billion barrels of that 1 billion. We control it. It's ours. So we see 480 more locations. We think we can grow this to 15,000 to 20,000 barrels over the next 5 years. This chart will change as well. We say conventional heavy oil, no, it's going to say, conventional medium-gravity oil. And it's thrilling for us because we have very limited competition, Wells payout place in the first 2 years. And then we waterflood them, and we get not 120,000 barrels on primary. We get 400,000 barrels per well under waterflood for Sparky now with [indiscernible]. Our second top area here is Southeast Saskatchewan. We got back in here in late 2021 with 2 accretive acquisitions. So we've really had some great success here organically, particularly as Paul highlighted on the opener, the Steelman area, look a couple of great land sales there. We've added upwards of about 60 locations to go after in aggregate down there. And what does that mean? Well, we acquired those lands, and we drilled them immediately. And what do you see here? Well, from Peter's [indiscernible], they've listed the 6 wells we've drilled in there.
They were on production last year 2022. We're all some of the top wells in the entire province of Saskatchewan for all of 2022. So we are drilling the best wells in Saskatchewan. But what does that mean? It means we're drilling wells that are coming on here, as you can see, north of 400 barrels a day IP30. And these wells critically are paying out meaning getting all of our $1.1 million, $1.2 million drill cost back in the netback from those wells in 8 to 9 weeks. So as well as we're paying out in a matter of a couple of months. These are fantastic economics, top decile for the country, continent really need some of the best payouts you'll see, and we've got a huge inventory to go after in South East Saskatchewan wells like this. 275 locations to go after. We now have a dominant operating position in here. We have 8,000 barrels a day coming out of the broader operating area. We've got 1 rig dedicated to this area year-round. So we've got cost certainty and rig availability nailed down. Just to close out my component here on ESG continue to be committed to being a leader here and doing a better job talking about some of the good stuff we're doing here. we recently put out our second annual ESG report here in December. It's on our website, and I encourage you to take a look at it.
If it's an interest to you, really looking for projects that are win-win, things like our conservation, gas conservation project in Southwest Saskatchewan, put in a pipeline there, spent a grand total of $12 million. We're now producing a bunch of gas that was flared and it's highly economic for us, but it also conserves over 33,000 tons of CO2 a year. So Surge continues to be focused on abandonments, meaning we're claiming and returning wells to a natural state. Doing that at about a 200% rate meaning abandoning 2 wells for every 1 well that we drilled last year. So continue to focus here, and I would encourage you to look at that ESG report. I guess last slide here. I get up in the morning, and I want to be the top performer in the country. I've already been the CEO of oil companies for them, for the most successful ones of 4 different teams. I don't want to be the CEO of an oil company. I want to be the CEO of the #1 performing public oil live co in Canada and last year's Surge was. This year, we already look strong and going into this year, especially with the accretion from the Enerplus deals showing up in 2023, 15% accretive to free cash flow per share. But go back to that asset quality. Why are all these analysts picking Surge as their #1 pick or a top pick in all of Canada for oil. Why? There's 11 of the top, why are they doing it?
Because of our asset quality, the net asset value is $22.30 a share and 1 of the best balance sheets out there, 1 of the best free cash flow yields out there. So we have the hall in dish and the real key is asset quality. As Jared showed you, we have 2 of the top 4 plays in the country, shallow, conventional, low-cost plays. Our plays work at $50 oil. They look ridiculous at $78 oil or whatever it's time today. So that's our story. Our goal is be the top performer again this year, and I think we've got a good shot at doing it. We'd open it up just for any questions people might have.
Okay. I'm going to start with -- what do you think the biggest contributing factor to your increase in PDP NAV was?
Great question, actually. It's probably the best results I've ever had even better than we had in any 1 year during when we found the Bakken play at Crescent Point. So to have your PDP NAV, as you get bigger, 5,000, your 5,000 barrels a day and you have a big discovery. It can really move the needle. As you get to 10,000, 15,000, 20,000, 25,000 barrels a day, how your PDP NAND go up 107% in 1 year is unbelievable. So the oil price definitely helped. The price deck was $70 WTI last year, and it's $80 -- just over $80 this year. But with power costs going up dramatically, about 1/3 to half of that upside was taken away because power costs went up in the engineering report. So it helped, but I would say our 2 big movers, the 3 movers would be the Steelman discovery in Southeast Saskatchewan. We spent $9 million on a Crown sale there. That's those big wells Jared was showing you. And 9 months later, 10 months later in our engineering report, it's over $100 million of NPV. So we turned $9 million into $101 million in 9 months. But equally important as well was the Enerplus transaction. We paid $198 million -- we've owned it for 11 weeks. It closed in December. Today, it has an NPV for the PDP of $287 million. So we paid $198 million and the PDP 10 months or 10 weeks later, 11 weeks later, is $487 million. So those are the main factors.
Pretty good return on investment. And 1 other thing on that note, I noticed your recovery factor went up by almost 1% on your [indiscernible] report. Is that correct?
That's perfect, right? Because that's what Jared and I have been showing you for 2 years, the logical moving over of the total proof and the PSP over into PDP, and it goes at about 1% per year. And that's a good thing. That just shows you that our big loan place pools, that's why we delivered 1 of the best PDP increases per share of any oil company in Canada -- is the asset quality. And it goes like 1%, as Jared said, means is equal to our entire enterprise value on discounting cash, it's so valuable, 1% change on 3 billion is 30 million barrels.
Yes. Well, now that it's significant. And now we're starting to see that come through. So I was pleased to see that. So I don't -- I can One on the topic of NAV, et cetera, a lot of your peer group is trading at a significant premium to their PDP NAV and you're at 1.2x. What do you think is going to take for the market to actually wake up and start giving you to narrow that valuation gap? Given an [indiscernible] in that you're at 3x EBITDA, your free cash flow yield, 24%.
Unlike where we're trading because you see today, we put out the good quarter. We put up the best PDP NAV growth per share in the country. And the market, we've been -- I haven't seen it, but we're up at 1 point over 6% leading the entire country in stock price today. So -- it just proves the market is efficient, but you have to go execute and put up the good quarters like we just did. And as long as we keep delivering, I think you'll see it. One thing I would caution you on and any investors listening to this is gas companies are crowing about their gas net asset values and their growth, great. But gas price decks have gone from GLJ price deck is over $6 an Mcf for gas companies. Well, gas strip is about $2.40, $2.50 a share or $2.50 OCF. So I'm saying to you, be careful of companies that are gas companies, when you look at the oil -- our net asset balance is about $82 [indiscernible]. I think it is [indiscernible]. So all I'm saying is we're within $5 that we're within a split of that right now. So I just bring it up because our NAV is for oil, we're 87% oil.
And as you talk about kind of essentially a catalyst here for market recognition, it's also worth repeating that there's only a few days of Enerplus in our Q4 numbers. So we haven't even put all the quarters here full with Enerplus. So you can expect that in early May when we come up with our Q1, you'll see that inaugural quarter. So that should be, hopefully, another positive another lift for the Surge story.
Good point.
Yes. On that topic, your [ 45 ],000 BOE -- do you think we could see a little growth uptick on that? Or are you just going to stick to the 25 and your pay down debt, et cetera?
Yes. With us trading so far below our net asset value, if it's $22.30 a share. I think what we're going to do is just keep our production flat, increase our dividend probably in Q4 as we hit the second phase debt target and pay debt down. As we hit [indiscernible] -- it'd probably be in Q2, we hit our third debt target here. Remember, when we do that, when we hit the second one in Q4 this year, we could increase the dividend 100%. We wouldn't. I think Birchcliff probably regrets pumping there's 900% now. But we would probably increase the dividend, I'll say, 25% to 30% or something like that, plus keep paying the debt down, plus start the share buyback program, and then we expect to hit in 1 year, in just 1 year, we expect to not hit the Phase II. We expect to hit the Phase II and a Phase III, well, that means we could increase the dividend 200%. So it just shows you how much free cash we have, we're just being disciplined. We'll give a nice chunk to the shareholders on dividend, have a share buyback, but keep chunking it on to the debt, and we're going to reach a terminal debt target in Q2 of next year, so just over a year from now.
Okay. So that's what leads to another question here from the audience. As you become -- and continue to be the must owned in the sector, which I think you will be given your leverage to oil. You have the highest leverage to all of your peer group from what I can see. And I don't expect your production mix to change. Do you have any prospective institutional holders lamenting late entry but also having to pay a premium to the market to assemble a meaningful position. I don't think you're trading at a premium to market. So let's agree with that. For the fund, given that daily trading volumes could be a bit of a hinder, moreover more generalist funds and newer energy phones knocking at your door.
Yes, you're definitely seeing a significant increase in institutional interest. We were recently out in Toronto for a large energy conference at full day had to add more time on either side of that. So we are seeing significant interest there. As you think about the equity raise, we had massive interest institutionally in the equity raise that we did in concert with the Enerplus deal, went out to raise $40 million massively oversubscribed, came in at about $280 million in demand. We upsized it to a total of $80 million. We had over 30 top institutions come in and take a significant component of that equity raise [indiscernible]. We then did see them in the market following on buying. So we are seeing increased interest and demand in buying from many of the top institutions.
And I think most people are fairly constructive on oil. We've taken a little bit of a breather going into the end of last year and early this year, and typically, January is not the greatest month for energy stocks. But have you seen a little -- have you seen any, I guess, those people have bought on your deal. Have you seen some rollover or if they just continue to buy as you come down a little bit more?
Yes, as far as you've been able to tell from the public disclosure and discussions with those buyers, they've been in the market buying and filling in those positions here when the opportunity presents itself.
Sorry, I had such a difficult time asking that question. And -- okay. Someone is asking -- I don't really think this applies to your type of reservoir, but will Surge [indiscernible] like these spider wells that LYCOS is doing in this Sparky?
Yes. So I think a differentiator we're trying to make there is there's becoming a lot of your trust in the medium and then ultimately, the heavy window of the Sparky from little guys like [indiscernible] is up to the biggest producer in Canada and CML. So what folks are often asking us about is the fish phone design. We're going in and putting the drying pinkish mainline with a bunch of spurs or bones of it. That isn't something we're really policing a Surge. And that's, again, back to the company and the way we've designed it [indiscernible] under rock quality. We've got great permeability and great confident wrong. The Sparky is sitting at about 700 meters depth. So we have great competent rock. We don't have sand issues. So really, those folks are drilling those fish full wells to deal with many of those bones plugging up the sand. We don't have that problem. But what we are doing here is attacking this halo, right? You can see the light gray, call it, the 18 to 20-degree oil window, the heavier end of the medium spectrum.
We're going in there and drilling -- we drilled 6, 7 leg wells in here. We are looking at tightening the anger-like spacing and going to potentially 10 or 12 leg wells in here and further increasing the productivity. So this is definitely an area of focus for us and something we'll be attacking with that open hole multi-let technology.
Okay. Okay. So that leads -- yes. So some of the -- are you still employing the multi-like horizontals in the -- for your new CapEx if yes, as a follow-up, can you talk about anything we've learned about longer-term decline rates in these wells?
Yes. So I think I answered a good component of that. But yes, definitely something we're in to look at and is seeing a larger and larger piece of the budget. But we do want to continue to focus using the frac single legs in the light and medium window. Those wells are fantastic, and they really are a interval to waterflood.
We've had over 1 million barrels of waterflood bookings in just a couple of pools, booking wells that are usually 120,000 barrels of [ EUR ] on primary upwards of 400,000 barrels with an injector on either side in multiple Sparky pools this year. So the horizontal multi-frac waterflood is working with in the Sparky. So we're not going to pivot 100% to just doing the multi legs. -- we're going to be very tactical in where we apply multilegs versus the single-leg fracs to maximize the economics for our shareholders. So I think that hopefully answers most of that question.
I think it does yes. And just 1 question on the Sparky reservoir. I mean, obviously, it's water floodable and you have a waterflood at the majority of it. But is it a good candidate for tertiary recovery as well?
Yes, I'd say there's probably potential there. Again, we are in the enviable position where we're still drilling this primary and starting waterflood. But I'm sure in the decades to come, things like CO2 flooding that's working great in Saskatchewan, other places, maybe candidates here, polymer floods, things like that. But we've got so much runway in front of us on primary waterflood, the tertiary recovery is way out there. You're not even thinking about that. Yes, we haven't -- this isn't something that's been pick clean. It needs tertiary recovery. There's so much to do here.
Yes. Okay. So production guidance for -- we just kind of answered that already. People are asking if metals still holding. I don't know if that's something you comment or not.
Yes. As far as we're where he is, but not something we could comment on otherwise.
Okay. And then see what do you expect your royalty rate and DD&A rate to be this year?
Our royalty rate should be about 8.5%. Our DD&A expense should be about $18 to $19 per barrel.
Okay. And hedging program, what does that look like for this year?
Yes. So it's not in the deck. It's on our website. Take a look at the back appendices there for some more detail. But at a high level, what we've done is taken some of those wide collars we had, particularly in Q2 and Q3 of this year, we had USD65 WTI floors, upwards of $110 to $130 ceilings for pennies, we took out the ceilings. So for Q2 and Q3, we really just own $65 puts. So you've got a lot of option value, all the upside there for WTI in the next coming quarters.
Okay. On M&A, given the choppy market and given that the outlook for gas is not good, really, I don't think, for at least another year for [ AECO ] anyway. A lot of your peers are a little bit gas here and we'll see their production. Their cash flow numbers come down. Do you expect to see more assets for sale? And are you seeing more for sale right now? And you guys have always been pretty astute to picking up things when other people are struggling a little. So what does the atmosphere look like right now?
We don't see that many corporates that meet our asset criteria. As you saw and just you know, we faced those Zener Plus assets for 7 years. They're beautiful long life water plugs that fit us perfectly, so 7 years later, we finally got them. We don't see many other companies with assets of that quality. So I think what we'll do is go look in particular for companies that are stressed financially that did takeovers for cash and shares and go in and look to clock elite reservoir.
So I think there's a better chance for us to find good reservoirs in our core areas rather than corporates or private cos -- so right now, yes, look for us to just go out and grind out the next 2, 3 quarters, our Phase II debt target. And if we do see an asset that pops up, particularly somebody who's taken on some debt on a deal or something, we would go in probably asset specific and try and pluck that reservoir out of that then.
Staying in your core areas.
Staying in core, yes.
Okay. And the other thing I was going to ask true, let's see, touch the M&A and KOL last year. When do you estimate natural gas prices and NGL prices will be this year, given you don't produce many of them. I don't know if you have an answer. I mean, what I heard for [ AECO ] prices could get as low as zero for the summer. And -- but what are you seeing on NGL prices?
Yes. And again, go prices have generally been under pressure. They only make up a fraction of our production. So condensate continues to be strong. The rest of the NGLs, pentane, butane, propane seem to be under pressure as well, much like gas. We've seen a lot of these guys drilling up north for the oil strip in the [indiscernible] in the oil, and that's put a lot of pressure on gas and some of the associated liquids.
Yes. Yes. I think that's 1 of the biggest problems and no one seems to be slowing down their capital in particularly I mean the -- but I do understand that there's going to be reaching full storage by the -- in Alberta, anyway. So -- okay. At what price can you sustain your dividend like I'm assuming down to about $60. Can you still sustain?
Yes, somewhere in the $60s is a good number, depends on FX, gas price, all the other inputs, right? But depending on where the dollar continues to go and gas prices and differentials have been a huge help for us here. They blew out Canadian oil differentials go, came right back in. They continue to tighten. So that will be another tailwind that helps drop that number down. But yes, something in the mid- to low $60s is a good estimate, and that's for an annual but for 12 months, not 1 day or [ 2 ] weeks.
Okay. And I would think with the SBR refill, et cetera, that should continue to narrow differentials even more?
Yes, exactly the folks that manage the SPR in the States came out and said they want to be buying up to 60 million barrels.
Most of that heavy and mediums, which will play well into WCS. And that combined with TMX, the new pipeline coming on up here that goes over to the West Coast, giving us access to Asian markets, there was a lot of reasons to be bullish on that WCS differential and I'll further drop that breakeven.
Yes. And then just again, for those people who are concerned -- or just on a blowdown scenario. What are your -- when does the Frobisher become an economic to drill as well as your Sparky?
Frobisher probably the best play in North America over the last 75 years, and it's based on the high flush rates, the quick payouts and the low-cost drilling, you don't need to frac them. We've had some of the wells there still at [ 1.4 ] in this, but we've actually seen a bit of a softening of the inflation. I think they'll gravitate back to $1.2 million all in and payout as Jared said, some of our wells are paying out in 2, 3 months.
So what shocked me just the other day at our Board meeting 2 days ago to approve the Q4, we now have over 200 brokers locations. We're only drilling 30 wells in Saskatchewan all year this year. So we have a [indiscernible] deal. We have LIDEC/KISB. So all I'm saying is I think it's been 1 of the best plays in all of North America because of the low-cost drilling, the flush rates and there's an active aquifer. So it's like a built-in water play pushing the light oil idea, highest netbacks in Canada. So yes, it's an amazing play.
Yes. I think what you asked about that, I mean, this chart here is essentially the inverse of that question. When we think about COVID and [indiscernible] oil was 30 and 40 WTI. We -- we looked at rig counts and where were guys drilling, and they were drilling in pretty much 3 or 4 places. They were drilling in Sparky, they were drilling in [indiscernible], and they were drilled to Clearwater. Those are the plays in the tops and the only players that work at those low prices, and 75% of our inventory is in most places.
Okay. Yes, I saw your breakeven would be fairly low. Another question. Okay. Safety and health. You guys haven't had any major accidents [indiscernible]?
No, we have 1 of the lower trip total recordable interest frequency, 1 of the lowest scores in the industry. We target top decile numbers there. It is 1 of the metrics that influences management compensation. So we are highly focused on maintaining zero incidents where we can. And nothing new.
We would even do it if we weren't comped a lot for it, just.
You don't have to be paid to keep people alive.
Exactly. So the importance corporately for the board now. We are focused on it.
Okay. any land sales coming up that you might be interested in?
Yes. We have sales [indiscernible], South East [indiscernible]. We will be killed by our land EP if we talk about it, Margaret make us, but as we -- just like we have the [indiscernible] sale about 9, 10 -- 10, 11 months ago, where we drilled the best wells. We added 40 beautiful [indiscernible] there. We have some more in both our 2 key core areas.
Okay. Well, we're looking forward to hearing the results of those sales when will we know?
On the next couple of months, and we've already acquired the next [indiscernible] we think, look like to the Steelman sale. So those wells will be drilled right out of the shoot in Q3, programs sometime in early July. So that has upwards of 25 more locations and we have vertical [indiscernible] wells updip that have done over 150,000 barrels. So we're extremely excited about that new [indiscernible] play.
Okay. So you surpass done a phenomenal job considering when you bought it, you really didn't think it was much, right? Like you guys with standard kind of [indiscernible].
Yes. The Astra deal and Fire Sky deal -- like for us, it'd be 8,000 barrels now as we are over 8,000 this week in our weekly production report. 2 year, 1.5 years ago, we are zeroing Saskatchewan and to go get dominant high-quality assets like the Enerplus assets to backfill the drilling has been exceeding.
[indiscernible] drilling passion.
[indiscernible], those assets, what do we think of those? Yes, those are -- again, to go to Jared's numbers that [indiscernible] shows you. I'd love that asset. If I got spun out in that today, it's a classic. It's 600 million barrels of oil in place, less than a 6% recovery factor. The wells are coming on still have 40%, 45% oil cut to them. And we have wells offsetting injectors. So we started to go in and do injectors. Now we have drilled it much because the wells cost about $3.5 million, $3.8 million. And we will be drilling it. We have 120 lots there. We love it. We took wells offsetting injectors that have done 600,000 barrels of light oil and they're flat at 65 barrels a day. Phenomenal asset. We would say that we would drill it in a higher commodity price environment like we're seeing now. So above 75. So look for us to add a few of those wells either this year or next year into our budget. There are phenomenal wells that pay out in less than 1.5 years at these prices, we like it.
You have things, obviously, with that have better economics right now than that.
Schoeman might be some. It's down to 1,200 barrels a day, pretty flat. We like it, but that might be 1 we sell the all of it. [indiscernible] is about 3,000 barrels of beautiful long length waterflooded light oil. Now the OpEx creeps up over time as you quit drilling it. So to go up there and drill a 10-well program would be huge for [indiscernible] and that's probably something we look at next year.
Okay. And can you comment on current -- we talked about -- [indiscernible], is asking about your current hedge portfolio moving into 2023 from Q4, but you kind of already answered that. So pretty much.
Yes, to go to the corporate presentation on the website at the back, there's a lot of great detail there as well.
Okay. And then I think that's kind of for the questions.
Great questions. Thanks for your time, guys. Really appreciate it. And look for us to put out another strong quarter in Q1 here in 8 weeks, 9 weeks. So I think we report in May.
May 3rd.
May 3rd.
A good quarter and -- just frankly, our focus is in the next 2 to 3 months. Debt pay out, hit the next debt target in probably early Q4 and lumped the dividend. We could have open 100%, but we'd probably do something like 25%, 30% and just keep chunking it up to the debt, start our share by the program as well, just have a ready and times when the market's weak, jump in and buy some stock.
So you've done a fantastic job. Thank you for -- then. And did I miss anything? Do you think for my questions?
We're good.
Okay. Thank you, guys. I appreciate the time as always, and we look forward to hearing more after.
Thank you.
Thanks.