Attached files
EXHIBIT 99.2
SYNERGY RESOURCES CORPORATION
DELIVERING ENERGY
DELIVERING RESULTS
April Corporate Presentation
Actual results may differ materially from those currently anticipated due to a
number of factors beyond the reasonable control of the Company. It is important
to note that actual outcomes and the Company's actual results could differ
materially from those in such forward-looking statements. Factors that could
cause actual results to differ materially include misinterpretation of data,
inaccurate estimates of oil and natural gas reserves, the uncertainty of the
requirements demanded by environmental agencies, the Company's ability to raise
financing for operations, breach by parties with whom we have contracted,
inability to maintain qualified employees or consultants because of compensation
or other issues, competition for equipment, inability to obtain drilling
permits, potential delays or obstacles in drilling operations and interpreting
data, the likelihood that no commercial quantities of oil or gas are found or
recoverable, and our ability to participate in the exploration of, and
successful completion of development programs on all aforementioned prospects
and leases. Additional information on risks for the Company can be found in
Company's periodic filings on Edgar with the US Securities and Exchange
Commission.
www.synergyresourcescorporation.com
20203 Highway 60
Platteville, CO 80651
970-737-1073
Stock Symbol: SYRG
Management
Edward Holloway
President, Chief Executive Officer, Director
Mr. Holloway has been a leading oil and gas executive in the Rocky Mountain
region for over 25 years. He co-founded Cache Exploration Inc., an oil and gas
company that drilled over 300 wells, and sold its assets to LYCO Energy
Corporation in 1987. He rebuilt Cache Exploration and sold the entire company to
Southwestern Production a decade later. He then co-founded Petroleum Management,
LLC and Petroleum Exploration & Management, LLC. Collectively, these companies
distribute over 25 million gallons of fuel annually and own/operate over 70 oil
and gas properties throughout Colorado and Wyoming. Mr. Holloway has particular
expertise in the Denver-Julesburg Basin, having served on the Board of the
Denver-Julesburg Petroleum Association. Mr. Holloway is also a past President of
the Colorado Oil & Gas Association. Mr. Holloway graduated from the University
of Northern Colorado with a B.S. in Finance.
William E. Scaff, Jr.
Vice-President, Treasurer, Director
Mr. Scaff has over 20 years experience in all aspects of oil and gas
finance, exploration, production and marketing. Previously, he oversaw financial
and credit transactions for Dresser Industries, a Fortune 50 oilfield equipment
company. After serving as a regional manager with TOTAL Petroleum, Mr. Scaff
co-founded Petroleum Management, LLC, in 1997 and Petroleum Exploration &
Management, LLC in 2001. Over the past decade these companies have achieved
significant success, and have operated oil and gas properties as partners with
some of the world's largest energy companies. He is a recognized leader in oil
field management and in operating wells to maximum efficiency and longevity. Mr.
Scaff is on the Board of Trustees of the Colorado/Wyoming Petroleum Marketers
Association. Mr. Scaff graduated from the University of Colorado with a B.S. in
Finance.
Board of Directors
Edward Holloway William E. Scaff, Jr.
--------------- ---------------------
Director - June 2008 Director - June 2008
Raymond E. McElhaney Bill M. Conrad
-------------------- --------------
Director - May 2005 Director - May 2005
R.W. "Bud" Noffsinger, III* Benjamin J. Barton*
--------------------------- -------------------
Director - June 2008 Director - September 2009
Rick Wilber*
------------
Director - June 2008
Introducing newest board member:
George Seward*
--------------
Director - July 2010
Prior to joining the Board, Mr. Seward was most notably a co-founder and Board
member of Prima Energy (formerly Nasdaq: PENG), guiding the company from
early-stage development to the sale to Petro-Canada for $534 million. Prima
Energy created tremendous shareholder value, for example $20,000 worth of
original stock in 1980 was valued at $3,000,000 at the time of sale in 2004. Mr.
Seward also serves as President of Pocito Oil and Gas (a limited production
company in Northeast Colorado, Southwest Nebraska and Western Kansas), President
of George Seward Alternative Energy, Partner in Schramm Feedlot (a 25,000 head
cattle feeding operation), Founder of Power Genetics (a cattle verification
processing organization), and holds his Colorado Real Estate Brokers License
(currently licensed with Cummings Realty). Mr. Seward graduated from Colorado
State University in 1973 with a major in Political Sciences.
* Denotes an Independent Director
Company Snapshot
Synergy Resources Corporation is an independent operator in the exploration and
production of crude oil and natural gas focusing on the Denver-Julesburg Basin
(the "D-J Basin"). Synergy identifies opportunities, acquires acreage, drills
and develops producing wells by leveraging its extensive experience and
relationships in the D-J Basin. Synergy Resources Corporation is a D-J Basin
Pure Play Operator with...
- Approximately 116,000 gross acres under lease (approximately 100,000 net)
- 60 wells consisting of 48 producing wells, 2 shut-in wells and 10 wells
in-completion
o Net Wells: 46.1
o Average Working Interest: 75%
o Synergy currently operates 88% of its wells
- Drilled and completed 36 wells under $500,000 cost per well
average
o Recently drilled 9 additional wells which are in-completion stage
- 200+ Lower-risk drilling locations currently identified
o In process of permitting 100+ wells in the Wattenberg Field
- Potential 20+ Horizontal Niobrara Wells in the Wattenberg Field
- Estimated 75,000 BOE reserves per Vertical Wattenberg Well
- Favorable oil and gas contracts in place
o Management has an excellent relationship with Suncor Energy and
Duke Conoco Phillips (crude and natural gas purchasers)
Creating Shareholder Value
Ticker Symbol: SYRG.OB ($4.70/shr closing price 04/05/11)
Values in (000s)
Cash (as of 02/28/11) $21,162
Market Capitalization (as of 03/08/11) $160,209
Shares Outstanding (as of 04/05/11) 34,087
Warrants Outstanding (wtd avg ex price $5.92) (as of
02/28/11) 15,247
Options Outstanding (wtd avg ex price $5.32) (as of
02/28/11) 4,270
Insider Ownership (as of 02/28/11) 23.4%
August 31 Fiscal Year-End
Reserve Engineer: Ryder Scott & Company
RECENT DEVELOPMENTS
Jan 12, 2011 - Closed on $18mm Private Placement ($16.7mm net) at $2.00 per
share.
Mar 21, 2011 - Closed on monetization of 2,384 net acres for $5,244,517 or
approximately $2,200 per acre.
Mar 21, 2011 - Closed on leases totaling 89,805 gross acres (approx 80,274 net).
Also acquired 5,724 acres at the Colorado state oil and gas auction.
March 31, 2011 - All $18mm in convertible promissory notes has converted into
common stock.
Recent Developments
D-J Basin Facts
o The Denver-Julesburg Basin (D-J Basin) is a hydrocarbon-rich area centered
in northeast Colorado that extends into southeast Wyoming, western
Nebraska and Kansas.
o The D-J Basin includes the Niobrara shale formation, which is showing
promise to be the next prolific horizontal resource.
o Relative to other producing regions, the D-J Basin is considered
a "Legacy Top 10 U.S. Field"
o The Wattenberg Field (in the D-J Basin) is the 7th largest field
in the U.S. in terms of proved gas reserves and 9th in production.
o It also ranks 18th in oil reserves and 26th in production with over 20,000
wells drilled.
o In late 2005, a change to 20 acre spacing in this field is estimated to
add an incremental 1.6 trillion cubic feet to the recoverable reserve
base.
Current Producers in the Wattenberg and D-J Basin
Some of the large independents active in the region are giving further
validity to the play:
o Chesapeake Energy Corporation (NYSE: CHK) - Market Cap 21.21B
- Recently sold part of their interest in the Niobrara for over
$4,800 per acre total consideration
o Noble Energy (NYSE:NBL) - Market Cap $16.92B
- Has 6 vertical rigs and 2-3 horizontal rigs in the region,
expanding to 5 horizontal rigs in 2011
o EOG Resources (NYSE: EOG) - Market Cap $29.34B
- Has 3 rig drilling program in the region and plan on 40 new wells
in 2011
o Anadarko Petroleum (NYSE: APC) - Market Cap $40.58B
- Plans to drill 470-500 vertical wells, 20-30 horizontal wells,
and refrac 500+ zones in 2011
o Petroleum Development Corporation (NasdaqGS: PETD) - Market Cap $1.10B
o EnCana (NYSE: ECA) - Market Cap $25.66B
o Marathon Oil (NYSE: MRO) - Market Cap $37.52B
- Entered into a joint venture with Marubeni Corp, in which a
subsidiary of Mauribeni will pay $270 million for a 30% working
interest in MRO's 180,000 net acres in the Niobrara formation
equating to roughly $5,000 per acre.
Source: Clouser, Gary. "The Denver-Julesburg Basin Delights." Oil and
Gas Investor, November, 2007. and company investor presentations
Market values as of April 4, 2011
------------------------------------------------------------------------
Wattenberg Field - D-J Basin
Niobrara potential exists in the entire basin, not just the Wattenberg
field
Synergy Resources Corporation 45 Wells Drilled (40 Completed)
o Wattenberg Field
o TK Farms Wells-Sec.36, T7N, R66W- 5 wells in production
o Northridge Wells-Sec.4, T5N, R66W- 6 wells in production
o Wiedeman Wells-Sec.32, T6N, R66W- 4 wells in production
o Meyer Wells-Sec.21, T5N, R66W- 7 wells in production
o State Wells-Sec.16, T4N, R67W -8 wells in production
o M&T Farm Wells- Sec.10, T6N, R65W - 6 wells in production
o Pratt Wells- Sec.29, T1N, R68W- 9 wells drilled (5 in completion)
Strengths of the Wattenberg Field
o Low drilling and completion costs
- Estimated $550,000 per well
o Rapid return on investment
- 8 to 18 month payback
o High success rate of drilling
- Over 99% of the wells in the Wattenberg Field are completed
o Rich in drilling opportunities
- 20 acre spacing
o Low lifting costs
- Less than $3 per barrel
o Natural gas rich in liquids
- High BTU content
o Long life production and reserves
- 30 years +
o Takeaway capacity has been enhanced in the Rocky Mountain Region
New Technology
Synergy Resources Corporation is at the forefront of applying new technology to
improve drilling efficiency, to reduce costs and to maximize well production
including:
o The use of directional drilling,
- reduces drilling costs, increases drilling success rates and
reduces environmental impact
o New well completion and stimulation techniques
- can triple the extraction of reserves over the life of the well
o New techniques to increase the flow rates of wells
- increases cash flow and investment returns
Source: Schlumberger Ltd.
Newly Acquired Acreage
o In March, completed addition of 89,805 gross acres (approximately
80,000 net)
o Also acquired 5,724 acres in Larimer, Park and Yuma Counties at
the Colorado state oil and gas auction
o Now one of the largest pure play D-J Basin acreage holders with
116,000 gross (approx 100,000 net)
Acreage and Well Growth
1Q/Nov. 2Q/Feb. 3Q/May 4Q/Aug. 1Q/Nov. 2Q/Feb.
2009 2010 2010 2010 2010 2011
--------------------------------------------------------
Gross Acres 7,210 13,301 13,461 13,517 19,792 116,000
Net Acres 6,670 11,075 11,118 11,174 13,556 100,000
Gross Wells 2 6 13 24 46 60
Net Wells 0.75 3.8 9.1 16.8 32.6 46.1
Revenue Growth Per Quarter
1Q/Nov. 2Q/Feb. 3Q/May 4Q/Aug. 1Q/Nov. 2Q/Feb.
2009 2010 2010 2010 2010 2011
--------------------------------------------------------
Oil $46,205 $198,392 $342,594 $854,372 $1,153,779 $1,631,905
Gas $ 6,581 $137,333 $264,659 $308,308 $ 289,816 $ 401,782
Wattenberg Vertical vs D-J Basin Horizontal Niobrara Well
Vertical Horizontal
D-J Basin Niobrara
Well Well
----------------------------------------------------------------
Cost to Drill and Complete Each Well $600,000 $3,300,000
# of Wells 5.50 1.00
----------- -------------
Total Cost To Drill & Complete Wells $3,300,000 $3,300,000
Est. Ultimate Recovery (EUR) Per
Well (BOEs) 75,000 300,000
# of Wells 5.50 1.00
----------- -------------
Total EUR in BOEs 412,500 300,000
----------------------------------------------------------------
----------------------------------------------------------------
Assumptions:
Oil Market Price $90.00 $90.00
Gas Market Price $4.00 $4.00
Mix of Oil 60% 60%
Cost to Re-Fracture Stimulate
(included in NPV) $150,000 $0
Assume Re-Fracture Every 5 Years Yes No
Net Revenue Interest 80% 80%
Production Tax Rate 11% 11%
Time Value of Money Discount 10% 10%
Gross Net Present Value $1,140,000 $7,543,000
# of Wells 5.50 1.00
----------- -------------
Total Gross Net Present Value $6,270,000 $7,543,000
Success Rate (Probability) 100% 60% - 80%
Adjusted NPV Using Mid-Point of
Probability $6,270,000 $5,280,100
----------------------------------------------------------------
Assumptions
o Does not include lease costs
o Vertical D-J Basin Well is modeled upon producing a single zone
Codell well with two refracs
Source: Beskow, Marty. Northland Capital Markets Equity Research.
February, 2011.
Summary
The management team has a very well-defined and clear plan for creating
shareholder value which includes:
- Continuing to expand our acreage footprint
- Utilizing an aggressive program of drilling oil and gas wells in
proven areas with a relatively predictable return and low-risk
history leveraging the management teams experience and expertise in
the Basin
- Leave the Niobrara potential behind pipe until the best practices
are vetted out by the larger players
- Move forward to a listing on a national exchange
