Attached files
EXHIBIT 99.1
Synergy Resources Reports Fiscal First Quarter 2013 Results
Revenues up 86% to $8.3 Million, Driving Operating Income
up 119% to $3.5 Million and Net Income of $0.04
per Share
Company to Host Investor Conference Call Today, January 9, 2013 at 12:00 p.m. ET
PLATTEVILLE, Colo., January 9, 2013 -- Synergy Resources Corporation (NYSE Mkt:
SYRG), a U.S. oil and gas exploration and production Company focused on the
Denver-Julesburg Basin, reported its fiscal first quarter results for the period
ended November 30, 2012.
First Quarter 2013 Financial Highlights vs. Same Year-Ago Quarter
o Revenues increased 86% to a $8.3 million
o Operating income improved 119% to $3.5 million
o Net income increased 38% to $2.2 million or $0.04 per share
o Adjusted EBITDA (a non-GAAP metric) totaled $6.0 million, up 107%,
representing a 73% return on revenue
o At November 30, 2012, cash and equivalents totaled $12.5 million,
borrowings were $5.5 million and available credit facility was $41.5
million
First Quarter 2013 Operational Highlights
o Net oil and natural gas production increased 89% to 150,909 barrels of
oil equivalent (BOE), averaging 1,658 BOE per day versus 876, as
compared to the same year-ago quarter
o As operator, drilled 25 vertical wells and brought 15 into production
during the quarter, increasing the total number of wells drilled as
operator to 132, with 112 brought into production
o Reached agreement to acquire Orr Energy, closed on December 5th,
adding to the Company's acreage and production profile in the core
Wattenberg Field and Northern extension of this field
o Participated with Encana Corp in six vertical wells that were brought
on-line (working interests of 25% - 66%)
o Participated with Bill Barrett Corp in two horizontal Niobrara wells,
one drilled to the B Bench and the other drilled to the C Bench
(working interests of 12.5%)
o As of December 31, 2012, the Company had completed, acquired or
participated in a total of 250 producing oil and gas wells, and was
working to bring on-line an additional 23 wells which had been drilled
during the quarter.
First Quarter 2013 Financial Results
Revenues totaled $8.3 million, up 23% from $6.7 million in the previous quarter
and up 86% from $4.5 million in the same quarter a year ago. The year-over-year
improvement was attributed to an 89% increase in production, primarily from the
new wells brought on line, offset by a 2% decrease in the realized average
selling price per BOE. During fiscal Q1 2013, average selling prices were $81.03
per barrel of oil and $4.27 per mcf of gas, as compared to $83.03 and $5.23,
respectively, a year-ago.
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Operating income increased to $3.5 million, up 4% from $3.4 million in the
previous quarter and up 119% from $1.6 million in the same year-ago period. Net
income increased to $2.2 million or $0.04 per basic and diluted share, up 15%
from $1.9 million or $0.04 per basic and diluted share in the previous quarter
and up 38% from $1.6 million or $0.05 per basic and $0.04 per diluted share in
the same year ago period. Fiscal Q1 2012 did not include any income tax expense,
while fiscal Q1 2013 included a deferred tax expense of $1.3 million (equivalent
to $0.03 per share).
Adjusted EBITDA increased to $6.0 million, up 20% from $5.0 million in the
previous quarter and up 107% from $2.9 million in the same year-ago quarter.
This represented a 73% return on revenue in the first fiscal quarter of 2013, up
from 65% return in Q1 in 2012.
As of November 30, 2012, the Company's cash and equivalents totaled $12.5
million, as compared to $19.3 million at August 31, 2012. At November 30, 2012,
there was $41.5 million available to borrow under the revolving line of credit.
The following table presents certain per unit metrics that compare results
of the corresponding quarterly reporting periods:
--------------------------------------------------------------------------------
Three Months Ended
------------------------------------------------------
Per Unit Metric November 30, 2012 November 30, 2011 % Change
--------
Sales volumes - oil 80,301 110%
(Bbls) 38,277
Sales volumes - gas (Mcf) 423,646 248,486 70%
Sales Volumes - BOE 150,909 79,691 89%
BOEPD 1,658 876
Revenue (in thousands)
Oil $ 6,507 3,178 105%
Gas 1,807 1,301 39%
--------------------- ------------------
Total $ 8,314 4,479 86%
Average sales price - oil ($/Bbls $ 81.03 $ 83.03 -2%
Average sales price - gas ($/Mcf 4.27 5.23 -19%
Average sales price - ($/BOE) 55.09 56.20 -2%
Lease operating expense ($/BOE) $ 3.47 $ 2.67 30%
Production taxes ($/BOE) 5.40 5.08 6%
DD&A expense ($/BOE) 15.37 15.23 1%
G&A expense ($/BOE) 7.36 11.79 -38%
--------------------------------------------------------------------------------
* "Bbl" refers to one stock tank barrel, or 42 U.S. gallons liquid
volume in reference to crude oil or other liquid hydrocarbons. "Mcf"
refers to one thousand cubic feet. A BOE (i.e. barrel of oil
equivalent) combines Bbls of oil and Mcf of gas by converting each six
Mcf of gas to one Bbl of oil.
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Management Commentary
"We remained very active in our vertical drilling program in the first quarter,
drilling all 25 of our vertical wells we had planned on budget and ahead of
schedule," said Synergy Resources President and CEO Edward Holloway. "We
extended the program with two additional vertical wells drilled in December.
Completion activities on these wells are underway, with initial production from
these wells expected in the second quarter. This accelerated pace now allows us
to focus on our horizontal drilling program for the remainder of this year.
"This horizontal drilling program includes up to four horizontal wells to be
drilled for our own account, with an anticipated start date in fiscal Q3. Our
2013 capital expenditure plans calls for participation in 10 non-operated
horizontal wells. However, recent discussions with other major operators
indicate an acceleration of horizontal drilling plans in the Wattenberg field
and we have been given notice on 16 wells. Fourteen of the potential wells are
in the Wattenberg Field and two are in the extended area of the field.
"We recently were able to significantly increase our borrowing facility to $150
million, with an initial borrowing base of $47 million and a maximum interest
rate of LIBOR plus 3.25%. This expanded line was used to close the acquisition
of Orr Energy, which added 36 wells producing an estimated 360 BOE per day. We
are now reviewing operational status of these wells to determine ways to further
stimulate production. We are also evaluating seismic data on the undrilled 1,005
net acres in Grover, Colorado that we acquired from Orr, in order to determine
where and when we will begin drilling. We also initiated our commodity hedging
program which will continue to be put in place over the next several months. Our
initial hedge covering approximately 15% of production consists of swaps
covering 24 months with an average price of $91. We expect to ultimately hedge
in excess of 45% of our annual production.
"Altogether, it was another strong quarter for Synergy which not only
demonstrated increasing production and continued high success rate with our
drilling program, but more importantly substantially broadened the foundation of
our operational base in one of the country's more prolific oil and gas fields.
This puts us on course for significant sequential growth during the remainder of
the fiscal year."
Conference Call
Synergy Resources will host a conference call later this morning, Wednesday,
January 9, 2013 at 12:00 p.m. Eastern time (10:00 a.m. Mountain time) to discuss
its fiscal first quarter 2013 results. President and CEO Ed Holloway, Vice
President William Scaff, Jr. and CFO Monty Jennings will host the presentation,
followed by a question and answer period.
Date: Wednesday, January 9, 2013
Time: 12:00 p.m. Eastern time (10:00 a.m. Mountain time)
Domestic Dial-In Number: 1-877-941-1427
International Dial-In Number: 1-480-629-9664
Conference ID#: 4586451
The conference call will be broadcast simultaneously and available for replay
here and via the investor section of the Company's web site at www.syrginfo.com.
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Please call the conference telephone number 5-10 minutes prior to the start
time. An operator will register your name and organization. If you have any
difficulty connecting with the conference call, please contact Justin Vaicek of
Liolios Group at (949) 574-3860.
A replay of the call will be available after 3:00 p.m. Eastern time on the same
day and until February 9, 2013.
Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay pin #: 4586451
About Synergy Resources Corporation
Synergy Resources Corporation is a domestic oil and natural gas exploration and
production Company. Synergy's core area of operations is in the Denver-Julesburg
Basin, which encompasses Colorado, Wyoming, Kansas, and Nebraska. The Wattenberg
field in the D-J Basin ranks as one of the most productive fields in the U.S.
The Company's corporate offices are located in Platteville, Colorado. More
Company news and information about Synergy Resources is available at
www.syrginfo.com.
Important Cautions Regarding Forward Looking Statements
This press release may contain forward-looking statements, within the meaning of
the Private Securities Litigation Reform Act of 1995. The use of words such as
"believes", "expects", "anticipates", "intends", "plans", "estimates", "should",
"likely" or similar expressions, indicates a forward-looking statement. These
statements are subject to risks and uncertainties and are based on the beliefs
and assumptions of management, and information currently available to
management. The actual results could differ materially from a conclusion,
forecast or projection in the forward-looking information. Certain material
factors or assumptions were applied in drawing a conclusion or making a forecast
or projection as reflected in the forward-looking information. The
identification in this press release of factors that may affect the Company's
future performance and the accuracy of forward-looking statements is meant to be
illustrative and by no means exhaustive. All forward-looking statements should
be evaluated with the understanding of their inherent uncertainty. Factors that
could cause the Company's actual results to differ materially from those
expressed or implied by forward-looking statements include, but are not limited
to: the success of the Company's exploration and development efforts; the price
of oil and gas; worldwide economic situation; change in interest rates or
inflation; willingness and ability of third parties to honor their contractual
commitments; the Company's ability to raise additional capital, as it may be
affected by current conditions in the stock market and competition in the oil
and gas industry for risk capital; the Company's capital costs, which may be
affected by delays or cost overruns; costs of production; environmental and
other regulations, as the same presently exist or may later be amended; the
Company's ability to identify, finance and integrate any future acquisitions;
and the volatility of the Company's stock price.
About Non-GAAP Financial Measures The Company uses "adjusted EBITDA," a non-GAAP
financial measure, for internal managerial purposes when evaluating
period-to-period comparisons. This measure is not a measure of financial
performance under U.S. GAAP and should be considered in addition to, not as a
substitute for, cash flows from operations, investing, or financing activities,
net income, nor as a liquidity measure or indicator of cash flows or an
indicator of operating performance reported in accordance with U.S. GAAP. The
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non-GAAP financial measures that the Company uses may not be comparable to
measures with similar titles reported by other companies. Also, in the future,
the Company may disclose different non-GAAP financial measures in order to help
investors more meaningfully evaluate and compare the Company's future results of
operations to its previously reported results of operations. The Company
strongly encourages investors to review its financial statements and
publicly-filed reports in their entirety and not rely on any single financial
measure. See, "Reconciliation of Non-GAAP Financial Measures," below for a
detailed description of these measures as well as a reconciliation of each to
the nearest U.S. GAAP measure.
Reconciliation of Non-GAAP Financial Measures
The Company defines adjusted EBITDA as net income (loss) adjusted to exclude the
impact of interest expense, interest income, income taxes, depreciation,
depletion and amortization for the period, and stock based compensation,
plus/minus the change in fair value of derivative assets or liabilities.The
Company believes adjusted EBITDA is relevant because it is a measure of cash
available to fund capital expenditures and service debt and is a metric used by
some industry analysts to provide a comparison of its results with its peers.
The following table presents a reconciliation of each of the Company's non-GAAP
financial measures to the nearest GAAP measure.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
The following table presents a reconciliation of each of our non-GAAP financial
measures to its nearest GAAP measure.
Three Months Ended (in thousands)
----------------------------------------------
November 30, November August 31,
2012 30, 2011 2012
-------------- ------------- ---------------
Adjusted EBITDA:
Net income $ 2,238 $ 1,627 $ 1,947
Interest and related items, net (7) (8) (10)
Provision for deferred income tax 1,315 - 1,477
Depletion, depletion, and
amortization 2,320 1,214 1,410
Stock based compensation 168 97 150
-------------- ------------- ---------------
Adjusted EBITDA $ 6,034 $ 2,930 $ 4,974
============== ============= ===============
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Financial Statements
Condensed financial statements are included below. Additional financial
information, including footnotes that are considered an integral part of the
financial statements, will be included in Synergy's Edgar Filings at www.sec.gov
on Form 10-Q for the period ended November 30, 2012.
SYNERGY RESOURCES CORPORATION
CONDENSED BALANCE SHEETS
(Unaudited, in thousands)
November 30 August 31
2012 2012
---------------- ----------------
ASSETS
Cash and cash equivalents $ 12,465 $ 19,284
Other current assets 9,356 7,183
---------------- ----------------
Total current assets 21,821 26,467
---------------- ----------------
Oil and gas properties and other equipment 106,214 92,702
Deferred tax asset, net - 332
Other assets 2,707 1,230
---------------- ----------------
Total assets $ 130,742 $ 120,731
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 18,759 $ 15,592
Revolving credit facility 5,486 3,000
Deferred tax liability, net 983 -
Asset retirement obligations 1,171 1,027
---------------- ----------------
Total liabilities 26,399 19,619
Common Stock and paid-in capital 124,920 123,927
Accumulated deficit (20,577) (22,815)
---------------- ----------------
Total shareholders' equity 104,343 101,112
---------------- ----------------
Total liabilities and
shareholders' equity $ 130,742 $ 120,731
================ ================
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SYNERGY RESOURCES CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
Three Months Ended
November 30 November 30
2012 2011
------------- ------------
Oil and gas revenues $ 8,314 $ 4,479
------------- ------------
Expenses:
Direct operating expenses 1,337 706
Depreciation, depletion,
and amortization 2,320 1,214
General and administrative 1,111 940
------------- ------------
Total expenses 4,768 2,860
------------- ------------
Operating income 3,546 1,619
------------- ------------
Other income:
Interest Income 7 8
------------- ------------
Deferred income tax provision (1,315) -
------------- ------------
Net income 2,238 1,627
============= ============
Net income per common share:
Basic $ 0.04 $ 0.05
============= ============
Diluted $ 0.04 $ 0.04
============= ============
Weighted average shares
outstanding:
Basic 51,661,704 36,098,212
============= ============
Diluted
53,616,182 37,845,212
============= ============
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SYNERGY RESOURCES CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
- ----------------------------------
For the three months ended November 30, 2012 and 2011
(unaudited, in thousands, except per share data)
2012 2011
--------------- --------------
Cash flows from operating activities:
Net income $ 2,238 $ 1,627
--------------- --------------
Adjustments to reconcile net income to net
cash
provided by operating activities:
Depreciation, depletion, and amortization 2,320 1,214
Provision for deferred taxes 1,315 -
Other, non-cash items 168 97
Changes in operating assets and liabilities (3,272) 1,649
--------------- --------------
Total adjustments 531 2,960
--------------- --------------
Net cash provided by operating activities 2,769 4,587
--------------- --------------
Cash flows from investing activities:
Acquisition of property and equipment (12,220) (7,071)
--------------- --------------
Net cash used in investing activities (12,220) (7,071)
--------------- --------------
Cash flows from financing activities:
Proceeds from exercise of warrants 146 -
Net proceeds from/(repayments of) revolving
credit facility 2,486 5,392
Principal repayment of related party notes
payable - 5,200)
--------------- --------------
Net cash provided by financing activities 2,632 192
--------------- --------------
Net decrease in cash and equivalents (6,819) (2,292)
Cash and equivalents at beginning of period 19,284 9,491
--------------- --------------
Cash and equivalents at end of period $ 12,465 $ 7,199
=============== ==============
Company Contact:
Rhonda Sandquist
Synergy Resources Corporation
rsandquist@syrginfo.com
Tel (970) 737-1073
Investor Relations Contact:
Justin Vaicek
Liolios Group
syrg@liolios.com
Tel (949) 574-386
