SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): October 29, 2014
SYNERGY RESOURCES CORPORATION
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(Exact name of Registrant as specified in its charter)
Colorado 001-35245 20-2835920
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(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
20203 Highway 60
Platteville, Colorado 80651
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(Address of principal executive offices, including Zip Code)
Registrant's telephone number, including area code: (970) 737-1073
N/A
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(Former name or former address if changed since last report)
Check appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below)
[] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[] Pre-commencement communications pursuant to Rule 13e-14(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
Line of Credit
On October 29, 2014 the Company entered into a commitment letter with
Suntrust Bank and Suntrust Robinson Humphry, Inc. (collectively "Suntrust") with
respect to its revolving line of credit facility.
Pursuant to the terms of the commitment letter, Suntrust will arrange a
syndicate of banks or financial institutions to make available to the Company a
line of credit, which the Company can borrow against from time to time, equal to
the lesser of the Borrowing Base or $500,000,000.
The Borrowing Base can increase or decrease based upon the value of the
collateral which will secure any amounts borrowed under the line of credit. For
the most part, the value of the collateral will be derived from the estimated
future cash flow of the Company's proved oil and gas reserves, discounted by
10%. The initial Borrowing Base will be $230,000,0000. The interest rate on
outstanding borrowings will be based upon a pricing grid which escalates with
utilization and establishes a minimum rate of 2.5%.
Any amounts borrowed from the banking syndicate will be used to fund the
acquisition of the oil and gas properties described below, to develop oil and
gas properties, acquire new oil and gas properties, and for working capital and
other general corporate purposes.
The new credit line will be subject to the negotiation and execution of
mutually acceptable and definitive loan documentation which will contain
conditions, representations and warranties, financial covenants, covenants, and
events of default that are customary for transactions of this type and which are
expected to be similar to those in the Company's existing revolving credit
agreement.
The Company's existing line of credit, which expires on May 29, 2019, will
remain in place until the new line of credit is available.
Agreement Relating to Acquisition of Oil and Gas Properties.
On October 29, 2014 the Company entered into an agreement with three
independent oil and gas companies to acquire oil and gas properties consisting
of:
o Non-operated working interests in seventeen horizontal wells, ten of
which are in production (including four mid-reach laterals) and seven
of which are in progress of completion.
o 73 operated and 11 non-operated vertical wells.
o 35 permit applications for operated horizontal wells (including 20
extended reach laterals).
o 5,040 gross acres (4,053 net) with rights to the Codell and Niobrara
formations.
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o 2,400 gross acres (1,739 net) with rights to other formations,
including the Sussex, Shannon and J-Sands.
o 3D seismic data.
o Miscellaneous equipment.
Working interests in the horizontal wells range from 6% to 40%.
Working interests in the vertical wells range from 5% to 100%.
The producing oil and gas properties are located in the Wattenberg Field,
which is part of the Denver-Julesburg Basin. Preliminary estimates indicate that
the undeveloped acreage will provide locations to drill 94 horizontal wells.
The purchase price for the oil and gas properties, subject to ordinary
closing adjustments, will be $125,000,000. The purchase price will be payable in
cash of $87,500,000 and $37,500,000 in restricted shares of the Company's common
stock.
The closing of the acquisition is subject to the completion of title
reviews by Synergy and other conditions which are normal for a transaction of
this nature.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
On October 29, 2014 the Company's compensation committee approved
amendments to the Company's employment agreements with Ed Holloway and William
E. Scaff, Jr., the Company's Co-Chief Executive Officers. The amendments provide
that the annual base salary for each of these officers will be increased to
$999,900, effective November 1, 2014.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 3, 2014
SYNERGY RESOURCES CORPORATION
By:/s/ Frank L. Jennings
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Frank L. Jennings, Principal Financial and
Accounting Office
