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): December 15, 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
On December 15, 2014, the Company entered into an amendment to its
revolving line of credit agreement. The amended terms include an increase in the
maximum amount of borrowings available to the Company. SunTrust Bank is the
Joint Lead Arranger/Administrative Agent for the eight bank syndicate and
KeyBank, National Association is the Joint Lead Arranger/Syndication Agent.
The maximum amount the Company can borrow at any one time is known as the
Borrowing Base. The Borrowing Base can increase or decrease based upon the value
of the collateral which secures 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 flows of the Company's proved oil and gas reserves,
discounted by 10%. The new Borrowing Base is $230,000,000. The maximum loan
commitment by the banks is $500,000,000, subject to lesser amounts imposed by
the Borrowing Base.
The interest rate on outstanding borrowings will be based upon a pricing
grid which escalates with utilization and establishes a minimum of 2.5%.
Amounts borrowed from the banks:
o will be used to develop oil and gas properties, acquire new oil and
gas properties, and for working capital and other general corporate
purposes;
o will be due and payable on December 15, 2019; and
o are secured by substantially all of the Company's producing wells and
developed oil and gas leases.
On December 15, 2014 the Company used approximately $66,167,000 from the
credit line in connection with the acquisition of the properties described in
Item 2.01 below.
Any of the following are an event of default which would cause any amounts
due under the line of credit to become immediately due and payable:
o the Company fails to make any interest or principal payment when due;
and
o the Company breaches any representation, warranty or covenant or
defaults in the timely performance of any other obligation in its
agreements with the banks.
The foregoing description of the line of credit agreement, including events
of default, does not purport to be complete and is qualified in its entirety by
reference to the full text of the credit agreement which will be filed as an
exhibit to the Company's report on Form 10-Q for the period ending November 30,
2014.
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Item 2.01 Completion of Acquisition or Disposition of Assets
As previously reported in a current report on Form 8-K filed by the Company
on November 4, 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 have been completed and are in the early stages of flow back;
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;
o 2,400 gross acres (1,739 net) with rights to other formations,
including the Sussex, Shannon and J-Sand;
o 3D seismic data; and
o Miscellaneous equipment.
The transaction contemplated by the agreement closed on December 15, 2014.
The agreement has an effective date of October 1, 2014. The Company will assume
operational responsibility for the 73 operated vertical wells.
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 150 horizontal wells.
The purchase price for the oil and gas properties, subject to ordinary
closing and post-closing adjustments, was $125 million. The purchase price was
paid with cash of approximately $75 million and 4,648,136 restricted shares of
the Company's common stock which, for purposes of the transaction, were valued
at $50 million.
The foregoing description is qualified in its entirety by reference to the
full text of the agreement pertaining to the acquisition which will be filed as
an exhibit to the Company's report on Form 10-Q for the period ending November
30, 2014.
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Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
The information included under Item 1.01 is incorporated by reference into
this Item 2.03.
Item 3.02. Unregistered Sales of Equity Securities
The issuance of shares of common stock described in Item 2.01 of this
report was deemed to be exempt from registration under the Securities Act of
1933, as amended (the "Securities Act") in reliance upon Section 4(2) of the
Securities Act, as a transaction not involving a public offering. The parties
which received the shares were provided full information regarding the Company's
business and operations and there was no general solicitation in connection with
the offer or sale of these securities. The parties acquired the shares of
restricted common stock for their own account. The certificates representing the
shares bear restrictive legends providing that the shares cannot be sold except
pursuant to an effective registration statement or an exemption from
registration. No commission was paid to any person in connection with the
issuance of these shares.
Item 9.01. Financial Statements and Exhibits
The financial statements required by Item 9.01(a) and (b) will be filed as
an amendment to this report.
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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: December 17, 2014
SYNERGY RESOURCES CORPORATION
By:/s/ Frank L. Jennings
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Frank L. Jennings, Principal Financial and
Accounting Office
