Attached files
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| 8-K - CURRENT REPORT - SRC Energy Inc. | syng_8k.htm |
EXHIBIT 99.1
NYSE MKT: SYRG
Important Cautions Regarding Forward
Looking Statements
Looking Statements
This presentation 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.
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; the worldwide economic situation; changes in interest rates or inflation; the ability
of the company to transport gas; 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.
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; the worldwide economic situation; changes in interest rates or inflation; the ability
of the company to transport gas; 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.
2
NYSE MKT: SYRG
Key Executives & Board Members
|
Edward Holloway
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William Scaff, Jr.
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Frank Jennings
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George Seward
|
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President & CEO
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Vice President, Director
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Chief Financial Officer
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Board of Directors
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• 30+ Years of Oil and Gas
Executive Leadership • Director of Synergy since
June 2008 • Former Co-Founder, Cache
Exploration Inc. • Co-Founder, Petroleum
Management, LLC and Petroleum Exploration & Management, LLC • Past Board Member of
Denver-Julesburg Petroleum Association • Past President of Colorado
Oil and Gas Association - 1990 |
• 30+ Years of Oil and Gas
Executive Leadership • Director of Synergy since
June 2008 • Former Dresser Industries
Area Manager and Total Petroleum Regional Manager • Co-Founder, Petroleum
Management, LLC and Petroleum Exploration & Management, LLC • Board Trustee of
Colorado/Wyoming Petroleum Marketers Association |
• 20+ years of accounting and
finance experience • Experience in oil and gas
drilling, services, exploration and production • Joined Synergy full time in
March 2011 • Five years as CFO of Gold
Resource Corporation (NYSE Amex: GORO) • 10 years as CPA with
PriceWaterhouseCoopers in Houston • Four years as audit manager
with The Walt Disney Companies • MBA from Indiana University
|
• George Seward was
appointed as a Director in July 2010. • Mr. Seward co-founded
Prima Energy in 1980 and served as its Secretary until 2004 when Prima was sold to Petro-Canada for $534 million. • Significant oil and natural
gas experience • Spearheaded leasing effort
in Nebraska for Synergy. |
3
NYSE MKT: SYRG
Our Leased Acreage *
§ Area #1 All of our current
wells both vertical and
horizontal are in the oil and
high-liquids portion of the
Wattenberg Field
(Niobrara/Codell/J-Sand
formations)
wells both vertical and
horizontal are in the oil and
high-liquids portion of the
Wattenberg Field
(Niobrara/Codell/J-Sand
formations)
§ Area #2 Northern D-J Basin
acreage is highly
prospective for horizontal
Niobrara and horizontal
Greenhorn
acreage is highly
prospective for horizontal
Niobrara and horizontal
Greenhorn
§ Area #3 Eastern Colorado
Proven dry gas field,
economic @ $4/mcf
Proven dry gas field,
economic @ $4/mcf
§ Area #4 Nebraska acreage
flanks the Central Kansas
Uplift; highly prospective
for Mississippian and
Pennsylvanian formations
flanks the Central Kansas
Uplift; highly prospective
for Mississippian and
Pennsylvanian formations
#4 Nebraska
123,000 net (oily)
#3 Eastern Colorado
56,000 net (dry gas)
#1 Wattenberg Field,
CO
CO
~20,000 net
(high liquids)
4
* All lease acreage calculations are approximate
#2 Northern D-J Basin
(Wattenberg Extension Area)
20,040 net (high liquids)
NYSE MKT: SYRG
Fiscal 2014 Accelerated Drilling Budget and
Summary Sources & Uses
Summary Sources & Uses
5
Net
Net Non-
Total Net
Well Cost
Drilling Budget
Wattenberg Field
Horizontal
20
5
25
4.5
$
112.5
$
Total
26
11
37
122.5
$
Synergy Fiscal 2014 Drilling Program Ending 8/31/2014
Cash and Equivalents
(1)
70
Operated Horizontal Wells
90
$
Estimated Cash Flow From Operations
87.5
Non-Operated Horizontal Wells
Vertical Wells
10
Acquisitions
30
Land Leasing
Total Sources
157.5
$
Total Uses
157.5
$
(1) Includes $19.3 million in cash and short term instruments at May 31, 2013 and portion of cash proceeds from follow on common stock offering closed 6/19/13
and partial exercise of $6 warrants
Sources ($MM)
Uses ($MM)
NYSE MKT: SYRG
Strengths of the Wattenberg Field
• Wattenberg Field is highly defined by over 17,000 vertical wells
drilled since the 1970’s
drilled since the 1970’s
• Synergy has successfully completed 100% of its wells in the
Wattenberg Field
Wattenberg Field
• Significant upside potential: Multiple pay zones with horizontal
wells targeting the Niobrara A, B, & C Benches and Codell
formation
wells targeting the Niobrara A, B, & C Benches and Codell
formation
• Horizontal completion technology has enhanced well returns
• 50 to 100% Internal Rates of Return from Horizontal wells(1)
• Long life production and reserves: 30+ years
• Low lifting costs: Year-to-date $4.32/BOE (9 mos. Ended
5/31/13)
5/31/13)
• Takeaway capacity: Expanding in Rocky Mountain Region
6
“We call it the ‘magic of the short-cycle oil in the U.S. onshore.’ It is the best you
can get. If we could find 20 more Wattenbergs, we would probably quit drilling
anything else.”
can get. If we could find 20 more Wattenbergs, we would probably quit drilling
anything else.”
- John Ford, Manager of Wattenberg Field for Anadarko, Oil & Gas Investor, 3/12
Wattenberg Overview
(1) IRRs are management estimates and are derived from operating experience, offset operator activity, and other published industry information
NYSE MKT: SYRG
Horizontal Drilling
Expands Opportunity
Expands Opportunity
• Advent of horizontal drilling has led to:
• Enhanced recovery of oil in place by 3 to 6 fold
over vertical drilling
over vertical drilling
• Increased production
• Reduced costs
• Mitigated environmental impact
• Completed and brought into production the
Renfroe Pad consisting of 3 Niobrara B and 2
Codell wells in September, 2013
Renfroe Pad consisting of 3 Niobrara B and 2
Codell wells in September, 2013
• Participated as a non-operator in 17
horizontal wells in the Wattenberg Field and
1 Niobrara B well in the Northern DJ (avg.
working interest ~ 19%)
horizontal wells in the Wattenberg Field and
1 Niobrara B well in the Northern DJ (avg.
working interest ~ 19%)
• Have received over 78 additional
notifications for horizontal wells from other
operators of which we have received 23 AFEs
with average working interest of 5.2%
notifications for horizontal wells from other
operators of which we have received 23 AFEs
with average working interest of 5.2%
Horizontal Drilling Allows Multiple Wells on a
Single Pad that Reach Multiple Zones
Single Pad that Reach Multiple Zones
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7
Single Pad
NYSE MKT: SYRG
First Operated Horizontal Well Pads
Synergy First Operated Wattenberg Well Pads
2
1
2
Renfroe Pad - operated 5 well pad with ~99%
W.I. (first production early September, 2013)
W.I. (first production early September, 2013)
Leffler Pad - operated 6 well pad with ~99%
W.I. (drilling commenced 1Q:FY2014)
W.I. (drilling commenced 1Q:FY2014)
PDC
PDC
Noble
Future Long Lateral
Development
Development
PDC
PDC
8
PDC
NYSE MKT: SYRG
Wattenberg Midstream Ramp-Up
9
2013
Under Construction
Permit Pending
2014
Permits Submitted
2015
Permits Submitted
Expansion Projects
Current Capacity:
445 MMcf/day
445 MMcf/day
Future Capacity:
1,065 MMcf/d
1,065 MMcf/d
Additional NGL Capacity
Front Range NGL pipeline expected to add 150-230 Mbo/d - Mont Belvieu
access November 2013
access November 2013
140% Capacity
Increase
Increase
NYSE MKT: SYRG
Wattenberg Extension Area in the
Northern DJ Basin Overview
Northern DJ Basin Overview
Bonanza Creek
Hog Farm Purchase
$10,640 / net acre
Noble - East Pony
Drilled 3 wells on 80 acre spacing
30-day IP: 720 Boe/d
EURs: 345,000 Boe
EOG &
Continental
Synergy Wattenberg Extension Area Overview - ~20,040 Net Acres(1)
1. All offset operator data sources from published
presentations and acreage positions reflect
approximations.
presentations and acreage positions reflect
approximations.
Whiting Red Tail Project Razor Well
IP: 861 Boe/d
IP: 861 Boe/d
From Niobrara B
Synergy operated vertical well
to be drilled by 12/31/13
100% working interest
Bill Barrett Corporation
39,920 net acres
Whiting acreage acquisition 32,000
net acres announced
net acres announced
August 2013
Participating with Noble on
horizontal Niobrara well
horizontal Niobrara well
Participating with Carrizo on 3
extended laterals
extended laterals
Synergy operated D-Sand test well
to be drilled by 12/31/13
to be drilled by 12/31/13
35% working interest
NYSE MKT: SYRG
*Oil Weighted Reserve & Production Growth
11
Average Daily Net Production Per Period (Boe/d)
Proved Reserves: 13.6 Mmboe (2/28/2013) & Total Unrisked Potential of 182.0 Mmboe
Proved Reserves (2/28/2013) and Unrisked Potential
0
500
1,000
1,500
2,000
2,500
3,000
2010
2011
2012
Q1:13A
Q2:13A
Q3:13A
Q4:13E
2,256
2,067
1,658
1,152
452
122
Wells
Per 640
Net
Well
Spacing
(1)
Total
Potential
Per Well
EUR
(1)
Unrisked
Potential
Wattenberg Field (4,500 ft. Laterals)
Niobrara B Bench - Hz
9
20,000
71
281
80%
224
325
72.8
Niobrara A Bench - Hz
2
20,000
320
62
80%
49
325
15.9
Niobrara C Bench - Hz
4
20,000
160
125
80%
100
325
32.5
(2)
Northern Extension (4,500 ft. laterals)
(1) EURs and unrisked potential are management estimates based on experience in Wattenberg and publicly available information from other industry participants.
(2) Codell net acres subtracts net vertical wells already drilled on 20 acre spacing.
13.6
13.6
72.8
15.9
32.5
42.0
22.5
-
20
40
60
80
100
120
140
160
180
200
Proved (Mmboe)
Total Upside
Northern
Extension
Codell
C Bench
A Bench
B Bench
Proved + Unrisked
Potential:
Potential:
199.3 MMboe
* Management believes the Wattenberg Field acreage will support between 16 and 26 horizontal wells per 640 acres on a fully developed basis and have used a mid-point of 21 wells for illustrative purposes
NYSE MKT: SYRG
1P Reserve Growth by Year (PV-10)
12
NYSE MKT: SYRG
Revenue and EBITDA Growth
Oil
Gas
NGL
13
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Average Sales Price per Quarter
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||||||||
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4Q Aug-11
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1Q Nov-11
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2Q Feb-12
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3Q May-12
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4Q Aug-12
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1Q Nov-12
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2Q Feb-13
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3Q May-13
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Oil (Bbls)
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$ 89.91
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$ 83.03
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$92.33
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$91.21
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$82.89
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$81.03
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$84.20
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$83.98
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Gas & Liquids (Mcf)
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$ 6.22
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$ 5.23
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$4.09
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$3.62
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$2.82
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$4.27
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$4.77
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$4.76
|
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NGL Premium (%)
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39%
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41%
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41%
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48%
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15%
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35%
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32%
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34%
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$38.3M
**
* MRQ = Most Recent Quarter **TTM = Trailing Twelve Months Generated 74% EBITDA margin on revenues
NYSE MKT: SYRG
Fully Funded
2014 CAPEX
Budget
2014 CAPEX
Budget
Fiscal 2014 budget of ~$157.5 million to drill/participate in horizontal and
vertical wells, additional lease hold, and acquisitions in the Wattenberg Field
is fully funded with cash on hand and projected free cash flow from revenues.
vertical wells, additional lease hold, and acquisitions in the Wattenberg Field
is fully funded with cash on hand and projected free cash flow from revenues.
~20,040 net acres in the Wattenberg Extension area in the Northern DJ
Basin provides additional +125 net total locations and +22.5 Mmboe
of un-risked potential(1)
Basin provides additional +125 net total locations and +22.5 Mmboe
of un-risked potential(1)
Borrowing base increased to $75 million from $47 million on 6/4/13. Current
liquidity of $39 million(2) on borrowing base as of August 31, 2013.
liquidity of $39 million(2) on borrowing base as of August 31, 2013.
To date, operated 80% of our Wattenberg Field wells. Allows for control over
timing and production, operating, and administrative costs.
timing and production, operating, and administrative costs.
Company Highlights & Key Takeaways
14
Senior management has an average of 30+ years of Wattenberg experience
and have owned and operated over 300+ DJ Basin wells. Management and
Directors own ~17%(3) of the Company including options.
and have owned and operated over 300+ DJ Basin wells. Management and
Directors own ~17%(3) of the Company including options.
1. Management estimates. Derivation of unrisked potential provided on slide 11. 2. $36 million outstanding as of 8/31/13. Pro forma for recent equity offering.
.
Significant
Exposure to
Wattenberg
Field
Exposure to
Wattenberg
Field
~20,000 net acres in the oil and liquids portion of the Wattenberg Field in
Weld County, CO. 608 net total locations - 163 Mmboe of un-risked
potential(1). 34 horizontal permits approved and 41 currently in process.
Weld County, CO. 608 net total locations - 163 Mmboe of un-risked
potential(1). 34 horizontal permits approved and 41 currently in process.
NYSE MKT: SYRG
Appendix
NYSE MKT: SYRG
Iowa
New Mexico
Kennedy Basin
DJ Basin
Central Kansas
Basin
Forest City
Basin
Basin
Cherokee Basin
Morgan
Weld
Washington
Laramie
Kimball
Banner
Logan
Phillips
Powder River
Basin
Basin
Chase
Hitchcock
Hay
s
s
Red
Willow
Willow
Frontier
Salina Basin
Richardso
n
n
Missouri
Hugoton Embayment
Wyoming
16
Mississippian & Pennsylvanian Plays Moving North
Current Pennsylvanian
Horizontal Test Wells
Credo Petroleum Corp.
Pennsylvanian Vertical
Well Initial Production
Pennsylvanian Vertical
Well Initial Production
218 BOPD
NYSE MKT: SYRG
Multiple Stacked Play
Nebraska Acreage Multiple Stacked Play
• 123,000 net acres in Nebraska that is highly prospective for Upper
Pennsylvanian, Cherokee and Mississippian Lime
Pennsylvanian, Cherokee and Mississippian Lime
• Historical production from vertical wells
• Multiple stacked oil play
• Long term leases (7+ years average remaining term)
• Apache views this as an extension of their horizontal oil play
• Majors pursuing acres: i.e., Apache Corp. (NYSE:APA) acquired
580,000 net acres in Nebraska & Kansas
580,000 net acres in Nebraska & Kansas
Chase County,
NE
NE
Chase County,
NE
NE
48,321 net (oily)
48,321 net (oily)
Dundy County,
NE
NE
Dundy County,
NE
NE
23,751 net (oily)
23,751 net (oily)
Hayes County,
NE
NE
Hayes County,
NE
NE
43,920 net (oily)
43,920 net (oily)
Hitchcock
County, NE 2,492
net (oily)
County, NE 2,492
net (oily)
Hitchcock
County, NE 2,492
net (oily)
County, NE 2,492
net (oily)
Type Log
17
NYSE MKT: SYRG
Key Stats: SYRG (NYSE MKT)
Stock Price (9/12/13)
$10.00
52 Week High/Low
$10.18-$3.11
Shares Outstanding
71.95 M
Public Float
54.6M
Warrants Outstanding
7 M
Options Outstanding
1.8 M
Avg. Daily Vol. (3 month)
592,000
Market Capitalization
$719M
Institutional Holdings
42%
Insider Holdings, est.
17%
Total Capital Raised (net)
$154.4 M
|
Revenue (ttm)
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$38.2 M
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Net Income (ttm)
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$10.53 M
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EPS (ttm)
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$0.20
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Cash & STI (pf)
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$ 96.6 M
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Total Assets (pf)
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$269.7 M
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Long Term Debt (pf)
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$44.5 M
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Current Credit Facility
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$150 M
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Borrowing Base
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$75.0 M
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Fiscal 2014 CAPEX
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$157 M
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Founded
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2008
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Fiscal Year End
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August 31
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18
Sources: Capital IQ, SEC, Thomson Reuters, Company estimates
ttm = trailing twelve months; pf = pro-forma disclosure incorporates data from most recent quarter and recent financing transactions; STI=
short term investments
short term investments
NYSE MKT: SYRG
Capitalization
19
NYSE MKT: SYRG
• Total CAPEX Budget of $157.5 million
• $90 million to drill 20 net new horizontal wells as operator
• $22.5 million to participate in 5 net non-operated horizontal wells
• $10 million for 12 vertical wells
• $30 million for acquisitions
• $5 million for land leasing
• CAPEX will be funded with cash on hand and cash flow from operations
2014 CAPEX Budget
20
NYSE MKT: SYRG
Hedging Summary
• The company’s commodity derivative contracts as of July 15, 2013 are summarized below:
NYSE MKT: SYRG
Board of Directors
|
Edward Holloway
•Synergy Resources President & CEO
•Director since June 2008
•30+ years of Oil and Gas Executive Leadership
•Co-Founder of Cache Exploration & Petroleum Management
|
Bill Conrad
•Independent director since May 2005
•Former President of Wyoming Oil & Gas
•Involved in the oil & gas industry for over 20 years
|
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William Scaff, Jr.
•Synergy Resources Executive Vice President
•Director since June 2008
•30+ years of Oil & Gas Executive Leadership
•Co-Founder of Petroleum Management
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Rick Wilber
•Independent director since June 2008
•Board member of Ultimate Software Group, Inc. (ULTI - NASDAQ)
•Private Investor and Consultant to numerous start up and early
stage companies |
|
George Seward
•Director since July 2010
•Co-Founded Prima Energy in 1980, sold to Petro-Canada in 2004
for $534 million •Significant oil and gas experience
|
R.W. “Bud” Noffsinger, III
•Independent director since September 2009
•President &CEO of RWN3
•Former Chief Credit Officer for First Western Trust Bank
|
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Raymond McElhaney
•Independent director since May 2005
•Co-Founded & current president of MCM Capital Management
•Former Founder and President of Spartan Petroleum and
Exploration |
|
22
NYSE MKT: SYRG
Sell-Side Research Coverage
|
Firm
|
Analyst
|
|
Brean Capital
|
Jeff Connolly
|
|
Cannacord Genuity
|
Stephen Berman
|
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Euro Pacific Equities
|
Joel Musante, CFA
|
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Global Hunter Securities
|
Mike Kelly
|
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Johnson Rice & Co.
|
Welles Fitzpatrick
|
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Iberia Capital Partners
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David Beard, CFA
|
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Key Banc
|
Jack Aydin
|
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Northland Capital Markets
|
Jared Lewis
|
|
Sidoti & Co.
|
Gabriel Daoud
|
|
SunTrust Robinson Humphrey
|
Ryan Oatman
|
|
Wunderlich Securities
|
Irene Haas
|
Please note that any opinions, estimates or forecasts regarding Synergy Resources performance made by these analysts are theirs alone
and do not represent opinions, forecasts or predictions of Synergy Resources or its management. Synergy Resources does not by its
reference above imply its endorsement of or concurrence with such information, conclusions or recommendations. This list includes
analysts currently known by Synergy Resources to follow the company, but may not be complete and may change as firms add or delete
coverage. Synergy Resources does not undertake any duty to update this information or any information provided by third parties.
and do not represent opinions, forecasts or predictions of Synergy Resources or its management. Synergy Resources does not by its
reference above imply its endorsement of or concurrence with such information, conclusions or recommendations. This list includes
analysts currently known by Synergy Resources to follow the company, but may not be complete and may change as firms add or delete
coverage. Synergy Resources does not undertake any duty to update this information or any information provided by third parties.
23