Attached files
EXHIBIT 99.1
Synergy Resources Reports Fiscal Third Quarter 2012 Results
Revenues up 157% to Record $7.5 Million, Driving Operating Income up
603% to Record $3.8 Million and Net Income of $0.05 per Share;
Company to Host Investor Conference Call on July 10, 2012 at 4:30 p.m. ET
PLATTEVILLE, Colo., July 9, 2012 -- 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 third quarter results for the period
ended May 31, 2012.
Third Quarter 2012 Financial Highlights vs. Same Year-Ago Quarter
o Revenues increased 157% to a record $7.5 million
o Operating income improved 603% to a record $3.8 million
o Net income totaled $2.4 million or $0.05 per share versus a loss of
$292,000 or $(0.01) per share
o Adjusted EBITDA (a non-GAAP metric) totaled a record $5.8 million, up 296%,
and representing a 77% return on revenue
o At May 31, 2012, cash and equivalents totaled $27.8 million, with a current
ratio of 2.4 to 1
Third Quarter 2012 Operational Highlights
o Net oil and natural gas production increased 190% to 124,763 barrels of oil
equivalent (BOE), averaging 1,356 BOE per day versus 467, as compared to
the same year-ago quarter.
o As the operator, drilled 11 wells and brought six into production during
the quarter. This increased the total of wells drilled as operator to 90,
with 79 brought into production and the remaining 11 currently being
completed.
o Production commenced at the Wake E24-77HN, the company's first horizontal
well, with a non-operating working interest of 25%.
o At May 31, 2012, the company had completed, acquired or participated in a
total of 170 producing oil and gas wells, including 106 added over the
previous 12 months.
o Increased estimated proved reserves to 3.6 million barrels of oil and 24.8
billion cubic feet of gas, or combined total BOE of 7.8 million. The
estimated present value of these reserves before tax and discounted 10% is
$129.7 million. Compared to the annual reserve report prepared on August
31, 2011, total BOE increased 74%, with present value increasing by 81%.
Third Quarter 2012 Financial Results
Revenues totaled $7.5 million, up 20% from $6.2 million in the previous quarter
and up 157% from $2.9 million in the same quarter a year ago. The year-over-year
improvement was attributed to a 190% increase in production, primarily from 106
new wells, offset by an 11% decrease in the realized average selling price per
BOE. During fiscal Q3 2012, average selling prices were $91.21 per barrel of oil
and $3.62 per mcf of gas, as compared to $98.15 and $5.34, respectively, a
year-ago.
Operating income increased to $3.8 million, up 31% from $2.9 million in the
previous quarter and up 603% from $547,000 in the same year-ago period. Net
income totaled $2.4 million or $0.05 per basic and diluted share, compared to a
loss of $292,000 or $(0.01) per basic share in the same year-ago quarter. Net
income in the third fiscal quarter of 2012 included the effect of a $1.4 million
income tax expense, versus no income tax expense included in the same year-ago
quarter.
Adjusted EBITDA increased to $5.8 million, up 28% from $4.5 million in the
previous quarter and up 296% from $1.5 million in the same year-ago quarter.
This represented a 77% return on revenue in the third fiscal quarter of 2012
(see further discussion about the presentation of adjusted EBITDA in "About
Non-GAAP Financial Measures," below).
Adjusted cash flows from operations increased to $5.8 million, a 28% increase
from $4.5 million in the previous quarter and up 199% from $1.9 million in the
same year-ago quarter. The company uses this non-GAAP metric as a tool for
measuring cash flow earned from operating activities without regard to timing
differences between the collection or payment of associated receivables and
payables (see further discussion about the presentation of adjusted cash flows
in "About Non-GAAP Financial Measures," below).
As of May 31, 2012, the company's cash and equivalents totaled $27.8 million, as
compared $9.5 million at August 31, 2011. The current ratio at May 31, 2012 was
2.4 to 1.
The following table presents certain per unit metrics that compare results of
the corresponding quarterly and nine-month reporting periods:
Per Unit Metric Three Months Ended Nine Months Ended
--------------- ------------------ -----------------
May 31, May 31, May 31, May 31,
2012 2011 % Change 2012 2011 % Change
---- ---- -------- ---- ------ -------
Sales volumes - oil
(Bbls) 69,230 23,371 196% 160,995 59,749 169%
Sales volumes - gas (Mcf) 333,200 117,647 183% 794,691 297,668 167%
Sales Volumes - BOE 124,763 42,979 190% 293,444 109,360 168%
BOEPD 1,356 467 190% 1,071 401 167%
Average sales price -
oil ($/Bbls) $ 91.21 $ 98.15 (7)% $ 90.97 $ 85.02 7%
Average sales price -
gas ($/Bbls) 3.62 5.34 (32)% 4.50 4.43 1%
Average sales price -
($/BOE) 60.29 67.98 (11)% 62.09 58.51 6%
Lease operating expense
($/BOE) 2.82 2.01 40% 3.04 1.86 63%
Production taxes ($/BOE) 5.64 6.76 (17)% 5.70 5.82 (2)%
DD&A expense ($/BOE) 14.34 18.70 (23)% 15.26 18.28 (17)%
G&A expense ($/BOE) 5.47 20.37 (73)% 8.72 17.92 (51)%
Management Commentary
"Further execution of our drilling program in the liquid-rich Wattenberg Field
once again drove record quarterly revenues and adjusted EBITDA,"said Synergy
Resources President and CEO Edward Holloway. "In fact, since the beginning of
our current drilling program we have drilled 40 wells, 11 in the third quarter,
with 29 reaching productive status by quarter's end. We expect the balance of 11
to reach productive status during our current fiscal Q4. We recently contracted
with Ensign Drilling for continuous use of the rig through December 31, 2012. "
"A significant event during the third quarter was initial production from our
first horizontal well completed in partnership with Noble Energy. We have since
participated in drilling four additional horizontal wells in the Niobrara
formation that are now being completed, and we have agreed to participate in
four more horizontal wells to be drilled by various operators. Furthermore, the
valuable experience gained by participating with other operators has allowed us
to commence planning horizontal wells that we will drill and operate for our own
account in fiscal 2013.
"Between cash generated from operations, proceeds from our December equity
offering, and borrowings available under our $20 million revolving line of
credit, we are very well positioned financially and on schedule operationally to
drill the remaining wells we planned for our 2012 drilling program. We expect to
sustain this momentum as we enter fiscal 2013."
Conference Call
Synergy Resources will host a conference call tomorrow, Tuesday, July 10, 2012
at 4:30 p.m. Eastern time (2:30 p.m. Mountain time) to discuss its fiscal third
quarter 2012 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: Tuesday, July 10, 2012
Time: 4:30 p.m. Eastern time (2:30 p.m. Mountain time)
Dial-In Number: 1-877-941-2068
International: 1-480-629-9712
Conference ID#: 4550558
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.
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 Rhonda Sandquist
of Synergy Resources at (970) 737-1073. .
A replay of the call will be available after 7:30 p.m. Eastern time on the same
day and until August 10, 2012.
Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay pin #: 4550558
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 Reserve Estimates
Reserve estimates mentioned in this release were prepared in accordance with
guidelines established by the Securities and Exchange Commission for proved
reserves. Probable and possible reserves are excluded. Prices are based on a
trailing twelve month average and are held constant over the life of the
properties. Similarly, costs are held constant for the duration of the well.
About Non-GAAP Financial Measures The company uses "adjusted cash flow from
operations" and "adjusted EBITDA," both non-GAAP financial measures, for
internal managerial purposes when evaluating period-to-period comparisons. These
measures are not measures 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 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 cash flow from operations as the cash flow earned
or incurred from operating activities without regard to timing differences in
the collection or payment of associated receivables and payables. The company
believes it is important to consider adjusted cash flow from operations as well
as cash flow from operations, as it often provides more transparency into what
drives the changes in the company's operating trends, such as production,
prices, operating costs, and related operational factors, without regard to
whether the earned or incurred item was collected or paid during the period. The
company also uses this measure because the collection of its receivables or
payment of obligations has not been a significant issue for its business, but
merely a timing issue from one period to the next.
The company defines adjusted EBITDA as net income (loss) plus net interest
expense, income taxes, and depreciation, depletion and amortization (including
amortization of non-cash stock-based compensation) for the period, plus/minus
the change in fair value of our derivative conversion liability. 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.
Financial Statements
Condensed financial statements are included below. Additional financial
information, including footnotes that are considered an integral part of the
financial statements, can be found in Synergy's Edgar Filings at www.sec.gov on
Form 10-Q for the period ended May 31, 2012.
SYNERGY RESOURCES CORPORATION
CONDENSED BALANCE SHEETS
May 31, August 31,
2012 2011
---------------- ------------------
ASSETS
Cash and cash equivalents $ 27,764,540 $ 9,490,506
Other current assets 6,348,451 5,140,452
---------------- ------------------
Total current assets 34,112,991 14,630,958
---------------- ------------------
Oil and gas properties and other 81,001,760 48,898,064
equipment
Deferred tax asset, net 1,809,000 -
Other assets 236,524 168,863
---------------- ------------------
Total assets $ 117,160,275 $ 63,697,885
================ ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 14,229,165 $ 13,946,413
Revolving credit facility 3,000,000 -
Asset retirement obligations 916,258 643,459
---------------- ------------------
Total liabilities 18,145,423 14,589,872
---------------- ------------------
Shareholders' equity:
Common stock and paid-in capital 123,777,791 84,047,594
Accumulated deficit (24,762,939) (34,939,581)
---------------- ------------------
Total shareholders' equity 99,014,852 49,108,013
---------------- ------------------
Total liabilities and
shareholders' equity $ 117,160,275 $ 63,697,885
================ ==================
SYNERGY RESOURCES CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Nine Months Ended
May 31, May 31, May 31, May 31,
2012 2011 2012 2011
-------------- -------------- -------------- --------------
Oil and gas revenues $ 7,521,833 $ 2,921,910 $ 18,219,672 $ 6,399,193
-------------- -------------- -------------- --------------
Expenses:
Lease operating expenses 1,159,472 668,683 2,720,206 1,131,837
Depreciation, depletion,
and amortization 1,833,506 830,639 4,599,585 2,062,825
General and administrative 682,412 875,316 2,559,250 1,960,006
-------------- -------------- -------------- --------------
Total expenses 3,675,390 2,374,638 9,879,041 5,154,668
-------------- -------------- -------------- --------------
Operating income 3,846,443 547,272 8,340,631 1,244,525
-------------- -------------- -------------- --------------
Other income (expense):
Change in fair value of
derivative conversion
liability - 86,192 - (10,229,229)
Interest income and
expense, net 16,320 (925,076) 27,011 (4,205,270)
-------------- -------------- -------------- --------------
Total other (expense) 16,320 (838,884) 27,011 (14,434,499)
-------------- -------------- -------------- --------------
Income tax
(expense)benefit (1,432,000) - 1,809,000 -
-------------- -------------- -------------- --------------
Net income (loss) $ 2,430,763 $ (291,612) $ 10,176,642 $ (13,189,974)
============== ============== ============== ==============
Net income (loss) per common
share:
Basic $ 0.05 $ (0.01) $ 0.23 $ (0.58)
============== ============== ============== ==============
Diluted $ 0.05 $ (0.01) $ 0.22 $ (0.58)
============== ============== ============== ==============
Weighted average
shares outstanding:
Basic 51,292,810 32,813,298 44,968,566 22,713,785
============== ============== ============== ==============
Diluted 53,174,792 32,813,298 46,775,994 22,713,785
============== ============== ============== ==============
SYNERGY RESOURCES CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
For the nine months ended May 31, 2012 and May 31, 2011
(unaudited)
2012 2011
------------- ------------
Cash flows from operating activities:
Net income (loss) $ 10,176,642 $(13,189,974)
------------- ------------
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation, depletion, and amortization 4,599,585 2,062,825
Provision for deferred taxes (1,809,000) -
Other, non-cash items 323,032 15,044,684
Changes in operating assets and liabilities 3,787,750 (92,653)
------------- ------------
Total adjustments 6,901,367 17,014,856
------------- ------------
Net cash provided by operating activities 17,078,009 3,824,882
------------- ------------
Cash flows from investing activities:
Acquisition of property and equipment (34,025,758) (16,167,575)
------------- ------------
Net cash used in investing activities
(34,025,758) (16,167,575)
------------- ------------
Cash flows from financing activities:
Net proceeds from sale of stock 37,421,783 16,690,721
Net proceeds from/(repayments of) revolving
credit facility 3,000,000 -
Principal repayment of related party notes
payable (5,200,000) -
------------- ------------
Net cash provided by financing activities 35,221,783 16,690,721
------------- ------------
Net decrease in cash and equivalents 18,274,034 4,348,028
Cash and equivalents at beginning of period 9,490,506 6,748,637
------------- ------------
Cash and equivalents at end of period $ 27,764,540 $ 11,096,665
============= =============
Company Contact:
Rhonda Sandquist
Synergy Resources Corporation
rsandquist@syrginfo.com
Tel (970) 737-1073
