SOURCE: Synergy Resources Corporation

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April 09, 2015 08:00 ET

Synergy Resources Reports Fiscal Second Quarter 2015 Results

Revenues of $23.7 Million Generating Net Income of $0.05 per Share; Company to Host Earnings Conference Call Today, April 9, 2015 at 12:00 p.m. ET 877-407-9122 Toll Free Dial-In, 201-493-6747 International/Local Dial-In

PLATTEVILLE, CO--(Marketwired - April 09, 2015) - Synergy Resources Corporation (NYSE MKT: SYRG), a U.S. oil and gas exploration and production company focused in the Denver-Julesburg Basin, reported its fiscal second quarter results for the period ended February 28, 2015.

Second Quarter 2015 Financial Results

  • Revenues increased 3% to $23.7 million up from $23.0 million in the same quarter a year ago. The year-over-year improvement was attributed to a 98% increase in production, primarily from the new horizontal wells brought on line and production from the Bayswater acquisition that closed in December 2014. Revenue growth was offset by a 48% decrease in the realized average selling price per BOE. During fiscal Q2 2015, average selling prices were $43.51 per barrel of oil and $3.38 per mcf of gas, as compared to $86.82 and $5.93, respectively, a year ago.
  • Net income was $4.7 million or $0.05 per basic and diluted share, down from $5.2 million or $0.07 per basic and diluted share in the same year-ago period. 
  • Adjusted EBITDA (a non-GAAP metric) increased 56% to $27.3 million up from $17.5 million a year ago.
  • At February 28, 2015, cash and cash equivalents totaled $218.5 million. Borrowings under the credit facility were $146.0 million with remaining liquidity of $46.0 million on a borrowing base of $192.0 million.

Second Quarter 2015 Highlights

  • Net oil and natural gas production increased to 697,069 barrels of oil equivalent (BOE), averaging 7,745 BOE per day versus 3,917, as compared to the same year-ago quarter, an average daily increase of 98%.
  • Closed on the acquisition of the Bayswater assets located in the Wattenberg Field on December 15, 2014.
  • Raised approximately $191 million in net proceeds in an equity offering at $10.75 per share that closed on February 2, 2015.
  • As of February 28, 2015, we were the operator of 39 gross producing horizontal wells in the Wattenberg Field.
  • 29 additional operated horizontal wells were awaiting completion and 11 more horizontal operated wells were in the drilling process as of February 28, 2015.

The following tables present certain per unit metrics that compare results of the corresponding quarterly reporting periods:

      
  Three Months Ended   
  February 28,   
  2015  2014  Change
Production:          
 Oil (Bbls)  412,469   204,622  102%
 Gas (Mcf)  1,707,598   887,494  92%
 BOE  697,069   352,537  98%
           
Revenues (in thousands):          
 Oil $17,948  $17,765  1%
 Gas  5,765   5,263  10%
  Total $23,713  $23,028  3%
           
Average realized price:          
 Oil $43.51  $86.82  -50%
 Gas $3.38  $5.93  -43%
 BOE $34.02  $65.32  -48%
        

"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. 

The following table summarizes operating costs on a per unit basis. Additional details regarding operating costs can be found in the condensed financial statements.

      
Costs per BOE Three Months Ended February 28,
  2015  2014
        
Lease operating expenses $5.29  $5.13
Production taxes $3.08  $6.40
DDA $22.24  $21.90
General and administrative $5.85  $5.02
Total $36.46  $38.45
      

Monty Jennings, CFO of Synergy commented, "This quarter's financial results reflect the benefits we are reaping from maintaining a keen eye on controlling costs as we achieved a 63% operating cash margin on revenues in the quarter, even while commodity prices were falling. Our financial EBITDA in the quarter was greater than 100% of revenues as we realized over twelve million in cash proceeds from monetizing commodity hedges that were entered into when prices for oil ranged from $80 to $95 per barrel. At the same time, we nearly doubled our production compared to the period a year ago as our shift to horizontal development has been fully implemented. We further bolstered our balance sheet during the quarter with nearly $191 million in net proceeds from our equity offering. We have also added to our human resource capital with the hiring of Brandon Lorenz as our Drilling Manager and Brant DeMuth as VP of Finance along with key people in land, environmental, and accounting, all of which positions the company well to manage its continued rapid growth."

Conference Call

The Company will hold a conference call on Thursday, April 9, 2015 at 12:00 p.m. Eastern time to discuss results for its fiscal second quarter ended February 28, 2015.

Synergy Resources co-CEO Ed Holloway, co-CEO William Scaff, Jr., CFO Monty Jennings, COO Craig Rasmuson and VP of Capital Markets and Investor Relations Jon Kruljac will host the presentation, followed by a question and answer period.

Date: Thursday, April 9, 2015
Time: 12:00 p.m. Eastern time (10:00 a.m. Mountain time)

877-407-9122 Toll Free Dial-In (US & Canada)
201-493-6747 International/Local Dial-In

The conference call will be webcast simultaneously which you can access via this link: http://syrginfo.equisolvewebcast.com/q2-2015 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, contact Rhonda Sandquist with Synergy Resources at 970-737-1073. A replay of the call will be available after 3:00 p.m. Eastern time on the same day and until April 23, 2015.

Replay Dial-In Numbers
877-660-6853 Toll Free (US & Canada)
201-612-7415 International/Local
Replay ID#411931

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 risk 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," as a non-GAAP financial measure to evaluate financial performance such as period-to-period comparisons. This Non-GAAP measure is not defined under U.S. GAAP and should be considered in addition to, not as a substitute for, indicators of financial performance reported in accordance with U.S. GAAP. The company may use non-GAAP measures that are not 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. The company encourages investors to review its financial statements and publicly-filed reports in their entirety and not rely on any single financial measure. The section titled "Reconciliation of Non-GAAP Financial Measures" includes a detailed description of this measure as well as a reconciliation to its most similar U.S. GAAP measure.

Reconciliation of Non-GAAP Financial Measures

The company defines adjusted EBITDA as net income adjusted to exclude the impact of interest expense, interest income, income taxes, depreciation, depletion and amortization, stock based compensation, and the plus or minus change in fair value of derivative assets or liabilities. The company believes adjusted EBITDA is relevant because it is a measure of cash flow 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 the company's non-GAAP financial measures to the nearest GAAP measure.

                   
  SYNERGY RESOURCES CORPORATION
  RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
  (unaudited, in thousands)
           
      Three Months Ended   Six Months Ended
      February 28,   February 28,   February 28,   February 28,
  ADJUSTED EBITDA   2015   2014   2015   2014
                       
  Net income   $4,652   $5,161   $25,803   $11,261
                       
  Depreciation, depletion, and amortization    15,506    7,719    31,960    13,310
  Income tax expense    3,207    2,338    14,951    5,725
  Stock based compensation    1,136    448    1,929    867
  Change in fair value - derivatives    2,832    1,805    (13,876)    (831)
  Interest income    (28)    (17)    (28)    (48)
   Adjusted EBITDA   $27,305   $17,454   $60,739   $30,284
              
              
              
              

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 Form10-Q for the period ended February 28, 2015.

           
           
  SYNERGY RESOURCES CORPORATION
  CONDENSED BALANCE SHEETS
  (unaudited, in thousands)
   
           
      February 28,   August 31,
      2015   2014
  ASSETS          
  Cash and short term investments   $218,470   $34,753
  Other current assets    51,093    33,487
   Total current assets    269,563    68,240
  Oil and gas properties and other equipment    552,511    379,400
  Other assets    9,769    902
    Total assets   $831,843   $448,542
             
  LIABILITIES AND SHAREHOLDERS' EQUITY          
  Current liabilities   $77,280    103,578
  Revolving credit facility    146,000    37,000
  Asset retirement obligations    7,189    4,730
  Commodity derivative    -    307
  Deferrred tax liability, net    36,504    21,437
   Total liabilities    266,973    167,052
  Shareholders' equity:          
   Common stock and paid-in capital    523,448    265,871
   Retained Earnings    41,422    15,619
    Total shareholders' equity    564,870    281,490
     Total liabilities and shareholders' equity   $831,843   $448,542
           
           
           
                   
  SYNERGY RESOURCES CORPORATION
  CONDENSED STATEMENTS OF OPERATIONS
  (unaudited, in thousands, except share and per share data)
           
      Three Months Ended   Six Months Ended
      February 28,   February 28,   February 28,   February 28,
      2015   2014   2015   2014
                       
  Oil and gas revenues   $23,713   $23,028   $66,251   $42,294
  Expenses:                    
   Lease operating expenses    3,689    1,806    6,730    3,079
   Production taxes    2,143    2,255    6,321    4,271
   Depreciation, depletion, and amortization    15,506    7,719    31,960    13,310
   General and administrative    4,079    1,770    8,189    4,938
    Total expenses    25,417    13,550    53,200    25,598
  Operating income    (1,704)    9,478    13,051    16,696
                       
  Other income (expense):                    
   Commodity derivative realized gain (loss)    12,367    (191)    13,799    (589)
   Commodity derivative unrealized gain (loss)    (2,832)    (1,805)    13,876    831
   Interest income and expense, net    28    17    28    48
    Total other income (expense)    9,563    (1,979)    27,703    290
    Income tax provision    3,207    2,338    14,951    5,725
  Net income   $4,652   $5,161   $25,803   $11,261
  Net income per common share:                    
   Basic   $0.05   $0.07   $0.31   $0.15
   Diluted   $0.05   $0.07   $0.30   $0.15
  Weighted average shares outstanding:                    
   Basic    89,903,288    76,203,938    84,396,143    74,934,940
   Diluted    90,636,107    77,990,416    85,145,431    76,843,593
               
               
           
  SYNERGY RESOURCES CORPORATION
  CONDENSED STATEMENTS OF CASH FLOWS
  (unaudited, in thousands)
      Six Months Ended
      February 28,   February 28,
      2015   2014
             
  Cash flows from operating activities:          
   Net income   $25,803   $11,261
   Adjustments to reconcile net income to net cash          
   provided by operating activities:          
    Depreciation, depletion, and amortization    31,960    13,310
    Provision for deferred taxes    14,951    5,725
    Other, non-cash items    (11,947)    36
    Changes in operating assets and liabilities    4,348    3,022
   Total adjustments    39,312    22,093
    Net cash provided by operating activities    65,115    33,354
  Cash flows from investing activities:          
   Acquisition of property and equipment    (197,530)    (87,497)
   Net proceeds from sales of oil and gas properties    3,696     
   Net proceeds from short term investments    -    39,990
   Net cash used in investing activities    (193,834)    (47,507)
  Cash flows from financing activities:          
   Proceeds from exercise of warrants    15,367    29,104
   Net Proceeds from sale of stock    190,845     
   Net Proceeds from revolving credit facility    106,700     
   Other    (476)    (34)
   Net cash provided by financing activities    312,436    29,070
  Net increase (decrease) in cash and equivalents    183,717    14,917
  Cash and equivalents at beginning of period    34,753    19,463
  Cash and equivalents at end of period    218,470    34,380
  Short term investments    -    20,028
  Cash, equivalents and short term investments   $218,470   $54,408
        
        
        

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