Synergy Resources Completes Acquisition of Assets from Orr Energy
PLATTEVILLE, Colo., Dec. 6, 2012 /PRNewswire/ -- Synergy Resources Corporation (NYSE Mkt: SYRG), a U.S. oil and gas exploration and production company focused on the Denver-Julesburg (D-J) Basin, has purchased from Orr Energy certain assets that include 36 producing oil and gas wells in the Wattenberg Field of the Denver-Julesburg Basin, along with a number of undeveloped leases both in the Wattenberg and surrounding area.
Synergy paid a total consideration of $42 million for the assets, comprised of $30 million in cash and $12 million in Synergy's common stock (approximately 3.1 million shares).
The 36 wells are currently producing at an aggregate average rate of 360 net BOE/D, with Synergy the operator on 35 of the wells. The oldest well has been producing since 2006, and all of the wells have been drilled vertically to the Codell, Niobrara and/or J-Sand formations.
Synergy has a 100% working interest (77% net revenue interest) in 29 of the wells, with a smaller working /net revenue interest in the remaining seven wells. The company will have a 100% working interest (80% net revenue interest) in the majority of future wells drilled on the leased acreage.
The drilled and undrilled leases cover approximately 3,933 gross (3,196 net) acres. Of these net acres, 2,191 are in the core of the Wattenberg field, adjoining or near existing Synergy leased acreage. Given the 20 acre spacing for vertical wells on this acreage, there is the potential to drill approximately 75 new vertical wells. Based on the 80 acre spacing for horizontal wells, there is the potential to drill 55 Codell / Niobrara horizontal wells.
The remaining net acres (approximately 1,005) are located northeast of the Wattenberg field near Grover, Colorado, and have not been drilled by Orr Energy. Management plans to use existing seismic data acquired in the transaction to establish a drilling program for new vertical and horizontal wells on this acreage. This acreage is in close proximity to the producing wells of other operators, where production is believed to contain a high oil ratio.
The cost to acquire the Orr Energy assets was included in the fiscal 2013 CAPEX guidance Synergy provided on its fiscal year end 2012 earnings call. Ed Holloway, CEO of Synergy Resources noted: "The acquisition will be accretive to our financial performance by the fiscal second quarter 2013. While we had already anticipated sequential quarterly revenue growth to return in our current fiscal first quarter; the acquisition will certainly increase our growth rate in the second quarter."
William Scaff, Synergy Resources' executive vice president, commented: "The acquired acreage continues to build critical mass within our existing core Wattenberg acreage and the new undrilled acreage continues to build our inventory of potential new well sites. Through the acquisition, Orr Energy becomes one of our largest shareholders. We were able to acquire Orr Energy due to mutual respect between the two management teams and ongoing confidence that these assets will continue to grow further under Synergy Resource management."
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.
For more information about Synergy Resources Corp., contact Justin Vaicek at Liolios Group at 949-574-3860 or email SYRG@liolios.com.
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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; 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.
SOURCE Synergy Resources Corporation