Synergy Resources Reports Fiscal First Quarter 2013 Results

         Synergy Resources Reports Fiscal First Quarter 2013 Results

Revenues up 86% to $8.3 Million, Driving Operating Income up 119% to $3.5
Million and Net Income of $0.04 per Share

Company to Host Investor Conference Call Today, January 9, 2013 at 12:00 p.m.
ET

PR Newswire

PLATTEVILLE, Colo., Jan. 9, 2013

PLATTEVILLE, Colo., Jan. 9, 2013 /PRNewswire/ --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 first quarter
results for the period ended November 30, 2012.

First Quarter 2013 Financial Highlights vs. Same Year-Ago Quarter

  oRevenues increased 86% to a $8.3 million
  oOperating income improved 119% to $3.5 million
  oNet income increased 38% to $2.2 million or $0.04 per share
  oAdjusted EBITDA (a non-GAAP metric) totaled $6.0 million, up 107%,
    representing a 73% return on revenue
  oAt November 30, 2012, cash and equivalents totaled $12.5 million,
    borrowings were $5.5 million and available credit facility was $41.5
    million

First Quarter 2013 Operational Highlights

  oNet oil and natural gas production increased 89% to 150,909 barrels of oil
    equivalent (BOE), averaging 1,658 BOE per day versus 876, as compared to
    the same year-ago quarter
  oAs operator, drilled 25 vertical wells and brought 15 into production
    during the quarter, increasing the total number of wells drilled as
    operator to 132, with 112 brought into production
  oReached agreement to acquire Orr Energy, closed on December 5th, adding to
    the company's acreage and production profile in the core Wattenberg Field
    and Northern extension of this field
  oParticipated with Encana Corp in six vertical wells that were brought
    on-line (working interests of 25% - 66%)
  oParticipated with Bill Barrett Corp in two horizontal Niobrara wells, one
    drilled to the B Bench and the other drilled to the C Bench (working
    interests of 12.5%)
  oAs of December 31, 2012, the company had completed, acquired or
    participated in a total of 250 producing oil and gas wells, and was
    working to bring on-line an additional 23 wells which had been drilled
    during the quarter.

First Quarter 2013 Financial Results

Revenues totaled $8.3 million, up 23% from $6.7 million in the previous
quarter and up 86% from $4.5 million in the same quarter a year ago. The
year-over-year improvement was attributed to an 89% increase in production,
primarily from the new wells brought on line, offset by a 2% decrease in the
realized average selling price per BOE. During fiscal Q1 2013, average selling
prices were $81.03 per barrel of oil and $4.27 per mcf of gas, as compared to
$83.03 and $5.23, respectively, a year-ago.

Operating income increased to $3.5 million, up 4% from $3.4 million in the
previous quarter and up 119% from $1.6 million in the same year-ago period.
Net income increased to $2.2 million or $0.04 per basic and diluted share, up
15% from $1.9 million or $0.04 per basic and diluted share in the previous
quarter and up 38% from $1.6 million or $0.05 per basic and $0.04 per diluted
share in the same year ago period. Fiscal Q1 2012 did not include any income
tax expense, while fiscal Q1 2013 included a deferred tax expense of $1.3
million (equivalent to $0.03 per share).

Adjusted EBITDA increased to $6.0 million, up 20% from $5.0 million in the
previous quarter and up 107% from $2.9 million in the same year-ago quarter.
This represented a 73% return on revenue in the first fiscal quarter of 2013,
up from 65% return in Q1 in 2012.

As of November 30, 2012, the company's cash and equivalents totaled $12.5
million, as compared to $19.3 million at August 31, 2012. At November 30,
2012, there was $41.5 million available to borrow under the revolving line of
credit.

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

                               Three Months Ended
Per Unit Metric                November 30,        November 30,
                               2012                2011               % Change
Sales volumes - oil (Bbls)     80,301              38,277             110%
Sales volumes - gas (Mcf)      423,646             248,486            70%
Sales Volumes – BOE            150,909             79,691             89%
BOEPD                          1,658               876
Revenue (in thousands)
Oil                            $      6,507   3,178              105%
Gas                            1,807               1,301              39%
Total                          $      8,314   4,479              86%
Average sales price - oil      $      81.03   $      83.03  -2%
($/Bbls)
Average sales price - gas      4.27                5.23               -19%
($/Mcf)
Average sales price - ($/BOE)  55.09               56.20              -2%
Lease operating expense        $       3.47  $       2.67 30%
($/BOE)
Production taxes ($/BOE)       5.40                5.08               6%
DD&A expense ($/BOE)           15.37               15.23              1%
G&A expense ($/BOE)            7.36                11.79              -38%

* "Bbl" refers to one stock tank barrel, or 42 U.S. gallons liquid volume in
reference to crude oil or other liquidhydrocarbons."Mcf" refers to one
thousand cubic feet. A BOE (i.e. barrel of oil equivalent) combines Bbls
ofoil and Mcf of gas by converting each six Mcf of gas to one Bbl of oil.

Management Commentary
"We remained very active in our vertical drilling program in the first
quarter, drilling all 25 of our vertical wells we had planned on budget and
ahead of schedule," said Synergy Resources President and CEO Edward Holloway.
"We extended the program with two additional vertical wells drilled in
December. Completion activities on these wells are underway, with initial
production from these wells expected in the second quarter. This accelerated
pace now allows us to focus on our horizontal drilling program for the
remainder of this year.

"This horizontal drilling program includes up to four horizontal wells to be
drilled for our own account, with an anticipated start date in fiscal Q3. Our
2013 capital expenditure plans calls for participation in 10 non-operated
horizontal wells. However, recent discussions with other major operators
indicate an acceleration of horizontal drilling plans in the Wattenberg field
and we have been given notice on 16 wells. Fourteen of the potential wells are
in the Wattenberg Field and two are in the extended area of the field.

"We recently were able to significantly increase our borrowing facility to
$150 million, with an initial borrowing base of $47 million and a maximum
interest rate of LIBOR plus 3.25%. This expanded line was used to close the
acquisition of Orr Energy, which added 36 wells producing an estimated 360 BOE
per day. We are now reviewing operational status of these wells to determine
ways to further stimulate production. We are also evaluating seismic data on
the undrilled 1,005 net acres in Grover, Colorado that we acquired from Orr,
in order to determine where and when we will begin drilling. We also initiated
our commodity hedging program which will continue to be put in place over the
next several months. Our initial hedge covering approximately 15% of
production consists of swaps covering 24 months with an average price of $91.
We expect to ultimately hedge in excess of 45% of our annual production.

"Altogether, it was another strong quarter for Synergy which not only
demonstrated increasing production and continued high success rate with our
drilling program, but more importantly substantially broadened the foundation
of our operational base in one of the country's more prolific oil and gas
fields. This puts us on course for significant sequential growth during the
remainder of the fiscal year."

Conference Call
Synergy Resources will host a conference call later this morning, Wednesday,
January 9, 2013 at 12:00 p.m. Eastern time (10:00 a.m. Mountain time) to
discuss its fiscal first quarter 2013 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: Wednesday, January 9, 2013
Time: 12:00 p.m. Eastern time (10:00 a.m. Mountain time)
Domestic Dial-In Number: 1-877-941-1427
International Dial-In Number: 1-480-629-9664
Conference ID#: 4586451

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 Justin Vaicek
of Liolios Group at (949) 574-3860.

A replay of the call will be available after 3:00 p.m. Eastern time on the
same day and until February 9, 2013.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay pin #: 4586451

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 Non-GAAP Financial Measures The company uses "adjusted EBITDA," a
non-GAAP financial measure, for internal managerial purposes when evaluating
period-to-period comparisons. This measure is not a measure 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 EBITDA as net income (loss) adjusted to exclude
the impact of interest expense, interest income, income taxes, depreciation,
depletion and amortization for the period, and stock based compensation,
plus/minus the change in fair value of derivative assets or liabilities.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.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
                           Three Months Ended (in thousands)
                           November 30, 2012  November 30, 2011  August 31,
                                                                 2012
Adjusted EBITDA:
Net income                 $          $          $      
                               2,238          1,627         1,947
Interest and related       (7)                (8)                (10)
items, net
Provision for deferred     1,315              -                  1,477
income tax
Depletion, depletion, and  2,320              1,214              1,410
amortization
Stock based compensation   168                97                 150
Adjusted EBITDA            $          $          $      
                               6,034          2,930         4,974

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 Form 10-Q for the period ended November 30, 2012.

SYNERGY RESOURCES CORPORATION
CONDENSED BALANCE SHEETS
(Unaudited, in thousands)
                                          November 30           August 31
                                          2012                    2012
ASSETS
Cash and cash equivalents                 $        12,465  $   19,284
Other current assets                      9,356                   7,183
Total current assets                      21,821                  26,467
Oil and gas properties and other          106,214                 92,702
equipment
Deferred tax asset, net                   -                       332
Other assets                              2,707                   1,230
Total assets                              $       130,742   $ 120,731
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities                       $        18,759  $   15,592
Revolving credit facility                 5,486                   3,000
Deferred tax liability, net               983                     -
Asset retirement obligations              1,171                   1,027
Total liabilities                         26,399                  19,619
Shareholders' equity:
Common stock and paid-in capital          124,920                 123,927
Accumulated deficit                       (20,577)                (22,815)
Total shareholders' equity                104,343                 101,112
Total liabilities and shareholders'       $       130,742   $ 120,731
equity



SYNERGY RESOURCES CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
                               Three Months Ended
                               November 30            November 30
                               2012                   2011
Oil and gas revenues           $       8,314   $       4,479
Expenses:
Direct operating expenses      1,337                  706
Depreciation, depletion,       2,320                  1,214
 and amortization
General and administrative     1,111                  940
Total expenses                 4,768                  2,860
Operating income               3,546                  1,619
Other income:
Interest Income                7                      8
Deferred income tax provision  (1,315)                -
Net income                     $       2,238   $       1,627
Net income per common share:
Basic                          $        0.04  $        0.05
Diluted                        $        0.04  $        0.04
Weighted average
 shares outstanding:
Basic                          51,661,704             36,098,212
Diluted                        53,616,182             37,845,212

SYNERGY RESOURCES CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
For the three months ended November 30, 2012 and November 30, 2011
(Unaudited, in thousands)
                                                          2012        2011
Cash flows from operating activities:
Net income                                              $  2,238  $ 1,627
Adjustments to reconcile net income to net cash
 provided by operating activities:
Depreciation, depletion, and amortization               2,320       1,214
Provision for deferred taxes                            1,315       -
Other, non-cash items                                   168         97
Changes in operating assets and liabilities             (3,272)     1,649
Total adjustments                                       531         2,960
Net cash provided by operating activities                 2,769       4,587
Cash flows from investing activities:
Acquisition of property and equipment                     (12,220)    (7,071)
Net cash used in investing activities                     (12,220)    (7,071)
Cash flows from financing activities:
Proceeds from exercise of warrants                        146         -
Net proceeds from/(repayments of) revolving credit        2,486       5,392
facility
Principal repayment of related party notes payable        -           (5,200)
Net cash provided by financing activities                 2,632       192
Net decrease in cash and equivalents                      (6,819)     (2,292)
Cash and equivalents at beginning of period               19,284      9,491
Cash and equivalents at end of period                     $ 12,465   $ 7,199

SOURCE Synergy Resources Corporation

Website: http://www.SYRGinfo.com
Contact: Company, Rhonda Sandquist, Synergy Resources Corporation,
rsandquist@syrginfo.com, +1-970-737-1073, Investor Relations, Justin Vaicek,
Liolios Group, syrg@liolios.com, +1-949-574-3860
 
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