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Synergy Resources Reports Fiscal Third Quarter 2013 Results


Synergy Resources Reports Fiscal Third Quarter 2013 Results

Revenues up 64% to $12.3 Million, Driving Operating Income up 26% to $4.9 Million and Net Income of $0.07 per Share; Company to Host Earnings Conference Call Today, July 10, 2013 at 12:00 p.m. ET; Phone Numbers Are 877-407-9122 for Toll Free Dial-In; or 201-493-6747 for International/Local Dial-In

PLATTEVILLE, CO -- (Marketwired) -- 07/10/13 -- 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 third quarter results for the period ended May 31, 2013.

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


 
--  Revenues increased 64% to $12.3 million
--  Operating income increased 26% to $4.9 million
--  Net income increased 32% to $3.6 million
--  Adjusted EBITDA (a non-GAAP metric) increased 61% to a total of $9.3
    million, representing a 76% return on revenue

Third Quarter 2013 Operational Highlights


 
--  Net oil and natural gas production increased to 207,543 barrels of oil
    equivalent (BOE), a year over year increase of 66%.
--  Average daily production increased to 2,256 BOE, a sequential quarter
    increase of 9% from 2,067 BOE produced during the second quarter and a
    66% increase from 1,356 BOE in the year-ago quarter.
--  As non-operator, participated in 6 gross horizontal wells (2 net) in
    the Wattenberg Field.
--  As of May 31, 2013, our well count increased to a total of 294 gross
    oil and gas wells (221 net), including 9 wells in various stages of
    drilling or completion activities.
--  Spudded the first operated horizontal well on the Renfroe pad where we
    have a 97% working interest and over 80% net revenue interest.

Third Quarter 2013 Financial Results

Revenues totaled $12.3 million, up 13% from $10.9 million in the previous quarter and up 64% from $7.5 million in the same quarter a year ago. The year-over-year improvement was attributed to a 66% increase in production, primarily from our operated vertical program and from our participation in non-operated horizontal wells in the Wattenberg Field, offset by a 2% decrease in the realized average selling price per BOE. During fiscal Q3 2013, average selling prices were $83.98 per barrel of oil and $4.76 per mcf of gas, as compared to $91.21 and $3.62, respectively, a year-ago.

Operating income increased to $4.9 million, up 9% from $4.5 million in the previous quarter and up 26% from $3.8 million in the same year-ago period. Net income was $3.6 million or $0.07 per basic share and $0.06 per diluted share, up 49% from $2.4 million or $0.05 per basic and diluted share in the year ago period.

Adjusted EBITDA (a non-GAAP financial measure) increased to $9.3 million, up from $7.9 million in the previous quarter and up from $5.8 million in the same period a year-ago.

As of May 31, 2013, our cash and equivalents totaled $19.2 million, as compared to $19.3 million at August 31, 2012. At May 31, 2013, there was $44.5 million borrowed under the revolving line of credit.

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


 
                                                                            
Year over Year                              Three Months Ended              
------------------------------------ -------------------------------        
                                         May 31,         May 31,            
                                           2013            2012      Change 
                                     --------------- --------------- ------ 
Production:                                                                 
  Oil (Bbls)                                 115,225          69,230     66%
  Gas (McF)                                  553,909         333,200     66%
  BOE (Bbls)                                 207,543         124,763     66%
  BOEPD                                        2,256           1,356     66%
                                                                            
Revenues (in thousands):                                                    
  Oil                                $         9,677 $         6,314     53%
  Gas                                          2,637           1,208    118%
                                     --------------- ---------------        
  Total                              $        12,314 $         7,522     64%
                                     =============== ===============        
                                                                            
Average sales price:                                                        
  Oil                                $         83.98 $         91.21     -8%
  Gas                                $          4.76 $          3.62     31%
  BOE (Bbls)                         $         59.33 $         60.29     -2%
                                                                            
  Lease operating expense ($/BOE)    $          5.05 $          3.65     38%
  Production taxes ($/BOE)           $          5.14 $          5.64     -9%
  DD&A expense ($/BOE)               $         18.41 $         14.70     25%
  G&A expense ($/BOE)                $          7.29 $          6.87      6%
                                                                            
                                                                            
Quarter over Quarter                        Three Months Ended              
------------------------------------ -------------------------------        
                                         May 31,       February 28          
                                           2013            2013      Change 
                                     --------------- --------------- ------ 
Production:                                                                 
  Oil (Bbls)                                 115,225         100,694     14%
  Gas (McF)                                  553,909         512,069      8%
  BOE (Bbls)                                 207,543         186,039     12%
  BOEPD                                        2,256           2,067      9%
                                                                            
Revenues (in thousands):                                                    
  Oil                                $         9,677 $         8,478     14%
  Gas                                          2,637           2,443      8%
                                     --------------- ---------------        
  Total                              $        12,314 $        10,921     13%
                                     =============== ===============        
                                                                            
Average sales price:                                                        
  Oil                                $         83.98 $         84.20      0%
  Gas                                $          4.76 $          4.77      0%
  BOE (Bbls)                         $         59.33 $         58.70      1%
                                                                            
  Lease operating expense ($/BOE)    $          5.05 $          4.20     20%
  Production taxes ($/BOE)           $          5.14 $          5.88    -13%
  DD&A expense ($/BOE)               $         18.41 $         17.07      8%
  G&A expense ($/BOE)                $          7.29 $          7.46     -2%
                                                                            
                                                                            
Year over Year                              Nine Months Ended               
------------------------------------ -------------------------------        
                                         May 31,         May 31,            
                                           2013            2012      Change 
                                     --------------- --------------- ------ 
Production:                                                                 
  Oil (Bbls)                                 296,220         160,995     84%
  Gas (McF)                                1,489,624         794,691     87%
  BOE (Bbls)                                 544,490         293,444     86%
  BOEPD                                        1,994           1,075     86%
                                                                            
Revenues (in thousands):                                                    
  Oil                                $        24,662 $        14,646     68%
  Gas                                          6,887           3,574     93%
                                     --------------- ---------------        
  Total                              $        31,549 $        18,220     73%
                                     =============== ===============        
                                                                            
Average sales price:                                                        
  Oil                                $         83.25 $         90.97     -8%
  Gas                                $          4.62 $          4.50      3%
  BOE (Bbls)                         $         57.94 $         62.09     -7%
                                                                            
  Lease operating expense ($/BOE)    $          4.32 $          3.57     21%
  Production taxes ($/BOE)           $          5.46 $          5.70     -4%
  DD&A expense ($/BOE)               $         17.11 $         15.68      9%
  G&A expense ($/BOE)                $          7.37 $          8.72    -15%

Monty Jennings, Chief Financial Officer, commented, "In our fiscal third quarter we began the transition to horizontal operations and we have been focused on readying our initial horizontal pad sites for drilling activity and building our inventory of permits for horizontal wells in the Wattenberg Field. Although we didn't complete any new operated wells in the third quarter, our production has grown through additional compression equipment on our vertical well pad sites and through continued participation in non-operated wells. The third quarter was another record quarter in both production and revenue for Synergy while we maintained a high operating margin. We look forward to completing our first five operated horizontal wells later this quarter and continuing our aggressive horizontal drilling program which should accelerate our growth in fiscal 2014."

Conference Call Information

Synergy Resources President and CEO Ed Holloway, Executive Vice President William Scaff, Jr., CFO Monty Jennings, and VP of Operations Craig Rasmuson will host the presentation, followed by a question and answer period.

Date: Wednesday, July 10, 2013 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/q3-2013 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 Jon Kruljac with Synergy Resources at 303-840-8166. A replay of the call will be available after 3:00 p.m. Eastern time on the same day and until July 24, 2013.

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 new s 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; 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.

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 May 31, 2013.


 
                                                                            
                       SYNERGY RESOURCES CORPORATION                        
                          CONDENSED BALANCE SHEETS                          
                         (Unaudited, in thousands)                          
                                                                            
                                                  May 31,       August 31,  
                                                    2013           2012     
                                               -------------  ------------- 
ASSETS                                                                      
Cash and cash equivalents                      $      19,211  $      19,284 
Other current assets                                  10,792          7,183 
                                               -------------  ------------- 
  Total current assets                                30,003         26,467 
                                               -------------  ------------- 
                                                                            
Oil and gas properties and other equipment           172,810         92,702 
Deferred tax asset, net                                    -            332 
Other assets                                             728          1,230 
                                               -------------  ------------- 
  Total assets                                 $     203,541  $     120,731 
                                               =============  ============= 
                                                                            
LIABILITIES AND SHAREHOLDERS' EQUITY                                        
Current liabilities                                   24,319         15,592 
Revolving credit facility                             44,486          3,000 
Deferred tax liability, net                            4,288              - 
Asset retirement obligations                           2,694          1,027 
                                               -------------  ------------- 
  Total liabilities                                   75,787         19,619 
                                               -------------  ------------- 
                                                                            
Shareholder's equity:                                                       
  Common stock and paid-in capital                   141,985        123,927 
  Accumulated deficit                                (14,231)       (22,815)
                                               -------------  ------------- 
  Total shareholders' equity                         127,754        101,112 
                                               -------------  ------------- 
  Total liabilities and shareholders' equity   $     203,541  $     120,731 
                                               =============  ============= 
                                                                            
                                                                            
                        SYNERGY RESOURCES CORPORATION                       
                     CONDENSED STATEMENTS OF OPERATIONS                     
         (Unaudited, in thousands, except share and per share data)         
                                                                            
                             Three Months Ended         Nine Months Ended   
                            May 31,      May 31,      May 31,      May 31,  
                              2013         2012         2013         2012   
                          -----------  -----------  -----------  -----------
                                                                            
Oil and gas revenues      $    12,314  $     7,522  $    31,549  $    18,220
                          -----------  -----------  -----------  -----------
                                                                            
Expenses                                                                    
  Lease operating                                                           
   expenses                     1,048          456        2,352        1,048
  Production taxes              1,067          703        2,975        1,672
  Depreciation,                                                             
   depletion,and                                                            
   amortization                 3,820        1,834        9,316        4,600
  General and                                                               
   administrative               1,514          682        4,013        2,559
                          -----------  -----------  -----------  -----------
    Total expenses              7,449        3,675       18,656        9,879
                          -----------  -----------  -----------  -----------
                                                                            
Operating income                4,865        3,847       12,893        8,341
                          -----------  -----------  -----------  -----------
                                                                            
Other income (expense)                                                      
  Commodity derivative                                                      
   gain                           540            -          386            -
  Interest expense, net           (94)           -          (94)           -
  Interest income                   5           16           20           27
                          -----------  -----------  -----------  -----------
    Total other income            451           16          312           27
                          -----------  -----------  -----------  -----------
                                                                            
Income before income                                                        
 taxes                          5,316        3,863       13,205        8,368
                                                                            
Deferred income tax                                                         
 (provision) benefit           (1,701)      (1,432)      (4,620)       1,809
                          -----------  -----------  -----------  -----------
Net income                $     3,615  $     2,431  $     8,585  $    10,177
                          ===========  ===========  ===========  ===========
                                                                            
Net income per common                                                       
 share:                                                                     
  Basic                   $      0.07  $      0.05  $      0.16  $      0.23
                          ===========  ===========  ===========  ===========
  Diluted                 $      0.06  $      0.05  $      0.15  $      0.22
                          ===========  ===========  ===========  ===========
                                                                            
Weighted average shares                                                     
 outstanding:                                                               
  Basic                    55,238,098   51,292,810   53,283,695   44,968,566
  Diluted                  58,918,586   53,174,793   55,623,990   46,775,994
                                                                            
                                                                            
                       SYNERGY RESOURCES CORPORATION                        
                     CONDENSED STATEMENTS OF CASH FLOWS                     
                         (unaudited, in thousands)                          
                                                                            
                                                      Nine Months Ended     
                                                 May 31, 2013  May 31, 2012 
                                                 ------------  ------------ 
                                                                            
Cash flow from operating activities:                                        
  Net income                                     $      8,585  $     10,177 
                                                 ------------  ------------ 
  Adjustments to reconcile net income to net                                
   cash provided by operating activities:                                   
  Depreciation, depletion, and amortization             9,316         4,600 
  Provision for deferred taxes                          4,620        (1,809)
  Other, non-cash items                                   626           323 
  Changes in operating assets and liabilities           5,096         3,787 
                                                 ------------  ------------ 
  Total adjustments                                    19,658         6,901 
                                                 ------------  ------------ 
  Net cash provided by operating activities            28,243        17,078 
                                                 ------------  ------------ 
                                                                            
Cash flows from investing activities:                                       
  Acquisition of property and equipment               (70,269)      (34,026)
                                                 ------------  ------------ 
  Net cash used in investing activities               (70,269)      (34,026)
                                                 ------------  ------------ 
                                                                            
Cash flows from financing activities:                                       
  Net proceeds from equity transactions                   467        37,422 
  Net proceeds from/(repayments of) debt               41,486        (2,200)
                                                 ------------  ------------ 
  Net cash provided by financing activities            41,953        35,222 
                                                                            
Net increase (decrease) in cash and cash                                    
 equivalents                                              (73)       18,274 
Cash and equivalents at beginning of period            19,284         9,491 
                                                 ------------  ------------ 
Cash and equivalents at end of period            $     19,211  $     27,765 
                                                 ============  ============ 

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.


 
                                                                            
               RECONCILIATION OF NON-GAAP FINANCIAL MEASURES                
                         (Unaudited, in thousands)                          
                                                                            
                                                                            
                                               Three Months Ended           
                                     -------------------------------------- 
                                       May 31,    February 28,    May 31,   
                                         2013         2013          2012    
                                     -----------  ------------  ----------- 
Adjusted EBITDA:                                                            
  Net income                         $     3,615  $      2,732  $     2,431 
  Depletion, depletion, and                                                 
   amortization                            3,820         3,176        1,834 
  Provision for deferred income tax        1,701         1,604        1,432 
  Stock based compensation                   611           215          108 
  Commodity derivative change               (502)          134            - 
  Interest and related items, net             89            (8)         (16)
                                     -----------  ------------  ----------- 
    Adjusted EBITDA                  $     9,334  $      7,853  $     5,789 
                                     ===========  ============  =========== 
                                                                            
                                                                            
                                                                            
                                                      Nine Months Ended     
                                                 -------------------------- 
                                                 May 31, 2013  May 31, 2012 
                                                 ------------  ------------ 
Adjusted EBITDA:                                                            
  Net income                                     $      8,585  $     10,177 
  Depletion, depreciation, and amortization             9,316         4,600 
  Provision for deferred income tax                     4,620        (1,809)
  Stock based compensation                                994           323 
  Commodity derivative change                            (368)            - 
  Interest and related items, net                          74           (27)
                                                 ------------  ------------ 
    Adjusted EBITDA                              $     23,221  $     13,264 
                                                 ============  ============ 

Investor Relations Contact: Jon Kruljac Synergy Resources Corporation jkruljac@syrginfo.com Tel (303) 840-8166

Company Contact: Rhonda Sandquist Synergy Resources Corporation rsandquist@syrginfo.com Tel (970) 737-1073

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