Synergy Resources Corporation Reports Third Quarter Results

News provided by

Synergy Resources Corporation

Jul 20, 2011, 06:00 ET

DENVER, July 20, 2011 /PRNewswire/ -- Synergy Resources Corporation (OTCBB: SYRG), a domestic oil and gas exploration and production company focused in the Denver-Julesburg Basin (the "D-J Basin"),  today reported third quarter results for the period ended May 31, 2011.  Net oil and natural gas production for the third quarter 2011 increased to 467 barrels of oil per day (Boe/d) compared to 149 Boe/d for the third quarter 2010.  

Third Quarter 2011 Highlights

  • Reported oil and natural gas production of 467 Boe/d for the third quarter 2011, an increase of 213%;
  • Posted a 412% increase in revenues to $3,106,336 compared to $607,253;
  • Acquired interests in 88 oil and natural gas leases in the core Wattenberg Field;
  • Generated $5,244,517 from the sale of mineral interests in 3,502 gross acres;
  • Reported operating cash flow of $3,824,882;
  • Posted positive shareholders equity of $45.1 million compared to a negative $1.0 million.

Frank Jennings, Chief Financial Officer of Synergy Resources Corporation, noted "Our financial results for the quarter reflect approximately $844,585 in non-cash charges associated with our convertible notes and derivative conversion liability.  For the quarter, interest expense included non-cash amortization and accretion of $1,184,664.  As discussed last quarter, all of the note holders have elected to convert their notes into shares of common stock, which eliminate future non-cash charges and interest expense after March 31, 2011. On a pro-forma basis adjusted for these non-cash charges we had net income of $550,000 for the quarter. Additionally, we no longer have the liability on our balance sheet which results in a positive shareholders' equity of $45.1 million compared to a negative $1.0 million at the beginning of the year."

Operating income for the three month period ended May 31, 2011 was $547,272 compared to an operating loss of $51,094 for the comparable year-ago quarter.  Revenues for the third quarter were a record $3,106,336 compared to $607,253 for the comparable year-ago quarter.  The Company narrowed its net loss to $291,612 or $0.01 per share for the third quarter 2011 from a net loss of $3,649,812 or $0.30 per share for the same year ago period.  Improved operating results for the quarter were associated with increasing revenues from the Company's 36 wells completed during 2010. As of May 31, 2011, Synergy Resources had 124 gross wells, 114 producing wells, 8 wells in progress and two shut in wells (net wells of 89).

Edward Holloway, Chief Executive Officer and President of Synergy Resources, said, "Fiscal 2011 is rapidly shaping up to be our Company's best year since inception.  Accelerated drilling activity on our core Wattenberg projects has improved our production rates and continues to drive our strong revenue growth.  Our liquid-rich projects, located predominantly in the northeast and central portion of the Wattenberg, contributed to our record quarterly performance. In addition, we increased our prospective Niobrara acreage position and also engaged in several transactions that expanded our footprint in the Wattenberg Field and the D-J Basin."

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 the 7th largest field in the U.S. in terms of proved gas reserves and 9th in production. Synergy's corporate offices are located in Platteville, Colorado.  More company news and information is available at www.SYRGinfo.com.

This press release may contain forward-looking statements.  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.

SYNERGY RESOURCES CORPORATION

CONDENSED BALANCE SHEETS





As of


As of





May 31, 2011

August 31, 2010




(unaudited)


ASSETS

Current assets:





Cash and cash equivalents

$

11,096,665

$

6,748,637

Accounts receivable

5,091,538

3,176,320

Inventory

706,742

387,864

Other current assets

18,307

12,310



Total current assets

16,913,252

10,325,131









Property and equipment:





Oil and gas properties, full cost method, net

38,582,870

12,692,194

Other property and equipment, net

230,671

150,789



Property and equipment, net

38,813,541

12,842,983









Other assets

90,000

1,673,799












Total assets

$

55,816,793

$

24,841,913









LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:





Accounts payable

3,641,713

3,570,231

Accrued expenses

1,334,560

517,921

Notes payable, related party

5,200,000

-



Total current liabilities

10,176,273

4,088,152









Asset retirement obligations

521,081

254,648

Convertible promissory notes, net of debt discount

-

12,190,945

Derivative conversion liability

-

9,325,117



Total liabilities

10,697,354

25,858,862









Shareholders' equity:





Common stock and paid in capital

81,648,837

22,322,474

Accumulated (deficit)

(36,529,398)

(23,339,423)



Total shareholders' equity

45,119,439

(1,016,949)












Total liabilities and shareholders' equity

$

55,816,793

$

24,841,913

SYNERGY RESOURCES CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)















Three Months Ended May 31,


Nine Months Ended May 31,




2011

2010

2011

2010













Revenues:











Oil and gas revenues

$

2,921,910

$

607,253

$

6,399,193

$

995,764

Service revenues

184,426

-

211,715

-

Total revenues

3,106,336

607,253

6,610,908

995,764













Expenses:











Lease operating expenses

668,683

106,503

1,131,837

161,545

Depreciation, depletion,
   and amortization

830,639

200,890

2,062,825

293,829

General and administrative

1,059,742

350,954

2,171,721

986,364

Total expenses

2,559,064

658,347

5,366,383

1,441,738













Operating income (loss)

547,272

(51,094)

1,244,525

(445,974)













Other income (expense):











Change in fair value of
  derivative conversion liability

86,192

(2,764,888)

(10,229,229)

(2,764,888)

Interest expense, net

(950,860)

(834,381)

(4,246,945)

(1,248,517)

Interest income

25,784

551

41,675

4,237

Total other income (expense)

(838,884)

(3,598,718)

(14,434,499)

(4,009,168)













Net loss

$

(291,612)

$

(3,649,812)

$

(13,189,974)

$

(4,455,142)













Net loss per common share:











Basic and Diluted

(0.01)

(0.30)

(0.58)

(0.37)













Weighted average
   shares outstanding:











Basic and Diluted

32,813,298

11,998,000

22,713,785

11,998,000

SOURCE Synergy Resources Corporation

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