Synergy earns 2Q profit, eyes acquisitions

PLATTEVILLE – Synergy Resources Corp. (NYSE MKT: SYRG) earned $4.6 million during its fiscal second quarter, down from $5.2 million during the same period a year earlier.

The company posted $23.7 million in revenue during the fiscal second quarter ended Feb. 28, a 3 percent increase from $23 million during the same quarter a year earlier. The higher revenue stemmed from a 98-percent increase in production from Synergy’s horizontal wells and production related to its acquisition of Denver-based Bayswater Exploration & Production’s Wattenberg field assets Dec. 15.

Synergy’s average selling price of oil and natural gas declined 48 percent to $43.51 per barrel for oil and $3.38 per thousand cubic feet of natural gas, offsetting further revenue growth, according to Synergy. Those selling prices declined from $86.82 per barrel of oil and $5.93 per thousand cubic feet of natural gas during the second quarter a year earlier.

West Texas Intermediate crude oil spot prices gained less than 1 percent to $50.80 Thursday afternoon, down from highs reaching $107 last summer.

Amid the oil price downturn, Synergy is seeking to make acquisitions sometime in this year.

“We’re working all angles,” co-CEO Ed Holloway said. “We’re in discussions continually with people we’ve been in discussions with for a couple of years to new discussions.”

Synergy co-CEO Bill Scaff called the downturn an “opportunity-rich” environment to acquire additional drilling acreage.

“We can’t talk a lot about it, but we expect there to be activity in that regard this year,” he said.

The company also has sought to lower its drilling costs from about $3.3 million to less than $3 million, chief operating officer Craig Rasmuson said.

As of Feb. 28, the company had cash and equivalents of $218.5 million and had borrowed $146 million under its credit facility.

Synergy’s production rose to 697,000 barrels of oil equivalent during the second quarter compared with 353,000 barrels of oil equivalent during the same quarter a year earlier. The company averaged 7,745 barrels of oil equivalent per day during the second quarter compared with an average 3,917 barrels of oil equivalent per day the same quarter a year earlier.

Synergy shares lost less than 1 point to close at $12.13.

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