Synergy Resources to pay $505M for Noble assets in Weld County
DENVER — Oil company Synergy Resources Corp. (NYSE: SYRG) on Tuesday announced it has struck a deal to buy a sizeable chunk of drilling assets in Weld County from Houston-based Noble Energy Inc. (NYSE: NBL) for $505 million.
While the assets represent a small portion of Noble’s holdings in the Denver-Julesburg Basin, the acquisition of 33,100 net acres would nearly double the local holdings of Synergy, which last year moved its corporate offices from Platteville to Denver.
The acreage purchased is primarily in and around the city of Greeley, Synergy officials said.
The deal is expected to close on two separate dates, with the purchase of undeveloped land and non-operated production portions expected to close in the second quarter and operated producing properties to close later this year.
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Synergy officials said they plan to fund the cash transaction with a variety of sources. In addition to cash on hand and an $80 million private placement of senior notes, the company said Tuesday it plans to offer 45 million shares of common stock in a public offering. If underwriters pick up an additional 6.75 million shares, the full value of that offering could exceed $350 million based on the closing price of Synergy’s shares on Tuesday of $6.89.
Synergy’s share price, however, slid 6 percent to $6.49 in after-hours trading following Tuesday’s announcement, which came after markets closed.
“This acquisition is transformational for Synergy and a significant step forward in the Company’s evolution to become a leading operator in the Wattenberg Field,” Synergy chairman and chief executive Lynn Peterson said in a release.
Lynn said the company does not expect the acquisition to increase Synergy’s operational activities this year but that development of the new acreage should be a significant part of 2017’s operational program, which is expected to include up to three drilling rigs. Synergy currently is operating one rig in Weld County.
In addition to the deal with Noble, Synergy announced that it has reached deals with a pair of private entities to divest 3,700 net undeveloped acres and 107 vertical wells located primarily in Adams County for a total of $27 million. The well transaction closed recently and the other is expected to close in the second quarter.
In addition to the acquisition, Synergy reported a first-quarter net loss of $51.4 million, or 42 cents per share, on Tuesday. That compares with a net loss of $993,000, or 1 cent per share, for the same period last year. Revenue, meanwhile, decreased from $18.9 million last year to $18.3 million this year thanks to continued low oil prices.
As for Noble, the asset sale would leave that company with 363,100 net acres in the Denver-Julesburg Basin. Company officials said the company is focusing more on its East Pony and Wells Ranch areas in Weld County. The company has announced $775 million in asset sales this year as it tries to strengthen its balance sheet.
