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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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COLORADO
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20-2835920
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1625 Broadway, Suite 300, Denver, CO
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80202
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock
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NYSE MKT
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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•
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extended or further decline in oil and natural gas prices;
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•
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operating hazards that adversely affect our ability to conduct business;
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•
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uncertainties in the estimates of proved reserves;
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•
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effect of seasonal weather conditions and wildlife restrictions on our operations;
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•
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our ability to fund, develop, produce and acquire additional oil and natural gas reserves that are economically recoverable;
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•
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our ability to obtain adequate financing;
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•
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effect of local and regional factors on oil and natural gas prices;
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•
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incurrence of ceiling test write-downs;
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•
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our inability to control operations on properties we do not operate;
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•
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availability and capacity of gathering systems and pipelines for our production;
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•
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the strength and financial resources of our competitors;
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•
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our ability to successfully identify, execute or effectively integrate future acquisitions;
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•
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effect of federal, state and local laws and regulations;
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•
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effects of new environmental legislation or regulatory initiatives, including those related to hydraulic fracturing;
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•
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our ability to market our production;
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•
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the effects of local moratoria or bans on our business;
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•
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effect of environmental liabilities;
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•
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effect of the adoption and implementation of new statutory and regulatory requirements for derivative transactions;
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•
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changes in U.S. tax laws;
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•
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our ability to satisfy our contractual obligations and commitments;
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•
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the amount of our indebtedness and ability to maintain compliance with debt covenants;
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•
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key executives allocating a portion of their time to other business interests;
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•
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effectiveness of our disclosure controls and our internal controls over financial reporting;
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•
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the geographic concentration of our principal properties;
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•
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our ability to protect critical data and technology systems;
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•
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the availability of water for use in our operations; and
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•
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the risks and uncertainties described in "Risk Factors."
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ITEM 1.
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BUSINESS
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•
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Concentrate on our existing core area in and around the D-J Basin, where we have significant operating experience.
All of our current wells are located within the D-J Basin and our undeveloped acreage is located either in or adjacent to the D-J Basin. Focusing our operations in this area leverages our management, technical and operational experience in the basin.
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•
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Develop and exploit existing oil and natural gas properties.
Since inception our principal growth strategy has been to develop and exploit our acquired and leased properties to add proved reserves. In the Wattenberg Field, we target three benches of the Niobrara formation as well as the Codell formation for horizontal drilling and production. Our plans focus on horizontal development as we believe horizontal drilling is the most efficient way to recover the potential hydrocarbons. We consider the Wattenberg Field to be relatively low-risk because information gained from the large number of existing wells can be applied to potential future wells. There is enough similarity between wells in the Wattenberg Field that the exploitation process is generally repeatable.
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•
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Improve hydrocarbon recovery through increased well density.
We utilize the best available industry practices in our effort to determine the optimal recovery area for each well. When we began our operated horizontal well development program in the Wattenberg Field, we assumed spacing of 16 wells per 640 acre section. With increased experience and industry knowledge, we are now testing up to 24 horizontal wells per section.
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•
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Complete selective acquisitions.
We seek to acquire developed and undeveloped oil and gas properties, primarily in the D-J Basin and certain adjacent areas. We generally seek acquisitions that will provide us with opportunities for reserve additions and increased cash flow through production enhancement and additional development and exploratory prospect generation.
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•
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Retain control over the operation of a substantial portion of our production.
As operator of a majority of our wells and undeveloped acreage, we control the timing and selection of new wells to be drilled or existing wells to be re-completed. This allows us to modify our capital spending as our financial resources and underlying lease terms allow and market conditions permit.
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•
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Maintain financial flexibility while focusing on operational cost control.
We strive to be a cost-efficient operator in the D-J Basin. Our relatively low utilization of debt enhances our financial flexibility and our high degree of operational control, as well as our focus on operating efficiencies and short return on investment cycle times, is central to our operating strategy. Additionally, we seek to maintain low lease operating, drilling and completion costs. We intend to finance our operations through a mixture of cash from operations, debt and equity capital as market conditions allow.
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•
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Use the latest technology to maximize returns.
Beginning in fiscal 2013, we shifted our emphasis away from drilling vertical wells towards drilling horizontal wells. In doing so, we have significantly increased our production and the value of our asset base. While horizontal drilling requires higher up-front costs, these wells have generated relatively higher returns on our capital deployed. Increasing the number of wells drilled within a given drilling section and applying technical advances in drilling and completion designs is leading to enhanced productivity. Production results from various well designs are analyzed and the conclusions from each analysis are factored into future well designs that take into account spacing between hydraulic fracturing stages, potential communication between wellbores, lateral length, timing and economics. Similarly, we evaluate the use of different completion fluids.
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•
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Core acreage position in the Wattenberg Field.
Wells in our core properties in the Wattenberg Field generally exhibit high liquids content, and those properties are generally prospective for Niobrara A, B, and C bench and Codell development. We believe these factors will lead to attractive EURs per well, per unit capital and operating costs and rates of return. Increased well density within the Codell and Niobrara formations as well as our acquisition efforts and organic leasing efforts within the core Wattenberg Field have added to our multi-year drilling inventory. We also believe our core acreage could be prospective for Greenhorn, Sussex, and J-Sand development.
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•
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Financial flexibility.
Our capital structure and high degree of operational control continues to provide us with significant financial flexibility. We have historically utilized very little debt in our capital structure. In addition to being a potential future source of liquidity, our low debt level has enabled us to make capital decisions with limited restrictions imposed by debt covenants, lender oversight and/or mandatory repayment schedules. Additionally, as the operator of 66% of our anticipated future net drilling locations, we control the timing and selection of drilling locations as well as completion schedules. This allows us to modify our capital spending program depending on financial resources, leasehold requirements and market conditions.
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•
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Management experience.
Our key management team possesses an average of over
thirty years o
f experience in oil and gas exploration and production in multiple resource plays, including the Wattenberg Field.
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•
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Balanced oil and natural gas reserves and production.
At
August 31, 2015
, approximately
49
% of our estimated proved reserves were oil and condensate and
51
% were natural gas and natural gas liquids, measured on a Btu equivalent basis. We believe this balanced commodity mix will provide diversification of sources of cash flow.
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•
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Cost-efficient operator.
We have continued to demonstrate our ability to drill wells in a cost efficient way and to successfully integrate acquired assets without incurring significant increases in overhead.
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•
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High success rate.
We have concentrated our drilling in areas that we perceive as relatively low risk and, as a result, have had a very high success rate in our drilling program throughout the Wattenberg Field.
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Years Ended August 31,
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||||||||||||||||
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2015
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2014
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2013
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||||||||||||
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Gross
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Net
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Gross
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Net
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Gross
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Net
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||||||
Development Wells:
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||||||
Productive:
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Oil
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8
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1
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47
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22
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48
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32
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Gas
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1
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—
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2
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1
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—
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—
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Nonproductive
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—
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—
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—
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—
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—
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—
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||||||
Exploratory Wells:
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||||||
Productive:
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||||||
Oil
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67
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40
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11
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10
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—
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—
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Gas
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—
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—
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—
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|
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—
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—
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—
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Nonproductive
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—
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—
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1
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—
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—
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—
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Years Ended August 31,
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||||||||||
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2015
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2014
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2013
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||||||
Production
:
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Oil (MBbls)
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1,970
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941
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421
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Gas (MMcf)
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7,344
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3,747
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2,108
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MBOE
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3,194
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1,566
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773
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Average sales price:
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Oil ($/Bbl)
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$
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50.75
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$
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89.98
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$
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85.95
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Gas ($/Mcf)
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$
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3.39
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$
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5.21
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$
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4.75
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BOE
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$
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39.09
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$
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66.56
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$
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59.83
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||||||
Average production cost per BOE
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$
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4.70
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$
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5.10
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$
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4.42
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•
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acquire a working interest in one or more prospects from others and participate with the other working interest owners in drilling, and if warranted, completing oil or gas wells on a prospect, or
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•
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purchase producing oil or gas properties.
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•
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royalties and other burdens and obligations, expressed or implied, under oil and gas leases;
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•
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overriding royalties and other burdens created by us or our predecessors in title;
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•
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a variety of contractual obligations (including, in some cases, development obligations) arising under operating agreements, farm-out agreements, production sales contracts and other agreements that may affect the properties or title thereto;
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•
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back-ins and reversionary interests existing under purchase agreements and leasehold assignments;
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•
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liens that arise in the normal course of operations, such as those for unpaid taxes, statutory liens securing obligations to unpaid suppliers and contractors and contractual liens under operating agreements;
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•
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pooling, unitization and communitization agreements, declarations and orders; and
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•
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easements, restrictions, rights-of-way and other matters that commonly affect property.
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Productive Wells
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Developed Acreage
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Undeveloped Acreage
1
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||||||||||||
State
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Gross
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Net
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Gross
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Net
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Gross
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Net
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||||||
Colorado
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582
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407
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24,555
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19,400
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232,411
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139,400
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Nebraska
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—
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—
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—
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—
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191,520
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187,677
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Wyoming
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—
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—
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—
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—
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1,143
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472
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Kansas
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—
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—
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—
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—
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840
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840
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Total
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582
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|
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407
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24,555
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19,400
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425,914
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328,389
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State
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Held by Production
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Not Held by Production
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||
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Colorado
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24,555
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232,411
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Nebraska
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—
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191,520
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Wyoming
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—
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1,143
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Kansas
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—
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|
|
840
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Total
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24,555
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|
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425,914
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Leased Acres
(Gross)
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Expiration
of Lease
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76,537
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2016
|
31,361
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2017
|
51,110
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2018
|
266,906
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After 2018
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Oil
(MBbls)
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Gas
(MMcf)
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|
MBOE
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|||
Proved:
|
|
|
|
|
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|||
Developed
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7,393
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|
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46,026
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|
|
15,064
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Undeveloped
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20,299
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|
|
127,932
|
|
|
41,621
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Total
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27,692
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|
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173,958
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56,685
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Proved - August 31, 2015
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||||||||||||||
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Developed
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Total
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||||||||||
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Producing
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Nonproducing
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Undeveloped
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Proved
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||||||||
Future cash inflow
|
$
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554,366
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|
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$
|
—
|
|
|
$
|
1,492,249
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|
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$
|
2,046,615
|
|
Future production costs
|
(211,911
|
)
|
|
—
|
|
|
(441,098
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)
|
|
(653,009
|
)
|
||||
Future development costs
|
(29,486
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)
|
|
—
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(481,234
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)
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(510,720
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)
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||||
Future pre-tax net cash flows
|
$
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312,969
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|
$
|
—
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|
|
$
|
569,917
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|
|
$
|
882,886
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PV-10 (Non-U.S. GAAP)
|
$
|
227,063
|
|
|
$
|
—
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|
|
$
|
211,218
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|
|
$
|
438,281
|
|
|
Proved - August 31, 2014
|
||||||||||||||
|
Developed
|
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Total
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||||||||||
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Producing
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Nonproducing
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Undeveloped
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Proved
|
||||||||
Future cash inflow
|
$
|
511,252
|
|
|
$
|
234,452
|
|
|
$
|
1,094,283
|
|
|
$
|
1,839,987
|
|
Future production costs
|
(127,900
|
)
|
|
(48,990
|
)
|
|
(218,129
|
)
|
|
(395,019
|
)
|
||||
Future development costs
|
(13,245
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)
|
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(29,403
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)
|
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(369,869
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)
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(412,517
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)
|
||||
Future pre-tax net cash flows
|
$
|
370,107
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|
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$
|
156,059
|
|
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$
|
506,285
|
|
|
$
|
1,032,451
|
|
PV-10 (Non-U.S. GAAP)
|
250,749
|
|
|
76,593
|
|
|
206,356
|
|
|
$
|
533,698
|
|
|
Proved - August 31, 2013
|
||||||||||||||
|
Developed
|
|
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Total
|
||||||||||
|
Producing
|
|
Nonproducing
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Undeveloped
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Proved
|
||||||||
Future cash inflow
|
$
|
206,065
|
|
|
$
|
286,207
|
|
|
$
|
256,758
|
|
|
$
|
749,030
|
|
Future production costs
|
(46,410
|
)
|
|
(52,605
|
)
|
|
(47,337
|
)
|
|
(146,352
|
)
|
||||
Future development costs
|
—
|
|
|
(26,086
|
)
|
|
(82,204
|
)
|
|
(108,290
|
)
|
||||
Future pre-tax net cash flows
|
$
|
159,655
|
|
|
$
|
207,516
|
|
|
$
|
127,217
|
|
|
$
|
494,388
|
|
PV-10 (Non-U.S. GAAP)
|
$
|
92,888
|
|
|
$
|
104,392
|
|
|
$
|
38,836
|
|
|
$
|
236,116
|
|
Proved Undeveloped Reserves
|
|
|
|
Net Reserves
(MBOE)
|
|
Beginning September 1, 2013
|
4,859
|
|
Converted to proved developed
|
(587
|
)
|
Extensions
|
13,436
|
|
Acquisitions
|
1,522
|
|
Revisions
|
(19
|
)
|
Ending August 31, 2014
|
19,211
|
|
Converted to proved developed
|
(414
|
)
|
Extensions
|
17,633
|
|
Acquisitions
|
3,780
|
|
Divestitures
|
(1,278
|
)
|
Revisions
|
2,689
|
|
Ending August 31, 2015
|
41,621
|
|
ITEM 1A.
|
RISK FACTORS
|
•
|
worldwide and regional economic conditions impacting the global supply and demand for oil and natural gas;
|
•
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the actions of OPEC;
|
•
|
the price and quantity of imports of foreign oil and natural gas;
|
•
|
political conditions in or hostilities in oil-producing and natural gas-producing regions and related sanctions, including current conflicts in the Middle East and conditions in Africa, South America, Russia and Ukraine;
|
•
|
the level of global oil and domestic natural gas exploration and production;
|
•
|
the level of global oil and domestic natural gas inventories;
|
•
|
prevailing prices on local oil and natural gas price indexes in the areas in which we operate;
|
•
|
localized supply and demand fundamentals and gathering, processing and transportation availability;
|
•
|
weather conditions and natural disasters;
|
•
|
domestic and foreign governmental regulations;
|
•
|
authorization of exports from the United States of liquefied natural gas or oil;
|
•
|
speculation as to the future price of oil and the speculative trading of oil and natural gas futures contracts;
|
•
|
price and availability of competitors’ supplies of oil and natural gas;
|
•
|
technological advances affecting energy consumption; and
|
•
|
the price and availability of alternative fuels.
|
•
|
unexpected drilling conditions including blowouts, cratering and explosions;
|
•
|
uncontrollable flows of oil, natural gas or well fluids;
|
•
|
equipment failures, fires or accidents;
|
•
|
pollution and other environmental risks; and
|
•
|
shortages in experienced labor or shortages or delays in the delivery of equipment.
|
•
|
historical production from the area compared with production from similar producing wells;
|
•
|
the assumed effects of regulations by governmental agencies;
|
•
|
assumptions concerning future oil and natural gas prices; and
|
•
|
assumptions concerning future operating costs, severance and excise taxes, development costs and work-over and remedial costs.
|
•
|
the quantities of oil and natural gas that are ultimately recovered;
|
•
|
the production and operating costs incurred;
|
•
|
the amount and timing of future development expenditures; and
|
•
|
future oil and natural gas sales prices.
|
•
|
borrowings from banks or other lenders;
|
•
|
the sale of non-core assets;
|
•
|
the issuance of debt securities;
|
•
|
the sale of common stock, preferred stock or other equity securities;
|
•
|
joint venture financing; and
|
•
|
production payments.
|
•
|
timing and amount of capital expenditures;
|
•
|
expertise and diligence in adequately performing operations and complying with applicable agreements;
|
•
|
financial resources;
|
•
|
inclusion of other participants in drilling wells; and
|
•
|
use of technology.
|
•
|
the availability of funds for, and information relating to, properties;
|
•
|
the standards established by us for the minimum projected return on investment; and
|
•
|
the transportation of natural gas and crude oil.
|
•
|
require us to apply for and receive a permit before drilling commences or certain associated facilities are developed;
|
•
|
restrict the types, quantities and concentration of substances that can be released into the environment in connection with drilling, hydraulic fracturing, and production activities;
|
•
|
limit or prohibit drilling activities on certain lands lying within wilderness, wetlands, threatened and endangered species habitat and other protected areas;
|
•
|
require remedial measures to mitigate pollution from former operations, such as plugging abandoned wells; and
|
•
|
impose substantial liabilities for pollution resulting from our operations.
|
•
|
the covenants contained in our credit facility limit our ability to borrow money in the future for acquisitions, capital expenditures or to meet our operating expenses or other general corporate obligations and may limit our flexibility in operating our business;
|
•
|
the amount of our interest expense may increase because amounts borrowed under our credit facility bear interest at variable rates, which, if interest rates increase, could result in higher interest expense;
|
•
|
we may have a higher level of debt than some of our competitors, which may put us at a competitive disadvantage;
|
•
|
we may be more vulnerable to economic downturns and adverse developments in our industry or the economy in general, especially extended or further declines in oil and natural gas prices; and
|
•
|
our debt level could limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate.
|
•
|
pay dividends or distributions on our capital stock or issue preferred stock;
|
•
|
repurchase, redeem or retire our capital stock or subordinated debt;
|
•
|
make certain loans and investments;
|
•
|
sell assets;
|
•
|
enter into certain transactions with affiliates;
|
•
|
create or assume certain liens on our assets;
|
•
|
enter into sale and leaseback transactions;
|
•
|
merge or to enter into other business combination transactions; or
|
•
|
engage in certain other corporate activities.
|
•
|
Announcements by us or our competitors of significant contracts, new acquisitions, discoveries, commercial relationships, joint ventures or capital commitments;
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
Quarter Ended
|
|
High
|
|
Low
|
November 30, 2014
|
|
$13.75
|
|
$8.05
|
February 29, 2015
|
|
$13.50
|
|
$8.14
|
May 31, 2015
|
|
$12.98
|
|
$10.40
|
August 31, 2015
|
|
$12.82
|
|
$9.04
|
Quarter Ended
|
|
High
|
|
Low
|
November 30, 2013
|
|
$11.40
|
|
$8.86
|
February 29, 2014
|
|
$10.69
|
|
$8.11
|
May 31, 2014
|
|
$12.96
|
|
$9.70
|
August 31, 2014
|
|
$14.11
|
|
$10.13
|
Period
|
|
Total Number of Shares (or Units) Purchased
|
|
Average Price Paid per Share (or Unit)
|
|
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs)
|
|||||
June 1, 2015 - June 30, 2015
(1)
|
|
1,600
|
|
|
$
|
11.79
|
|
|
—
|
|
|
—
|
|
July 1, 2015 - July 31, 2015
(1)
|
|
1,600
|
|
|
$
|
10.75
|
|
|
—
|
|
|
—
|
|
August 1, 2015 - August 31, 2015
(1)
|
|
1,600
|
|
|
$
|
9.77
|
|
|
—
|
|
|
—
|
|
Total
|
|
4,800
|
|
|
|
|
|
|
|
|
|
August 31,
|
|||||||||||
|
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
Synergy Resources Corporation
|
|
100.00
|
|
138.22
|
|
124.44
|
|
416.00
|
|
598.22
|
|
477.33
|
|
S&P 500
|
|
100.00
|
|
118.50
|
|
139.83
|
|
165.99
|
|
207.89
|
|
208.88
|
|
SIC Code 1311
|
|
100.00
|
|
128.07
|
|
121.59
|
|
143.53
|
|
180.23
|
|
98.77
|
|
|
|
|
|
|
|
|
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
For the Years Ended August 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Results of Operations
(in thousands):
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
124,843
|
|
|
$
|
104,219
|
|
|
$
|
46,223
|
|
|
$
|
24,969
|
|
|
$
|
10,002
|
|
Net income (loss)
|
18,042
|
|
|
28,853
|
|
|
9,581
|
|
|
12,124
|
|
|
(11,600
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
0.19
|
|
|
$
|
0.38
|
|
|
$
|
0.17
|
|
|
$
|
0.26
|
|
|
$
|
(0.45
|
)
|
Diluted
|
$
|
0.19
|
|
|
$
|
0.37
|
|
|
$
|
0.16
|
|
|
$
|
0.25
|
|
|
$
|
(0.45
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Certain Balance Sheet Information (in thousands):
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Assets
|
$
|
746,449
|
|
|
$
|
448,542
|
|
|
$
|
291,236
|
|
|
$
|
120,731
|
|
|
$
|
63,698
|
|
Working (Deficit) Capital
|
93,129
|
|
|
(35,338
|
)
|
|
50,608
|
|
|
10,875
|
|
|
685
|
|
|||||
Total Liabilities
|
174,052
|
|
|
167,052
|
|
|
88,016
|
|
|
19,619
|
|
|
14,590
|
|
|||||
Equity
|
572,397
|
|
|
281,490
|
|
|
203,220
|
|
|
101,112
|
|
|
49,108
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Certain Operating Statistics:
|
|
|
|
|
|
|
|
|
|
||||||||||
Production:
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil (MBbls)
|
1,970
|
|
|
941
|
|
|
421
|
|
|
236
|
|
|
90
|
|
|||||
Gas (MMcf)
|
7,344
|
|
|
3,747
|
|
|
2,108
|
|
|
1,109
|
|
|
451
|
|
|||||
Total production in MBOE
|
3,194
|
|
|
1,566
|
|
|
773
|
|
|
421
|
|
|
165
|
|
|||||
Average sales price per BOE
|
$
|
39.09
|
|
|
$
|
66.56
|
|
|
$
|
59.83
|
|
|
$
|
59.38
|
|
|
$
|
59.24
|
|
LOE per BOE
|
$
|
4.70
|
|
|
$
|
5.10
|
|
|
$
|
4.42
|
|
|
$
|
2.89
|
|
|
$
|
2.94
|
|
DDA per BOE
|
$
|
20.62
|
|
|
$
|
21.05
|
|
|
$
|
17.26
|
|
|
$
|
14.29
|
|
|
$
|
16.62
|
|
ITEM 7.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Vertical Wells
|
||||||||||||||||
Operated Wells
|
|
Non-Operated Wells
|
|
Totals
|
||||||||||||
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
||||||
352
|
|
|
304
|
|
|
71
|
|
|
21
|
|
|
423
|
|
|
325
|
|
Horizontal Wells
|
||||||||||||||||
Operated Wells
|
|
Non-Operated Wells
|
|
Totals
|
||||||||||||
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
||||||
71
|
|
|
69
|
|
|
88
|
|
|
13
|
|
|
159
|
|
|
82
|
|
|
Years Ended August 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Average NYMEX prices
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil (per Bbl)
|
$
|
60.65
|
|
|
$
|
100.39
|
|
|
$
|
94.58
|
|
|
$
|
94.88
|
|
|
$
|
91.79
|
|
Natural gas (per Mcf)
|
$
|
3.12
|
|
|
$
|
4.38
|
|
|
$
|
3.55
|
|
|
$
|
2.82
|
|
|
$
|
4.12
|
|
|
Fiscal Years Ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Oil (NYMEX WTI)
|
|
|
|
|
|
||||||
Average NYMEX Price
|
$
|
60.65
|
|
|
$
|
100.39
|
|
|
$
|
94.58
|
|
Realized Price
|
$
|
50.75
|
|
|
$
|
89.98
|
|
|
$
|
85.95
|
|
Differential
|
$
|
(9.90
|
)
|
|
$
|
(10.41
|
)
|
|
$
|
(8.63
|
)
|
|
|
|
|
|
|
||||||
Gas (NYMEX Henry Hub)
|
|
|
|
|
|
||||||
Average NYMEX Price
|
$
|
3.12
|
|
|
$
|
4.38
|
|
|
$
|
3.55
|
|
Realized Price
|
$
|
3.39
|
|
|
$
|
5.21
|
|
|
$
|
4.75
|
|
Differential
|
$
|
0.27
|
|
|
$
|
0.83
|
|
|
$
|
1.20
|
|
|
Years Ended August 31,
|
|
|
|||||||
|
2015
|
|
2014
|
|
Change
|
|||||
Production:
|
|
|
|
|
|
|||||
Oil (MBbls)
|
1,970
|
|
|
941
|
|
|
109
|
%
|
||
Gas (MMcf)
|
7,344
|
|
|
3,747
|
|
|
96
|
%
|
||
|
|
|
|
|
|
|
||||
Total production in MBOE
|
3,194
|
|
|
1,566
|
|
|
104
|
%
|
||
|
|
|
|
|
|
|||||
Revenues (in thousands):
|
|
|
|
|
|
|||||
Oil
|
$
|
99,969
|
|
|
$
|
84,693
|
|
|
18
|
%
|
Gas
|
24,874
|
|
|
19,526
|
|
|
27
|
%
|
||
|
$
|
124,843
|
|
|
$
|
104,219
|
|
|
20
|
%
|
Average sales price:
|
|
|
|
|
|
|||||
Oil
|
$
|
50.75
|
|
|
$
|
89.98
|
|
|
-44
|
%
|
Gas
|
$
|
3.39
|
|
|
$
|
5.21
|
|
|
-35
|
%
|
BOE
|
$
|
39.09
|
|
|
$
|
66.56
|
|
|
-41
|
%
|
|
Year Ended August 31,
|
||||||
(in thousands)
|
2015
|
|
2014
|
||||
Depletion of oil and gas properties
|
$
|
65,158
|
|
|
$
|
32,132
|
|
Depreciation, accretion, and amortization
|
711
|
|
|
826
|
|
||
Total DDA
|
$
|
65,869
|
|
|
$
|
32,958
|
|
|
|
|
|
||||
DDA expense per BOE
|
$
|
20.62
|
|
|
$
|
21.05
|
|
|
Years Ended August 31,
|
|
|
|||||||
|
2014
|
|
2013
|
|
Change
|
|||||
Production:
|
|
|
|
|
|
|||||
Oil (MBbls)
|
941
|
|
|
421
|
|
|
123.5
|
%
|
||
Gas (MMcf)
|
3,747
|
|
|
2,108
|
|
|
77.8
|
%
|
||
|
|
|
|
|
|
|||||
Total production in MBOE
|
1,566
|
|
|
773
|
|
|
102.6
|
%
|
||
|
|
|
|
|
|
|||||
Revenues (in thousands):
|
|
|
|
|
|
|||||
Oil
|
$
|
84,693
|
|
|
$
|
36,206
|
|
|
133.9
|
%
|
Gas
|
19,526
|
|
|
10,017
|
|
|
94.9
|
%
|
||
|
$
|
104,219
|
|
|
$
|
46,223
|
|
|
125.5
|
%
|
Average sales price:
|
|
|
|
|
|
|||||
Oil
|
$
|
89.98
|
|
|
$
|
85.95
|
|
|
4.7
|
%
|
Gas
|
$
|
5.21
|
|
|
$
|
4.75
|
|
|
9.7
|
%
|
BOE
|
$
|
66.56
|
|
|
$
|
59.83
|
|
|
11.2
|
%
|
|
Years ended August 31,
|
||||||
(in thousands)
|
2014
|
|
2013
|
||||
Depletion of oil and gas properties
|
$
|
32,132
|
|
|
$
|
13,046
|
|
Depreciation, accretion, and amortization
|
826
|
|
|
290
|
|
||
Total DDA
|
$
|
32,958
|
|
|
$
|
13,336
|
|
|
|
|
|
||||
DDA expense per BOE
|
$
|
21.05
|
|
|
$
|
17.26
|
|
|
For the years ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Cash provided by operations
|
$
|
125,087
|
|
|
$
|
74,905
|
|
|
$
|
32,120
|
|
Acquisitions and development of oil and gas properties and equipment
|
(275,808
|
)
|
|
(155,602
|
)
|
|
(80,469
|
)
|
|||
Short-term investments
|
—
|
|
|
60,018
|
|
|
(60,000
|
)
|
|||
Cash provided by other investing activities
|
6,239
|
|
|
704
|
|
|
—
|
|
|||
Cash provided by equity financing activities
|
204,953
|
|
|
35,265
|
|
|
74,528
|
|
|||
Net borrowings on Revolver
|
38,684
|
|
|
—
|
|
|
34,000
|
|
|||
Net increase in cash and equivalents
|
$
|
99,155
|
|
|
$
|
15,290
|
|
|
$
|
179
|
|
•
|
$15.4 million
from the exercise of Series C warrants. As of
August 31, 2015
, all Series C warrants had been exercised.
|
•
|
Approximately
$190.8 million
(after underwriting discounts, commissions and expenses) from our public offering of
18,613,952
shares (including the shares sold pursuant to an over-allotment option exercised by the underwriters) at a price to the public of
$10.75
per share. These proceeds have been, or will be, used to fund additional asset acquisitions in the Wattenberg Field which may become available from time to time, to pay down outstanding indebtedness under our revolving credit facility and for other corporate purposes, including working capital.
|
•
|
Net proceeds of
$38.7 million
drawn under our revolving credit facility.
|
|
For the years ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Cash payments for capital expenditures
|
$
|
275,808
|
|
|
$
|
155,602
|
|
|
$
|
80,469
|
|
Accrued costs, beginning of period
|
(71,849
|
)
|
|
(25,491
|
)
|
|
(5,733
|
)
|
|||
Accrued costs, end of period
|
33,072
|
|
|
71,849
|
|
|
25,491
|
|
|||
Non-cash acquisitions, common stock
|
60,221
|
|
|
11,184
|
|
|
16,684
|
|
|||
Other
|
7,622
|
|
|
905
|
|
|
1,233
|
|
|||
Accrual basis capital expenditures
|
$
|
304,874
|
|
|
$
|
214,049
|
|
|
$
|
118,144
|
|
|
|
Volumes
|
|
Average Collar Prices
(1)
|
|
Average Put Prices
(1)
|
||||||
Month
|
|
Oil
(Bbl)
|
|
Gas (MMBtu)
|
|
Average Oil (Bbl) Price
|
|
Average Gas (MMBtu) Price
|
|
Average Oil (Bbl) Price
|
|
Average Gas (MMBtu) Price
|
Oct 1 to Dec 31, 2015
|
|
152,000
|
|
516,000
|
|
N/A
|
|
$2.64 - $3.65
|
|
$50.99
|
|
N/A
|
Jan 1 to Dec 31, 2016
|
|
420,000
|
|
1,680,000
|
|
N/A
|
|
$3.03 - $3.47
|
|
$48.57
|
|
N/A
|
Jan 1 to Aug 31, 2017
|
|
160,000
|
|
840,000
|
|
N/A
|
|
$2.64 - $3.48
|
|
$50.50
|
|
N/A
|
|
Less than
One Year
|
|
One to
Three Years
|
|
Three to Five Years
|
|
More Than Five Years
|
|
Total
|
||||||||||
Rig Contract
(1)
|
$
|
2,340
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,340
|
|
Volume commitments
(2)
|
11,626
|
|
|
45,272
|
|
|
45,272
|
|
|
11,010
|
|
|
113,180
|
|
|||||
Revolving credit facility
(3)
|
1,950
|
|
|
3,900
|
|
|
80,681
|
|
|
—
|
|
|
86,531
|
|
|||||
Operating Leases
|
408
|
|
|
101
|
|
|
—
|
|
|
—
|
|
|
509
|
|
|||||
Total
|
$
|
16,324
|
|
|
$
|
49,273
|
|
|
$
|
125,953
|
|
|
$
|
11,010
|
|
|
$
|
202,560
|
|
1
|
Represents an estimate of the remaining commitment related to the use of one rig. Actual amounts will vary as a result of a number of variables, including target formations, measured depth, and other technical details.
|
2
|
We have entered into agreements that require us to deliver minimum amounts of crude oil to certain third parties through 2021. Production can be sourced via third party contract, in-kind agreements, or self-sustained production. We will incur a charge of approximately $5.56 per Bbl if a minimum quantity of crude oil is not delivered to the pipeline-related counterparties. Additionally, we may be subject to potential damages should we fail to deliver committed volumes to a third party refiner. Amounts reflect the estimated deficiency payments under our pipeline-related commitments assuming no deliveries are made. Potential damages and other charges related to nonperformance under these contracts are not included in the amounts above. See further discussion in Note
14
to our consolidated financial statements.
|
3
|
Includes interest payments assuming a constant interest rate of 2.5%.
|
|
Years Ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Adjusted EBITDA:
|
|
|
|
|
|
||||||
Net income
|
$
|
18,042
|
|
|
$
|
28,853
|
|
|
$
|
9,581
|
|
Depreciation, depletion and amortization
|
65,869
|
|
|
32,958
|
|
|
13,336
|
|
|||
Full cost ceiling impairment
|
16,000
|
|
|
—
|
|
|
—
|
|
|||
Provision for income tax
|
11,677
|
|
|
15,014
|
|
|
6,870
|
|
|||
Stock-based compensation
|
7,691
|
|
|
2,968
|
|
|
1,362
|
|
|||
Commodity derivative change
|
(1,790
|
)
|
|
(2,459
|
)
|
|
2,649
|
|
|||
Interest expense (income)
|
159
|
|
|
(82
|
)
|
|
50
|
|
|||
Adjusted EBITDA
|
$
|
117,648
|
|
|
$
|
77,252
|
|
|
$
|
33,848
|
|
|
As of August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Standardized measure of discounted future net cash flows:
|
$
|
365,829
|
|
|
$
|
402,699
|
|
|
$
|
181,732
|
|
Add: 10 percent annual discount, net of income taxes
|
372,658
|
|
|
376,827
|
|
|
199,111
|
|
|||
Add: future undiscounted income taxes
|
144,399
|
|
|
252,925
|
|
|
113,545
|
|
|||
Future pre-tax net cash flows
|
$
|
882,886
|
|
|
$
|
1,032,451
|
|
|
$
|
494,388
|
|
Less: 10 percent annual discount, pre-tax
|
$
|
(444,605
|
)
|
|
$
|
(498,753
|
)
|
|
$
|
(258,272
|
)
|
PV-10
|
$
|
438,281
|
|
|
$
|
533,698
|
|
|
$
|
236,116
|
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
Exhibit
Number
|
Exhibit
|
3.1
|
Restated Articles of Incorporation of Synergy Resources Corporation (the “Company”) (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of the Company filed on September 16, 2015)
|
3.2
|
Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Registration Statement of the Company on Form SB-2 filed on October 9, 2007)
|
10.1
|
Amended and Restated Credit Agreement, dated as of November 28, 2012 (the “Credit Agreement”), by and among the Company, Community Banks of Colorado, as administrative agent and the lenders party thereto as amended by the First Amendment to Credit Agreement dated as of February 12, 2013 and the Second Amendment to Credit Agreement dated June 28, 2013 (incorporated by reference to Exhibit 10.21 to the Annual Report on Form 10-K of the Company filed on October 30, 2014)
|
10.1.1
|
Third Amendment to Credit Agreement, dated as of December 20, 2013, by and among the Company, Community Banks of Colorado as administrative agent and the lenders party thereto (incorporated by reference to Exhibit 10.22 to the Current Report on Form 8-K of the Company filed on December 26, 2013)
|
10.1.2
|
Fourth Amendment to Credit Agreement, dated as of June 3, 2014, by and among the Company, Community Banks of Colorado, as administrative agent and the lenders party thereto (incorporated by reference to Exhibit 10.23 to the Current Report on Form 8-K of the Company filed on June 10, 2014)
|
10.1.3
|
Fifth Amendment to Credit Agreement, dated as of December 15, 2014, by and among the Company, SunTrust Bank as administrative agent and the lenders and other parties thereto (incorporated by reference to Exhibit 10.32 to the Quarterly Report on Form 10-Q of the Company filed on January 9, 2015)
|
10.1.4
|
Sixth Amendment to Credit Agreement, dated as of June 2, 2015, by and among the Company, SunTrust Bank, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.35 to the Current Report on Form 8-K of the Company filed on June 8, 2015)
|
10.2
|
Employment agreement dated as of June 1, 2013 between the Company and Ed Holloway (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed on June 7, 2013)+
|
10.3
|
Employment agreement dated as of June 1, 2013 between the Company and William E. Scaff, Jr. (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of the Company filed on June 7, 2013)+
|
10.4
|
Employment agreement dated as of May 27, 2015 between the Company and Lynn A. Peterson (incorporated by reference to Exhibit 10.34 to the Current Report on Form 8-K of the Company filed on June 2, 2015)+
|
10.5
|
Employment agreement dated as of June 4, 2014 between the Company and Frank L. Jennings (incorporated by reference to Exhibit 10.24 to the Current Report on Form 8-K of the Company filed on June 10, 2014)+
|
10.6
|
Employment agreement dated as of June 4, 2014 between the Company and Craig Rasmuson (incorporated by reference to Exhibit 10.25 to the Current Report on Form 8-K of the Company filed on June 10, 2014)+
|
10.7
|
Employment agreement dated as of June 4, 2014 between the Company and Valerie S. Dunn (incorporated by reference to Exhibit 10.26 to the Current Report on Form 8-K of the Company filed on June 10, 2014)+
|
10.8
|
Form of Indemnification Agreement*
|
10.9
|
2011 Non-Qualified Stock Option Plan (incorporated by reference to Exhibit 4.2 to the Registration Statement of the Company on Form S-8 filed on October 11, 2013)+
|
10.10
|
2011 Incentive Stock Option Plan (incorporated by reference to Exhibit 4.3 to the Registration Statement of the Company on Form S-8 filed on October 11, 2013)+
|
10.11
|
2011 Stock Bonus Plan (incorporated by reference to Exhibit 4.1 to the Registration Statement of the Company on Form S-8 filed on October 11, 2013)+
|
10.12
|
Lease dated as of July 1, 2014 between the Company and HS Land & Cattle, LLC*
|
10.13
|
Agreement Regarding Conflicting Interest Transactions among the Company, Ed Holloway, William E. Scaff, Jr., Petroleum Management, LLC, Petroleum Exploration and Management, LLC, and HS Land & Cattle, LLC (incorporated by reference to Exhibit 10.4 to the Annual Report on Form 10-K/A of the Company filed on June 3, 2011)
|
10.14
|
Purchase and Sale Agreement dated September 16, 2013, with Trilogy Resources, LLC (incorporated by reference to Exhibit 10.18 to the Quarterly Report on Form 10-Q of the Company filed on January 9, 2014)
|
10.15
|
Purchase and Sale Agreement dated August 27, 2013, with Apollo Operating, LLC (incorporated by reference to Exhibit 10.18 to the Quarterly Report on Form 10-Q of the Company filed on January 9, 2014)
|
10.16
|
Purchase and Sale Agreement between Bayswater Exploration and Production, LLC, et al, as Sellers, and Synergy Resources Corporation, as Buyer, dated October 29, 2014 (incorporated by reference to Exhibit 10.33 to the Quarterly Report on Form 10-Q of the Company filed on January 9, 2015)
|
10.17
|
Exploration Agreement dated as of March 1, 2013 between the Company and Vecta Oil & Gas Ltd. (incorporated by reference to Exhibit 10.18 to the Quarterly Report on Form 10-Q filed on April 9, 2013)
|
21.1
|
Subsidiaries of the Company - None
|
23.1
|
Consent of EKS&H LLLP*
|
23.2
|
Consent of Ryder Scott Company, L.P. *
|
31.1
|
Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended*
|
31.2
|
Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended*
|
31.3
|
Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended*
|
32.1
|
Certifications of the Principal Executive Officers and Principal Financial Officer pursuant to 18 USC 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
|
99.1
|
Report of Ryder Scott Company, L.P.*
|
101.INS
|
XBRL
Instance Document *
|
101.SCH
|
XBRL Taxonomy Extension Schema*
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase*
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase*
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase*
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase*
|
Index to Financial Statements
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
|
Balance Sheets as of August 31, 2015 and 2014
|
|
|
|
Statements of Operations for the years ended August 31, 2015, 2014 and 2013
|
|
|
|
Statements of Changes in Shareholders’ Equity
for the years ended August 31, 2015, 2014 and 2013
|
|
|
|
Statements of Cash Flows for the years ended August 31, 2015, 2014 and 2013
|
|
|
|
Notes to Financial Statements
|
ASSETS
|
August 31, 2015
|
|
August 31, 2014
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
133,908
|
|
|
$
|
34,753
|
|
Accounts receivable:
|
|
|
|
||||
Oil and gas sales
|
13,601
|
|
|
16,974
|
|
||
Joint interest billing and other
|
15,325
|
|
|
15,398
|
|
||
Commodity derivative
|
2,897
|
|
|
365
|
|
||
Other current assets
|
1,109
|
|
|
750
|
|
||
Total current assets
|
166,840
|
|
|
68,240
|
|
||
|
|
|
|
||||
Oil and gas properties, full cost method:
|
|
|
|
||||
Proved properties, net
|
452,393
|
|
|
275,018
|
|
||
Unproved properties and properties under development, not being amortized
|
77,564
|
|
|
95,278
|
|
||
Other property and equipment, net
|
4,783
|
|
|
9,104
|
|
||
Property and equipment, net
|
534,740
|
|
|
379,400
|
|
||
|
|
|
|
||||
Commodity derivative
|
1,565
|
|
|
54
|
|
||
Goodwill
|
40,711
|
|
|
—
|
|
||
Other assets
|
2,593
|
|
|
848
|
|
||
|
|
|
|
||||
Total assets
|
$
|
746,449
|
|
|
$
|
448,542
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Trade accounts payable
|
$
|
670
|
|
|
$
|
1,747
|
|
Well costs payable
|
33,071
|
|
|
71,849
|
|
||
Revenue payable
|
19,044
|
|
|
14,487
|
|
||
Production taxes payable
|
20,899
|
|
|
14,376
|
|
||
Other accrued expenses
|
27
|
|
|
817
|
|
||
Commodity derivative
|
—
|
|
|
302
|
|
||
Total current liabilities
|
73,711
|
|
|
103,578
|
|
||
|
|
|
|
||||
Revolving credit facility
|
78,000
|
|
|
37,000
|
|
||
Commodity derivative
|
—
|
|
|
307
|
|
||
Deferred tax liability, net
|
10,007
|
|
|
21,437
|
|
||
Asset retirement obligations
|
12,334
|
|
|
4,730
|
|
||
Total liabilities
|
174,052
|
|
|
167,052
|
|
||
|
|
|
|
||||
Commitments and contingencies (See Note 14)
|
|
|
|
|
|
||
|
|
|
|
||||
Shareholders' equity:
|
|
|
|
||||
Preferred stock - $0.01 par value, 10,000,000 shares authorized:
no shares issued and outstanding |
—
|
|
|
—
|
|
||
Common stock - $0.001 par value, 200,000,000 shares authorized:
105,099,342 and 77,999,082 shares issued and outstanding, respectively |
105
|
|
|
78
|
|
||
Additional paid-in capital
|
538,631
|
|
|
265,793
|
|
||
Retained earnings
|
33,661
|
|
|
15,619
|
|
||
Total shareholders' equity
|
572,397
|
|
|
281,490
|
|
||
|
|
|
|
||||
Total liabilities and shareholders' equity
|
$
|
746,449
|
|
|
$
|
448,542
|
|
|
For the Years Ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
|
|
|
|
|
||||||
Oil and gas revenues
|
$
|
124,843
|
|
|
$
|
104,219
|
|
|
$
|
46,223
|
|
|
|
|
|
|
|
||||||
Expenses
|
|
|
|
|
|
||||||
Lease operating expenses
|
15,017
|
|
|
7,991
|
|
|
3,417
|
|
|||
Production taxes
|
11,340
|
|
|
9,667
|
|
|
4,237
|
|
|||
Depreciation, depletion, accretion, and amortization
|
65,869
|
|
|
32,958
|
|
|
13,336
|
|
|||
Full cost ceiling impairment
|
16,000
|
|
|
—
|
|
|
—
|
|
|||
General and administrative
|
18,995
|
|
|
10,139
|
|
|
5,688
|
|
|||
Total expenses
|
127,221
|
|
|
60,755
|
|
|
26,678
|
|
|||
|
|
|
|
|
|
||||||
Operating (loss) income
|
(2,378
|
)
|
|
43,464
|
|
|
19,545
|
|
|||
|
|
|
|
|
|
||||||
Other income (expense)
|
|
|
|
|
|
||||||
Commodity derivative realized gain (loss)
|
30,466
|
|
|
(2,138
|
)
|
|
(395
|
)
|
|||
Commodity derivative unrealized gain (loss)
|
1,790
|
|
|
2,459
|
|
|
(2,649
|
)
|
|||
Interest expense, net
|
(245
|
)
|
|
—
|
|
|
(97
|
)
|
|||
Interest income
|
86
|
|
|
82
|
|
|
47
|
|
|||
Total other income (expense)
|
32,097
|
|
|
403
|
|
|
(3,094
|
)
|
|||
|
|
|
|
|
|
||||||
Income before income taxes
|
29,719
|
|
|
43,867
|
|
|
16,451
|
|
|||
|
|
|
|
|
|
||||||
Income tax provision
|
11,677
|
|
|
15,014
|
|
|
6,870
|
|
|||
Net income
|
$
|
18,042
|
|
|
$
|
28,853
|
|
|
$
|
9,581
|
|
|
|
|
|
|
|
||||||
Net income per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.19
|
|
|
$
|
0.38
|
|
|
$
|
0.17
|
|
Diluted
|
$
|
0.19
|
|
|
$
|
0.37
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
||||||
Weighted-average shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
94,628,665
|
|
|
76,214,737
|
|
|
57,089,362
|
|
|||
Diluted
|
95,319,269
|
|
|
77,808,054
|
|
|
59,088,761
|
|
|
Number of Common
Shares |
|
Par Value
Common Stock |
|
Additional
Paid - In Capital |
|
Accumulated
Earnings (Deficit) |
|
Total Shareholders'
Equity |
|||||||||
Balance, August 31, 2012
|
51,409,340
|
|
|
$
|
52
|
|
|
$
|
123,876
|
|
|
$
|
(22,815
|
)
|
|
$
|
101,113
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Shares issued for Orr Energy acquisition
|
3,128,422
|
|
|
3
|
|
|
13,515
|
|
|
—
|
|
|
13,518
|
|
||||
Shares issued in exchange for mineral assets
|
687,122
|
|
|
1
|
|
|
3,165
|
|
|
—
|
|
|
3,166
|
|
||||
Shares issued for cash at $6.25 per share pursuant to the June 13, 2013 offering memorandum, net of offering costs of $4.4 million
|
13,225,000
|
|
|
13
|
|
|
78,230
|
|
|
—
|
|
|
78,243
|
|
||||
Shares issued for exercise of warrants
|
1,052,698
|
|
|
1
|
|
|
3,274
|
|
|
—
|
|
|
3,275
|
|
||||
Payment of tax withholdings using withheld shares
|
—
|
|
|
—
|
|
|
(6,990
|
)
|
|
—
|
|
|
(6,990
|
)
|
||||
Shares issued for exercise of stock options
|
1,030,057
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
||||
Stock-based compensation
|
55,084
|
|
|
—
|
|
|
1,314
|
|
|
—
|
|
|
1,314
|
|
||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
9,581
|
|
|
9,581
|
|
||||
Balance, August 31, 2013
|
70,587,723
|
|
|
$
|
71
|
|
|
$
|
216,383
|
|
|
$
|
(13,234
|
)
|
|
$
|
203,220
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Shares issued in exchange for mineral assets
|
357,901
|
|
|
—
|
|
|
2,856
|
|
|
—
|
|
|
2,856
|
|
||||
Shares issued for Trilogy and Apollo acquisitions
|
872,483
|
|
|
1
|
|
|
8,327
|
|
|
—
|
|
|
8,328
|
|
||||
Shares issued for exercise of warrants
|
6,063,801
|
|
|
6
|
|
|
35,628
|
|
|
—
|
|
|
35,634
|
|
||||
Shares issued under stock bonus plan
|
89,875
|
|
|
—
|
|
|
1,201
|
|
|
—
|
|
|
1,201
|
|
||||
Shares issued for exercise of stock options
|
27,299
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Stock-based compensation for vested options
|
—
|
|
|
—
|
|
|
1,767
|
|
|
—
|
|
|
1,767
|
|
||||
Payment of tax withholdings using withheld shares
|
—
|
|
|
—
|
|
|
(369
|
)
|
|
—
|
|
|
(369
|
)
|
||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
28,853
|
|
|
28,853
|
|
||||
Balance, August 31, 2014
|
77,999,082
|
|
|
$
|
78
|
|
|
$
|
265,793
|
|
|
$
|
15,619
|
|
|
$
|
281,490
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Shares issued for cash at $10.75 per share pursuant to the February 2, 2015 stock offering memorandum, net of offering costs of $9.3 million
|
18,613,952
|
|
|
19
|
|
|
190,826
|
|
|
—
|
|
|
190,845
|
|
||||
Shares issued in exchange for mineral assets
|
995,672
|
|
|
1
|
|
|
11,786
|
|
|
—
|
|
|
11,787
|
|
||||
Shares issued for Bayswater acquisition
|
4,648,136
|
|
|
5
|
|
|
48,429
|
|
|
—
|
|
|
48,434
|
|
||||
Shares issued for exercise of warrants
|
2,562,473
|
|
|
2
|
|
|
15,368
|
|
|
—
|
|
|
15,370
|
|
||||
Shares issued under stock bonus plan
|
161,755
|
|
|
—
|
|
|
2,950
|
|
|
—
|
|
|
2,950
|
|
||||
Shares issued for exercise of stock options
|
118,272
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Stock-based compensation for vested options
|
—
|
|
|
—
|
|
|
4,741
|
|
|
—
|
|
|
4,741
|
|
||||
Payment of tax withholdings using withheld shares
|
—
|
|
|
—
|
|
|
(1,262
|
)
|
|
—
|
|
|
(1,262
|
)
|
||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
18,042
|
|
|
18,042
|
|
||||
Balance, August 31, 2015
|
105,099,342
|
|
|
$
|
105
|
|
|
$
|
538,631
|
|
|
$
|
33,661
|
|
|
$
|
572,397
|
|
|
For the Years Ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
18,042
|
|
|
$
|
28,853
|
|
|
$
|
9,581
|
|
Adjustments to reconcile net income to net cash
provided by operating activities:
|
|
|
|
|
|
||||||
Depletion, depreciation, accretion, and amortization
|
65,869
|
|
|
32,958
|
|
|
13,336
|
|
|||
Full cost ceiling impairment
|
16,000
|
|
|
—
|
|
|
—
|
|
|||
Provision for deferred taxes
|
11,679
|
|
|
15,014
|
|
|
6,870
|
|
|||
Stock-based compensation
|
7,691
|
|
|
2,968
|
|
|
1,362
|
|
|||
Cash settlements on commodity derivative contracts
|
31,721
|
|
|
(2,138
|
)
|
|
(395
|
)
|
|||
Cash premiums paid for commodity derivative contracts
|
(4,117
|
)
|
|
—
|
|
|
—
|
|
|||
(Gain) loss on commodity derivatives contracts
|
(32,256
|
)
|
|
(321
|
)
|
|
3,044
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
|
|
|
|
|
||||||
Oil and gas sales
|
3,373
|
|
|
(9,613
|
)
|
|
(3,756
|
)
|
|||
Joint interest billing
|
73
|
|
|
(10,698
|
)
|
|
(1,432
|
)
|
|||
Accounts payable
|
|
|
|
|
|
||||||
Trade
|
(1,077
|
)
|
|
798
|
|
|
(550
|
)
|
|||
Revenue
|
4,557
|
|
|
8,406
|
|
|
1,921
|
|
|||
Production taxes
|
5,121
|
|
|
8,099
|
|
|
2,472
|
|
|||
Accrued expenses
|
(1,230
|
)
|
|
448
|
|
|
(141
|
)
|
|||
Other
|
(359
|
)
|
|
131
|
|
|
(192
|
)
|
|||
Total adjustments
|
107,045
|
|
|
46,052
|
|
|
22,539
|
|
|||
Net cash provided by operating activities
|
125,087
|
|
|
74,905
|
|
|
32,120
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Acquisition of property and equipment
|
(275,808
|
)
|
|
(155,602
|
)
|
|
(80,469
|
)
|
|||
Short-term investments
|
—
|
|
|
60,018
|
|
|
(60,000
|
)
|
|||
Net proceeds from sales of oil and gas properties
|
6,239
|
|
|
704
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(269,569
|
)
|
|
(94,880
|
)
|
|
(140,469
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from sale of stock
|
200,100
|
|
|
—
|
|
|
82,656
|
|
|||
Offering costs
|
(9,255
|
)
|
|
—
|
|
|
(4,413
|
)
|
|||
Proceeds from exercise of warrants
|
15,370
|
|
|
35,634
|
|
|
3,275
|
|
|||
Shares withheld for payment of employee payroll taxes
|
(1,262
|
)
|
|
(369
|
)
|
|
(6,990
|
)
|
|||
Proceeds from revolving credit facility
|
186,000
|
|
|
—
|
|
|
34,000
|
|
|||
Principal repayments on revolving credit facility
|
(145,000
|
)
|
|
—
|
|
|
—
|
|
|||
Financing fee
|
(2,316
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash provided by financing activities
|
243,637
|
|
|
35,265
|
|
|
108,528
|
|
|||
|
|
|
|
|
|
||||||
Net increase in cash and equivalents
|
99,155
|
|
|
15,290
|
|
|
179
|
|
|||
|
|
|
|
|
|
||||||
Cash and equivalents at beginning of period
|
34,753
|
|
|
19,463
|
|
|
19,284
|
|
|||
|
|
|
|
|
|
||||||
Cash and equivalents at end of period
|
$
|
133,908
|
|
|
$
|
34,753
|
|
|
$
|
19,463
|
|
1.
|
Organization and Summary of Significant Accounting Policies
|
|
For the Years Ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Capitalized overhead
|
$
|
2,049
|
|
|
$
|
1,230
|
|
|
$
|
637
|
|
|
For the Years Ended August 31,
|
|||||||
|
2015
|
|
2014
|
|
2013
|
|||
Potentially dilutive common shares from:
|
|
|
|
|
|
|||
Stock options
|
2,785,500
|
|
|
533,000
|
|
|
670,000
|
|
Restricted stock
|
145,000
|
|
|
—
|
|
|
—
|
|
Warrants
|
—
|
|
|
—
|
|
|
8,500,000
|
|
Total
|
2,930,500
|
|
|
533,000
|
|
|
9,170,000
|
|
2.
|
Property and Equipment
|
|
As of August 31,
|
||||||
|
2015
|
|
2014
|
||||
Oil and gas properties, full cost method:
|
|
|
|
||||
Unevaluated costs, not subject to amortization:
|
|
|
|
||||
Lease acquisition and other costs
|
$
|
58,068
|
|
|
$
|
41,531
|
|
Wells in progress
|
19,496
|
|
|
53,747
|
|
||
Subtotal, unevaluated costs
|
77,564
|
|
|
95,278
|
|
||
|
|
|
|
||||
Evaluated costs:
|
|
|
|
||||
Producing and non-producing
|
588,802
|
|
|
329,926
|
|
||
Total capitalized costs
|
666,366
|
|
|
425,204
|
|
||
Less, accumulated depletion and full cost ceiling impairments
|
(136,409
|
)
|
|
(54,908
|
)
|
||
Oil and gas properties, net
|
529,957
|
|
|
370,296
|
|
||
|
|
|
|
||||
Land
|
4,478
|
|
|
3,898
|
|
||
Other property and equipment
|
875
|
|
|
5,961
|
|
||
Less, accumulated depreciation
|
(570
|
)
|
|
(755
|
)
|
||
Other property and equipment, net
|
4,783
|
|
|
9,104
|
|
||
|
|
|
|
||||
Total property and equipment, net
|
$
|
534,740
|
|
|
$
|
379,400
|
|
|
For the Years Ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Acquisition of property:
|
|
|
|
|
|
||||||
Unproved
|
$
|
32,701
|
|
|
$
|
15,002
|
|
|
$
|
12,295
|
|
Proved
|
51,400
|
|
|
33,795
|
|
|
43,143
|
|
|||
Exploration costs
|
146,892
|
|
|
43,089
|
|
|
—
|
|
|||
Development costs
|
4,957
|
|
|
111,238
|
|
|
61,128
|
|
|||
Other property and equipment
|
741
|
|
|
9,315
|
|
|
—
|
|
|||
Asset retirement obligation
|
7,051
|
|
|
1,610
|
|
|
1,578
|
|
|||
Total costs incurred
|
$
|
243,742
|
|
|
$
|
214,049
|
|
|
$
|
118,144
|
|
|
Period Incurred
|
|
Total as of
|
||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012 and prior
|
|
August 31, 2015
|
||||||||||
Unproved leasehold acquisition costs
|
$
|
32,701
|
|
|
$
|
8,246
|
|
|
$
|
8,007
|
|
|
$
|
9,114
|
|
|
$
|
58,068
|
|
Unevaluated development costs
|
19,496
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,496
|
|
|||||
Total unevaluated costs
|
$
|
52,197
|
|
|
$
|
8,246
|
|
|
$
|
8,007
|
|
|
$
|
9,114
|
|
|
$
|
77,564
|
|
3
.
|
Acquisitions
|
Purchase Price
|
December 15, 2014
|
||
Consideration given:
|
|
||
Cash
|
$
|
74,221
|
|
Synergy Resources Corp. Common Stock (1)
|
48,434
|
|
|
Net liabilities assumed, including asset retirement obligations
|
3,315
|
|
|
Total consideration given
|
$
|
125,970
|
|
|
|
||
Allocation of Purchase Price
|
|
||
Proved oil and gas properties (2)
|
$
|
51,400
|
|
Unproved oil and gas properties
|
6,500
|
|
|
Other assets, including accounts receivable
|
3,392
|
|
|
Deferred tax asset
|
23,967
|
|
|
Total fair value of assets acquired
|
$
|
85,259
|
|
|
|
||
Goodwill
|
$
|
40,711
|
|
|
Year Ended August 31,
|
||||||
(in thousands)
|
2015
|
|
2014
|
||||
Oil and gas revenues
|
$
|
131,716
|
|
|
$
|
108,740
|
|
Net income
|
$
|
19,822
|
|
|
$
|
27,720
|
|
|
|
|
|
||||
Earnings per common share
|
|
|
|
||||
Basic
|
$
|
0.21
|
|
|
$
|
0.34
|
|
Diluted
|
$
|
0.21
|
|
|
$
|
0.34
|
|
Purchase Price
|
November 12,
2013
|
||
Consideration given:
|
|
||
Cash
|
$
|
15,902
|
|
Synergy Resources Corp. Common Stock *
|
2,896
|
|
|
Net liabilities assumed, including asset retirement obligations
|
977
|
|
|
Total consideration given
|
$
|
19,775
|
|
|
|
||
Allocation of Purchase Price
|
|
||
Proved oil and gas properties
|
$
|
11,514
|
|
Unproved oil and gas properties
|
7,725
|
|
|
Other assets, including accounts receivable
|
536
|
|
|
Total fair value of assets acquired
|
$
|
19,775
|
|
Purchase Price
|
November 13, 2013
|
||
Consideration given:
|
|
||
Cash
|
$
|
14,688
|
|
Synergy Resources Corp. Common Stock *
|
5,432
|
|
|
Net liabilities assumed, including asset retirement obligation
|
1,403
|
|
|
Total consideration given
|
$
|
21,523
|
|
|
|
||
Allocation of Purchase Price
|
|
||
Proved oil and gas properties
|
$
|
13,284
|
|
Unproved oil and gas properties
|
7,577
|
|
|
Other assets, including accounts receivable
|
662
|
|
|
Total fair value of assets acquired
|
$
|
21,523
|
|
|
Year Ended August 31,
|
||||||
(in thousands)
|
2014
|
|
2013
|
||||
Oil and gas revenues
|
$
|
106,584
|
|
|
$
|
55,633
|
|
Net income
|
$
|
29,681
|
|
|
$
|
13,191
|
|
|
|
|
|
||||
Earnings per common share
|
|
|
|
||||
Basic
|
$
|
0.39
|
|
|
$
|
0.23
|
|
Diluted
|
$
|
0.38
|
|
|
$
|
0.22
|
|
4.
|
Depletion, depreciation, accretion, and amortization (“DDA”)
|
|
For the Years Ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Depletion of oil and gas properties
|
$
|
65,158
|
|
|
$
|
32,132
|
|
|
$
|
13,046
|
|
Depreciation, accretion, and amortization
|
711
|
|
|
826
|
|
|
290
|
|
|||
Total DDA Expense
|
$
|
65,869
|
|
|
$
|
32,958
|
|
|
$
|
13,336
|
|
5
.
|
Asset Retirement Obligations
|
|
For the Years Ended August 31,
|
||
|
2015
|
|
2014
|
Inflation rate
|
3.90%
|
|
3.90%
|
Estimated asset life
|
16.0 - 30.0 years
|
|
25.0 - 39.0 years
|
Credit adjusted risk free interest rate
|
8%
|
|
8%
|
|
As of August 31,
|
||||||
|
2015
|
|
2014
|
||||
Beginning asset retirement obligation
|
$
|
4,730
|
|
|
$
|
2,777
|
|
Liabilities incurred
|
1,372
|
|
|
1,024
|
|
||
Liabilities assumed
|
1,913
|
|
|
586
|
|
||
Accretion expense
|
553
|
|
|
343
|
|
||
Revisions in previous estimates
|
3,766
|
|
|
—
|
|
||
|
$
|
12,334
|
|
|
$
|
4,730
|
|
6
.
|
Revolving Credit Facility
|
7
.
|
Commodity Derivative Instruments
|
Settlement Period
|
|
Derivative
Instrument
|
|
Average Volumes
(Bbls
per month)
|
|
Average
Fixed
Price
|
|
Floor
Price
|
|
Ceiling
Price
|
||||||
Crude Oil - NYMEX WTI
|
|
|
|
|
|
|
|
|
|
|
||||||
Sep 1, 2015 - Dec 31, 2015
|
|
Put
|
|
40,000
|
|
|
—
|
|
|
$
|
50.00
|
|
|
—
|
|
|
Sep 1, 2015 - Oct 31, 2015
|
|
Put
|
|
2,000
|
|
|
—
|
|
|
$
|
50.00
|
|
|
—
|
|
|
Sep 1, 2015 - Dec 31, 2015
|
|
Put
|
|
10,000
|
|
|
—
|
|
|
$
|
55.00
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Jan 1, 2016 - Dec 31, 2016
|
|
Put
|
|
25,000
|
|
|
—
|
|
|
$
|
50.00
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Jan 1, 2017 - Apr 30, 2017
|
|
Put
|
|
20,000
|
|
|
—
|
|
|
$
|
50.00
|
|
|
—
|
|
|
May 1, 2017 - Aug 31, 2017
|
|
Put
|
|
20,000
|
|
|
—
|
|
|
$
|
55.00
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Settlement Period
|
|
Derivative
Instrument
|
|
Average Volumes
(MMBtu
per month)
|
|
Average
Fixed
Price
|
|
Floor
Price
|
|
Ceiling
Price
|
||||||
Natural Gas - NYMEX Henry Hub
|
|
|
|
|
|
|
|
|
|
|
||||||
Sep 1, 2015 - Dec 31, 2015
|
|
Collar
|
|
72,000
|
|
|
—
|
|
|
$
|
4.15
|
|
|
$
|
4.49
|
|
Jan 1, 2016 - May 31, 2016
|
|
Collar
|
|
60,000
|
|
|
—
|
|
|
$
|
4.05
|
|
|
$
|
4.54
|
|
Jun 1, 2016 - Aug 31, 2016
|
|
Collar
|
|
60,000
|
|
|
—
|
|
|
$
|
3.90
|
|
|
$
|
4.14
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Natural Gas - CIG Rocky Mountain
|
|
|
|
|
|
|
|
|
|
|
||||||
Sep 1, 2015 - Dec 31, 2015
|
|
Collar
|
|
100,000
|
|
|
—
|
|
|
$
|
2.20
|
|
|
$
|
3.05
|
|
Jan 1, 2016 - Dec 31, 2016
|
|
Collar
|
|
100,000
|
|
|
—
|
|
|
$
|
2.65
|
|
|
$
|
3.10
|
|
Jan 1, 2017 - Apr 30, 2017
|
|
Collar
|
|
100,000
|
|
|
—
|
|
|
$
|
2.80
|
|
|
$
|
3.95
|
|
May 1 2017 - Aug 31, 2017
|
|
Collar
|
|
110,000
|
|
|
—
|
|
|
$
|
2.50
|
|
|
$
|
3.06
|
|
Settlement Period
|
|
Derivative
Instrument |
|
Average Volumes
(Bbls per month) |
|
Average
Fixed Price |
|
Floor Price
|
|
Ceiling Price
|
|||||
Crude Oil - NYMEX WTI
|
|
|
|
|
|
|
|
|
|
|
|||||
Jan 1, 2016 - Dec 31, 2016
|
|
Put
|
|
10,000
|
|
|
—
|
|
|
$
|
45.00
|
|
|
—
|
|
|
|
|
|
As of August 31, 2015
|
||||||||||
Underlying Commodity
|
|
Balance Sheet
Location
|
|
Gross Amounts of Recognized Assets and Liabilities
|
|
Gross Amounts Offset in the
Balance Sheet
|
|
Net Amounts of Assets and Liabilities Presented in the
Balance Sheet
|
||||||
Commodity Derivative contracts
|
|
Current assets
|
|
$
|
3,047
|
|
|
$
|
(150
|
)
|
|
$
|
2,897
|
|
Commodity Derivative contracts
|
|
Noncurrent assets
|
|
$
|
1,774
|
|
|
$
|
(209
|
)
|
|
$
|
1,565
|
|
Commodity Derivative contracts
|
|
Current liabilities
|
|
$
|
150
|
|
|
$
|
(150
|
)
|
|
$
|
—
|
|
Commodity Derivative contracts
|
|
Noncurrent liabilities
|
|
$
|
209
|
|
|
$
|
(209
|
)
|
|
$
|
—
|
|
|
|
|
|
As of August 31, 2014
|
||||||||||
Underlying Commodity
|
|
Balance Sheet
Location
|
|
Gross Amounts of Recognized Assets and Liabilities
|
|
Gross Amounts Offset in the
Balance Sheet
|
|
Net Amounts of Assets and Liabilities Presented in the
Balance Sheet
|
||||||
Commodity Derivative contracts
|
|
Current assets
|
|
$
|
903
|
|
|
$
|
(538
|
)
|
|
$
|
365
|
|
Commodity Derivative contracts
|
|
Noncurrent assets
|
|
$
|
718
|
|
|
$
|
(664
|
)
|
|
$
|
54
|
|
Commodity Derivative contracts
|
|
Current liabilities
|
|
$
|
840
|
|
|
$
|
(538
|
)
|
|
$
|
302
|
|
Commodity Derivative contracts
|
|
Noncurrent liabilities
|
|
$
|
971
|
|
|
$
|
(664
|
)
|
|
$
|
307
|
|
|
For the Years Ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Realized gain (loss) on commodity derivatives
|
$
|
30,466
|
|
|
$
|
(2,138
|
)
|
|
$
|
(395
|
)
|
Unrealized gain (loss) on commodity derivatives
|
1,790
|
|
|
2,459
|
|
|
(2,649
|
)
|
|||
Total gain (loss)
|
$
|
32,256
|
|
|
$
|
321
|
|
|
$
|
(3,044
|
)
|
|
|
Year Ended August 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Monthly settlement
|
|
$
|
9,957
|
|
|
$
|
(2,138
|
)
|
|
$
|
(395
|
)
|
Early liquidation
|
|
20,509
|
|
|
—
|
|
|
—
|
|
|||
Total realized gain (loss)
|
|
$
|
30,466
|
|
|
$
|
(2,138
|
)
|
|
$
|
(395
|
)
|
8.
|
Fair Value Measurements
|
•
|
Level 1: Quoted prices available in active markets for identical assets or liabilities;
|
•
|
Level 2: Quoted prices in active markets for similar assets and liabilities that are observable for the asset or liability;
|
•
|
Level 3: Unobservable pricing inputs that are generally less observable from objective sources, such as discounted cash or valuation models.
|
|
Fair Value Measurements at August 31, 2015
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Financial assets and liabilities:
|
|
|
|
|
|
|
|
||||||||
Commodity derivative asset
|
$
|
—
|
|
|
$
|
4,462
|
|
|
$
|
—
|
|
|
$
|
4,462
|
|
Commodity derivative liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Fair Value Measurements at August 31, 2014
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Financial assets and liabilities:
|
|
|
|
|
|
|
|
||||||||
Commodity derivative asset
|
$
|
—
|
|
|
$
|
419
|
|
|
$
|
—
|
|
|
$
|
419
|
|
Commodity derivative liability
|
$
|
—
|
|
|
$
|
609
|
|
|
$
|
—
|
|
|
$
|
609
|
|
9
.
|
Interest Expense
|
|
For the Years Ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Revolving bank credit facility
|
$
|
2,776
|
|
|
$
|
986
|
|
|
$
|
1,067
|
|
Amortization of debt issuance costs
|
853
|
|
|
448
|
|
|
160
|
|
|||
Less, interest capitalized
|
(3,384
|
)
|
|
(1,434
|
)
|
|
(1,130
|
)
|
|||
Interest expense, net
|
$
|
245
|
|
|
$
|
—
|
|
|
$
|
97
|
|
10.
|
Shareholders’ Equity
|
|
For the Years Ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Preferred stock, shares authorized
|
10,000,000
|
|
|
10,000,000
|
|
|
10,000,000
|
|
|||
Preferred stock, par value
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
Preferred stock, shares issued and outstanding
|
nil
|
|
|
nil
|
|
|
nil
|
|
|||
Common stock, shares authorized
|
200,000,000
|
|
|
200,000,000
|
|
|
100,000,000
|
|
|||
Common stock, par value
|
$
|
0.001
|
|
|
$
|
0.001
|
|
|
$
|
0.001
|
|
Common stock, shares issued and outstanding
|
105,099,342
|
|
|
77,999,082
|
|
|
70,587,723
|
|
•
|
In February 2015, the Company completed the sale of common stock in an underwritten public offering led by Seaport Global Securities LLC.
|
•
|
In June 2013, the Company completed the sale of common stock in an underwritten public offering led by Johnson Rice LLC.
|
|
For the Years Ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Number of common shares sold
|
18,613,952
|
|
|
—
|
|
|
13,225,000
|
|
|||
Offering price per common share
|
$
|
10.75
|
|
|
$
|
—
|
|
|
$
|
6.25
|
|
Net proceeds (in thousands)
|
$
|
190,845
|
|
|
$
|
—
|
|
|
$
|
78,243
|
|
|
For the Years Ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Number of common shares issued for mineral property leases
|
995,672
|
|
|
357,901
|
|
|
687,122
|
|
|||
Number of common shares issued for acquisitions
|
4,648,136
|
|
|
872,483
|
|
|
3,128,422
|
|
|||
Total common shares issued
|
5,643,808
|
|
|
1,230,384
|
|
|
3,815,544
|
|
|||
|
|
|
|
|
|
||||||
Average price per common share
|
$
|
10.67
|
|
|
$
|
9.09
|
|
|
$
|
4.37
|
|
Aggregate value of shares issues (in thousands)
|
$
|
60,221
|
|
|
$
|
11,184
|
|
|
$
|
16,684
|
|
|
Number of Shares Issuable Upon Warrant Exercise
|
|
Weighted-Average Exercise Price Per Share
|
|||
Outstanding, August 31, 2012
|
15,031,067
|
|
|
$
|
6.02
|
|
Exercised
|
1,216,265
|
|
|
$
|
3.44
|
|
Forfeited/Expired
|
5,148,000
|
|
|
$
|
6.74
|
|
Outstanding, August 31, 2013
|
8,666,802
|
|
|
$
|
5.92
|
|
Exercised
|
6,104,329
|
|
|
$
|
5.88
|
|
Forfeited / Expired
|
—
|
|
|
$
|
—
|
|
Outstanding, August 31, 2014
|
2,562,473
|
|
|
$
|
6.00
|
|
Exercised
|
2,562,473
|
|
|
$
|
6.00
|
|
Forfeited / Expired
|
—
|
|
|
$
|
—
|
|
Outstanding, August 31, 2015
|
—
|
|
|
$
|
—
|
|
11
.
|
Stock-Based Compensation
|
|
For the Years Ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Stock options
|
$
|
4,741
|
|
|
$
|
1,767
|
|
|
$
|
1,039
|
|
Stock bonus shares
|
2,950
|
|
|
1,201
|
|
|
277
|
|
|||
Investor relations warrants
|
—
|
|
|
—
|
|
|
46
|
|
|||
|
$
|
7,691
|
|
|
$
|
2,968
|
|
|
$
|
1,362
|
|
|
For the Years Ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Number of options to purchase common shares
|
2,377,500
|
|
|
433,000
|
|
|
1,025,000
|
|
|||
Weighted-average exercise price
|
$
|
11.55
|
|
|
$
|
10.37
|
|
|
$
|
6.05
|
|
Term (in years)
|
10 years
|
|
|
10 years
|
|
|
10 years
|
|
|||
Vesting Period (in years)
|
3-5 years
|
|
|
5 years
|
|
|
3-5 years
|
|
|||
Fair Value (in thousands)
|
$
|
13,266
|
|
|
$
|
3,009
|
|
|
$
|
4,179
|
|
|
For the Years Ended August 31,
|
|||||||
|
2015
|
|
2014
|
|
2013
|
|||
Expected term
|
6.5 years
|
|
|
6.7 years
|
|
|
6.2 years
|
|
Expected volatility
|
47
|
%
|
|
73
|
%
|
|
77
|
%
|
Risk free rate
|
1.4 - 2.0%
|
|
|
1.8 - 2.3%
|
|
|
0.9 - 2.1%
|
|
Expected dividend yield
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
Average forfeiture rate
|
3.5
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
Number of
Shares |
|
Weighted-Average
Exercise Price ($) |
|
Weighted-Average
Remaining Contractual Life |
|
Aggregate Intrinsic Value
($ thousands) |
|||||
Outstanding, August 31, 2012
|
4,915,000
|
|
|
$
|
5.09
|
|
|
2.2 years
|
|
$
|
3,656
|
|
Granted
|
1,025,000
|
|
|
$
|
6.05
|
|
|
|
|
|
||
Exercised
|
(2,120,000
|
)
|
|
$
|
1.10
|
|
|
|
|
15,690
|
|
|
Forfeited
|
(2,000,000
|
)
|
|
$
|
10.00
|
|
|
|
|
|
||
Outstanding, August 31, 2013
|
1,820,000
|
|
|
$
|
4.88
|
|
|
8.7 years
|
|
8,160
|
|
|
Granted
|
433,000
|
|
|
$
|
10.37
|
|
|
|
|
|
||
Exercised
|
(61,000
|
)
|
|
$
|
3.71
|
|
|
|
|
481
|
|
|
Expired
|
(25,000
|
)
|
|
$
|
10.32
|
|
|
|
|
|
||
Outstanding, August 31, 2014
|
2,167,000
|
|
|
$
|
5.94
|
|
|
8.0 years
|
|
16,287
|
|
|
Granted
|
2,377,500
|
|
|
$
|
11.55
|
|
|
|
|
|
||
Exercised
|
(258,000
|
)
|
|
$
|
3.81
|
|
|
|
|
2,103
|
|
|
Forfeited
|
(110,000
|
)
|
|
$
|
4.97
|
|
|
|
|
|
||
Outstanding, August 31, 2015
|
4,176,500
|
|
|
$
|
9.29
|
|
|
8.6 years
|
|
$
|
8,187
|
|
Outstanding, Exercisable at August 31, 2015
|
1,330,600
|
|
|
$
|
7.03
|
|
|
7.5 years
|
|
$
|
5,211
|
|
Outstanding, Vested and expected to vest at August 31, 2015
|
4,027,604
|
|
|
$
|
9.21
|
|
|
8.6 years
|
|
$
|
8,180
|
|
|
|
Outstanding Options
|
|
Exercisable Options
|
|||||||
Range of Exercise Prices
|
|
Options
|
Weighted-Average Remaining Contractual Life
(Years) |
Weighted-Average Exercise Price per Share
|
|
Options
|
Weighted-Average Exercise Price per Share
|
||||
|
|
|
|
|
|
|
|
||||
Under $5.00
|
|
679,000
|
|
6.1 years
|
$
|
3.53
|
|
|
463,000
|
|
$3.52
|
$5.00 - $6.99
|
|
637,000
|
|
7.5 years
|
6.54
|
|
|
412,000
|
|
6.59
|
|
$7.00 - $10.99
|
|
563,000
|
|
8.6 years
|
9.65
|
|
|
89,600
|
|
8.97
|
|
$11.00 - $13.46
|
|
2,297,500
|
|
9.6 years
|
11.66
|
|
|
366,000
|
|
11.50
|
|
Total
|
|
4,176,500
|
|
8.6 years
|
$
|
9.29
|
|
|
1,330,600
|
|
$7.03
|
|
|
|
|
|
|
|
|
|
Unvested Options at August 31, 2015
|
||
Unrecognized compensation expense (in thousands)
|
$
|
12,733
|
|
Remaining vesting phase
|
3.6 years
|
|
|
Number of
Shares |
|
Weighted-Average
Grant-Date Fair Value ($) |
|
|||
Non-vested, August 31, 2012
|
13,750
|
|
|
$
|
3.06
|
|
|
Granted
|
109,096
|
|
|
$
|
6.41
|
|
|
Vested
|
(76,179
|
)
|
|
$
|
5.60
|
|
|
Forfeited
|
—
|
|
|
$
|
—
|
|
|
Non-vested, August 31, 2013
|
46,667
|
|
|
$
|
6.75
|
|
|
Granted
|
343,780
|
|
|
$
|
11.34
|
|
|
Vested
|
(97,114
|
)
|
|
$
|
11.38
|
|
|
Forfeited
|
—
|
|
|
$
|
—
|
|
|
Non-vested, August 31, 2014
|
293,333
|
|
|
$
|
10.60
|
|
|
Granted
|
547,699
|
|
|
$
|
11.17
|
|
|
Vested
|
(208,532
|
)
|
|
$
|
11.09
|
|
|
Forfeited
|
—
|
|
|
$
|
—
|
|
|
Non-vested, August 31, 2015
|
632,500
|
|
|
$
|
10.93
|
|
|
|
Unvested awards as of August 31, 2015
|
||
Unrecognized compensation expense (in thousands)
|
$
|
6,720
|
|
Remaining vesting phase
|
2.2 years
|
|
12
.
|
Income Taxes
|
|
As of August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
(4
|
)
|
|
$
|
4
|
|
|
$
|
—
|
|
State
|
(111
|
)
|
|
111
|
|
|
—
|
|
|||
Total current income tax expense (benefit)
|
$
|
(115
|
)
|
|
$
|
115
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
$
|
10,820
|
|
|
$
|
13,748
|
|
|
$
|
6,367
|
|
State
|
972
|
|
|
1,151
|
|
|
503
|
|
|||
Total deferred income tax expense
|
$
|
11,792
|
|
|
$
|
14,899
|
|
|
$
|
6,870
|
|
|
|
|
|
|
|
||||||
Income tax provision
|
$
|
11,677
|
|
|
$
|
15,014
|
|
|
$
|
6,870
|
|
|
As of August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Federal income tax at statutory rate
|
$
|
10,105
|
|
|
$
|
14,915
|
|
|
$
|
5,594
|
|
State income taxes, net of federal tax
|
908
|
|
|
1,341
|
|
|
503
|
|
|||
Statutory depletion
|
(451
|
)
|
|
(1,266
|
)
|
|
(929
|
)
|
|||
Stock-based compensation
|
92
|
|
|
—
|
|
|
1,911
|
|
|||
Nondeductible compensation
|
850
|
|
|
125
|
|
|
—
|
|
|||
Other
|
173
|
|
|
(101
|
)
|
|
(209
|
)
|
|||
Income tax provision
|
$
|
11,677
|
|
|
$
|
15,014
|
|
|
$
|
6,870
|
|
Effective rate expressed as a percentage
|
39
|
%
|
|
34
|
%
|
|
42
|
%
|
|
As of August 31,
|
||||||
|
2015
|
|
2014
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforward
|
$
|
3,387
|
|
|
$
|
8,589
|
|
Stock-based compensation
|
2,788
|
|
|
1,115
|
|
||
Statutory depletion
|
2,652
|
|
|
2,194
|
|
||
Unrealized loss on commodity derivative
|
—
|
|
|
70
|
|
||
Other
|
192
|
|
|
4
|
|
||
Gross deferred tax assets
|
$
|
9,019
|
|
|
$
|
11,972
|
|
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
||||
Basis of oil and gas properties
|
18,433
|
|
|
33,409
|
|
||
Unrealized gain on commodity derivative
|
593
|
|
|
—
|
|
||
Gross deferred tax liabilities
|
19,026
|
|
|
33,409
|
|
||
Deferred tax liability, net
|
$
|
10,007
|
|
|
$
|
21,437
|
|
13
.
|
Related Party Transactions
|
|
For the Years Ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Rent expense
|
$
|
180
|
|
|
$
|
180
|
|
|
$
|
130
|
|
|
For the Years Ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Shares of restricted common stock
|
—
|
|
|
15,883
|
|
|
31,454
|
|
|||
Value of common stock (in thousands)
|
$
|
—
|
|
|
$
|
106
|
|
|
$
|
105
|
|
|
For the Years Ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Mineral acres leased
|
—
|
|
|
4,844
|
|
|
2,263
|
|
|||
Shares of restricted common stock
|
—
|
|
|
40,435
|
|
|
22,202
|
|
|||
Value of common stock (in thousands)
|
$
|
—
|
|
|
$
|
313
|
|
|
$
|
91
|
|
|
For the Years Ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Total royalty payments
|
$
|
209
|
|
|
$
|
292
|
|
|
$
|
304
|
|
14
.
|
Other Commitments and Contingencies
|
Year ending August 31,
|
|||
(in MBbls/year)
|
|||
2016
|
|
2,213
|
|
2017
|
|
4,072
|
|
2018
|
|
4,072
|
|
2019
|
|
4,072
|
|
2020
|
|
4,072
|
|
Thereafter
|
|
1,860
|
|
Total
|
|
20,361
|
|
15
.
|
Supplemental Schedule of Information to the Statements of Cash Flows
|
|
For the Years Ended August 31,
|
||||||||||
Supplemental cash flow information:
|
2015
|
|
2014
|
|
2013
|
||||||
Interest paid
|
$
|
2,817
|
|
|
$
|
989
|
|
|
$
|
995
|
|
Income taxes paid
|
202
|
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Accrued well costs
|
$
|
33,071
|
|
|
$
|
71,849
|
|
|
$
|
25,491
|
|
Assets acquired in exchange for common stock
|
60,221
|
|
|
11,184
|
|
|
16,684
|
|
|||
Asset retirement costs and obligations
|
7,051
|
|
|
1,610
|
|
|
1,578
|
|
16.
|
Unaudited Oil and Gas Reserves Information
|
|
Oil (MBbl)
|
|
Gas (MMcf)
|
|
MBOE
|
|||
Balance, August 31, 2012
|
5,086
|
|
|
33,446
|
|
|
10,660
|
|
Revision of previous estimates
|
(194
|
)
|
|
(2,924
|
)
|
|
(681
|
)
|
Purchase of reserves in place
|
1,000
|
|
|
7,361
|
|
|
2,228
|
|
Extensions, discoveries, and other additions
|
1,576
|
|
|
4,915
|
|
|
2,395
|
|
Sale of reserves in place
|
—
|
|
|
—
|
|
|
—
|
|
Production
|
(421
|
)
|
|
(2,108
|
)
|
|
(773
|
)
|
Balance, August 31, 2013
|
7,047
|
|
|
40,690
|
|
|
13,829
|
|
Revision of previous estimates
|
83
|
|
|
3,047
|
|
|
591
|
|
Purchase of reserves in place
|
1,028
|
|
|
5,956
|
|
|
2,021
|
|
Extensions, discoveries, and other additions
|
9,142
|
|
|
49,289
|
|
|
17,357
|
|
Sale of reserves in place
|
(35
|
)
|
|
(56
|
)
|
|
(44
|
)
|
Production
|
(941
|
)
|
|
(3,747
|
)
|
|
(1,566
|
)
|
Balance, August 31, 2014
|
16,324
|
|
|
95,179
|
|
|
32,188
|
|
Revision of previous estimates
|
(1,699
|
)
|
|
(4,889
|
)
|
|
(2,513
|
)
|
Purchase of reserves in place
|
4,201
|
|
|
21,957
|
|
|
7,860
|
|
Extensions, discoveries, and other additions
|
11,465
|
|
|
73,392
|
|
|
23,696
|
|
Sale of reserves in place
|
(629
|
)
|
|
(4,337
|
)
|
|
(1,352
|
)
|
Production
|
(1,970
|
)
|
|
(7,344
|
)
|
|
(3,194
|
)
|
Balance, August 31, 2015
|
27,692
|
|
|
173,958
|
|
|
56,685
|
|
|
|
|
|
|
|
|||
Proved developed and undeveloped reserves:
|
|
|
|
|
|
|||
Developed at August 31, 2013
|
4,659
|
|
|
25,866
|
|
|
8,970
|
|
Undeveloped at August 31, 2013
|
2,388
|
|
|
14,824
|
|
|
4,859
|
|
Balance, August 31, 2013
|
7,047
|
|
|
40,690
|
|
|
13,829
|
|
|
|
|
|
|
|
|||
Developed at August 31, 2014
|
6,616
|
|
|
38,162
|
|
|
12,977
|
|
Undeveloped at August 31, 2014
|
9,708
|
|
|
57,017
|
|
|
19,211
|
|
Balance, August 31, 2014
|
16,324
|
|
|
95,179
|
|
|
32,188
|
|
|
|
|
|
|
|
|||
Developed at August 31, 2015
|
7,393
|
|
|
46,026
|
|
|
15,064
|
|
Undeveloped at August 31, 2015
|
20,299
|
|
|
127,932
|
|
|
41,621
|
|
Balance, August 31, 2015
|
27,692
|
|
|
173,958
|
|
|
56,685
|
|
•
|
Purchases of reserves in place
. In
2015
, purchases of reserves in place of
7,860
MBO
E were attributable to the acquisition of proved reserves from Bayswater. Please see Note
3
for further information.
|
•
|
Revision of previous estimates.
In
2015
, revisions to previous estimates decreased proved developed and undeveloped reserves by a net amount of
2,513
MBOE. As the Company continued to revise its drilling plans toward horizontal drilling, the vertical proved undeveloped and vertical developed non-producing locations were removed from its development plan.
|
•
|
Extensions and discoveries.
In
2015
, total extensions and discoveries of
23,696
MBOE were primarily attributable to successful drilling in the Wattenberg Field. The Company drilled
67
successful exploratory wells. In addition, successful drilling by other operators in adjacent acreage allowed us to increase our proved undeveloped locations.
|
•
|
Purchases of reserves in place.
In
2014
, purchases of reserves in place of
2,021
MBOE were attributable to the acquisition of producing oil and gas wells and undeveloped acreage from Trilogy Resources, LLC and Apollo Operating, LLC. Please see Note 3 for further information.
|
•
|
Revision of previous estimates.
In
2014
, revisions to previous estimates increased proved developed and undeveloped reserves by a net amount of
591
MBOE. The prices for the
2014
oil and gas reserves are based on the
12
month arithmetic average for the first of month prices as adjusted for our differentials from September 1, 2013 through
August 31, 2014
. The
2014
crude oil price of
$89.48
per barrel (West Texas Intermediate Cushing) was
$3.08
higher than the
2013
crude oil price of
$86.40
per barrel. The 2014 natural gas price of
$5.03
per Mcf (Henry Hub) was
$0.63
higher than the
2013
price of
$4.40
per Mcf.
|
•
|
Extensions and discoveries.
In
2014
, total extensions and discoveries of
17,357
MBOE were primarily attributable to successful drilling in the Wattenberg Field. The new producing wells in this area and their adjacent proved undeveloped locations added during the year increased the Company’s proved reserves.
|
•
|
Purchases of reserves in place.
In
2013
, purchases of reserves in place of
2,228
MBOE were attributable to the acquisition of
36
producing oil and gas wells and undeveloped acreage from Orr Energy, LLC.
|
•
|
Revision of previous estimates.
In
2013
, revisions to previous estimates decreased proved developed and undeveloped reserves by a net amount of
681
MBOE as the Company’s drilling schedule was adjusted to reflect the elimination of previously planned vertical drilling locations as the development focus shifted from vertical to horizontal drilling.
|
•
|
Extensions and discoveries.
In
2013
, total extensions and discoveries of
2,395
MBOE were primarily attributable to successful drilling in the Wattenberg Field. The new producing wells in this area and their adjacent proved undeveloped locations added during the year increased the Company’s proved reserves.
|
|
For the Years Ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Future cash inflow
|
$
|
2,046,615
|
|
|
$
|
1,839,987
|
|
|
$
|
749,030
|
|
Future production costs
|
(653,009
|
)
|
|
(395,019
|
)
|
|
(146,352
|
)
|
|||
Future development costs
|
(510,720
|
)
|
|
(412,517
|
)
|
|
(108,290
|
)
|
|||
Future income tax expense
|
(144,399
|
)
|
|
(252,925
|
)
|
|
(113,545
|
)
|
|||
Future net cash flows
|
738,487
|
|
|
779,526
|
|
|
380,843
|
|
|||
10% annual discount for estimated timing of cash flows
|
(372,658
|
)
|
|
(376,827
|
)
|
|
(199,111
|
)
|
|||
Standardized measure of discounted future net cash flows
|
$
|
365,829
|
|
|
$
|
402,699
|
|
|
$
|
181,732
|
|
|
Oil (Bbl)
|
|
Gas (Mcf)
|
||||
August 31, 2013 (Average)
|
$
|
86.40
|
|
|
$
|
4.40
|
|
August 31, 2014 (Average)
|
$
|
89.48
|
|
|
$
|
5.03
|
|
August 31, 2015 (Average)
|
$
|
53.27
|
|
|
$
|
3.28
|
|
|
For the Years Ended August 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Standardized measure, beginning of year
|
$
|
402,699
|
|
|
$
|
181,732
|
|
|
$
|
102,505
|
|
Sale and transfers, net of production costs
|
(98,486
|
)
|
|
(86,808
|
)
|
|
(38,569
|
)
|
|||
Net changes in prices and production costs
|
(233,051
|
)
|
|
15,828
|
|
|
(4,550
|
)
|
|||
Extensions, discoveries, and improved recovery
|
173,918
|
|
|
300,087
|
|
|
70,191
|
|
|||
Changes in estimated future development costs
|
10,002
|
|
|
(20,817
|
)
|
|
(6,006
|
)
|
|||
Development costs incurred during the period
|
4,957
|
|
|
15,000
|
|
|
5,106
|
|
|||
Revision of quantity estimates
|
(38,340
|
)
|
|
4,589
|
|
|
(14,214
|
)
|
|||
Accretion of discount
|
57,629
|
|
|
23,612
|
|
|
35,103
|
|
|||
Net change in income taxes
|
58,547
|
|
|
(76,616
|
)
|
|
(7,850
|
)
|
|||
Divestitures of reserves
|
(19,234
|
)
|
|
(925
|
)
|
|
—
|
|
|||
Purchase of reserves in place
|
56,795
|
|
|
47,017
|
|
|
40,016
|
|
|||
Changes in timing and other
|
(9,607
|
)
|
|
—
|
|
|
—
|
|
|||
Standardized measure, end of year
|
$
|
365,829
|
|
|
$
|
402,699
|
|
|
$
|
181,732
|
|
17
.
|
Unaudited Quarterly Financial Data
|
|
For the Year Ended August 31, 2015
|
||||||||||||||
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Revenues
|
$
|
42,538
|
|
|
$
|
23,713
|
|
|
$
|
26,033
|
|
|
$
|
32,559
|
|
Expenses
|
27,783
|
|
|
25,417
|
|
|
29,102
|
|
|
44,919
|
|
||||
Operating income (loss)
|
14,755
|
|
|
(1,704
|
)
|
|
(3,069
|
)
|
|
(12,360
|
)
|
||||
Other income (expense)
|
18,140
|
|
|
9,563
|
|
|
(1,245
|
)
|
|
5,639
|
|
||||
Income (loss) before income taxes
|
32,895
|
|
|
7,859
|
|
|
(4,314
|
)
|
|
(6,721
|
)
|
||||
Income tax provision (benefit)
|
11,744
|
|
|
3,207
|
|
|
(1,833
|
)
|
|
(1,441
|
)
|
||||
Net income (loss)
|
$
|
21,151
|
|
|
$
|
4,652
|
|
|
$
|
(2,481
|
)
|
|
$
|
(5,280
|
)
|
Net income (loss) per common share:
(1)
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.27
|
|
|
$
|
0.05
|
|
|
$
|
(0.02
|
)
|
|
$
|
(0.05
|
)
|
Diluted
|
$
|
0.26
|
|
|
$
|
0.05
|
|
|
$
|
(0.02
|
)
|
|
$
|
(0.05
|
)
|
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
79,008,719
|
|
|
89,903,288
|
|
|
104,234,519
|
|
|
105,084,651
|
|
||||
Diluted
|
80,141,152
|
|
|
90,636,107
|
|
|
(2)
|
|
(2)
|
|
For the Year Ended August 31, 2014
|
||||||||||||||
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Revenues
|
$
|
19,266
|
|
|
$
|
23,028
|
|
|
$
|
25,672
|
|
|
$
|
36,253
|
|
Expenses
|
12,048
|
|
|
13,550
|
|
|
14,413
|
|
|
20,744
|
|
||||
Operating income
|
7,218
|
|
|
9,478
|
|
|
11,259
|
|
|
15,509
|
|
||||
Other income (expense)
|
2,269
|
|
|
(1,979
|
)
|
|
(983
|
)
|
|
1,096
|
|
||||
Income before income taxes
|
9,487
|
|
|
7,499
|
|
|
10,276
|
|
|
16,605
|
|
||||
Income tax provision
|
3,387
|
|
|
2,338
|
|
|
3,116
|
|
|
6,173
|
|
||||
Net income
|
$
|
6,100
|
|
|
$
|
5,161
|
|
|
$
|
7,160
|
|
|
$
|
10,432
|
|
Net income per common share:
(1)
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.08
|
|
|
$
|
0.07
|
|
|
$
|
0.09
|
|
|
$
|
0.13
|
|
Diluted
|
$
|
0.08
|
|
|
$
|
0.07
|
|
|
$
|
0.09
|
|
|
$
|
0.13
|
|
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
73,674,865
|
|
|
76,203,938
|
|
|
77,176,420
|
|
|
77,771,916
|
|
||||
Diluted
|
76,044,605
|
|
|
77,990,416
|
|
|
79,008,619
|
|
|
79,698,720
|
|
1
|
The sum of net income (loss) per common share for the four quarters may not agree with the annual amount reported because the number used as the denominator for each quarterly computation is based on the weighted-average number of shares outstanding during that quarter whereas the annual computation is based upon an average for the entire year.
|
2
|
Common share equivalents were excluded from the calculation of net income (loss) per share as the inclusion of the common share equivalents was anti-dilutive.
|
18.
|
Subsequent Events
|
|
SYNERGY RESOURCES CORPORATION
|
|
|
|
|
|
Ed Holloway, Co-Chief Executive Officer
(Co-Principal Executive Officer)
|
|
|
|
|
|
William E. Scaff, Jr., Co-Chief Executive Officer
(Co-Principal Executive Officer) |
|
|
|
|
|
James P. Henderson, Principal Financial Officer
|
|
|
|
|
|
Frank L. Jennings, Principal Accounting Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Ed Holloway
|
|
Co-Chief Executive Officer and Director
|
|
October 15, 2015
|
Ed Holloway
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ William E. Scaff, Jr.
|
|
Co-Chief Executive Officer, Treasurer and Director
|
|
October 15, 2015
|
William E. Scaff, Jr.
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Lynn A. Peterson
|
|
President and Director
|
|
October 15, 2015
|
Lynn A. Peterson
|
|
|
|
|
|
|
|
|
|
/s/ Rick Wilber
|
|
Director
|
|
October 15, 2015
|
Rick Wilber
|
|
|
|
|
|
|
|
|
|
/s/ Raymond E. McElhaney
|
|
Director
|
|
October 15, 2015
|
Raymond E. McElhaney
|
|
|
|
|
|
|
|
|
|
/s/ Bill M. Conrad
|
|
Director
|
|
October 15, 2015
|
Bill M. Conrad
|
|
|
|
|
|
|
|
|
|
/s/ R. W. Noffsinger, III
|
|
Director
|
|
October 15, 2015
|
R. W. Noffsinger, III
|
|
|
|
|
|
|
|
|
|
/s/ George Seward
|
|
Director
|
|
October 15, 2015
|
George Seward
|
|
|
|
|
|
|
|
|
|
/s/ Jack Aydin
|
|
Director
|
|
October 15, 2015
|
Jack Aydin
|
|
|
|
|
1.
|
To pay the rent for the premises above-described.
|
2.
|
To allow the Lessor to enter upon the premises at any reasonable hour.
|
3.
|
To pay its prorata share of taxes and utilities, as determined by Lessor, with respect to the building located on said premises.
|
4.
|
Not to sub-lease said premises without consent of Lessor.
|
5.
|
To keep all sidewalks on and around the premises free and clear of ice and snow, and to keep the entire exterior premises free from all litter, dirt, debris and obstructions; to keep the premises in a clean and sanitary condition as required by the ordinances of the city and county in which the property is situate.
|
6.
|
To keep the improvements upon the premises, including sewer connections, plumbing, wiring and glass in good repair, all at Lessor’s expense.
|
7.
|
No assent, express or implied, to any breach of any one or more of the agreements hereof shall be deemed or taken to be a waiver of any succeeding or other breach. Any payment by Lessee, or acceptance by Lessor, of a lesser amount than due shall be treated only as a payment on account.
|
8.
|
If, after the expiration of this lease, the Lessee shall remain in possession of the premises and continue to pay rent without a written agreement as to such possession, then such tenancy shall be regarded as a month-to-month tenancy, at a monthly rental, payable in advance, equivalent to the last month’s rent paid under this lease, and subject to all the terms and conditions of this lease.
|
1.
|
I have reviewed this annual report on Form 10-K of Synergy Resources Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
|
I have reviewed this annual report on Form 10-K of Synergy Resources Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
|
I have reviewed this annual report on Form 10-K of Synergy Resources Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.
|
Date:
|
October 15, 2015
|
By:
|
/s/ Ed Holloway
|
|
|
|
|
Ed Holloway, Co-Chief Executive Officer
|
|
Date:
|
October 15, 2015
|
By:
|
/s/ William Scaff, Jr.
|
|
|
|
|
William Scaff, Jr., Co-Chief Executive Officer
|
|
Date:
|
October 15, 2015
|
By:
|
/s/ James P. Henderson
|
|
|
|
|
James P. Henderson, Principal Financial Officer
|
|
|
As of August 31, 2015
|
|
||||||||||||||||
|
|
Proved
|
||||||||||||||||
|
|
Developed
|
|
|
|
Total
|
||||||||||||
|
|
Producing
|
|
Non-Producing
|
|
Undeveloped
|
|
Proved
|
||||||||||
Net Remaining Reserves
|
|
|
|
|
|
|
|
|
||||||||||
Oil/Condensate – Barrels
|
|
7,393,406
|
|
|
0
|
|
|
20,298,726
|
|
|
27,692,132
|
|
||||||
Gas – MCF
|
|
46,025,840
|
|
|
0
|
|
|
127,932,002
|
|
|
173,957,842
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||||||
Income Data
|
|
|
|
|
|
|
|
|
||||||||||
Future Gross Revenue
|
|
|
$537,735,052
|
|
|
$
|
0
|
|
|
|
$1,447,481,104
|
|
|
$
|
1,985,216,156
|
|
||
Deductions
|
|
224,765,905
|
|
|
1,498,890
|
|
|
876,066,267
|
|
|
1,102,331,062
|
|
||||||
Future Net Income (FNI)
|
|
|
$312,969,147
|
|
|
$(1,498,890)
|
|
$
|
571,414,837
|
|
|
$
|
882,885,094
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||||
Discounted FNI @ 10%
|
|
|
$227,062,852
|
|
|
$(1,228,372)
|
|
$
|
212,446,905
|
|
|
$
|
438,281,385
|
|
|
|
Discounted Future Net Income
|
||
|
|
As of August 31, 2015
|
||
Discount Rate
|
|
Total
|
|
|
Percent
|
|
Proved
|
|
|
|
|
|
|
|
5
|
|
$604,832,229
|
|
|
8
|
|
$495,547,814
|
|
|
12
|
|
$390,474,861
|
|
|
15
|
|
$332,489,968
|
|
|
20
|
|
$261,956,830
|
|