Synergy Resources Corp. (NYSE: SYRG) announced Dec. 16 that it closed on the purchase of certain assets from a private operator in the Wattenberg Field for about $125 million.
The assets include leases that are all HBP covering 5,040 gross (4,053 net) acres with rights to the Codell and Niobrara formations.
The purchase gives Synergy, based in Platteville, Colo., a total acreage position in the Wattenberg Field of roughly 35,000 net acres and adds 150 potential net horizontal Codell and Niobrara wells bringing its inventory of undrilled locations to over 1,250 based on 24 wells per 640 acres.
In addition, the acquisition includes 73 operated and 11 nonoperated vertical wells and nonoperated working interests in 17 horizontal wells, 10 of which are in production (including four mid-reach laterals) and seven which have been completed and are in the early stages of flow back. The seven wells are all extended reach two mile horizontal wells.
Working interests in the nonoperated horizontal wells ranges from 6-40%.
Other assets purchased include 35 permits in process for operated horizontal wells (including 20 extended reach laterals), 3-D seismic data and an additional 2,400 gross (1,739 net) acres with rights to other formations, including the Sussex, Shannon and J-Sand.
The original purchase price for the assets of $125 million has been amended by increasing the stock component to 40% from 30%. Specifically, the seller will receive about 4.6 million restricted shares of Synergy's common stock based on $10.76 per share price and $75 million in cash.
Synergy will fund the cash portion of the purchase via its $230 million borrowing base. The acquisition has an effective date of Oct. 1.
SunTrust Bank is joint lead arranger/administrative agent and KeyBank, National Association is joint lead arranger/syndication agent of the borrowing base and six other banks have joined in the syndicated loan.
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