Domestic oil and natural gas exploration and production company Synergy Resources Corp. (NYSE Mkt: SYRG) filed a mixed shelf for common stock, preferred stock, convertible preferred stock, rights and warrants for an initial price offering not to exceed $250 million.
Prices and terms are yet to be determined, but capital raised would be “put to good use” by the Denver-Julesburg Basin (DJ Basin) focused company, said Global Hunter Securities analysts in a note to investors Tuesday.
In October, Synergy Resources agreed to purchase 36 producing oil and gas wells in the Wattenberg Field from Orr Energy for $42 million, comprised of $30 million in cash and $12 million in shares of Synergy's common stock.
The combined 36 oil and gas wells are currently producing at an average rate of 360 boe/d, with the oldest well in the field producing since 2006. All of the wells have been drilled vertically to the Codell, Niobrara and/or J-Sand formations. Synergy will be the operator on 35 of the 36 wells.
“With SYRG looking to spend $82MM in fiscal 2013 (including the cash portion of the Orr Energy acquisition), the $12MM in cash on Nov. 30, 2012 and the ~$42MM in credit facility overhead will likely need to be augmented – and with shares more than doubling since last summer, an equity raise makes sense. Given the quality of SYRG’s acreage in the core Wattenberg and the potential in NE Colorado, we see this capital as being put to good use,” noted the analysts.
Synergy holds 238,800 gross acres under lease in Colorado and Nebraska.