DENVER, CO–(Marketwired – September 06, 2016) – Synergy Resources Corporation (NYSE MKT: SYRG) (“Synergy” or the “Company”), an oil and gas exploration and production company focused in the Denver-Julesburg Basin, today issues its preliminary 2017 fiscal year production and capex guidance, provides operations update and announces participation in upcoming investor conferences.
|Preliminary 2017 Guidance|
|Full-Year 2017 Guidance|
|Daily Production (BOE/day)||17,500 – 20,000|
|Drilling & Completion Costs ($MM)||$260 – $300|
|Lease Operating Expense (LOE/BOE)||$5.00 – $5.50|
The Company has identified over 1,000 gross drilling locations with mid to long laterals (~7,500′ to ~9,500′) across its consolidated Greeley Crescent (“GC”) acreage position. Based on current analysis, 20-24 wells per drilling spacing unit has been determined to be optimal well spacing design. This evaluation is ongoing and as a result of further analysis, acreage trades and potential acquisitions, the Company expects the number of drilling locations to increase over time.
The 2017 preliminary budget is based upon a two rig program operating primarily inside the boundaries of the GC acreage. The guidance presented above reflects Synergy’s preliminary operating plan. The guidance ranges for daily production as well as drilling and completion costs reflect the uncertainty around both commodity price levels and the timing of operations. Because Synergy does not have substantial operational or near-term financial commitments, the Company retains the operational and financial flexibility to reduce or accelerate activity in response to existing economic conditions.
During 2017, the Company expects to drill 68 gross mid-length laterals and 34 gross long length laterals, spread across all three benches of the Niobrara as well as the Codell formations. During the same period Synergy expects to complete 52 gross mid-length laterals and 43 gross long length laterals. The Company projects an average working interest of 80% and an average net revenue interest of 64% for all wells drilled and completed in 2017.
The drilling and completion program has been developed in conjunction with the Company’s third party oil, gas and water midstream partners. Synergy expects oil gathering infrastructure to be built in advance of operations, significantly reducing truck traffic in and around operating areas. Management expects basin differentials to remain at approximately $10 per barrel until gross production exceeds its current pipeline commitments, at which time the differentials could be reduced as Synergy should have additional market optionality.
The preliminary lease operating expense guidance of $5-$5.50 per barrel of oil equivalent reflects the Company’s expectation of ongoing remediation work on vertical wells as the Wattenberg Field continues to evolve toward horizontal development.
The Company’s drilling operations are progressing on schedule at the two Evans pads, where each of Synergy’s operated rigs are scheduled to drill 11 wells. Thirteen of the wells have projected laterals of ~9,500′ with the remaining nine wells projected to have ~12,000′ laterals. Drilling operations are expected to be completed mid fourth quarter followed by commencement of completion operations in late 2016 and moving into 2017.
Completion operations are underway and on schedule on the Company’s Fagerberg pad which has 14 mid length wells. The Company expects to have these wells in production mid fourth quarter.
Lynn A. Peterson, Chief Executive Officer of Synergy commented “With the staff that we have assembled and the quality of the acreage we have acquired the Company is excited and well prepared as we approach 2017. We will continue to exercise financial discipline and prudently respond to commodity prices throughout the coming quarters. The contiguous nature of our acreage position not only provides us the opportunity to efficiently build out infrastructure but it also allows us to drill longer laterals that we expect to yield stronger economics when compared to our historical program. With the continued performance of our four mid-length Bestway wells, located in the heart of the GC acreage, we are excited to be drilling the 22 wells on our offsetting Evans pads.” Peterson continued, “As Synergy operates during the second half of 2016 and prepares to enter 2017 we are well positioned to leverage our operational momentum to generate industry leading production growth rates while maintaining an under levered balance sheet and operational flexibility.”