Synergy Resources Corp. (SYRG)

[Timothy Smith]

$SYRG - Synergy trades well above its book value (PBV=3) with a balanced production mix of 2,067 boepd (54% oil) in Q2 FY 2013, and holds proved reserves of 10.7 MMboe (August 2012).

With Enterprise Value (EV) at $390 million, Synergy trades at a staggering $188,700/boepd and a whopping $36.45/boe of proved reserves.

In Q2 FY 2013, the long-term debt rose to ~$42 million due to the recent acquisition of Orr Energy that owned 360 boepd and 1,005 net acres in the Wattenberg Field.

With estimated annual operating cash flow at $30-35 million for FY 2013, the D/CF ratio (annualized) is at ~1.3x which is decent. However, it must be pointed out that the long-term debt will rise further during the next quarters, to fund the Capex budget for FY 2013 which is estimated at $82 million.

It is also worth noting that Synergy's core areas are not heavily oil-weighted, but they weigh more on the dry gas and the natural gas liquids (NGL) production. This is why, Synergy has a balanced production mix (54% oil and 46% natural gas).

Look for improvements to NG pricing to also be a catalyst here. This likely is a good hold for 2014 at these levels in my opinion.