Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Nov. 30, 2013 | Jan. 01, 2014 | |
Document And Entity Information Abstract | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 30-Nov-13 | ' |
Entity Registrant Name | 'SYNERGY RESOURCES CORP | ' |
Entity Central Index Key | '0001413507 | ' |
Current Fiscal Year End Date | '--08-31 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Document Fiscal Year Focus | '2014 | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Units Outstanding | ' | 75,993,960 |
BALANCE_SHEETS
BALANCE SHEETS (USD $) | Nov. 30, 2013 | Aug. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $20,973 | $19,463 |
Short-term investments | 40,032 | 60,018 |
Accounts receivable: | ' | ' |
Oil and gas sales | 9,425 | 7,361 |
Joint interest billing | 5,468 | 4,700 |
Inventory | 294 | 194 |
Other current assets | 471 | 239 |
Commodity derivative | 69 | ' |
Total current assets | 76,732 | 91,975 |
Property and equipment: | ' | ' |
Evaluated oil and gas properties, full cost method, net | 170,142 | 132,979 |
Unevaluated oil and gas properties | 89,307 | 64,715 |
Other property and equipment, net | 2,029 | 271 |
Property and equipment, net | 261,478 | 197,965 |
Other assets | 602 | 1,296 |
Total assets | 338,812 | 291,236 |
Current liabilities: | ' | ' |
Trade accounts payable | 346 | 949 |
Well costs payable | 26,813 | 25,491 |
Revenue payable | 8,810 | 6,081 |
Production taxes payable | 8,422 | 6,277 |
Other accrued expenses | 504 | 254 |
Commodity derivative | ' | 2,315 |
Total current liabilities | 44,895 | 41,367 |
Revolving credit facility | 37,000 | 37,000 |
Commodity derivative | 81 | 334 |
Deferred tax liability, net | 9,925 | 6,538 |
Asset retirement obligations | 3,540 | 2,777 |
Total liabilities | 95,441 | 88,016 |
Commitments and contingencies (See Note 12) | ' | ' |
Shareholders' equity: | ' | ' |
Preferred stock - $0.01 par value, 10,000,000 shares authorized: no shares issued and outstanding | ' | ' |
Common stock - $0.001 par value, 100,000,000 shares authorized: 75,746,743 and 70,587,723 shares issued and outstanding, respectively | 76 | 71 |
Additional paid-in capital | 250,429 | 216,383 |
Accumulated deficit | -7,134 | -13,234 |
Total shareholders' equity | 243,371 | 203,220 |
Total liabilities and shareholders' equity | $338,812 | $291,236 |
BALANCE_SHEETS_Parenthetical
BALANCE SHEETS (Parenthetical) (USD $) | Nov. 30, 2013 | Aug. 31, 2013 |
BALANCE SHEETS [Abstract] | ' | ' |
Preferred stock, par value per share | $0.01 | $0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value per share | $0.00 | $0.00 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 75,746,743 | 70,587,723 |
Common stock, shares outstanding | 75,746,743 | 70,587,723 |
STATEMENTS_OF_OPERATIONS
STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Nov. 30, 2013 | Nov. 30, 2012 |
STATEMENTS OF OPERATIONS [Abstract] | ' | ' |
Oil and gas revenues | $19,266 | $8,314 |
Expenses | ' | ' |
Lease operating expenses | 1,273 | 523 |
Production taxes | 2,016 | 814 |
Depletion, depreciation, and amortization | 5,591 | 2,320 |
General and administrative | 3,168 | 1,111 |
Total expenses | 12,048 | 4,768 |
Operating income | 7,218 | 3,546 |
Other income (expense) | ' | ' |
Commodity derivative realized loss | -398 | ' |
Commodity derivative unrealized gain | 2,636 | ' |
Interest income | 31 | 7 |
Total other income | 2,269 | 7 |
Income before income taxes | 9,487 | 3,553 |
Deferred income tax provision | -3,387 | -1,315 |
Net income | $6,100 | $2,238 |
Net income per common share: | ' | ' |
Basic | $0.08 | $0.04 |
Diluted | $0.08 | $0.04 |
Weighted average shares outstanding: | ' | ' |
Basic | 73,674,865 | 51,661,704 |
Diluted | 76,044,605 | 53,616,182 |
STATEMENTS_OF_CASH_FLOWS
STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Nov. 30, 2013 | Nov. 30, 2012 |
Cash flows from operating activities: | ' | ' |
Net income | $6,100 | $2,238 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depletion, depreciation, and amortization | 5,591 | 2,320 |
Provision for deferred taxes | 3,387 | 1,315 |
Stock-based compensation | 419 | 168 |
Valuation (increase) in commodity derivatives | -2,636 | ' |
Accounts receivable | ' | ' |
Oil and gas sales | -2,064 | -1,618 |
Joint interest billing | -768 | -467 |
Inventory | -100 | ' |
Accounts payable | ' | ' |
Trade | -603 | -1,073 |
Revenue | 2,729 | 821 |
Production taxes | 2,145 | 777 |
Accrued expenses | 250 | -147 |
Other | 463 | -1,565 |
Total adjustments | 8,813 | 531 |
Net cash provided by operating activities | 14,913 | 2,769 |
Cash flows from investing activities: | ' | ' |
Acquisition of property and equipment | -57,127 | -12,220 |
Short-term investments | 19,987 | ' |
Net cash used in investing activities | -37,140 | -12,220 |
Cash flows from financing activities: | ' | ' |
Proceeds from exercise of warrants | 23,771 | 146 |
Proceeds from revolving credit facility | ' | 2,486 |
Shares withheld for payment of employee payroll taxes | -34 | ' |
Net cash provided by financing activities | 23,737 | 2,632 |
Net increase (decrease) in cash and cash equivalents | 1,510 | -6,819 |
Cash and cash equivalents at beginning of period | 19,463 | 19,284 |
Cash and cash equivalents at end of period | $20,973 | $12,465 |
Organization_and_Summary_of_Si
Organization and Summary of Significant Accounting Policies | 3 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Organization and Summary of Significant Accounting Policies [Abstract] | ' | ||||||||
Organization and Summary of Significant Accounting Policies | ' | ||||||||
1. | Organization and Summary of Significant Accounting Policies | ||||||||
Organization: Synergy Resources Corporation ("the Company") is engaged in oil and gas acquisition, exploration, development and production activities, primarily in the Denver-Julesburg Basin ("D-J Basin") of Colorado. | |||||||||
Basis of Presentation: The Company has adopted August 31st as the end of its fiscal year. The Company does not utilize any special purpose entities. | |||||||||
At the directive of the Securities and Exchange Commission to use "plain English" in public filings, the Company will use such terms as "we," "our," "us" or "the Company" in place of Synergy Resources Corporation. When such terms are used in this manner throughout this document, they are in reference only to the corporation, Synergy Resources Corporation, and are not used in reference to the Board of Directors, corporate officers, management, or any individual employee or group of employees. | |||||||||
The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). | |||||||||
Interim Financial Information: The interim financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the SEC as promulgated in Rule 10-01 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such SEC rules and regulations. The Company believes that the disclosures included are adequate to make the information presented not misleading, and recommends that these financial statements be read in conjunction with the audited financial statements and notes thereto for the year ended August 31, 2013. | |||||||||
In management's opinion, the unaudited financial statements contained herein reflect all adjustments, consisting solely of normal recurring items, which are necessary for the fair presentation of the Company's financial position, results of operations, and cash flows on a basis consistent with that of its prior audited financial statements. However, the results of operations for interim periods may not be indicative of results to be expected for the full fiscal year. | |||||||||
Reclassifications: Certain amounts previously presented for prior periods have been reclassified to conform to the current presentation. The reclassifications had no effect on net income, working capital or equity previously reported. | |||||||||
Use of Estimates: The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, including oil and gas reserves, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management routinely makes judgments and estimates about the effects of matters that are inherently uncertain. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Estimates and assumptions are revised periodically and the effects of revisions are reflected in the financial statements in the period it is determined to be necessary. Actual results could differ from these estimates. | |||||||||
Cash and Cash Equivalents: The Company considers cash in banks, deposits in transit, and highly liquid debt instruments purchased with original maturities of less than three months to be cash and cash equivalents. | |||||||||
Short-Term Investments: As part of its cash management strategies, the Company invests in short-term interest bearing deposits such as certificates of deposits with maturities of less than one year. | |||||||||
Inventory: Inventories consist primarily of tubular goods and well equipment to be used in future drilling operations or repair operations and are carried at the lower of cost or market. | |||||||||
Oil and Gas Properties: The Company uses the full cost method of accounting for costs related to its oil and gas properties. Accordingly, all costs associated with acquisition, exploration, and development of oil and gas reserves (including the costs of unsuccessful efforts) are capitalized into a single full cost pool. These costs include land acquisition costs, geological and geophysical expense, carrying charges on non-producing properties, costs of drilling and overhead charges directly related to acquisition and exploration activities. Under the full cost method, no gain or loss is recognized upon the sale or abandonment of oil and gas properties unless non-recognition of such gain or loss would significantly alter the relationship between capitalized costs and proved oil and gas reserves. | |||||||||
Capitalized costs of oil and gas properties are depleted using the unit-of-production method based upon estimates of proved reserves. For depletion purposes, the volume of petroleum reserves and production is converted into a common unit of measure at the energy equivalent conversion rate of six thousand cubic feet of natural gas to one barrel of crude oil. Investments in unevaluated properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is added to the capitalized costs to be amortized. | |||||||||
Under the full cost method of accounting, a ceiling test is performed each quarter. The full cost ceiling test is an impairment test prescribed by SEC regulations. The ceiling test determines a limit on the book value of oil and gas properties. The capitalized costs of proved and unproved oil and gas properties, net of accumulated depreciation, depletion, and amortization, and the related deferred income taxes, may not exceed the estimated future net cash flows from proved oil and gas reserves, less future cash outflows associated with asset retirement obligations that have been accrued, plus the cost of unevaluated properties not being amortized, plus the lower of cost or estimated fair value of unevaluated properties being amortized. Prices are held constant for the productive life of each well. Net cash flows are discounted at 10%. If net capitalized costs exceed this limit, the excess is charged to expense and reflected as additional accumulated depreciation, depletion and amortization. The calculation of future net cash flows assumes continuation of current economic conditions. Once impairment expense is recognized, it cannot be reversed in future periods, even if increasing prices raise the ceiling amount. No provision for impairment was required for the three months ended November 30, 2013 or November 30, 2012. | |||||||||
The oil and natural gas prices used to calculate the full cost ceiling limitation are based upon a 12 month rolling average, calculated as the unweighted arithmetic average of the first day of the month price for each month within the 12 month period prior to the end of the reporting period, unless prices are defined by contractual arrangements. Prices are adjusted for basis or location differentials. | |||||||||
Oil and Gas Reserves: Oil and gas reserves represent theoretical, estimated quantities of crude oil and natural gas which geological and engineering data estimate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. There are numerous uncertainties inherent in estimating oil and gas reserves and their values, including many factors beyond the Company's control. Accordingly, reserve estimates are different from the future quantities of oil and gas that are ultimately recovered and the corresponding lifting costs associated with the recovery of these reserves. | |||||||||
The determination of depletion and amortization expenses, as well as the ceiling test calculation related to the recorded value of the Company's oil and natural gas properties, is highly dependent on estimates of proved oil and natural gas reserves. | |||||||||
Capitalized Interest: The Company capitalizes interest on expenditures made in connection with acquisition of mineral interests and development projects that are not subject to current amortization. Interest is capitalized during the period that activities are in progress to bring the projects to their intended use. See Note 9 for additional information. | |||||||||
Capitalized Overhead: A portion of the Company's overhead expenses are directly attributable to acquisition and development activities. Under the full cost method of accounting, these expenses in the amounts showing in the table below were capitalized in the full cost pool (in thousands): | |||||||||
Three Months Ended | |||||||||
November 30, | November 30, | ||||||||
2013 | 2012 | ||||||||
Capitalized Overhead | $ | 317 | $ | 103 | |||||
Well Costs Payable: The cost of wells in progress are recorded as incurred, generally based upon invoiced amounts or joint interest billings ("JIB"). For those instances in which an invoice or JIB is not received on a timely basis, estimated costs are accrued to oil and gas properties, generally based on the Authorization for Expenditure ("AFE"). | |||||||||
Other Property and Equipment: Support equipment (including such items as vehicles, well servicing equipment, and office furniture and equipment) is stated at the lower of cost or market. Depreciation of support equipment is computed using primarily the straight-line method over periods ranging from five to seven years. | |||||||||
Asset Retirement Obligations: The Company's activities are subject to various laws and regulations, including legal and contractual obligations to reclaim, remediate, or otherwise restore properties at the time the asset is permanently removed from service. Calculation of an asset retirement obligation ("ARO") requires estimates about several future events, including the life of the asset, the costs to remove the asset from service, and inflation factors. The ARO is initially estimated based upon discounted cash flows over the life of the asset and is accreted to full value over time using the Company's credit adjusted risk free interest rate. Estimates are periodically reviewed and adjusted to reflect changes. | |||||||||
The present value of a liability for the ARO is initially recorded when it is incurred if a reasonable estimate of fair value can be made. This is typically when a well is completed or an asset is placed in service. When the ARO is initially recorded, the Company capitalizes the cost (asset retirement cost or "ARC") by increasing the carrying value of the related asset. ARCs related to wells are capitalized to the full cost pool and subject to depletion. Over time, the liability increases for the change in its present value (accretion of ARO), while the net capitalized cost decreases over the useful life of the asset, as depletion expense is recognized. In addition, ARCs are included in the ceiling test calculation for valuing the full cost pool. | |||||||||
Oil and Gas Sales: The Company derives revenue primarily from the sale of crude oil and natural gas produced on its properties. Revenues from production on properties in which the Company shares an economic interest with other owners are recognized on the basis of the Company's pro-rata interest. Revenues are reported on a gross basis for the amounts received before taking into account production taxes and lease operating costs, which are reported as separate expenses. Revenue is recorded and receivables are accrued using the sales method, which occurs in the month production is delivered to the purchaser, at which time ownership of the oil is transferred to the purchaser. Payment is generally received between thirty and ninety days after the date of production. Provided that reasonable estimates can be made, revenue and receivables are accrued to recognize delivery of product to the purchaser. Differences between estimates and actual volumes and prices, if any, are adjusted upon final settlement. | |||||||||
Major Customers and Operating Region: The Company operates exclusively within the United States of America. Except for cash and equivalent investments, all of the Company's assets are employed in and all of its revenues are derived from the oil and gas industry. The table below presents the percentages of oil and gas revenue resulting from purchases by major customers. | |||||||||
Three Months Ended | |||||||||
30-Nov | 30-Nov | ||||||||
Major Customers | 2013 | 2012 | |||||||
Company A | 60% | 68% | |||||||
Company B | 15% | 22% | |||||||
The Company sells production to a small number of customers, as is customary in the industry. Based on the current demand for oil and natural gas, the availability of other buyers, and the Company having the option to sell to other buyers if conditions so warrant, the Company believes that its oil and gas production can be sold in the market in the event that it is not sold to the Company's existing customers. However, in some circumstances, a change in customers may entail significant transition costs and/or shutting in or curtailing production for weeks or even months during the transition to a new customer. | |||||||||
Accounts receivable consist primarily of trade receivables from oil and gas sales and amounts due from other working interest owners whom have been billed for their proportionate share of well costs. The Company typically has the right to withhold future revenue disbursements to recover outstanding joint interest billings on outstanding receivables from joint interest owners. | |||||||||
Customers with balances greater than 10% of total receivable balances as of each of the periods presented are shown in the following table: | |||||||||
Major Customers | As of | As of | |||||||
30-Nov-13 | 30-Nov-12 | ||||||||
Company A | 29% | 35% | |||||||
Company B | 16% | 30% | |||||||
Company C | 10% | - | |||||||
Stock-Based Compensation: The Company recognizes all equity-based compensation as stock-based compensation expense based on the fair value of the compensation measured at the grant date, calculated using the Black-Scholes-Merton option pricing model. The expense is recognized over the vesting period of the respective grants. See Note 11 for additional information. | |||||||||
Earnings Per Share Amounts: Basic earnings per share includes no dilution and is computed by dividing net income or loss by the weighted-average number of shares outstanding during the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the Company. The number of potential shares outstanding relating to stock options and warrants is computed using the treasury stock method. Potentially dilutive securities outstanding are not included in the calculation when such securities would have an anti-dilutive effect on earnings per share. The following table sets forth the share calculation of diluted earnings per share: | |||||||||
Three Months Ended | |||||||||
November 30, | November 30, | ||||||||
2013 | 2012 | ||||||||
Weighted-average shares outstanding-basic | 73,674,865 | 51,661,704 | |||||||
Potentially dilutive common shares from: | |||||||||
Stock Options | 551,060 | 1,533,812 | |||||||
Warrants | 1,818,680 | 420,666 | |||||||
2,369,740 | 1,954,478 | ||||||||
Weighted-average shares outstanding - diluted | 76,044,605 | 53,616,182 | |||||||
The following potentially dilutive securities, which could dilute future earnings per share, were excluded from the calculation because they were anti-dilutive: | |||||||||
Three Months Ended | |||||||||
November 30, | November 30, | ||||||||
2013 | 2012 | ||||||||
Warrants | - | 14,098,000 | |||||||
Employee stock options | 810,000 | 2,875,000 | |||||||
Total | 810,000 | 16,973,000 | |||||||
Income Taxes: Income taxes are computed using the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, their respective tax bases as well as the effect of net operating losses, tax credits and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities due to a change in income tax rates is recognized in the results of operations in the period that includes the enactment date. | |||||||||
No significant uncertain tax positions exist. The Company's policy is to recognize interest and penalties related to uncertain tax benefits in income tax expense. As of November 30, 2013, the Company has not recognized any interest or penalties related to uncertain tax benefits. | |||||||||
Financial Instruments: The Company considers cash in banks, deposits in transit, and highly liquid debt instruments purchased with original maturities of less than three months to be cash and cash equivalents. A substantial portion of the Company's financial instruments consist of cash and cash equivalents, short-term investments, accounts receivable, trade accounts payable, accrued expenses, and obligations under the revolving line of credit facility, all of which are considered to be representative of their fair value due to the short-term and highly liquid nature of these instruments. | |||||||||
Financial instruments, whether measured on a recurring or non-recurring basis, are recorded at fair value. A fair value hierarchy, established by the Financial Accounting Standards Board, prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). | |||||||||
As discussed in Note 5, the Company incurred asset retirement obligations during the periods presented, the value of which was determined using unobservable pricing inputs (or Level 3 inputs). The Company uses the income valuation technique to estimate the fair value of the obligation using several assumptions and judgments about the ultimate settlement amounts, inflation factors, credit adjusted discount rates, and timing of settlement. | |||||||||
Commodity Derivative Instruments: The Company has entered into commodity derivative instruments, primarily utilizing swaps or "no premium" collars to reduce the effect of price changes on a portion of our future oil production. The Company's commodity derivative instruments are measured at fair value and are included in the accompanying balance sheets as commodity derivative assets and liabilities. Unrealized gains and losses are recorded based on the changes in the fair values of the derivative instruments. Both the unrealized and realized gains and losses resulting from the contract settlement of derivatives are recorded in the commodity derivative line on the statement of operations. The Company values its derivative instruments by obtaining independent market quotes, as well as using industry standard models that consider various assumptions, including quoted forward prices for commodities, risk free interest rates, and estimated volatility factors, as well as other relevant economic measures. The Company compares the valuations it calculates to valuations provided by the counterparties to assess the reasonableness of each valuation. The discount rate used in the fair values of these instruments includes a measure of nonperformance risk by the counterparty or the Company, as appropriate. For additional discussion, please refer to Note 7-Commodity Derivative Instruments. | |||||||||
Recent Accounting Pronouncements: The Company evaluates the pronouncements of various authoritative accounting organizations to determine the impact of new pronouncements on US GAAP and the impact on the Company. There were various updates recently issued by the Financial Accounting Standards Board, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's consolidated financial position, results of operations or cash flows. |
Property_and_Equipment
Property and Equipment | 3 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Property and Equipment [Abstract] | ' | ||||||||
Property and Equipment | ' | ||||||||
2. | Property and Equipment | ||||||||
Capitalized costs of property and equipment at November 30, 2013, and August 31, 2013, consisted of the following (in thousands): | |||||||||
As of | As of | ||||||||
30-Nov-13 | 31-Aug-13 | ||||||||
Oil and gas properties, full cost method: | |||||||||
Unevaluated costs, not subject to amortization: | |||||||||
Lease acquisition and other costs | $ | 55,389 | $ | 38,826 | |||||
Wells in progress | 33,918 | 25,889 | |||||||
Subtotal, unevaluated costs | 89,307 | 64,715 | |||||||
Evaluated costs: | |||||||||
Producing and non-producing | 198,409 | 155,755 | |||||||
Total capitalized costs | 287,716 | 220,470 | |||||||
Less, accumulated depletion | (28,267 | ) | (22,776 | ) | |||||
Oil and gas properties, net | 259,449 | 197,694 | |||||||
Land | 1,744 | 44 | |||||||
Other property and equipment | 586 | 500 | |||||||
Less, accumulated depreciation | (301 | ) | (273 | ) | |||||
Other property and equipment, net | 2,029 | 271 | |||||||
Total property and equipment, net | $ | 261,478 | $ | 197,965 | |||||
Periodically, the Company reviews its unevaluated properties to determine if the carrying value of such assets exceeds estimated fair value. The reviews for the three months ended November 30, 2013 and 2012 indicated that estimated fair values of such assets exceeded carrying values, thus revealing no impairment. The full cost ceiling test, explained in Note 1, and, as performed for the three months ended November 30, 2013 and 2012, similarly revealed no impairment of oil and gas assets. |
Acquisitions
Acquisitions | 3 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Acquisitions [Abstract] | ' | ||||||||
Acquisitions | ' | ||||||||
3. | Acquisitions | ||||||||
On September 16, 2013, the Company entered into a definitive purchase and sale agreement, with Trilogy Resources, LLC ("Trilogy"), for its interests in 21 producing oil and gas wells and approximately 800 net mineral acres (the "Trilogy Assets"). On November 12, 2013, the Company closed the transaction for a combination of cash and stock. Trilogy received 301,339 shares of the Company's common stock valued at $2.9 million and cash consideration of approximately $16.0 million. No material transaction costs were incurred in connection with this acquisition. | |||||||||
The acquisition was accounted for using the acquisition method under ASC 805, Business Combinations, which requires the acquired assets and liabilities to be recorded at fair values as of the acquisition date of November 12, 2013. The following table summarizes the preliminary purchase price and the preliminary estimated values of assets acquired and liabilities assumed and is subject to revision as the Company continues to evaluate the fair value of the acquisition (in thousands): | |||||||||
Preliminary Purchase Price | November 12, | ||||||||
2013 | |||||||||
Consideration Given | |||||||||
Cash | $ | 16,008 | |||||||
Synergy Resources Corp. Common Stock * | 2,896 | ||||||||
Total consideration given | $ | 18,904 | |||||||
Preliminary Allocation of Purchase Price | |||||||||
Proved oil and gas properties | $ | 14,317 | |||||||
Unproved oil and gas properties | 5,057 | ||||||||
Total fair value of oil and gas properties acquired | 19,374 | ||||||||
Working capital | $ | (119 | ) | ||||||
Asset retirement obligation | (351 | ) | |||||||
Fair value of net assets acquired | $ | 18,904 | |||||||
Working capital acquired was estimated as follows: | |||||||||
Accounts receivable | 500 | ||||||||
Accrued liabilities and expenses | (619 | ) | |||||||
Total working capital | $ | (119 | ) | ||||||
* | The fair value of the consideration attributed to the Common Stock under ASC 805 was based on the Company's closing stock price on the measurement date of November 12, 2013. (301,3339 shares at $9.61 per share) | ||||||||
On August 27, 2013, the Company entered into a definitive purchase and sale agreement, with Apollo Operating, LLC ("Apollo"), for its interests in 45 producing oil and gas wells, approximately 1,000 net mineral acres, and a Class II disposal well (the "Apollo Assets"). On November 13, 2013, the Company closed the transaction for a combination of cash and stock. Apollo received 550,518 shares of the Company's common stock valued at $5.2 million and cash consideration of approximately $11.0 million. No material transaction costs were incurred in connection with this acquisition. | |||||||||
The acquisition was accounted for using the acquisition method under ASC 805, Business Combinations, which requires the acquired assets and liabilities to be recorded at fair values as of the acquisition date of November 13, 2013. The following table summarizes the preliminary purchase price and the preliminary estimated values of assets acquired and liabilities assumed and is subject to revision as the Company continues to evaluate the fair value of the acquisition (in thousands): | |||||||||
Preliminary Purchase Price | November 13, | ||||||||
2013 | |||||||||
Consideration Given | |||||||||
Cash | $ | 11,007 | |||||||
Synergy Resources Corp. Common Stock * | 5,224 | ||||||||
Total consideration given | $ | 16,231 | |||||||
Preliminary Allocation of Purchase Price | |||||||||
Proved oil and gas properties | $ | 9,271 | |||||||
Disposal Well | $ | 1,340 | |||||||
Unproved oil and gas properties | 6,725 | ||||||||
Total fair value of oil and gas properties acquired | 17,336 | ||||||||
Working capital | $ | (883 | ) | ||||||
Asset retirement obligation | (221 | ) | |||||||
Fair value of net assets acquired | $ | 16,232 | |||||||
Working capital acquired was estimated as follows: | |||||||||
Accounts receivable | 380 | ||||||||
Accrued liabilities and expenses | (1,263 | ) | |||||||
Total working capital | $ | (883 | ) | ||||||
* | The fair value of the consideration attributed to the Common Stock under ASC 805 was based on the Company's closing stock price on the measurement date of November 13, 2013. (550,518 shares at $9.49 per share) | ||||||||
Subsequent to the close of the Apollo acquisition, the Company acquired the remaining 75% working interests not owned by Apollo from the other owners in the disposal well. Aggregate consideration paid to the other owners approximated $3.7 million. The Company believes the price paid for the remaining interests approximates the fair market value of the disposal well. | |||||||||
Pro Forma Financial Information | |||||||||
As stated above, on November 12 and 13, 2013, the Company completed acquisitions of oil and gas properties from Trilogy Resources, LLC and Apollo Operating, LLC. Below are the combined results of operations for the three months ended November 30, 2013 and 2012 as if the acquisition had occurred on September 1, 2012. | |||||||||
The unaudited pro forma results reflect significant pro forma adjustments related to funding the acquisition through the issuance of common stock, additional depreciation expense, costs directly attributable to the acquisitions and costs incurred as a result of the Trilogy and Apollo acquisitions. The pro forma results do not include any cost savings or other synergies that may result from the acquisition or any estimated costs that have been or will be incurred by the Company to integrate the properties acquired. The pro forma results are not necessarily indicative of what actually would have occurred if the acquisition had been completed as of the beginning of the period, nor are they necessarily indicative of future results. | |||||||||
Three Months Ended | |||||||||
(in thousands) | |||||||||
30-Nov | 30-Nov | ||||||||
2013 | 2012 | ||||||||
Oil and Gas Revenues | $ | 21,631 | $ | 10,960 | |||||
Net income | $ | 6,928 | $ | 3,247 | |||||
Earnings per common share | |||||||||
Basic | $ | 0.09 | $ | 0.06 | |||||
Diluted | $ | 0.09 | $ | 0.06 | |||||
Depletion_depreciation_and_amo
Depletion, depreciation and amortization ("DDA") | 3 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Depletion, depreciation and amortization ("DDA") [Abstract] | ' | ||||||||
Depletion, depreciation and amortization ("DDA") | ' | ||||||||
4. | Depletion, depreciation and amortization ("DDA") | ||||||||
Depletion, depreciation and amortization for the three months ended November 30, 2013 and 2012, consisted of the following (in thousands): | |||||||||
Three Months ended | |||||||||
November 30, | November 30, | ||||||||
2013 | 2012 | ||||||||
Depletion | $ | 5,490 | $ | 2,262 | |||||
Depreciation and amortization | 101 | 58 | |||||||
Total DDA Expense | $ | 5,591 | $ | 2,320 | |||||
Capitalized costs of evaluated oil and gas properties are depleted quarterly using the units-of-production method based on a depletion rate, which is calculated by comparing production volumes for the quarter to estimated total reserves at the beginning of the quarter. |
Asset_Retirement_Obligations
Asset Retirement Obligations | 3 Months Ended | ||||
Nov. 30, 2013 | |||||
Asset Retirement Obligations [Abstract] | ' | ||||
Asset Retirement Obligations | ' | ||||
5. | Asset Retirement Obligations | ||||
Upon completion or acquisition of a well, the Company recognizes obligations for its oil and gas operations for anticipated costs to remove and dispose of surface equipment, plug and abandon the well, and restore the drilling site to its original use. The estimated present value of such obligations is determined using several assumptions and judgments about the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in regulations. Changes in estimates are reflected in the obligations as they occur. If the fair value of a recorded asset retirement obligation changes, a revision is recorded to both the asset retirement obligation and the asset retirement capitalized cost. For the purpose of determining the fair value of ARO incurred during the fiscal years presented, the Company used the following assumptions: | |||||
For the Three Months Ended November 30, | |||||
2013 | 2012 | ||||
Inflation rate | 3.9 - 4.0% | 3.9 - 4.0% | |||
Estimated asset life | 24.0 - 40.0 years | 24.0 - 27.6 years | |||
Credit adjusted risk free interest rate | 8.00% | 11.20% | |||
The following table summarizes the change in asset retirement obligations for the three months ended November 30, 2013 (in thousands): | |||||
Asset retirement obligations, August 31, 2013 | $ | 2,777 | |||
Liabilities incurred | 120 | ||||
Liabilities assumed | 572 | ||||
Liabilities settled | - | ||||
Accretion | 71 | ||||
Asset retirement obligations, November 30, 2013 | $ | 3,540 | |||
Revolving_Credit_Facility
Revolving Credit Facility | 3 Months Ended | |
Nov. 30, 2013 | ||
Revolving Credit Facility [Abstract] | ' | |
Revolving Credit Facility | ' | |
6. | Revolving Credit Facility | |
On November 28, 2012, February 12, 2013, June 28, 2013, and December 20, 2013, the Company amended its revolving credit facility ("LOC") with a bank syndicate. The LOC is available for working capital requirements, capital expenditures, acquisitions, general corporate purposes, and to support letters of credit. The terms provide for $300 million ($150 million prior to December 20, 2013) in the maximum amount of borrowings available to the Company, subject to a borrowing base limitation. Community Banks of Colorado acts as the administrative agent for the bank syndicate with respect to the LOC. The credit facility expires on November 28, 2016. | ||
Interest under the LOC is payable monthly and accrues at a variable rate, subject to a minimum rate. For each borrowing, the Company designates its choice of reference rates, which can be either the Prime Rate plus a margin of 0% to 1%, or London Interbank Offered Rate (LIBOR) plus a margin of 2.50% to 3.25%. The interest rate margin, as well as other bank fees, varies with utilization of the LOC. The average annual interest rate for borrowings during the quarter ended November 30, 2013, was 2.7%. As of November 30, 2013, the interest rate on the outstanding balance was 2.68%, representing LIBOR plus a margin of 2.5%. | ||
Certain of the Company's assets, including substantially all developed properties, have been designated as collateral under the arrangement. The borrowing commitment is subject to adjustment based upon a borrowing base calculation that includes the value of oil and gas reserves. The borrowing base limitation is generally subject to redetermination on a semi-annual basis. The most recent redetermination in December 2013 increased the borrowing base to $90 million from $75 million. As of November 30, 2013, based upon a borrowing base of $75 million and an outstanding principal balance of $37 million the unused borrowing base available for future borrowing totaled approximately $38 million. The increase in the borrowing base in December increased the amount available for future borrowing to approximately $53 million. | ||
The arrangement contains covenants that, among other things, restrict the payment of dividends and require compliance with certain customary financial ratios. On a quarterly basis, the Company must maintain (a) an adjusted current ratio greater than 1.0, (b) a ratio of earnings before interest, taxes, depletion, amortization and exploration expense (EBITDAX) greater than 3.5 times interest and fees, (c) a ratio of total funded debt less than 3.5 times EBITDAX, and (d) a ratio of total funded debt less than 0.5 times total capitalization. Furthermore, terms of the LOC require the Company to maintain hedge contracts covering future production quantities that are included in the borrowing base. The most recent amendment to the LOC generally requires an overall hedge position that covers a rolling 24 months of estimated future production with a minimum position of no less than 45% and a maximum position of no more than 80% of hydrocarbon production. As of November 30, 2013, the most recent compliance date, the Company was in compliance with all loan covenants. | ||
As noted above, the most recent amendment to the LOC was subsequent to November 30, 2013, and the revisions implemented thereby included, among other things, an increase in the maximum commitment to $300 million, an increase in the borrowing base to $90 million, and an increase in the number of banks participating in the syndicate. | ||
Commodity_Derivative_Instrumen
Commodity Derivative Instruments | 3 Months Ended | ||||||||||||||
Nov. 30, 2013 | |||||||||||||||
Commodity Derivative Instruments [Abstract] | ' | ||||||||||||||
Commodity Derivative Instruments | ' | ||||||||||||||
7. | Commodity Derivative Instruments | ||||||||||||||
The Company has entered into commodity derivative instruments, as described below. The Company has utilized swaps or "no premium" collars to reduce the effect of price changes on a portion of its future oil production. A swap requires a payment to the counterparty if the settlement price exceeds the strike price and the same counterparty is required to make a payment if the settlement price is less than the strike price. A collar requires a payment to the counterparty if the settlement price is above the ceiling price and requires the counterparty to make a payment if the settlement price is below the floor price. The objective of the Company's use of derivative financial instruments is to achieve more predictable cash flows in an environment of volatile oil and gas prices and to manage its exposure to commodity price risk. While the use of these derivative instruments limits the downside risk of adverse price movements, such use may also limit the Company's ability to benefit from favorable price movements. The Company may, from time to time, add incremental derivatives to hedge additional production, restructure existing derivative contracts or enter into new transactions to modify the terms of current contracts in order to realize the current value of the Company's existing positions. The Company does not enter into derivative contracts for speculative purposes. | |||||||||||||||
The use of derivatives involves the risk that the counterparties to such instruments will be unable to meet the financial terms of such contracts. The Company's derivative contracts are currently with two counterparties. The Company has netting arrangements with the counterparties that provide for the offset of payables against receivables from separate derivative arrangements with the counterparty in the event of contract termination. The derivative contracts may be terminated by a non-defaulting party in the event of default by one of the parties to the agreement. | |||||||||||||||
The Company's commodity derivative instruments are measured at fair value and are included in the accompanying balance sheets as commodity derivative assets and liabilities. Unrealized gains and losses are recorded based on the changes in the fair values of the derivative instruments. Both the unrealized and realized gains and losses resulting from contract settlement of derivatives are recorded in the commodity derivative line on the statements of operations. The Company's valuation estimate takes into consideration the counterparty's credit worthiness, the Company's credit worthiness, and the time value of money. The consideration of the factors results in an estimated exit-price for each derivative asset or liability under a market place participant's view. Management believes that this approach provides a reasonable, non-biased, verifiable, and consistent methodology for valuing commodity derivative instruments. | |||||||||||||||
The Company's commodity derivative contracts as of November 30, 2013 are summarized below: | |||||||||||||||
Collars | Basis (1) | Quantity | Strike Price | ||||||||||||
(Bbl/month) | ($/Bbl) | ||||||||||||||
31-Dec-13 | NYMEX | 3,014 | $87.00 - $102.50 | ||||||||||||
Jan 1, 2014 - Dec 31, 2014 | NYMEX | 1,840 | $85.00 - $98.50 | ||||||||||||
Jan 1, 2015 - Jun 30, 2015 | NYMEX | 7,000 | $80.00 - $92.50 | ||||||||||||
Swaps | Basis (1) | Average Quantity | Average Swap Price | ||||||||||||
(Bbl/month) | ($/Bbl) | ||||||||||||||
31-Dec-13 | NYMEX | 32,014 | $96.21 | ||||||||||||
Jan 1, 2014 - Dec 31, 2014 | NYMEX | 11,340 | $92.13 | ||||||||||||
Subsequent to November 30, 2013, the Company entered into the following commodity derivative contracts: | |||||||||||||||
Collars | Basis (1) | Quantity | Strike Price | ||||||||||||
(Bbl/month) | ($/Bbl) | ||||||||||||||
Jan 1, 2014 - Feb 28, 2014 | NYMEX | 5,000 | $87.00 - $98.50 | ||||||||||||
Mar 1, 2014 - Dec 31, 2014 | NYMEX | 20,000 | $87.00 - $96.25 | ||||||||||||
Jan 1, 2015 - Jun 30, 2015 | NYMEX | 2,500 | $80.00 - $95.75 | ||||||||||||
Jul 1, 2015 - Dec 31, 2015 | NYMEX | 9,000 | $80.00 - $92.25 | ||||||||||||
(1) NYMEX refers to WTI quoted prices on the New York Mercantile Exchange | |||||||||||||||
The following table details the fair value of the derivatives recorded in the applicable balance sheet, by category: | |||||||||||||||
Underlying Commodity | Balance Sheet | Gross Amounts of Recognized Assets | Gross Amounts of Recognized liabilities | Net Amounts of Assets and (Liabilities) Presented in the Balance Sheet | |||||||||||
Location | |||||||||||||||
Crude oil derivative contract | Current | $ | 326 | $ | (257 | ) | $ | 69 | |||||||
Crude oil derivative contract | Noncurrent | $ | 161 | $ | (242 | ) | $ | (81 | ) | ||||||
The amount of gain (loss) recognized in the statements of operations related to derivative financial instruments was as follows: | |||||||||||||||
Three Months ended | |||||||||||||||
30-Nov | 30-Nov | ||||||||||||||
2013 | 2012 | ||||||||||||||
Unrealized gain on commodity derivatives | $ | 2,636 | $ | - | |||||||||||
Realized loss on commodity derivatives | (398 | ) | - | ||||||||||||
Total gain | $ | 2,238 | $ | - | |||||||||||
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | ||||||||||||||||
Nov. 30, 2013 | |||||||||||||||||
Fair Value Measurements [Abstract] | ' | ||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||
8. | Fair Value Measurements | ||||||||||||||||
ASC Topic 820, Fair Value Measurements and Disclosure, establishes a hierarchy for inputs used in measuring fair value for financial assets and liabilities that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions of what market participants would use in pricing the asset or liability based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of the inputs as follows: | |||||||||||||||||
· | Level 1: Quoted prices are 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. | ||||||||||||||||
The financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. There were no significant assets or liabilities that were measured at fair value on a non-recurring basis during the reporting periods after initial recognition. | |||||||||||||||||
The Company's non-recurring fair value measurements include asset retirement obligations, please refer to Note 5-Asset Retirement Obligations, and for the purchase price allocations for the fair value of assets and liabilities acquired through business combinations, please refer to Note 3-Acquisitions. | |||||||||||||||||
The Company determines the estimated fair value of its asset retirement obligations by calculating the present value of estimated cash flows related to plugging and abandonment liabilities using level 3 inputs. The significant inputs used to calculate such liabilities include estimates of costs to be incurred; the Company's credit adjusted discount rates, inflation rates and estimated dates of abandonment. The asset retirement liability is accreted to its present value each period and the capitalized asset retirement cost is depleted as a component of the full cost pool using the units-of-production method. | |||||||||||||||||
The acquisition of a group of assets in a business combination transaction requires fair value estimates for assets acquired and liabilities assumed. The fair value of assets and liabilities acquired through business combinations is calculated using a discounted-cash flow approach using level 3 inputs. Cash flow estimates require forecasts and assumptions for many years into the future for a variety of factors, including risk-adjusted oil and gas reserves, commodity prices and operating costs. | |||||||||||||||||
The following table presents the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of November 30, 2013 by level within the fair value hierarchy (in thousands): | |||||||||||||||||
Fair Value Measurements at November 30, 2013 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Financial Assets: | |||||||||||||||||
Commodity derivative asset | $ | - | $ | 69 | $ | - | $ | 69 | |||||||||
Financial Liabilities: | |||||||||||||||||
Commodity derivative asset | $ | - | $ | 81 | $ | - | $ | 81 | |||||||||
Commodity Derivative Instruments | |||||||||||||||||
The Company determines its estimate of the fair value of derivative instruments using a market approach based on several factors, including quoted market prices in active markets, quotes from third parties, the credit rating of each counterparty, and the Company's own credit rating. In consideration of counterparty credit risk, the Company assessed the possibility of whether the counterparty to the derivative would default by failing to make any contractually required payments. Additionally, the Company considers that it is of substantial credit quality and has the financial resources and willingness to meet its potential repayment obligations associated with the derivative transactions. At November 30, 2013, derivative instruments utilized by the Company consist of both "no premium" collars and swaps. The crude oil derivative markets are highly active. Although the Company's derivative instruments are valued using public indices, the instruments themselves are traded with third-party counterparties and are not openly traded on an exchange. As such, the Company has classified these instruments as level 2. | |||||||||||||||||
Fair Value of Financial Instruments | |||||||||||||||||
The Company's financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, commodity derivative instruments (discussed above) and credit facility borrowings. The carrying values of cash and cash equivalents and accounts receivable, accounts payable are representative of their fair values due to their short-term maturities. The carrying amount of the Company's credit facility approximated fair value as it bears interest at variable rates over the term of the loan. |
Interest_Expense
Interest Expense | 3 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Interest Expense [Abstract] | ' | ||||||||
Interest Expense | ' | ||||||||
9. | Interest Expense | ||||||||
The components of interest expense recorded for the three months ended November 30, 2013 and 2012, consisted of the following (in thousands): | |||||||||
Three Months Ended | |||||||||
30-Nov | 30-Nov | ||||||||
2013 | 2012 | ||||||||
Revolving credit facility | $ | 251 | $ | 30 | |||||
Amortization of debt issuance costs | 94 | 20 | |||||||
Less, interest capitalized | (345 | ) | (50 | ) | |||||
Interest expense, net | $ | - | $ | - |
Shareholders_Equity
Shareholders' Equity | 3 Months Ended | |||||||||||||||
Nov. 30, 2013 | ||||||||||||||||
Shareholders' Equity [Abstract] | ' | |||||||||||||||
Shareholders' Equity | ' | |||||||||||||||
10. | Shareholders' Equity | |||||||||||||||
The Company's classes of stock are summarized as follows: | ||||||||||||||||
As of | As of | |||||||||||||||
November 30, | August 31, | |||||||||||||||
2013 | 2013 | |||||||||||||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | ||||||||||||||
Preferred stock, par value | $ | 0.01 | $ | 0.01 | ||||||||||||
Preferred stock, shares issued and outstanding | nil | nil | ||||||||||||||
Common stock, shares authorized | 100,000,000 | 100,000,000 | ||||||||||||||
Common stock, par value | $ | 0.001 | $ | 0.001 | ||||||||||||
Common stock, shares issued and outstanding | 75,746,743 | 70,587,723 | ||||||||||||||
Preferred Stock may be issued in series with such rights and preferences as may be determined by the Board of Directors. Since inception, the Company has not issued any preferred shares. | ||||||||||||||||
Common stock issued for acquisition of mineral interests | ||||||||||||||||
During the three months ended November 30, 2013 the Company issued common shares in exchange for mineral property interests. The value of each transaction was determined using the market price of the Company's common stock on the date of each transaction. | ||||||||||||||||
For the three months ended November 30, 2013 | ||||||||||||||||
Number of common shares issued for mineral property leases | 203,891 | |||||||||||||||
Number of common shares issued for acquisitions | 851,857 | |||||||||||||||
Total common shares issued | 1,055,748 | |||||||||||||||
Average price per common share | $ | 9.38 | ||||||||||||||
Aggregate value of shares issued (in thousands) | $ | 9,898 | ||||||||||||||
The following table summarizes information about the Company's issued and outstanding common stock warrants as of November 30, 2013: | ||||||||||||||||
Exercise Price | Description | Number of Shares | Remaining Contractual Life (in years) | Exercise Price times Number of Shares (in thousands) | ||||||||||||
$6.00 | Series C | 4,538,000 | 1.1 | $ | 27,228 | |||||||||||
$1.60 | Series D | 3,989 | 1.1 | 6 | ||||||||||||
4,541,989 | $ | 27,234 | ||||||||||||||
The following table summarizes activity for common stock warrants for the three month period ended November 30, 2013: | ||||||||||||||||
Number of | Weighted Average | |||||||||||||||
Warrants | Exercise Price | |||||||||||||||
Outstanding, August 31, 2013 | 8,666,802 | $ | 5.92 | |||||||||||||
Granted | - | $ | - | |||||||||||||
Exercised | (4,124,813 | ) | $ | 5.82 | ||||||||||||
Expired | - | $ | - | |||||||||||||
Outstanding, November 30, 2013 | 4,541,989 | $ | 6 | |||||||||||||
StockBased_Compensation
Stock-Based Compensation | 3 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Stock-Based Compensation [Abstract] | ' | ||||||||
Stock-Based Compensation | ' | ||||||||
11. | Stock-Based Compensation | ||||||||
In addition to cash compensation, the Company may compensate certain service providers, including employees, directors, consultants, and other advisors, with equity based compensation in the form of stock options, restricted stock grants, and warrants. The Company records an expense related to equity compensation by pro-rating the estimated fair value of each grant over the period of time that the recipient is required to provide services to the Company (the "vesting phase"). The calculation of fair value is based, either directly or indirectly, on the quoted market value of the Company's common stock. Indirect valuations are calculated using the Black-Scholes-Merton option pricing model. | |||||||||
The amount of stock based compensation expense recorded for the three months ended November 30, 2013 and 2012 is shown in the table below (in thousands): | |||||||||
Three Months ended | |||||||||
30-Nov | 30-Nov | ||||||||
2013 | 2012 | ||||||||
Stock options | $ | 420 | $ | 125 | |||||
Restricted stock grants | - | 12 | |||||||
Investor relations warrants | - | 31 | |||||||
$ | 420 | $ | 168 | ||||||
For the periods presented, all stock based compensation expense was classified as a component within General and Administrative expenses on the Statements of Operations. | |||||||||
During the three months ended November 30, 2013 and 2012, the Company granted the following employee stock options: | |||||||||
Three Months ended | |||||||||
November 30, | November 30, | ||||||||
2013 | 2012 | ||||||||
Number of options to purchase common shares | 150,000 | 230,000 | |||||||
Weighted average exercise price | $ | 9.98 | $ | 3.9 | |||||
Term (in years) | 10 | 10 | |||||||
Vesting Period (in years) | 5 | 5 | |||||||
Fair Value (in thousands) | $ | 1,014 | $ | 621 | |||||
The assumptions used in valuing stock options granted during each of the three months presented were as follows: | |||||||||
Three Months Ended | |||||||||
30-Nov-13 | 30-Nov-12 | ||||||||
Expected Term | 6.5 years | 6.4 years | |||||||
Expected Volatility | 74% | 79.90% | |||||||
Risk free rate | 1.91% | 1.01% | |||||||
Expected dividend yield | 0.00% | 0.00% | |||||||
Forfeiture rate | 0.00% | 0.00% | |||||||
The following table summarizes activity for stock options for the three months ended November 30, 2013: | |||||||||
Number | Weighted Average Exercise Price | ||||||||
of Shares | |||||||||
Outstanding, August 31, 2013 | 1,820,000 | $4.88 | |||||||
Granted | 150,000 | $9.98 | |||||||
Exercised | -16,000 | $4.26 | |||||||
Outstanding, November 30, 2013 | 1,954,000 | $5.27 | |||||||
The following table summarizes information about issued and outstanding stock options as of November 30, 2013: | |||||||||
Outstanding Options | Vested Options | ||||||||
Number of shares | 1,954,000 | 468,000 | |||||||
Weighted average remaining contractual life | 8.6 years | 7.7 years | |||||||
Weighted average exercise price | $5.27 | $3.83 | |||||||
Aggregate intrinsic value (in thousands) | $8,223 | $2,625 | |||||||
The estimated unrecognized compensation cost from unvested stock options as of November 30, 2013, which will be recognized ratably over the remaining vesting phase, is as follows: | |||||||||
Unvested Options at November 30, 2013 | |||||||||
Unrecognized compensation expense (in thousands) | $5,646 | ||||||||
Remaining vesting phase | 3.5 years |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended | |
Nov. 30, 2013 | ||
Commitments and Contingencies [Abstract] | ' | |
Commitments and Contingencies | ' | |
12. | Commitments and Contingencies | |
From time to time, the Company receives notice from other operators of their intent to drill and operate a well in which the Company will own a working interest. The Company has the option to participate in the well and assume the obligation for its pro-rata share of the costs. As of November 30, 2013 the Company was participating in seven horizontal wells that were in various stages of drilling or completion. Costs accrued for these seven wells in progress totaled $3.0 million. | ||
Effective December 18, 2013, the Company amended its turn-key drilling contract with Ensign United States Drilling, Inc. (Ensign). Under the contract, the Company secured the use of one automated drilling rig for one year. Drilling operations under the contract are expected to commence in early January 2014. Total payments due to Ensign will depend upon a number of variables, including the depth of wells drilled, the target formation, and other technical details. The Company estimates that this contract will cover the drilling of 24 horizontal wells with total drilling costs of approximately $23.0 million. |
Related_Party_Transaction
Related Party Transaction | 3 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Related Party Transactions [Abstract] | ' | ||||||||
Related Party Transactions | ' | ||||||||
13. | Related Party Transaction | ||||||||
The Company leases office space and an equipment yard from HS Land & Cattle, LLC ("HSLC") in Platteville, Colorado. Effective July 1, 2013, the monthly rent was increased to $15,000 from $10,000 to include additional areas leased by the Company. The twelve month lease arrangement with HSLC is renewable annually on July 1. Under the lease arrangement, the Company paid HSLC $45,000 and $30,000 during the three months ended November 30, 2013 and 2012, respectively. HSLC is controlled by two of the Company's executive officers. | |||||||||
Effective January 1, 2012, the Company commenced processing revenue distribution payments to all persons that own a mineral interest in wells that it operates. Payments to mineral interest owners included payments to entities controlled by three of the Company's directors, Ed Holloway, William Scaff Jr, and George Seward. The following table summarizes the royalty payments made to directors or their affiliates for the three months ended November 30, 2013 and 2012 (in thousands): | |||||||||
Three Months ended | |||||||||
30-Nov | 30-Nov | ||||||||
2013 | 2012 | ||||||||
Total Royalty Payments | $ | 82 | $ | 45 | |||||
Supplemental_Schedule_of_Infor
Supplemental Schedule of Information to the Statements of Cash Flows | 3 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Supplemental Schedule of Information to the Statements of Cash Flows [Abstract] | ' | ||||||||
Supplemental Schedule of Information to the Statements of Cash Flows | ' | ||||||||
14. | Supplemental Schedule of Information to the Statements of Cash Flows | ||||||||
The following table supplements the cash flow information presented in the financial statements for the three months ended November 30, 2013 and 2012 (in thousands): | |||||||||
Three Months ended | |||||||||
November 30, | November 30, | ||||||||
2013 | 2012 | ||||||||
Supplemental cash flow information: | |||||||||
Interest paid | $ | 251 | $ | 30 | |||||
Income taxes paid | - | - | |||||||
Non-cash investing and financing activities: | |||||||||
Well costs payable | $ | 26,813 | $ | 8,522 | |||||
Assets acquired in exchange for common stock | 9,898 | 677 | |||||||
Asset retirement costs and obligations | 692 | 115 | |||||||
Subsequent_Events
Subsequent Events | 3 Months Ended | |
Nov. 30, 2013 | ||
Subsequent Events [Abstract] | ' | |
Subsequent Events | ' | |
15. | Subsequent Events | |
Subsequent to November 30, 2013, the Company amended its revolving credit facility as described in Note 6. | ||
Subsequent to November 30, 2013, he Company amended its turnkey drilling contract with Ensign United States Drilling Inc. as described in Note 12. | ||
Subsequent to November 30, 2013, the Company issued 212,500 shares of common stock pursuant to the exercise of Series C warrants. The Company received cash proceeds of $1,275,000. | ||
Subsequent to November 30, 2013, the Company completed the six wells on the Leffler prospect. The wells are temporarily shut-in pending completion of modifications at the midstream processing plant that will purchase natural gas produced by the wells. Full production is expected to commence in January. |
Organization_and_Summary_of_Si1
Organization and Summary of Significant Accounting Policies (Policies) | 3 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Organization and Summary of Significant Accounting Policies [Abstract] | ' | ||||||||
Basis of Presentation | ' | ||||||||
Basis of Presentation: The Company has adopted August 31st as the end of its fiscal year. The Company does not utilize any special purpose entities. | |||||||||
At the directive of the Securities and Exchange Commission to use "plain English" in public filings, the Company will use such terms as "we," "our," "us" or "the Company" in place of Synergy Resources Corporation. When such terms are used in this manner throughout this document, they are in reference only to the corporation, Synergy Resources Corporation, and are not used in reference to the Board of Directors, corporate officers, management, or any individual employee or group of employees. | |||||||||
The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). | |||||||||
Interim Financial Information | ' | ||||||||
Interim Financial Information: The interim financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the SEC as promulgated in Rule 10-01 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such SEC rules and regulations. The Company believes that the disclosures included are adequate to make the information presented not misleading, and recommends that these financial statements be read in conjunction with the audited financial statements and notes thereto for the year ended August 31, 2013. | |||||||||
In management's opinion, the unaudited financial statements contained herein reflect all adjustments, consisting solely of normal recurring items, which are necessary for the fair presentation of the Company's financial position, results of operations, and cash flows on a basis consistent with that of its prior audited financial statements. However, the results of operations for interim periods may not be indicative of results to be expected for the full fiscal year. | |||||||||
Reclassifications | ' | ||||||||
Reclassifications: Certain amounts previously presented for prior periods have been reclassified to conform to the current presentation. The reclassifications had no effect on net income, working capital or equity previously reported. | |||||||||
Use of Estimates | ' | ||||||||
Use of Estimates: The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, including oil and gas reserves, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management routinely makes judgments and estimates about the effects of matters that are inherently uncertain. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Estimates and assumptions are revised periodically and the effects of revisions are reflected in the financial statements in the period it is determined to be necessary. Actual results could differ from these estimates. | |||||||||
Cash and Cash Equivalents | ' | ||||||||
Cash and Cash Equivalents: The Company considers cash in banks, deposits in transit, and highly liquid debt instruments purchased with original maturities of less than three months to be cash and cash equivalents. | |||||||||
Short-Term Investments | ' | ||||||||
Short-Term Investments: As part of its cash management strategies, the Company invests in short-term interest bearing deposits such as certificates of deposits with maturities of less than one year. | |||||||||
Inventory | ' | ||||||||
Inventory: Inventories consist primarily of tubular goods and well equipment to be used in future drilling operations or repair operations and are carried at the lower of cost or market. | |||||||||
Oil and Gas Properties | ' | ||||||||
Oil and Gas Properties: The Company uses the full cost method of accounting for costs related to its oil and gas properties. Accordingly, all costs associated with acquisition, exploration, and development of oil and gas reserves (including the costs of unsuccessful efforts) are capitalized into a single full cost pool. These costs include land acquisition costs, geological and geophysical expense, carrying charges on non-producing properties, costs of drilling and overhead charges directly related to acquisition and exploration activities. Under the full cost method, no gain or loss is recognized upon the sale or abandonment of oil and gas properties unless non-recognition of such gain or loss would significantly alter the relationship between capitalized costs and proved oil and gas reserves. | |||||||||
Capitalized costs of oil and gas properties are depleted using the unit-of-production method based upon estimates of proved reserves. For depletion purposes, the volume of petroleum reserves and production is converted into a common unit of measure at the energy equivalent conversion rate of six thousand cubic feet of natural gas to one barrel of crude oil. Investments in unevaluated properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is added to the capitalized costs to be amortized. | |||||||||
Under the full cost method of accounting, a ceiling test is performed each quarter. The full cost ceiling test is an impairment test prescribed by SEC regulations. The ceiling test determines a limit on the book value of oil and gas properties. The capitalized costs of proved and unproved oil and gas properties, net of accumulated depreciation, depletion, and amortization, and the related deferred income taxes, may not exceed the estimated future net cash flows from proved oil and gas reserves, less future cash outflows associated with asset retirement obligations that have been accrued, plus the cost of unevaluated properties not being amortized, plus the lower of cost or estimated fair value of unevaluated properties being amortized. Prices are held constant for the productive life of each well. Net cash flows are discounted at 10%. If net capitalized costs exceed this limit, the excess is charged to expense and reflected as additional accumulated depreciation, depletion and amortization. The calculation of future net cash flows assumes continuation of current economic conditions. Once impairment expense is recognized, it cannot be reversed in future periods, even if increasing prices raise the ceiling amount. No provision for impairment was required for the three months ended November 30, 2013 or November 30, 2012. | |||||||||
The oil and natural gas prices used to calculate the full cost ceiling limitation are based upon a 12 month rolling average, calculated as the unweighted arithmetic average of the first day of the month price for each month within the 12 month period prior to the end of the reporting period, unless prices are defined by contractual arrangements. Prices are adjusted for basis or location differentials. | |||||||||
Oil and Gas Reserves | ' | ||||||||
Oil and Gas Reserves: Oil and gas reserves represent theoretical, estimated quantities of crude oil and natural gas which geological and engineering data estimate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. There are numerous uncertainties inherent in estimating oil and gas reserves and their values, including many factors beyond the Company's control. Accordingly, reserve estimates are different from the future quantities of oil and gas that are ultimately recovered and the corresponding lifting costs associated with the recovery of these reserves. | |||||||||
The determination of depletion and amortization expenses, as well as the ceiling test calculation related to the recorded value of the Company's oil and natural gas properties, is highly dependent on estimates of proved oil and natural gas reserves. | |||||||||
Capitalized Interest | ' | ||||||||
Capitalized Interest: The Company capitalizes interest on expenditures made in connection with acquisition of mineral interests and development projects that are not subject to current amortization. Interest is capitalized during the period that activities are in progress to bring the projects to their intended use. See Note 9 for additional information. | |||||||||
Capitalized Overhead | ' | ||||||||
Capitalized Overhead: A portion of the Company's overhead expenses are directly attributable to acquisition and development activities. Under the full cost method of accounting, these expenses in the amounts showing in the table below were capitalized in the full cost pool (in thousands): | |||||||||
Three Months Ended | |||||||||
November 30, | November 30, | ||||||||
2013 | 2012 | ||||||||
Capitalized Overhead | $ | 317 | $ | 103 | |||||
Well Costs Payable | ' | ||||||||
Well Costs Payable: The cost of wells in progress are recorded as incurred, generally based upon invoiced amounts or joint interest billings ("JIB"). For those instances in which an invoice or JIB is not received on a timely basis, estimated costs are accrued to oil and gas properties, generally based on the Authorization for Expenditure ("AFE"). | |||||||||
Other Property and Equipment | ' | ||||||||
Other Property and Equipment: Support equipment (including such items as vehicles, well servicing equipment, and office furniture and equipment) is stated at the lower of cost or market. Depreciation of support equipment is computed using primarily the straight-line method over periods ranging from five to seven years. | |||||||||
Asset Retirement Obligations | ' | ||||||||
Asset Retirement Obligations: The Company's activities are subject to various laws and regulations, including legal and contractual obligations to reclaim, remediate, or otherwise restore properties at the time the asset is permanently removed from service. Calculation of an asset retirement obligation ("ARO") requires estimates about several future events, including the life of the asset, the costs to remove the asset from service, and inflation factors. The ARO is initially estimated based upon discounted cash flows over the life of the asset and is accreted to full value over time using the Company's credit adjusted risk free interest rate. Estimates are periodically reviewed and adjusted to reflect changes. | |||||||||
The present value of a liability for the ARO is initially recorded when it is incurred if a reasonable estimate of fair value can be made. This is typically when a well is completed or an asset is placed in service. When the ARO is initially recorded, the Company capitalizes the cost (asset retirement cost or "ARC") by increasing the carrying value of the related asset. ARCs related to wells are capitalized to the full cost pool and subject to depletion. Over time, the liability increases for the change in its present value (accretion of ARO), while the net capitalized cost decreases over the useful life of the asset, as depletion expense is recognized. In addition, ARCs are included in the ceiling test calculation for valuing the full cost pool. | |||||||||
Oil and Gas Sales | ' | ||||||||
Oil and Gas Sales: The Company derives revenue primarily from the sale of crude oil and natural gas produced on its properties. Revenues from production on properties in which the Company shares an economic interest with other owners are recognized on the basis of the Company's pro-rata interest. Revenues are reported on a gross basis for the amounts received before taking into account production taxes and lease operating costs, which are reported as separate expenses. Revenue is recorded and receivables are accrued using the sales method, which occurs in the month production is delivered to the purchaser, at which time ownership of the oil is transferred to the purchaser. Payment is generally received between thirty and ninety days after the date of production. Provided that reasonable estimates can be made, revenue and receivables are accrued to recognize delivery of product to the purchaser. Differences between estimates and actual volumes and prices, if any, are adjusted upon final settlement. | |||||||||
Major Customers and Operating Region | ' | ||||||||
Major Customers and Operating Region: The Company operates exclusively within the United States of America. Except for cash and equivalent investments, all of the Company's assets are employed in and all of its revenues are derived from the oil and gas industry. The table below presents the percentages of oil and gas revenue resulting from purchases by major customers. | |||||||||
Three Months Ended | |||||||||
30-Nov | 30-Nov | ||||||||
Major Customers | 2013 | 2012 | |||||||
Company A | 60% | 68% | |||||||
Company B | 15% | 22% | |||||||
The Company sells production to a small number of customers, as is customary in the industry. Based on the current demand for oil and natural gas, the availability of other buyers, and the Company having the option to sell to other buyers if conditions so warrant, the Company believes that its oil and gas production can be sold in the market in the event that it is not sold to the Company's existing customers. However, in some circumstances, a change in customers may entail significant transition costs and/or shutting in or curtailing production for weeks or even months during the transition to a new customer. | |||||||||
Accounts receivable consist primarily of trade receivables from oil and gas sales and amounts due from other working interest owners whom have been billed for their proportionate share of well costs. The Company typically has the right to withhold future revenue disbursements to recover outstanding joint interest billings on outstanding receivables from joint interest owners. | |||||||||
Customers with balances greater than 10% of total receivable balances as of each of the periods presented are shown in the following table: | |||||||||
Major Customers | As of | As of | |||||||
30-Nov-13 | 30-Nov-12 | ||||||||
Company A | 29% | 35% | |||||||
Company B | 16% | 30% | |||||||
Company C | 10% | - | |||||||
Stock-Based Compensation | ' | ||||||||
Stock-Based Compensation: The Company recognizes all equity-based compensation as stock-based compensation expense based on the fair value of the compensation measured at the grant date, calculated using the Black-Scholes-Merton option pricing model. The expense is recognized over the vesting period of the respective grants. See Note 11 for additional information. | |||||||||
Earnings Per Share Amounts | ' | ||||||||
Earnings Per Share Amounts: Basic earnings per share includes no dilution and is computed by dividing net income or loss by the weighted-average number of shares outstanding during the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the Company. The number of potential shares outstanding relating to stock options and warrants is computed using the treasury stock method. Potentially dilutive securities outstanding are not included in the calculation when such securities would have an anti-dilutive effect on earnings per share. The following table sets forth the share calculation of diluted earnings per share: | |||||||||
Three Months Ended | |||||||||
November 30, | November 30, | ||||||||
2013 | 2012 | ||||||||
Weighted-average shares outstanding-basic | 73,674,865 | 51,661,704 | |||||||
Potentially dilutive common shares from: | |||||||||
Stock Options | 551,060 | 1,533,812 | |||||||
Warrants | 1,818,680 | 420,666 | |||||||
2,369,740 | 1,954,478 | ||||||||
Weighted-average shares outstanding - diluted | 76,044,605 | 53,616,182 | |||||||
The following potentially dilutive securities, which could dilute future earnings per share, were excluded from the calculation because they were anti-dilutive: | |||||||||
Three Months Ended | |||||||||
November 30, | November 30, | ||||||||
2013 | 2012 | ||||||||
Warrants | - | 14,098,000 | |||||||
Employee stock options | 810,000 | 2,875,000 | |||||||
Total | 810,000 | 16,973,000 | |||||||
Income Taxes | ' | ||||||||
Income Taxes: Income taxes are computed using the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, their respective tax bases as well as the effect of net operating losses, tax credits and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities due to a change in income tax rates is recognized in the results of operations in the period that includes the enactment date. | |||||||||
No significant uncertain tax positions exist. The Company's policy is to recognize interest and penalties related to uncertain tax benefits in income tax expense. As of November 30, 2013, the Company has not recognized any interest or penalties related to uncertain tax benefits. | |||||||||
Financial Instruments | ' | ||||||||
Financial Instruments: The Company considers cash in banks, deposits in transit, and highly liquid debt instruments purchased with original maturities of less than three months to be cash and cash equivalents. A substantial portion of the Company's financial instruments consist of cash and cash equivalents, short-term investments, accounts receivable, trade accounts payable, accrued expenses, and obligations under the revolving line of credit facility, all of which are considered to be representative of their fair value due to the short-term and highly liquid nature of these instruments. | |||||||||
Financial instruments, whether measured on a recurring or non-recurring basis, are recorded at fair value. A fair value hierarchy, established by the Financial Accounting Standards Board, prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). | |||||||||
As discussed in Note 5, the Company incurred asset retirement obligations during the periods presented, the value of which was determined using unobservable pricing inputs (or Level 3 inputs). The Company uses the income valuation technique to estimate the fair value of the obligation using several assumptions and judgments about the ultimate settlement amounts, inflation factors, credit adjusted discount rates, and timing of settlement. | |||||||||
Commodity Derivative Instruments | ' | ||||||||
Commodity Derivative Instruments: The Company has entered into commodity derivative instruments, primarily utilizing swaps or "no premium" collars to reduce the effect of price changes on a portion of our future oil production. The Company's commodity derivative instruments are measured at fair value and are included in the accompanying balance sheets as commodity derivative assets and liabilities. Unrealized gains and losses are recorded based on the changes in the fair values of the derivative instruments. Both the unrealized and realized gains and losses resulting from the contract settlement of derivatives are recorded in the commodity derivative line on the statement of operations. The Company values its derivative instruments by obtaining independent market quotes, as well as using industry standard models that consider various assumptions, including quoted forward prices for commodities, risk free interest rates, and estimated volatility factors, as well as other relevant economic measures. The Company compares the valuations it calculates to valuations provided by the counterparties to assess the reasonableness of each valuation. The discount rate used in the fair values of these instruments includes a measure of nonperformance risk by the counterparty or the Company, as appropriate. For additional discussion, please refer to Note 7-Commodity Derivative Instruments. | |||||||||
Recent Accounting Pronouncements | ' | ||||||||
Recent Accounting Pronouncements: The Company evaluates the pronouncements of various authoritative accounting organizations to determine the impact of new pronouncements on US GAAP and the impact on the Company. There were various updates recently issued by the Financial Accounting Standards Board, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's consolidated financial position, results of operations or cash flows. |
Organization_and_Summary_of_Si2
Organization and Summary of Significant Accounting Policies (Tables) | 3 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Organization and Summary of Significant Accounting Policies [Abstract] | ' | ||||||||
Schedule of Capitalized Overhead Expenses | ' | ||||||||
Three Months Ended | |||||||||
November 30, | November 30, | ||||||||
2013 | 2012 | ||||||||
Capitalized Overhead | $ | 317 | $ | 103 | |||||
Schedule of Percentages of Oil and Gas Revenue Purchased By Major Customers | ' | ||||||||
Three Months Ended | |||||||||
30-Nov | 30-Nov | ||||||||
Major Customers | 2013 | 2012 | |||||||
Company A | 60% | 68% | |||||||
Company B | 15% | 22% | |||||||
Schedule of Customers With Balances Greater Than 10% of Total Receivables | ' | ||||||||
Major Customers | As of | As of | |||||||
30-Nov-13 | 30-Nov-12 | ||||||||
Company A | 29% | 35% | |||||||
Company B | 16% | 30% | |||||||
Company C | 10% | - | |||||||
Reconciliation of Weighted-average Shares Outstanding Basic and Diluted | ' | ||||||||
Three Months Ended | |||||||||
November 30, | November 30, | ||||||||
2013 | 2012 | ||||||||
Weighted-average shares outstanding-basic | 73,674,865 | 51,661,704 | |||||||
Potentially dilutive common shares from: | |||||||||
Stock Options | 551,060 | 1,533,812 | |||||||
Warrants | 1,818,680 | 420,666 | |||||||
2,369,740 | 1,954,478 | ||||||||
Weighted-average shares outstanding - diluted | 76,044,605 | 53,616,182 | |||||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | ' | ||||||||
Three Months Ended | |||||||||
November 30, | November 30, | ||||||||
2013 | 2012 | ||||||||
Warrants | - | 14,098,000 | |||||||
Employee stock options | 810,000 | 2,875,000 | |||||||
Total | 810,000 | 16,973,000 | |||||||
Property_and_Equipment_Tables
Property and Equipment (Tables) | 3 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Property and Equipment [Abstract] | ' | ||||||||
Schedule of Capitalized Costs of Property and Equipment | ' | ||||||||
As of | As of | ||||||||
30-Nov-13 | 31-Aug-13 | ||||||||
Oil and gas properties, full cost method: | |||||||||
Unevaluated costs, not subject to amortization: | |||||||||
Lease acquisition and other costs | $ | 55,389 | $ | 38,826 | |||||
Wells in progress | 33,918 | 25,889 | |||||||
Subtotal, unevaluated costs | 89,307 | 64,715 | |||||||
Evaluated costs: | |||||||||
Producing and non-producing | 198,409 | 155,755 | |||||||
Total capitalized costs | 287,716 | 220,470 | |||||||
Less, accumulated depletion | (28,267 | ) | (22,776 | ) | |||||
Oil and gas properties, net | 259,449 | 197,694 | |||||||
Land | 1,744 | 44 | |||||||
Other property and equipment | 586 | 500 | |||||||
Less, accumulated depreciation | (301 | ) | (273 | ) | |||||
Other property and equipment, net | 2,029 | 271 | |||||||
Total property and equipment, net | $ | 261,478 | $ | 197,965 | |||||
Acquisitions_Tables
Acquisitions (Tables) | 3 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Business Acquisition [Line Items] | ' | ||||||||
Schedule of Pro Forma Results | ' | ||||||||
Three Months Ended | |||||||||
(in thousands) | |||||||||
30-Nov | 30-Nov | ||||||||
2013 | 2012 | ||||||||
Oil and Gas Revenues | $ | 21,631 | $ | 10,960 | |||||
Net income | $ | 6,928 | $ | 3,247 | |||||
Earnings per common share | |||||||||
Basic | $ | 0.09 | $ | 0.06 | |||||
Diluted | $ | 0.09 | $ | 0.06 | |||||
Trilogy Resources [Member] | ' | ||||||||
Business Acquisition [Line Items] | ' | ||||||||
Schedule of Fair Value of Acquisition | ' | ||||||||
Preliminary Purchase Price | November 12, | ||||||||
2013 | |||||||||
Consideration Given | |||||||||
Cash | $ | 16,008 | |||||||
Synergy Resources Corp. Common Stock * | 2,896 | ||||||||
Total consideration given | $ | 18,904 | |||||||
Preliminary Allocation of Purchase Price | |||||||||
Proved oil and gas properties | $ | 14,317 | |||||||
Unproved oil and gas properties | 5,057 | ||||||||
Total fair value of oil and gas properties acquired | 19,374 | ||||||||
Working capital | $ | (119 | ) | ||||||
Asset retirement obligation | (351 | ) | |||||||
Fair value of net assets acquired | $ | 18,904 | |||||||
Working capital acquired was estimated as follows: | |||||||||
Accounts receivable | 500 | ||||||||
Accrued liabilities and expenses | (619 | ) | |||||||
Total working capital | $ | (119 | ) | ||||||
* | The fair value of the consideration attributed to the Common Stock under ASC 805 was based on the Company's closing stock price on the measurement date of November 12, 2013. (301,3339 shares at $9.61 per share) | ||||||||
Apollo Operating [Member] | ' | ||||||||
Business Acquisition [Line Items] | ' | ||||||||
Schedule of Fair Value of Acquisition | ' | ||||||||
Preliminary Purchase Price | November 13, | ||||||||
2013 | |||||||||
Consideration Given | |||||||||
Cash | $ | 11,007 | |||||||
Synergy Resources Corp. Common Stock * | 5,224 | ||||||||
Total consideration given | $ | 16,231 | |||||||
Preliminary Allocation of Purchase Price | |||||||||
Proved oil and gas properties | $ | 9,271 | |||||||
Disposal Well | $ | 1,340 | |||||||
Unproved oil and gas properties | 6,725 | ||||||||
Total fair value of oil and gas properties acquired | 17,336 | ||||||||
Working capital | $ | (883 | ) | ||||||
Asset retirement obligation | (221 | ) | |||||||
Fair value of net assets acquired | $ | 16,232 | |||||||
Working capital acquired was estimated as follows: | |||||||||
Accounts receivable | 380 | ||||||||
Accrued liabilities and expenses | (1,263 | ) | |||||||
Total working capital | $ | (883 | ) | ||||||
* | The fair value of the consideration attributed to the Common Stock under ASC 805 was based on the Company's closing stock price on the measurement date of November 13, 2013. (550,518 shares at $9.49 per share) | ||||||||
Depletion_depreciation_and_amo1
Depletion, depreciation and amortization ("DDA") (Tables) | 3 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Depletion, depreciation and amortization ("DDA") [Abstract] | ' | ||||||||
Schedule of Depletion, Depreciation and Amortization | ' | ||||||||
Three Months ended | |||||||||
November 30, | November 30, | ||||||||
2013 | 2012 | ||||||||
Depletion | $ | 5,490 | $ | 2,262 | |||||
Depreciation and amortization | 101 | 58 | |||||||
Total DDA Expense | $ | 5,591 | $ | 2,320 | |||||
Asset_Retirement_Obligations_T
Asset Retirement Obligations (Tables) | 3 Months Ended | ||||
Nov. 30, 2013 | |||||
Asset Retirement Obligations [Abstract] | ' | ||||
Schedule of Fair Value Assumptions | ' | ||||
For the Three Months Ended November 30, | |||||
2013 | 2012 | ||||
Inflation rate | 3.9 - 4.0% | 3.9 - 4.0% | |||
Estimated asset life | 24.0 - 40.0 years | 24.0 - 27.6 years | |||
Credit adjusted risk free interest rate | 8.00% | 11.20% | |||
Schedule of Asset Retirement Obligations | ' | ||||
Asset retirement obligations, August 31, 2013 | $ | 2,777 | |||
Liabilities incurred | 120 | ||||
Liabilities assumed | 572 | ||||
Liabilities settled | - | ||||
Accretion | 71 | ||||
Asset retirement obligations, November 30, 2013 | $ | 3,540 | |||
Commodity_Derivative_Instrumen1
Commodity Derivative Instruments (Tables) | 3 Months Ended | ||||||||||||||
Nov. 30, 2013 | |||||||||||||||
Commodity Derivative Instruments [Abstract] | ' | ||||||||||||||
Schedule of Commodity Derivative Contracts | ' | ||||||||||||||
The Company's commodity derivative contracts as of November 30, 2013 are summarized below: | |||||||||||||||
Collars | Basis (1) | Quantity | Strike Price | ||||||||||||
(Bbl/month) | ($/Bbl) | ||||||||||||||
31-Dec-13 | NYMEX | 3,014 | $87.00 - $102.50 | ||||||||||||
Jan 1, 2014 - Dec 31, 2014 | NYMEX | 1,840 | $85.00 - $98.50 | ||||||||||||
Jan 1, 2015 - Jun 30, 2015 | NYMEX | 7,000 | $80.00 - $92.50 | ||||||||||||
Swaps | Basis (1) | Average Quantity | Average Swap Price | ||||||||||||
(Bbl/month) | ($/Bbl) | ||||||||||||||
31-Dec-13 | NYMEX | 32,014 | $96.21 | ||||||||||||
Jan 1, 2014 - Dec 31, 2014 | NYMEX | 11,340 | $92.13 | ||||||||||||
Subsequent to November 30, 2013, the Company entered into the following commodity derivative contracts: | |||||||||||||||
Collars | Basis (1) | Quantity | Strike Price | ||||||||||||
(Bbl/month) | ($/Bbl) | ||||||||||||||
Jan 1, 2014 - Feb 28, 2014 | NYMEX | 5,000 | $87.00 - $98.50 | ||||||||||||
Mar 1, 2014 - Dec 31, 2014 | NYMEX | 20,000 | $87.00 - $96.25 | ||||||||||||
Jan 1, 2015 - Jun 30, 2015 | NYMEX | 2,500 | $80.00 - $95.75 | ||||||||||||
Jul 1, 2015 - Dec 31, 2015 | NYMEX | 9,000 | $80.00 - $92.25 | ||||||||||||
(1) NYMEX refers to WTI quoted prices on the New York Mercantile Exchange | |||||||||||||||
Schedule of Fair Value of Derivatives | ' | ||||||||||||||
Underlying Commodity | Balance Sheet | Gross Amounts of Recognized Assets | Gross Amounts of Recognized liabilities | Net Amounts of Assets and (Liabilities) Presented in the Balance Sheet | |||||||||||
Location | |||||||||||||||
Crude oil derivative contract | Current | $ | 326 | $ | (257 | ) | $ | 69 | |||||||
Crude oil derivative contract | Noncurrent | $ | 161 | $ | (242 | ) | $ | (81 | ) | ||||||
Schedule of Gain (Loss) Recognized in Statements of Operations | ' | ||||||||||||||
Three Months ended | |||||||||||||||
30-Nov | 30-Nov | ||||||||||||||
2013 | 2012 | ||||||||||||||
Unrealized gain on commodity derivatives | $ | 2,636 | $ | - | |||||||||||
Realized loss on commodity derivatives | (398 | ) | - | ||||||||||||
Total gain | $ | 2,238 | $ | - | |||||||||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | ||||||||||||||||
Nov. 30, 2013 | |||||||||||||||||
Fair Value Measurements [Abstract] | ' | ||||||||||||||||
Schedule of Assets and Liabilities Measured on a Recurring Basis | ' | ||||||||||||||||
Fair Value Measurements at November 30, 2013 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Financial Assets: | |||||||||||||||||
Commodity derivative asset | $ | - | $ | 69 | $ | - | $ | 69 | |||||||||
Financial Liabilities: | |||||||||||||||||
Commodity derivative asset | $ | - | $ | 81 | $ | - | $ | 81 | |||||||||
Interest_Expense_Tables
Interest Expense (Tables) | 3 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Interest Expense [Abstract] | ' | ||||||||
Schedule of the Components of Interest Expense | ' | ||||||||
Three Months Ended | |||||||||
30-Nov | 30-Nov | ||||||||
2013 | 2012 | ||||||||
Revolving credit facility | $ | 251 | $ | 30 | |||||
Amortization of debt issuance costs | 94 | 20 | |||||||
Less, interest capitalized | (345 | ) | (50 | ) | |||||
Interest expense, net | $ | - | $ | - |
Shareholders_Equity_Tables
Shareholders' Equity (Tables) | 3 Months Ended | |||||||||||||||
Nov. 30, 2013 | ||||||||||||||||
Shareholders' Equity [Abstract] | ' | |||||||||||||||
Schedule of Classes of Stock | ' | |||||||||||||||
As of | As of | |||||||||||||||
November 30, | August 31, | |||||||||||||||
2013 | 2013 | |||||||||||||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | ||||||||||||||
Preferred stock, par value | $ | 0.01 | $ | 0.01 | ||||||||||||
Preferred stock, shares issued and outstanding | nil | nil | ||||||||||||||
Common stock, shares authorized | 100,000,000 | 100,000,000 | ||||||||||||||
Common stock, par value | $ | 0.001 | $ | 0.001 | ||||||||||||
Common stock, shares issued and outstanding | 75,746,743 | 70,587,723 | ||||||||||||||
Schedule of Common Stock Issued For Acquisition of Mineral Interests and Services | ' | |||||||||||||||
For the three months ended November 30, 2013 | ||||||||||||||||
Number of common shares issued for mineral property leases | 203,891 | |||||||||||||||
Number of common shares issued for acquisitions | 851,857 | |||||||||||||||
Total common shares issued | 1,055,748 | |||||||||||||||
Average price per common share | $ | 9.38 | ||||||||||||||
Aggregate value of shares issued (in thousands) | $ | 9,898 | ||||||||||||||
Schedule of Issued and Outstanding Common Stock Warrants | ' | |||||||||||||||
Exercise Price | Description | Number of Shares | Remaining Contractual Life (in years) | Exercise Price times Number of Shares (in thousands) | ||||||||||||
$6.00 | Series C | 4,538,000 | 1.1 | $ | 27,228 | |||||||||||
$1.60 | Series D | 3,989 | 1.1 | 6 | ||||||||||||
4,541,989 | $ | 27,234 | ||||||||||||||
Schedule of Outstanding Common Stock Warrant Activity | ' | |||||||||||||||
Number of | Weighted Average | |||||||||||||||
Warrants | Exercise Price | |||||||||||||||
Outstanding, August 31, 2013 | 8,666,802 | $ | 5.92 | |||||||||||||
Granted | - | $ | - | |||||||||||||
Exercised | (4,124,813 | ) | $ | 5.82 | ||||||||||||
Expired | - | $ | - | |||||||||||||
Outstanding, November 30, 2013 | 4,541,989 | $ | 6 | |||||||||||||
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 3 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Stock-Based Compensation [Abstract] | ' | ||||||||
Schedule of Stock-based Compensation Expense Recognized | ' | ||||||||
Three Months ended | |||||||||
30-Nov | 30-Nov | ||||||||
2013 | 2012 | ||||||||
Stock options | $ | 420 | $ | 125 | |||||
Restricted stock grants | - | 12 | |||||||
Investor relations warrants | - | 31 | |||||||
$ | 420 | $ | 168 | ||||||
Schedule of Employee Stock Options Granted During the Period | ' | ||||||||
Three Months ended | |||||||||
November 30, | November 30, | ||||||||
2013 | 2012 | ||||||||
Number of options to purchase common shares | 150,000 | 230,000 | |||||||
Weighted average exercise price | $ | 9.98 | $ | 3.9 | |||||
Term (in years) | 10 | 10 | |||||||
Vesting Period (in years) | 5 | 5 | |||||||
Fair Value (in thousands) | $ | 1,014 | $ | 621 | |||||
Schedule of Assumptions Used In Valuing Stock Options | ' | ||||||||
Three Months Ended | |||||||||
30-Nov-13 | 30-Nov-12 | ||||||||
Expected Term | 6.5 years | 6.4 years | |||||||
Expected Volatility | 74% | 79.90% | |||||||
Risk free rate | 1.91% | 1.01% | |||||||
Expected dividend yield | 0.00% | 0.00% | |||||||
Forfeiture rate | 0.00% | 0.00% | |||||||
Summary of Stock Option Activity Under Stock Option and Incentive Plans | ' | ||||||||
Number | Weighted Average Exercise Price | ||||||||
of Shares | |||||||||
Outstanding, August 31, 2013 | 1,820,000 | $4.88 | |||||||
Granted | 150,000 | $9.98 | |||||||
Exercised | -16,000 | $4.26 | |||||||
Outstanding, November 30, 2013 | 1,954,000 | $5.27 | |||||||
Schedule of Issued and Outstanding Stock Options | ' | ||||||||
Outstanding Options | Vested Options | ||||||||
Number of shares | 1,954,000 | 468,000 | |||||||
Weighted average remaining contractual life | 8.6 years | 7.7 years | |||||||
Weighted average exercise price | $5.27 | $3.83 | |||||||
Aggregate intrinsic value (in thousands) | $8,223 | $2,625 | |||||||
Schedule of Estimated Unrecognized Compensation Cost From Unvested Stock Options | ' | ||||||||
Unvested Options at November 30, 2013 | |||||||||
Unrecognized compensation expense (in thousands) | $5,646 | ||||||||
Remaining vesting phase | 3.5 years |
Related_Party_Transaction_Tabl
Related Party Transaction (Tables) | 3 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Related Party Transactions [Abstract] | ' | ||||||||
Schedule of Royalty Expense | ' | ||||||||
Three Months ended | |||||||||
30-Nov | 30-Nov | ||||||||
2013 | 2012 | ||||||||
Total Royalty Payments | $ | 82 | $ | 45 | |||||
Supplemental_Schedule_of_Infor1
Supplemental Schedule of Information to the Statements of Cash Flows (Tables) | 3 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Supplemental Schedule of Information to the Statements of Cash Flows [Abstract] | ' | ||||||||
Schedule of Supplemental Information to the Statements of Cash Flows | ' | ||||||||
Three Months ended | |||||||||
November 30, | November 30, | ||||||||
2013 | 2012 | ||||||||
Supplemental cash flow information: | |||||||||
Interest paid | $ | 251 | $ | 30 | |||||
Income taxes paid | - | - | |||||||
Non-cash investing and financing activities: | |||||||||
Well costs payable | $ | 26,813 | $ | 8,522 | |||||
Assets acquired in exchange for common stock | 9,898 | 677 | |||||||
Asset retirement costs and obligations | 692 | 115 | |||||||
Organization_and_Summary_of_Si3
Organization and Summary of Significant Accounting Policies (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Nov. 30, 2013 | Nov. 30, 2012 |
Organization and Summary of Significant Accounting Policies [Abstract] | ' | ' |
Net cash flows, discount rate | 10.00% | ' |
Capitalized overhead | $317 | $103 |
Company A [Member] | Oil and Gas Revenues [Member] | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Risk percentage | 60.00% | 68.00% |
Company A [Member] | Tenant accounts receivable [Member] | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Risk percentage | 29.00% | 35.00% |
Company B [Member] | Oil and Gas Revenues [Member] | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Risk percentage | 15.00% | 22.00% |
Company B [Member] | Tenant accounts receivable [Member] | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Risk percentage | 16.00% | 30.00% |
Company C [Member] | Tenant accounts receivable [Member] | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Risk percentage | 10.00% | ' |
Minimum [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Other property and equipment, useful life | '5 years | ' |
Maximum [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Other property and equipment, useful life | '7 years | ' |
Organization_and_Summary_of_Si4
Organization and Summary of Significant Accounting Policies (Earnings Per Share) (Details) | 3 Months Ended | |
Nov. 30, 2013 | Nov. 30, 2012 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Weighted-average shares outstanding - basic | 73,674,865 | 51,661,704 |
Potentially dilutive common shares from: | ' | ' |
Stock Options | 551,060 | 1,533,812 |
Warrants | 1,818,680 | 420,666 |
Potentially dilutive common shares | 2,369,740 | 1,954,478 |
Weighted-average shares outstanding - diluted | 76,044,605 | 53,616,182 |
Potentially dilutive common shares having anti-dilutive effect on earnings per share | 810,000 | 16,973,000 |
Warrant [Member] | ' | ' |
Potentially dilutive common shares from: | ' | ' |
Potentially dilutive common shares having anti-dilutive effect on earnings per share | ' | 14,098,000 |
Stock Options [Member] | ' | ' |
Potentially dilutive common shares from: | ' | ' |
Potentially dilutive common shares having anti-dilutive effect on earnings per share | 810,000 | 2,875,000 |
Property_and_Equipment_Schedul
Property and Equipment (Schedule of Capitalized Costs of Property And Equipment) (Details) (USD $) | Nov. 30, 2013 | Aug. 31, 2013 |
In Thousands, unless otherwise specified | ||
Unevaluated costs, not subject to amortization: | ' | ' |
Unevaluated costs, not subject to amortization | $89,307 | $64,715 |
Evaluated costs: | ' | ' |
Producing and non-producing | 198,409 | 155,755 |
Total capitalized costs | 287,716 | 220,470 |
Less, accumulated depletion | -28,267 | -22,776 |
Oil and gas properties, net | 259,449 | 197,694 |
Other property and equipment: | ' | ' |
Other property and equipment, gross | 586 | 500 |
Less, accumulated depreciation | -301 | -273 |
Other property and equipment, net | 2,029 | 271 |
Property and equipment, net | 261,478 | 197,965 |
Land [Member] | ' | ' |
Other property and equipment: | ' | ' |
Other property and equipment, gross | 1,744 | 44 |
Lease acquisition and other costs [Member] | ' | ' |
Unevaluated costs, not subject to amortization: | ' | ' |
Unevaluated costs, not subject to amortization | 55,389 | 38,826 |
Wells in progress [Member] | ' | ' |
Unevaluated costs, not subject to amortization: | ' | ' |
Unevaluated costs, not subject to amortization | $33,918 | $25,889 |
Acquisitions_Narrative_Details
Acquisitions (Narrative) (Details) (USD $) | 3 Months Ended | 1 Months Ended | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Nov. 30, 2013 | Nov. 12, 2013 | Nov. 13, 2013 | Nov. 30, 2013 |
Trilogy Resources [Member] | Apollo Operating [Member] | Apollo Operating [Member] | ||
acre | acre | |||
Business Acquisition [Line Items] | ' | ' | ' | ' |
Number of wells | ' | 21 | 45 | ' |
Mineral acres, net | ' | 800 | 1,000 | ' |
Business acquisition, shares issued | 851,857 | 301,339 | 550,518 | ' |
Business acquisition, shares issued, value | ' | $2,896 | $5,224 | ' |
Cash | ' | $16,008 | $11,007 | $3,700 |
Percent of entity acquired | ' | ' | ' | 75.00% |
Acquisitions_Schedule_of_Fair_
Acquisitions (Schedule of Fair Value of Acquisition) (Details) (USD $) | 3 Months Ended | 1 Months Ended | 3 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | Nov. 30, 2013 | Nov. 12, 2013 | Nov. 13, 2013 | Nov. 30, 2013 | ||
Trilogy Resources [Member] | Apollo Operating [Member] | Apollo Operating [Member] | ||||
Preliminary Purchase Price | ' | ' | ' | ' | ||
Cash | ' | $16,008 | $11,007 | $3,700 | ||
Synergy Resources Corp. Common Stock | ' | 2,896 | [1] | 5,224 | [2] | ' |
Total consideration given | ' | 18,904 | 16,231 | ' | ||
Preliminary Allocation of Purchase Price | ' | ' | ' | ' | ||
Proved oil and gas properties | ' | 14,317 | 9,271 | ' | ||
Disposal Well | ' | ' | 1,340 | ' | ||
Unproved oil and gas properties | ' | 5,057 | 6,725 | ' | ||
Total fair value of oil and gas properties acquired | ' | 19,374 | 17,336 | ' | ||
Working capital | ' | -119 | -883 | ' | ||
Asset retirement obligation | ' | -351 | -221 | ' | ||
Fair value of net assets acquired | ' | 18,904 | 16,232 | ' | ||
Working capital acquired was estimated as follows: | ' | ' | ' | ' | ||
Accounts receivable | ' | 500 | 380 | ' | ||
Accrued liabilities and expenses | ' | -619 | -1,263 | ' | ||
Total working capital | ' | ($119) | ($883) | ' | ||
Business acquisition, shares issued | 851,857 | 301,339 | 550,518 | ' | ||
Closing stock price | ' | $9.61 | $9.49 | ' | ||
[1] | The fair value of the consideration attributed to the Common Stock under ASC 805 was based on the Company's closing stock price on the measurement date of November 12, 2013. (301,339 shares at $9.61 per share) | |||||
[2] | The fair value of the consideration attributed to the Common Stock under ASC 805 was based on the Company's closing stock price on the measurement date of November 13, 2013. (550,518 shares at $9.49 per share) |
Acquisitions_Schedule_of_Pro_F
Acquisitions (Schedule of Pro Forma Results) (Details) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Nov. 30, 2013 | Nov. 30, 2012 |
Acquisitions [Abstract] | ' | ' |
Oil and Gas Revenues | $21,631 | $10,960 |
Net income | $6,928 | $3,247 |
Earnings per common share | ' | ' |
Basic | $0.09 | $0.06 |
Diluted | $0.09 | $0.06 |
Depletion_depreciation_and_amo2
Depletion, depreciation and amortization ("DDA") (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Nov. 30, 2013 | Nov. 30, 2012 |
Depletion, depreciation and amortization ("DDA") [Abstract] | ' | ' |
Depletion | $5,490 | $2,262 |
Depreciation and amortization | 101 | 58 |
Total DDA Expense | $5,591 | $2,320 |
Asset_Retirement_Obligations_S
Asset Retirement Obligations (Schedule of Fair Value Assumptions) (Details) | 3 Months Ended | |
Nov. 30, 2013 | Nov. 30, 2012 | |
Credit adjusted risk free interest rate | 8.00% | 11.20% |
Minimum [Member] | ' | ' |
Inflation rate | 3.90% | 3.90% |
Estimated asset life | '24 years | '24 years |
Maximum [Member] | ' | ' |
Inflation rate | 4.00% | 4.00% |
Estimated asset life | '40 years | '27 years 7 months 6 days |
Asset_Retirement_Obligations_S1
Asset Retirement Obligations (Schedule of Asset Retirement Obligations) (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Nov. 30, 2013 |
Asset Retirement Obligations [Abstract] | ' |
Asset retirement obligations, August 31, 2013 | $2,777 |
Liabilities incurred | 120 |
Liabilities assumed | 572 |
Liabilities settled | ' |
Accretion | 71 |
Asset retirement obligations, November 30, 2013 | $3,540 |
Revolving_Credit_Facility_Deta
Revolving Credit Facility (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Nov. 30, 2013 | Dec. 20, 2013 |
Line of Credit Facility [Line Items] | ' | ' |
Total borrowing commitment | $150,000 | $300,000 |
Borrowing base | 75,000 | 90,000 |
Amount outstanding | 37,000 | ' |
Current limited borrowing capacity on revolving credit facility | $38,000 | $53,000 |
Credit facility, expiration date | 28-Nov-16 | ' |
Minimum hedge percentage of scheduled production for a rolling 24 months, as required by revolving credit facility covenants | 45.00% | ' |
Maximum hedge percentage of scheduled production for a rolling 24 months, as required by revolving credit facility covenants | 80.00% | ' |
Revolving credit facility, additional rate over LIBOR | 2.50% | ' |
Average interest rate | 2.70% | ' |
Interest rate at period end | 2.68% | ' |
Minimum adjusted current ratio | 1 | ' |
Minimum EBITDAX times interest and fees | 3.5 | ' |
Maximum funded debt to EBITDAX | 3.5 | ' |
Maximum funded debt to total capitalization | 0.5 | ' |
Minimum [Member] | ' | ' |
Line of Credit Facility [Line Items] | ' | ' |
Revolving credit facility, additional rate over Prime | 0.00% | ' |
Revolving credit facility, additional rate over LIBOR | 2.50% | ' |
Maximum [Member] | ' | ' |
Line of Credit Facility [Line Items] | ' | ' |
Revolving credit facility, additional rate over Prime | 1.00% | ' |
Revolving credit facility, additional rate over LIBOR | 3.25% | ' |
Commodity_Derivative_Instrumen2
Commodity Derivative Instruments (Schedule of Commodity Derivative Contracts) (Details) | 3 Months Ended |
Nov. 30, 2013 | |
Contract One [Member] | Collar [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Quantity (Bbl/month) | 3,014 |
Term, minimum | 31-Dec-13 |
Contract One [Member] | Collar [Member] | Subsequent Event [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Quantity (Bbl/month) | 5,000 |
Strike/Swap Price ($/Bbl), minimum | 87 |
Strike/Swap Price ($/Bbl), maximum | 98.5 |
Term, minimum | 1-Jan-14 |
Term, maximum | 28-Feb-14 |
Contract One [Member] | Collar [Member] | Minimum [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Strike/Swap Price ($/Bbl) | 87 |
Contract One [Member] | Collar [Member] | Maximum [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Strike/Swap Price ($/Bbl) | 102.5 |
Contract One [Member] | Swap [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Quantity (Bbl/month) | 32,014 |
Strike/Swap Price ($/Bbl) | 96.21 |
Term, minimum | 31-Dec-13 |
Contract Two [Member] | Collar [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Quantity (Bbl/month) | 1,840 |
Term, minimum | 1-Jan-14 |
Term, maximum | 31-Dec-14 |
Contract Two [Member] | Collar [Member] | Subsequent Event [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Quantity (Bbl/month) | 20,000 |
Strike/Swap Price ($/Bbl), minimum | 87 |
Strike/Swap Price ($/Bbl), maximum | 96.25 |
Term, minimum | 1-Mar-14 |
Term, maximum | 31-Dec-14 |
Contract Two [Member] | Collar [Member] | Minimum [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Strike/Swap Price ($/Bbl) | 85 |
Contract Two [Member] | Collar [Member] | Maximum [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Strike/Swap Price ($/Bbl) | 98.5 |
Contract Two [Member] | Swap [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Quantity (Bbl/month) | 11,340 |
Strike/Swap Price ($/Bbl) | 92.13 |
Term, minimum | 1-Jan-14 |
Term, maximum | 31-Dec-14 |
Contract Three [Member] | Collar [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Quantity (Bbl/month) | 7,000 |
Term, minimum | 1-Jan-15 |
Term, maximum | 30-Jun-15 |
Contract Three [Member] | Collar [Member] | Subsequent Event [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Quantity (Bbl/month) | 2,500 |
Strike/Swap Price ($/Bbl), minimum | 80 |
Strike/Swap Price ($/Bbl), maximum | 95.75 |
Term, minimum | 1-Jan-15 |
Term, maximum | 30-Jun-15 |
Contract Three [Member] | Collar [Member] | Minimum [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Strike/Swap Price ($/Bbl) | 80 |
Contract Three [Member] | Collar [Member] | Maximum [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Strike/Swap Price ($/Bbl) | 92.5 |
Contract Four [Member] | Collar [Member] | Subsequent Event [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Quantity (Bbl/month) | 9,000 |
Strike/Swap Price ($/Bbl), minimum | 80 |
Strike/Swap Price ($/Bbl), maximum | 92.25 |
Term, minimum | 1-Jul-15 |
Term, maximum | 31-Dec-15 |
Commodity_Derivative_Instrumen3
Commodity Derivative Instruments (Schedule of Fair Value of Derivatives) (Details) (USD $) | Nov. 30, 2013 |
In Thousands, unless otherwise specified | |
Derivatives, Fair Value [Line Items] | ' |
Commodity derivative asset | $69 |
Commodity derivative liability | 81 |
Derivative Contract One [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Commodity derivative asset | 69 |
Derivative Contract Two [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Commodity derivative asset | -81 |
Commodity Contract [Member] | Current Assets [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Commodity derivative asset | 326 |
Commodity Contract [Member] | Noncurrent Assets [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Commodity derivative asset | 161 |
Commodity Contract [Member] | Current Liabilities [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Commodity derivative liability | 257 |
Commodity Contract [Member] | Noncurrent Liabilities [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Commodity derivative liability | $242 |
Commodity_Derivative_Instrumen4
Commodity Derivative Instruments (Schedule of Gain (Loss) Recognized in Statements of Operations) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Nov. 30, 2013 | Nov. 30, 2012 |
Commodity Derivative Instruments [Abstract] | ' | ' |
Unrealized gain on commodity derivatives | $2,636 | ' |
Realized loss on commodity derivatives | -398 | ' |
Total gain | $2,238 | ' |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | Nov. 30, 2013 |
In Thousands, unless otherwise specified | |
Financial Assets: | ' |
Commodity derivative asset | $69 |
Financial Liabilities: | ' |
Commodity derivative liability | 81 |
Recurring [Member] | Level 1 [Member] | ' |
Financial Assets: | ' |
Commodity derivative asset | ' |
Financial Liabilities: | ' |
Commodity derivative liability | ' |
Recurring [Member] | Level 2 [Member] | ' |
Financial Assets: | ' |
Commodity derivative asset | 69 |
Financial Liabilities: | ' |
Commodity derivative liability | 81 |
Recurring [Member] | Level 3 [Member] | ' |
Financial Assets: | ' |
Commodity derivative asset | ' |
Financial Liabilities: | ' |
Commodity derivative liability | ' |
Interest_Expense_Details
Interest Expense (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Nov. 30, 2013 | Nov. 30, 2012 |
Interest Expense [Abstract] | ' | ' |
Revolving bank credit facility at a variable rate | $251 | $30 |
Amortization of debt issuance costs | 94 | 20 |
Less, interest capitalized | -345 | -50 |
Interest expense, net | ' | ' |
Shareholders_Equity_Common_Sto
Shareholders' Equity (Common Stock Transactions) (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Nov. 30, 2013 | Aug. 31, 2013 |
Classes of stock | ' | ' |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, par value | $0.01 | $0.01 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares issued | 75,746,743 | 70,587,723 |
Common stock, shares outstanding | 75,746,743 | 70,587,723 |
Common stock issued for acquisition of mineral interests | ' | ' |
Number of common shares issued for mineral property leases | 203,891 | ' |
Number of common shares issued for acquisitions | 851,857 | ' |
Total common shares issued | 1,055,748 | ' |
Average price per common share | $9.38 | ' |
Aggregate value of shares issued | $9,898 | ' |
Shareholders_Equity_Common_Sto1
Shareholders' Equity (Common Stock Warrants) (Details) (USD $) | 3 Months Ended |
In Thousands, except Share data, unless otherwise specified | Nov. 30, 2013 |
Class of Warrant or Right [Line Items] | ' |
Number of Shares | 4,541,989 |
Exercise Price times Number of Shares | $27,234 |
Outstanding, August 31, 2013 | 8,666,802 |
Granted | ' |
Exercised | -4,124,813 |
Expired | ' |
Outstanding, November 30, 2013 | 4,541,989 |
Weighted average exercise price, August 31, 2013 | $5.92 |
Weighted average exercise price, granted | $0 |
Weighted average exercise price, exercised | $5.82 |
Weighted average exercise price, expired | $0 |
Weighted average exercise price, November 30, 2013 | $6 |
Series D [Member] | ' |
Class of Warrant or Right [Line Items] | ' |
Exercise Price | 1.6 |
Number of Shares | 3,989 |
Remaining Contractual Life | '1 year 1 month 6 days |
Exercise Price times Number of Shares | 6 |
Series C [Member] | ' |
Class of Warrant or Right [Line Items] | ' |
Exercise Price | 6 |
Number of Shares | 4,538,000 |
Remaining Contractual Life | '1 year 1 month 6 days |
Exercise Price times Number of Shares | $27,228 |
StockBased_Compensation_Detail
Stock-Based Compensation (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Nov. 30, 2013 | Nov. 30, 2012 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Stock-based compensation expense | $420 | $168 |
Term | '10 years | '10 years |
Vesting Period | '5 years | '5 years |
Fair value | 1,014 | 621 |
Summary of activity for stock options: | ' | ' |
Outstanding, August 31, 2013 | 1,820,000 | ' |
Granted | 150,000 | 230,000 |
Exercised | -16,000 | ' |
Outstanding, November 30, 2013 | 1,954,000 | ' |
Outstanding, weighted average exercise price | $4.88 | ' |
Granted, weighted average exercise price | $9.98 | $3.90 |
Exercised, weighted average exercise price | $4.26 | ' |
Outstanding, weighted average exercise price | $5.27 | ' |
Weighted average remaining contractual life | '8 years 7 months 6 days | ' |
Aggregate intrinsic value | 8,223 | ' |
Assumptions used in valuing stock options: | ' | ' |
Expected term | '6 years 6 months | '6 years 4 months 24 days |
Expected volatility | 74.00% | 79.90% |
Risk free rate | 1.91% | 1.01% |
Expected dividend yield | 0.00% | 0.00% |
Forfeiture rate | 0.00% | 0.00% |
Vested Options: | ' | ' |
Number of shares | 468,000 | ' |
Weighted average remaining contractual life | '7 years 8 months 12 days | ' |
Weighted average exercise price | $3.83 | ' |
Aggregate intrinsic value | 2,625 | ' |
Unrecognized compensation expense | 5,646 | ' |
Remaining vesting phase | '3 years 6 months | ' |
Stock options [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Stock-based compensation expense | 420 | 125 |
Restricted stock grants [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Stock-based compensation expense | ' | 12 |
Investor relations warrants [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Stock-based compensation expense | ' | $31 |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Nov. 30, 2013 |
Commitments and Contingencies [Abstract] | ' |
Pro-rata share of the aggregate cost of drilling and completing new wells | $3,000 |
Ensign United States Drilling [Member] | ' |
Long-term Purchase Commitment [Line Items] | ' |
Expected future costs | $23,000 |
Related_Party_Transaction_Deta
Related Party Transaction (Details) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Nov. 30, 2013 | Nov. 30, 2012 | Jul. 01, 2013 | Jun. 30, 2013 |
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Royalty expense | $82 | $45 | ' | ' |
HS Land & Cattle, LLC [Member] | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Monthly rent expense charged by related party | ' | ' | 15 | 10 |
Rent expense | $45 | $30 | ' | ' |
Supplemental_Schedule_of_Infor2
Supplemental Schedule of Information to the Statements of Cash Flows (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Nov. 30, 2013 | Nov. 30, 2012 |
Supplemental cash flow information: | ' | ' |
Interest paid | $251 | $30 |
Income taxes paid | ' | ' |
Non-cash investing and financing activities: | ' | ' |
Well costs payable | 26,813 | 8,522 |
Assets acquired in exchange for common stock | 9,898 | 677 |
Asset retirement costs and obligations | $692 | $115 |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 3 Months Ended | 1 Months Ended |
In Thousands, except Share data, unless otherwise specified | Nov. 30, 2013 | Jan. 09, 2014 |
Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ' | ' |
Exercise of warrants, shares | 16,000 | 212,500 |
Exercise of warrants, value | ' | $1,275 |