Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Nov. 30, 2014 | Jan. 07, 2015 | |
Document And Entity Information Abstract | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 30-Nov-14 | |
Entity Registrant Name | SYNERGY RESOURCES CORP | |
Entity Central Index Key | 1413507 | |
Current Fiscal Year End Date | -23 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2015 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Units Outstanding | 85,327,715 |
BALANCE_SHEETS
BALANCE SHEETS (USD $) | Nov. 30, 2014 | Aug. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $47,111 | $34,753 |
Accounts receivable: | ||
Oil and gas sales | 21,059 | 16,974 |
Joint interest billing and other | 24,964 | 15,398 |
Commodity derivative | 11,984 | 365 |
Earnest money deposit | 6,250 | |
Other current assets | 1,074 | 750 |
Total current assets | 112,442 | 68,240 |
Property and equipment: | ||
Evaluated oil and gas properties, full cost method, net | 295,396 | 275,018 |
Unevaluated oil and gas properties | 126,994 | 95,278 |
Other property and equipment, net | 4,849 | 9,104 |
Property and equipment, net | 427,239 | 379,400 |
Commodity derivative | 4,534 | 54 |
Other assets | 850 | 848 |
Total assets | 545,065 | 448,542 |
Current liabilities: | ||
Trade accounts payable | 354 | 1,747 |
Well costs payable | 69,511 | 71,849 |
Revenue payable | 25,251 | 14,487 |
Production taxes payable | 18,983 | 14,376 |
Other accrued expenses | 1,818 | 817 |
Commodity derivative | 302 | |
Total current liabilities | 115,917 | 103,578 |
Revolving credit facility | 77,000 | 37,000 |
Commodity derivative | 307 | |
Deferred tax liability, net | 33,296 | 21,437 |
Asset retirement obligations | 5,109 | 4,730 |
Total liabilities | 231,322 | 167,052 |
Commitments and contingencies (See Note 13) | ||
Shareholders' equity: | ||
Preferred stock - $0.01 par value, 10,000,000 shares authorized: no shares issued and outstanding | ||
Common stock - $0.001 par value, 200,000,000 shares authorized: 79,854,500 and 77,999,082 shares issued and outstanding, respectively | 80 | 78 |
Additional paid-in capital | 276,893 | 265,793 |
Retained earnings | 36,770 | 15,619 |
Total shareholders' equity | 313,743 | 281,490 |
Total liabilities and shareholders' equity | $545,065 | $448,542 |
BALANCE_SHEETS_Parenthetical
BALANCE SHEETS (Parenthetical) (USD $) | Nov. 30, 2014 | Aug. 31, 2014 |
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 | 200,000,000 | 200,000,000 |
Common stock, shares issued | 79,854,500 | 77,999,082 |
Common stock, shares outstanding | 79,854,500 | 77,999,082 |
STATEMENTS_OF_OPERATIONS
STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Nov. 30, 2014 | Nov. 30, 2013 |
STATEMENTS OF OPERATIONS [Abstract] | ||
Oil and gas revenues | $42,538 | $19,266 |
Expenses | ||
Lease operating expenses | 3,041 | 1,273 |
Production taxes | 4,178 | 2,016 |
Depletion, depreciation, and amortization | 16,454 | 5,591 |
General and administrative | 4,110 | 3,168 |
Total expenses | 27,783 | 12,048 |
Operating income | 14,755 | 7,218 |
Other income (expense) | ||
Commodity derivative realized gain (loss) | 1,432 | -398 |
Commodity derivative unrealized gain | 16,708 | 2,636 |
Interest income | 31 | |
Total other income | 18,140 | 2,269 |
Income before income taxes | 32,895 | 9,487 |
Income tax provision | 11,744 | 3,387 |
Net income | $21,151 | $6,100 |
Net income per common share: | ||
Basic | $0.27 | $0.08 |
Diluted | $0.26 | $0.08 |
Weighted average shares outstanding: | ||
Basic | 79,008,719 | 73,674,865 |
Diluted | 80,141,152 | 76,044,605 |
STATEMENTS_OF_CASH_FLOWS
STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Nov. 30, 2014 | Nov. 30, 2013 |
Cash flows from operating activities: | ||
Net income | $21,151 | $6,100 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depletion, depreciation, and amortization | 16,454 | 5,591 |
Provision for deferred taxes | 11,744 | 3,387 |
Stock-based compensation | 793 | 419 |
Valuation increase in commodity derivatives | -16,708 | -2,636 |
Accounts receivable | ||
Oil and gas sales | -4,085 | -2,064 |
Joint interest billing and other | -9,566 | -768 |
Accounts payable | ||
Trade | -1,393 | -603 |
Revenue | 10,764 | 2,729 |
Production taxes | 4,607 | 2,145 |
Accrued expenses | 1,001 | 250 |
Other | -327 | 363 |
Total adjustments | 13,284 | 8,813 |
Net cash provided by operating activities | 34,435 | 14,913 |
Cash flows from investing activities: | ||
Acquisition of property and equipment | -66,137 | -57,127 |
Short-term investments | 19,987 | |
Earnest money deposit | -6,250 | |
Net cash used in investing activities | -72,387 | -37,140 |
Cash flows from financing activities: | ||
Proceeds from exercise of warrants | 10,699 | 23,771 |
Net proceeds from revolving credit facility | 40,000 | |
Shares withheld for payment of employee payroll taxes | -389 | -34 |
Net cash provided by financing activities | 50,310 | 23,737 |
Net increase in cash and cash equivalents | 12,358 | 1,510 |
Cash and cash equivalents at beginning of period | 34,753 | 19,463 |
Cash and cash equivalents at end of period | $47,111 | $20,973 |
Organization_and_Summary_of_Si
Organization and Summary of Significant Accounting Policies | 3 Months Ended | ||||||||||||||||||||
Nov. 30, 2014 | |||||||||||||||||||||
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 (“SEC”) to use “plain English” in public filings, the Company will often use such terms as “we,” our,” or “us” 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. The balance sheet as of August 31, 2014 was derived from the Company's Annual Report on Form 10-K for the year ended August 31, 2014. Accordingly, 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, 2014. | |||||||||||||||||||||
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. | |||||||||||||||||||||
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 units-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. | |||||||||||||||||||||
Wells in progress represent the costs associated with the drilling of oil and gas wells that have yet to be completed as of November 30, 2014. Since the wells had not been completed as of November 30, 2014, they were classified within unevaluated oil and gas properties and were withheld from the depletion calculation and ceiling test. The costs for these wells will be transferred into proved property when the wells commence production and will become subject to depletion and the ceiling test calculation in subsequent periods. | |||||||||||||||||||||
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 depletion, depreciation, 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 unproved properties not being amortized, plus the lower of cost or estimated fair value of unproven 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 depletion, depreciation 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 either the three months ended November 30, 2014 or 2013. | |||||||||||||||||||||
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, | ||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Capitalized Overhead | $ | 503 | $ | 317 | |||||||||||||||||
Well Costs Payable: The costs 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. | |||||||||||||||||||||
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 short-term 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 | |||||||||||||||||||||
November 30, | November 30, | ||||||||||||||||||||
Major Customers | 2014 | 2013 | |||||||||||||||||||
Company A | 68 | % | 60 | % | |||||||||||||||||
Company B | 12 | % | 15 | % | |||||||||||||||||
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 | |||||||||||||||||||
November 30, | November 30, | ||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Company A | 29 | % | 29 | % | |||||||||||||||||
Company B | -* | 16 | % | ||||||||||||||||||
Company C | -* | 10 | % | ||||||||||||||||||
* | |||||||||||||||||||||
Balance was less than 10% of total receivable balances during the period. | |||||||||||||||||||||
Lease Operating Expenses: Costs incurred to operate and maintain wells and related equipment and facilities are expensed as incurred. Lease operating expenses (also referred to as production or lifting costs) include the costs of labor to operate the wells and related equipment and facilities, repairs and maintenance, materials, supplies, and fuel consumed and supplies utilized in operating the wells and related equipment and facilities, property taxes and insurance applicable to proved properties and wells and related equipment and facilities. | |||||||||||||||||||||
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 grant. See Note 11 for additional information. | |||||||||||||||||||||
Income Tax: 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 of 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 were identified as of any date on or before November 30, 2014. The Company's policy is to recognize interest and penalties related to uncertain tax benefits in income tax expense. As of November 30, 2014, 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 its future oil and gas 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 calculated by it 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. | |||||||||||||||||||||
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, | ||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Weighted-average shares outstanding-basic | 79,008,719 | 73,674,865 | |||||||||||||||||||
Potentially dilutive common shares from: | |||||||||||||||||||||
Stock Options | 793,270 | 551,060 | |||||||||||||||||||
Warrants | 339,163 | 1,818,680 | |||||||||||||||||||
1,132,433 | 2,369,740 | ||||||||||||||||||||
Weighted-average shares outstanding - diluted | 80,141,152 | 76,044,605 | |||||||||||||||||||
The following potentially dilutive securities outstanding for the periods presented were not included in the respective earnings per share calculation above; as such securities had an anti-dilutive effect on earnings per share: | |||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||
November 30, | November 30, | ||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Employee stock options | 523,000 | 810,000 | |||||||||||||||||||
Recent Accounting Pronouncements: We evaluate the pronouncements of various authoritative accounting organizations to determine the impact of new pronouncements on US GAAP and the impact on us. | |||||||||||||||||||||
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), which establishes a comprehensive new revenue recognition standard designed to depict the transfer of goods or services to a customer in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. In doing so, companies may need to use more judgment and make more estimates than under current revenue recognition guidance. ASU 2014-09 allows for the use of either the full or modified retrospective transition method, and the standard will be effective for annual reporting periods beginning after December 15, 2016 including interim periods within that period. Early adoption is not permitted. The Company is currently evaluating which transition approach to use and the impact of the adoption of this standard on its consolidated financial statements. | |||||||||||||||||||||
In December 2011, the FASB issued Accounting Standards Update 2011-11, “Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”), and issued Accounting Standards Update 2013-01, “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” (“ASU 2013-01”) in January 2013. These updates require disclosures about the nature of an entity's rights of offset and related arrangements associated with its recognized derivative contracts. The new disclosure requirements, which are effective for interim and annual periods beginning on or after January 1, 2013, were implemented by the Company on September 1, 2013. The implementation of ASU 2011-11 and ASU 2013-01 had no impact on the Company's financial position or results of operations. See Note 7 for the Company's derivative disclosures. | |||||||||||||||||||||
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, 2014 | |||||||||||||
Property and Equipment [Abstract] | |||||||||||||
Property and Equipment | 2 | Property and Equipment | |||||||||||
The capitalized costs related to the Company's oil and gas producing activities were as follows (in thousands): | |||||||||||||
As of | As of | ||||||||||||
30-Nov-14 | 31-Aug-14 | ||||||||||||
Oil and gas properties, full cost method: | |||||||||||||
Unevaluated costs, not subject to amortization: | |||||||||||||
Lease acquisition and other costs | $ | 61,133 | $ | 41,531 | |||||||||
Wells in progress | 65,861 | 53,747 | |||||||||||
Subtotal, unevaluated costs | 126,994 | 95,278 | |||||||||||
Evaluated costs: | |||||||||||||
Producing and non-producing | 366,951 | 329,926 | |||||||||||
Total capitalized costs | 493,945 | 425,204 | |||||||||||
Less, accumulated depletion | (71,555 | ) | (54,908 | ) | |||||||||
Oil and gas properties, net | 422,390 | 370,296 | |||||||||||
Land | 4,478 | 3,898 | |||||||||||
Other property and equipment | 822 | 5,961 | |||||||||||
Less, accumulated depreciation | (451 | ) | (755 | ) | |||||||||
Other property and equipment, net | 4,849 | 9,104 | |||||||||||
Total property and equipment, net | $ | 427,239 | $ | 379,400 | |||||||||
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, 2014 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, 2014, similarly revealed no impairment of oil and gas assets. | |||||||||||||
During the quarter ended November 30, 2014, certain amounts previously recorded were reclassified from one category to another without changing the total amounts recorded as property and equipment. Specifically, costs associated with the disposal well and related equipment were reclassified from other property and equipment into producing oil and gas properties. The updated classification for the disposal well and related equipment did not result in a change to previously reported depletion, depreciation, and amortization expense (“DDA”). In future periods, DDA for the disposal well will be included in the calculation of depletion for the full cost pool, and will not be calculated as a component of depreciation. Secondly, as discussed in Note 3, the analysis of assets acquired in certain 2014 business combination transactions was completed and fair values associated with probable horizontal well development were reclassified from evaluated costs into unevaluated costs. |
Acquisitions
Acquisitions | 3 Months Ended | ||||
Nov. 30, 2014 | |||||
Acquisitions [Abstract] | |||||
Acquisitions | 3 | Acquisitions | |||
During the year ended August 31, 2014, the Company closed on two transactions that qualified as Business Combinations under ASC 805. The initial accounting treatment of the transactions was based upon the preliminary analysis of the assets acquired. During the quarter ended November 30, 2014, the Company completed its analysis and finalized the allocation of purchase price to the assets acquired. The following tables present the final fair values. | |||||
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 $15.9 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 final purchase price and the final fair values of assets acquired and liabilities assumed (in thousands): | |||||
Purchase Price | November 12, | ||||
2013 | |||||
Consideration Given | |||||
Cash | $ | 15,902 | |||
Synergy Resources Corp. Common Stock * | 2,896 | ||||
Total consideration given | $ | 18,798 | |||
Allocation of Purchase Price | |||||
Proved oil and gas properties | $ | 11,514 | |||
Unproved oil and gas properties | $ | 7,725 | |||
Total fair value of oil and gas properties acquired | 19,239 | ||||
Working capital | $ | (83 | ) | ||
Asset retirement obligation | (358 | ) | |||
Fair value of net assets acquired | $ | 18,798 | |||
Working capital acquired was estimated as follows: | |||||
Accounts receivable | 536 | ||||
Accrued liabilities and expenses | (619 | ) | |||
Total working capital | $ | (83 | ) | ||
* | |||||
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) | |||||
On August 27, 2013, the Company entered into a definitive purchase and sale agreement (“the Agreement”), with Apollo Operating, LLC (“Apollo”), for its interests in 38 producing oil and gas wells, partial interest (25%) in one water disposal well (the “Disposal Well”), and approximately 3,639 gross (1,000 net) mineral acres (“the Apollo Operating Assets”). On November 13, 2013, the Company closed the transaction for a combination of cash and stock. Apollo received cash consideration of approximately $11.0 million and 550,518 shares of the Company's common stock valued at $5.2 million. Following its acquisition of the Apollo Operating Assets, the Company acquired all other remaining interests in the Disposal Well (the “Related Interests”) through several transactions with the individual owners of such interests. The Company acquired the Related Interests for approximately $3.7 million in cash consideration and 20,626 shares of the Company's common stock, valued at $0.2 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 final purchase price and the final fair values of assets acquired and liabilities assumed (in thousands): | |||||
Purchase Price | November 13, | ||||
2013 | |||||
Consideration Given | |||||
Cash | $ | 14,688 | |||
Synergy Resources Corp. Common Stock * | 5,432 | ||||
Total consideration given | $ | 20,120 | |||
Allocation of Purchase Price | |||||
Proved oil and gas properties | $ | 13,284 | |||
Unproved oil and gas properties | $ | 7,577 | |||
Total fair value of oil and gas properties acquired | 20,861 | ||||
Working capital | $ | (507 | ) | ||
Asset retirement obligation | (234 | ) | |||
Fair value of net assets acquired | $ | 20,120 | |||
Working capital acquired was estimated as follows: | |||||
Accounts receivable | 662 | ||||
Accrued liabilities and expenses | (1,169 | ) | |||
Total working capital | $ | (507 | ) | ||
* | |||||
The fair value of the consideration attributed to the Common Stock under ASC 805 was based on the Company's closing stock prices on the measurement dates (including 550,518 shares at $9.49 per share on November 13, 2013 plus 20,626 shares at various measurement dates at an average per share price of $10.08). | |||||
The Company believes both acquisitions will be accretive to cash flow and earnings per share. The acquisitions qualify as a business combination, and as such, the Company estimated the fair value of each property as of the acquisition date (the date on which the Company obtained control of the properties). Fair value measurements utilize assumptions of market participants. To determine the fair value of the oil and gas assets, the Company used an income approach based on a discounted cash flow model and made market assumptions as to future commodity prices, projections of estimated quantities of oil and natural gas reserves, expectations for timing and amount of future development and operating costs, projections of future rates of production, expected recovery rates and risk adjusted discount rates. The Company determined the appropriate discount rates used for the discounted cash flow analyses by using a weighted-average cost of capital from a market participant perspective plus property-specific risk premiums for the assets acquired. The Company estimated property-specific risk premiums taking into consideration that the related reserves are primarily natural gas, among other items. Given the unobservable nature of the significant inputs, they are deemed to be Level 3 in the fair value hierarchy. The working capital assets acquired were determined to be at fair value due to their short-term nature. | |||||
The preliminary analysis and allocation of the purchase price focused on the values inherent in the proved producing wells and the associated proved undeveloped reserves. All of the producing wells acquired in the transactions were vertical wells and the initial estimates allocated all fair value to proved properties associated with vertical well development. The final analysis also considered the additional value provided by the virtue of the ability to drill horizontal wells in the acquired acreage. Adding horizontal wells to the development plan required a further evaluation as to the classification of the horizontal reserves, as reserves classified as proved under a vertical well drilling plan may be classified differently under a horizontal drilling plan. In the subject acres, the horizontal well reserves are classified as unproved even though the vertical well reserves are proved. Thus, the final analysis attributed $15.3 million of fair value to the unproved properties. | |||||
The reclassification of $15.3 million of acquired fair value has been treated as a change in estimate, and no retroactive adjustments were made to DDA, net income, or retained earnings. Since only proved reserves are used to calculate DDA, and since proved reserves did not change, future DDA calculations will be reduced by the negligible amount associated with the removal of $15.3 million from the full cost pool. | |||||
Depletion_depreciation_and_amo
Depletion, depreciation and amortization ("DDA") | 3 Months Ended | ||||||||||||
Nov. 30, 2014 | |||||||||||||
Depletion, depreciation and amortization ("DDA") [Abstract] | |||||||||||||
Depletion, depreciation and amortization ("DDA") | 4 | Depletion, depreciation and amortization (“DDA”) | |||||||||||
Depletion, depreciation and amortization consisted of the following: | |||||||||||||
Three Months ended | |||||||||||||
November 30, | November 30, | ||||||||||||
(in thousands) | 2014 | 2013 | |||||||||||
Depletion | $ | 16,304 | $ | 5,490 | |||||||||
Depreciation and amortization | 150 | 101 | |||||||||||
Total DDA Expense | $ | 16,454 | $ | 5,591 | |||||||||
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, 2014 | ||||||||||||||||||||||||||||||
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 wells, and restore the drilling sites to their 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 periods, the Company used the following assumptions: | ||||||||||||||||||||||||||||||
For the Three Months Ended | ||||||||||||||||||||||||||||||
November 30, | ||||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||||
Inflation rate | 3.9 | % | 3.9 - 4.0% | |||||||||||||||||||||||||||
Estimated asset life | 25.0 - 39.0 years | 24.0 - 40.0 years | ||||||||||||||||||||||||||||
Credit adjusted risk free interest rate | 8 | % | 8 | % | ||||||||||||||||||||||||||
The following table summarizes the change in asset retirement obligations associated with the Company's oil and gas properties (in thousands): | ||||||||||||||||||||||||||||||
Asset retirement obligations, August 31, 2014 | $ | 4,730 | ||||||||||||||||||||||||||||
Liabilities incurred | 269 | |||||||||||||||||||||||||||||
Liabilities assumed | - | |||||||||||||||||||||||||||||
Accretion expense | 110 | |||||||||||||||||||||||||||||
Asset retirement obligations, November 30, 2014 | $ | 5,109 | ||||||||||||||||||||||||||||
Revolving_Credit_Facility
Revolving Credit Facility | 3 Months Ended | |
Nov. 30, 2014 | ||
Revolving Credit Facility [Abstract] | ||
Revolving Credit Facility | 6 | Revolving Credit Facility |
The description of the Company's revolving credit facility contained in this Note 6 provides historical information that existed as of November 30, 2014. As described in Note 15 – Subsequent Events, the facility was amended on December 15, 2014, to, among other things, increase the number of banks participating in the facility, name a new administrative agent bank, increase the commitment to $500 million and the borrowing base to $230 million, and to extend the maturity date. Additional details regarding the amendment can be found in Item 2 – Management Discussion and Analysis of Financial Condition and Results of Operations and in a copy of the amendment filed as an exhibit to this quarterly report. | ||
The Company maintains a 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. During the quarter ended November 30, 2014, the terms of the LOC provided for $300 million in the maximum amount of borrowings available to the Company, subject to a borrowing base limitation. Community Banks of Colorado acted as the administrative agent for the bank syndicate with respect to the LOC. The expiration date of the credit facility was May 29, 2019. | ||
Interest under the LOC is payable monthly and accrues at a variable rate, subject to a minimum rate of 2.5%. For each borrowing, the Company designates its choice of reference rates, which can be either the Prime Rate plus a margin of 0.5% to 1.5%, or the London Interbank Offered Rate (LIBOR) plus a margin of 1.75% to 2.75%. 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 three months ended November 30, 2014, was 2.5%, representing the minimum rate. | ||
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 subject to scheduled redeterminations on a semi-annual basis. In certain events, and at the discretion of the bank syndicate, an unscheduled redetermination could be prepared. During the quarter ended November 30, 2014, the borrowing base was $110 million. As of November 30, 2014, based upon a borrowing base of $110 million and an outstanding principal balance of $77 million, the unused borrowing base available for future borrowing totaled approximately $33 million. | ||
The arrangement contains covenants that, among other things, restrict the payment of dividends. In addition, 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 85% of hydrocarbon production. | ||
Furthermore, the arrangement requires the Company to maintain certain financial ratio compliance covenants. Under the requirements, on a quarterly basis, the Company must (a) not, at any time, permit its ratio of total funded debt as of such time to EBITDAX, as defined in the agreement, to be greater than or equal to 4.0 to 1.0; and (b) not, as of the last day of the fiscal quarter, permit its adjusted current ratio, as defined, to be less than 1.0 to 1.0. As of November 30, 2014, the most recent compliance date, the Company was in compliance with all loan covenants. | ||
Commodity_Derivative_Instrumen
Commodity Derivative Instruments | 3 Months Ended | ||||||||||||||||||
Nov. 30, 2014 | |||||||||||||||||||
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 and gas 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 four counterparties. Two of the counterparties are a participating lender in the Company's credit facility. 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 statements of operations. The Company's cash flow is only impacted when the actual settlements under commodity derivative contracts result in making or receiving a payment to or from the Counterparty. These settlements under the commodity derivative contracts are reflected as operating activities in the Company's statements of cash flows. | |||||||||||||||||||
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, 2014 are summarized below: | |||||||||||||||||||
Settlement Period | Derivative | Average Volumes | Average | Floor | Celling | ||||||||||||||
Instrument | (BBls/MMBtu | Strike | Price | Price | |||||||||||||||
per month) | Price | ||||||||||||||||||
Crude Oil - NYMEX WTI | |||||||||||||||||||
Dec 1, 2014 - Dec 31, 2014 | Collar | 21,840 | - | $ | 86.83 | $ | 96.44 | ||||||||||||
Dec 1, 2014 - Dec 31, 2014 | Swap | 56,840 | $ | 87.08 | - | - | |||||||||||||
Jan 1, 2015 - Jun 30, 2015 | Collar | 7,000 | - | $ | 80 | $ | 92.5 | ||||||||||||
Jan 1, 2015 - Jun 30, 2015 | Collar | 2,500 | - | $ | 80 | $ | 95.75 | ||||||||||||
Jul 1, 2015 - Dec 31, 2015 | Collar | 9,000 | - | $ | 80 | $ | 92.25 | ||||||||||||
Jan 1, 2015 - Dec 31, 2015 | Collar | 4,500 | - | $ | 80 | $ | 99.4 | ||||||||||||
Jan 1, 2015 - Dec 31, 2015 | Collar | 6,000 | - | $ | 85 | $ | 101.3 | ||||||||||||
Jan 1, 2015 - Jun 30, 2015 | Swap | 20,000 | $ | 90.1 | - | - | |||||||||||||
Jul 1, 2015 - Dec 31, 2015 | Swap | 15,500 | $ | 89.52 | - | - | |||||||||||||
Jan 1, 2015 - Oct 31, 2015 | Swap | 14,600 | $ | 78.65 | - | - | |||||||||||||
Jan 1, 2016 - May 31, 2016 | Collar | 10,000 | - | $ | 75 | $ | 96 | ||||||||||||
Jan 1, 2016 - May 31, 2016 | Collar | 5,000 | - | $ | 80 | $ | 100.75 | ||||||||||||
Jun 1, 2016 - Aug 31, 2016 | Collar | 15,000 | - | $ | 80 | $ | 100.05 | ||||||||||||
Jan 1, 2016 - Aug 31, 2016 | Swap | 5,000 | $ | 88.55 | - | - | |||||||||||||
Sep 1, 2016 - Dec 31, 2016 | Swap | 20,000 | $ | 88.1 | - | - | |||||||||||||
Jan 1, 2016 - Oct 31, 2016 | Swap | 6,400 | $ | 78.96 | - | - | |||||||||||||
Natural Gas - NYMEX Henry Hub | |||||||||||||||||||
Dec 1, 2014 - Dec 31, 2014 | Swap | 80,000 | $ | 4.58 | - | - | |||||||||||||
Dec 1, 2014 - Dec 31, 2014 | Collar | 30,000 | - | $ | 4.07 | $ | 4.18 | ||||||||||||
Jan 1, 2015 - Dec 31, 2015 | Collar | 72,000 | - | $ | 4.15 | $ | 4.49 | ||||||||||||
Jan 1, 2016 - May 31, 2016 | Collar | 60,000 | - | $ | 4.05 | $ | 4.54 | ||||||||||||
Jun 1, 2016 - Aug 31, 2016 | Collar | 60,000 | - | $ | 3.9 | $ | 4.14 | ||||||||||||
Offsetting of Derivative Assets and Liabilities | |||||||||||||||||||
As of November 30, 2014 and 2013, all derivative instruments held by the Company were subject to enforceable master netting arrangements held by various financial institutions. In general, the terms of the Company's agreements provide for offsetting of amounts payable or receivable between it and the counterparty, at election of both parties, for transactions that occur on the same date and in the same currency. They Company's agreements also provide that in the event of an early termination, the counterparties have the right to offset amounts owed or owing under that and any other agreement with the same counterparty. The Company's accounting policy is to offset these positions in its accompanying balance sheets. | |||||||||||||||||||
The following table provides a reconciliation between the net assets and liabilities reflected on the accompanying balance sheets and the potential of master netting arrangements on the fair value of the Company's derivative contract (in thousands): | |||||||||||||||||||
As of November 30, 2014 | |||||||||||||||||||
Underlying Commodity | Balance Sheet | Gross Amounts of Recognized Assets and Liabilities | Gross Amounts Offset in the Balance Sheet | Net Amounts of Assets and Liabilities Presented in the Balance Sheet | |||||||||||||||
Location | |||||||||||||||||||
Derivative contracts | Current assets | $ | 12,184 | $ | (200 | ) | $ | 11,984 | |||||||||||
Derivative contracts | Noncurrent assets | $ | 4,756 | $ | (222 | ) | $ | 4,534 | |||||||||||
Derivative contracts | Current liabilities | $ | 200 | $ | (200 | ) | $ | - | |||||||||||
Derivative contracts | Noncurrent liabilities | $ | 222 | $ | (222 | ) | $ | - | |||||||||||
As of August 31, 2014 | |||||||||||||||||||
Underlying Commodity | Balance Sheet | Gross Amounts of Recognized Assets and Liabilities | Gross Amounts Offset in the Balance Sheet | Net Amounts of Assets and Liabilities Presented in the Balance Sheet | |||||||||||||||
Location | |||||||||||||||||||
Derivative contracts | Current assets | $ | 903 | $ | (538 | ) | $ | 365 | |||||||||||
Derivative contracts | Noncurrent assets | $ | 718 | $ | (664 | ) | $ | 54 | |||||||||||
Derivative contracts | Current liabilities | $ | 840 | $ | (538 | ) | $ | 302 | |||||||||||
Derivative contracts | Noncurrent liabilities | $ | 971 | $ | (664 | ) | $ | 307 | |||||||||||
The amount of gain (loss) recognized in the statements of operations related to derivative financial instruments was as follows (in thousands): | |||||||||||||||||||
Three Months ended | |||||||||||||||||||
30-Nov | 30-Nov | ||||||||||||||||||
2014 | 2013 | ||||||||||||||||||
Unrealized gain on commodity derivatives | $ | 16,708 | $ | 2,636 | |||||||||||||||
Realized gain (loss) on commodity derivatives | 1,432 | (398 | ) | ||||||||||||||||
Total gain | $ | 18,140 | $ | 2,238 | |||||||||||||||
Credit-Related Contingent Features | |||||||||||||||||||
During the quarter ended November 30, 2014, the Company added a fourth counterparty to its derivative transactions. The additional counterparty is a member of the Company's credit facility syndicate and the Company's obligations under its credit facility and derivative contracts are secured by liens on substantially all of the Company's producing oil and gas properties. |
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | ||||||||||||||||||||||||||||||||||||
Nov. 30, 2014 | |||||||||||||||||||||||||||||||||||||
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 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. | |||||||||||||||||||||||||||||||||||||
The Company's non-recurring fair value measurements include asset retirement obligations and purchase price allocations for the fair value of assets and liabilities acquired through business combinations. | |||||||||||||||||||||||||||||||||||||
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. See Note 5—Asset Retirement Obligations, for additional information. | |||||||||||||||||||||||||||||||||||||
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 primarily unobservable inputs. Inputs are reviewed by management on an annual basis. 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. See Note 3—Acquisitions, for additional information. | |||||||||||||||||||||||||||||||||||||
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, 2014 and August 31, 2014 by level within the fair value hierarchy (in thousands): | |||||||||||||||||||||||||||||||||||||
Fair Value Measurements at November 30, 2014 | |||||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||
Financial assets and liabilities: | |||||||||||||||||||||||||||||||||||||
Commodity derivative asset | $ | - | $ | 16,518 | $ | - | $ | 16,518 | |||||||||||||||||||||||||||||
Commodity derivative liability | $ | - | $ | - | $ | - | $ | - | |||||||||||||||||||||||||||||
Fair Value Measurements at August 31, 2014 | |||||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||
Financial assets and liabilities: | |||||||||||||||||||||||||||||||||||||
Commodity derivative asset | $ | - | $ | 419 | $ | - | $ | 419 | |||||||||||||||||||||||||||||
Commodity derivative liability | $ | - | $ | 609 | $ | - | $ | 609 | |||||||||||||||||||||||||||||
Commodity Derivative Instruments | |||||||||||||||||||||||||||||||||||||
The Company determines its estimate of the fair value of commodity 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 standing. 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, 2014, derivative instruments utilized by the Company consist of both “no premium” collars and swaps. The crude oil and natural gas derivative markets are highly active. Although the Company's derivative instruments are based on several factors including 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, accounts receivable and 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, 2014 | |||||||||||||
Interest Expense [Abstract] | |||||||||||||
Interest Expense | 9 | Interest Expense | |||||||||||
The components of interest expense are (in thousands): | |||||||||||||
Three Months Ended | |||||||||||||
November 30, | November 30, | ||||||||||||
2014 | 2013 | ||||||||||||
Revolving credit facility | $ | 378 | $ | 251 | |||||||||
Amortization of debt issuance costs | 137 | 94 | |||||||||||
Less, interest capitalized | (515 | ) | (345 | ) | |||||||||
Interest expense, net | $ | - | $ | - | |||||||||
Shareholders_Equity
Shareholders' Equity | 3 Months Ended | ||||||||||||||||
Nov. 30, 2014 | |||||||||||||||||
Shareholders' Equity [Abstract] | |||||||||||||||||
Shareholders' Equity | 10 | Shareholders' Equity | |||||||||||||||
The Company's classes of stock are summarized as follows: | |||||||||||||||||
As of November 30, | As of August 31, | ||||||||||||||||
2014 | 2014 | ||||||||||||||||
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 | 200,000,000 | 200,000,000 | |||||||||||||||
Common stock, par value | $ | 0.001 | $ | 0.001 | |||||||||||||
Common stock, shares issued and outstanding | 79,854,500 | 77,999,082 | |||||||||||||||
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 warrants | |||||||||||||||||
The following table summarizes information about the Company's issued and outstanding common stock warrants as of November 30, 2014: | |||||||||||||||||
Description | Number of Warrants | Exercise Price | Remaining Contractual Life (in years) | Exercise Price times Number of Warrants | |||||||||||||
Series C | 778,330 | $ | 6 | 0.1 | $ | 4,669,980 | |||||||||||
Series D | 1,058 | $ | 1.6 | 0.1 | $ | 1,693 | |||||||||||
779,388 | $ | 4,671,673 | |||||||||||||||
The following table summarizes activity for common stock warrants for the three month period ended November 30, 2014: | |||||||||||||||||
Number of | Weighted-Average | ||||||||||||||||
Warrants | Exercise Price | ||||||||||||||||
Outstanding, August 31, 2014 | 2,562,473 | $ | 6 | ||||||||||||||
Granted | - | $ | - | ||||||||||||||
Exercised | (1,783,085 | ) | $ | 6 | |||||||||||||
Expired | - | $ | - | ||||||||||||||
Outstanding, November 30, 2014 | 779,388 | $ | 6 | ||||||||||||||
StockBased_Compensation
Stock-Based Compensation | 3 Months Ended | |||||||||||||||||||||||||||||
Nov. 30, 2014 | ||||||||||||||||||||||||||||||
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. For the periods presented, all stock-based compensation was classified as a component within general and administrative expense on the statement of operations. | ||||||||||||||||||||||||||||||
The amount of stock-based compensation expense is as follows (in thousands): | ||||||||||||||||||||||||||||||
Three Months ended | ||||||||||||||||||||||||||||||
November 30, | November 30, | |||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||||
Stock options | $ | 500 | $ | 419 | ||||||||||||||||||||||||||
Employee stock grants | 293 | - | ||||||||||||||||||||||||||||
$ | 793 | $ | 419 | |||||||||||||||||||||||||||
During the three months ended November 30, 2014 and 2013, the Company granted the following employee stock options: | ||||||||||||||||||||||||||||||
Three Months ended | ||||||||||||||||||||||||||||||
November 30, | November 30, | |||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||||
Number of options to purchase common shares | 75,000 | 150,000 | ||||||||||||||||||||||||||||
Weighted-average exercise price | $ | 12.87 | $ | 9.98 | ||||||||||||||||||||||||||
Term (in years) | 10 | 10 | ||||||||||||||||||||||||||||
Vesting Period (in years) | 5 | 5 | ||||||||||||||||||||||||||||
Fair Value (in thousands) | $ | 639 | $ | 1,014 | ||||||||||||||||||||||||||
The assumptions used in valuing stock options granted during each of the three months presented were as follows: | ||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||
November 30, | November 30, | |||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||||
Expected term | 6.5 years | 6.5 years | ||||||||||||||||||||||||||||
Expected volatility | 72 | % | 74 | % | ||||||||||||||||||||||||||
Risk free rate | 1.95 | % | 1.91 | % | ||||||||||||||||||||||||||
Expected dividend yield | 0 | % | 0 | % | ||||||||||||||||||||||||||
Forfeiture rate | 0.3 | % | 0 | % | ||||||||||||||||||||||||||
The following table summarizes activity for stock options for the three months ended November 30, 2014: | ||||||||||||||||||||||||||||||
Number | Weighted-Average | |||||||||||||||||||||||||||||
of Shares | Exercise Price | |||||||||||||||||||||||||||||
Outstanding, August 31, 2014 | 2,167,000 | $ | 5.94 | |||||||||||||||||||||||||||
Granted | 75,000 | $ | 12.87 | |||||||||||||||||||||||||||
Exercised | (120,000 | ) | $ | 3.76 | ||||||||||||||||||||||||||
Forfeited | - | - | ||||||||||||||||||||||||||||
Outstanding, November 30, 2014 | 2,122,000 | $ | 6.31 | |||||||||||||||||||||||||||
The following table summarizes information about issued and outstanding stock options as of November 30, 2014: | ||||||||||||||||||||||||||||||
Outstanding | Vested | |||||||||||||||||||||||||||||
Options | Options | |||||||||||||||||||||||||||||
Number of shares | 2,122,000 | 831,100 | ||||||||||||||||||||||||||||
Weighted-average remaining contractual life | 7.9 years | 7.1 years | ||||||||||||||||||||||||||||
Weighted-average exercise price | $ | 6.31 | $ | 4.87 | ||||||||||||||||||||||||||
Aggregate intrinsic value (in thousands) | $ | 7,958 | $ | 4,115 | ||||||||||||||||||||||||||
The estimated unrecognized compensation cost from unvested stock options as of November 30, 2014, which will be recognized ratably over the remaining vesting phase, is as follows: | ||||||||||||||||||||||||||||||
Unvested Options at | ||||||||||||||||||||||||||||||
November 30, | ||||||||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||||||||
Unrecognized compensation expense (in thousands) | $ | 5,533 | ||||||||||||||||||||||||||||
Remaining vesting phase | 3.4 years |
Related_Party_Transactions
Related Party Transactions | 3 Months Ended | ||||||||||||
Nov. 30, 2014 | |||||||||||||
Related Party Transactions [Abstract] | |||||||||||||
Related Party Transactions | 12 | Related Party Transactions | |||||||||||
Whenever the Company engages in transactions with its officers, directors, or other related parties, the terms of the transaction are reviewed by the disinterested directors. All transactions must be on terms no less favorable to the Company than similar transactions with unrelated parties. | |||||||||||||
Lease Agreement: The Company leases its headquarters, a field office, and an equipment storage yard under a twelve month lease agreement with HS Land & Cattle, LLC (“HSLC”). HSLC is controlled by Ed Holloway and William Scaff, Jr., the Company's Co-Chief Executive Officers. The current lease terminates on June 30, 2015. Historically, the lease has been renewed annually. Under this agreement, the Company incurred the following expenses to HSLC for the fiscal years presented (in thousands): | |||||||||||||
Three Months ended | |||||||||||||
November 30, | November 30, | ||||||||||||
2014 | 2013 | ||||||||||||
Rent expense | $ | 45 | $ | 45 | |||||||||
Revenue Distribution Processing: 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, 2014 and 2013 (in thousands): | |||||||||||||
Three Months ended | |||||||||||||
November 30, | November 30, | ||||||||||||
2014 | 2013 | ||||||||||||
Total Royalty Payments | $ | 53 | $ | 82 | |||||||||
Other_Commitments_and_Continge
Other Commitments and Contingencies | 3 Months Ended | |
Nov. 30, 2014 | ||
Other Commitments and Contingencies [Abstract] | ||
Other Commitments and Contingencies | 13 | Other Commitments and Contingencies |
As of November 30, 2014, the Company was using three rigs under contracts with Ensign United States Drilling, Inc. All of the contracts are based upon turn-key pricing and have termination dates during the first half of fiscal year 2015. At the option of the Company, the drilling commitments can be extended into future months, although pricing terms may be modified. Actual payments due to Ensign will depend upon a number of variables, including the surface location, the target formation, measured depth of well and other technical details. | ||
From time to time, the Company receives notice from other operators of their intent to drill and operate a well in which the Company owns a working interest (a “non-operated well”). 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, 2014, the Company was participating in 9 gross (2 net) new horizontal wells, with aggregate costs to its interest estimated at $9.1 million. It is the Company's policy to accrue costs on a non-operated well when it receives notice that active drilling operations have commenced. Accordingly, the November 30, 2014 financial statements include accrued costs of $5.4 million for these wells. |
Supplemental_Schedule_of_Infor
Supplemental Schedule of Information to the Statements of Cash Flows | 3 Months Ended | ||||||||||||
Nov. 30, 2014 | |||||||||||||
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, 2014 and 2013 (in thousands): | |||||||||||||
Three Months Ended | |||||||||||||
November 30, | November 30, | ||||||||||||
2014 | 2013 | ||||||||||||
Supplemental cash flow information: | |||||||||||||
Interest paid | $ | 321 | $ | 251 | |||||||||
Income taxes paid | 110 | - | |||||||||||
Non-cash investing and financing activities: | |||||||||||||
Accrued well costs | $ | 69,511 | $ | 26,813 | |||||||||
Assets acquired in exchange for common stock | - | 9,898 | |||||||||||
Asset retirement costs and obligations | 269 | 692 | |||||||||||
Subsequent_Events
Subsequent Events | 3 Months Ended | |
Nov. 30, 2014 | ||
Subsequent Events [Abstract] | ||
Subsequent Events | 15 | Subsequent Events |
The following discussion pertains to material events occurring subsequent to November 30, 2014, but prior to the issuance of the financial statements. | ||
Amendment to Revolving Credit Facility | ||
On December 15, 2014, the Company amended its revolving credit facility. Under the amendment, the maximum loan commitment is $500 million and the borrowing base is $230 million. The number of banks participating in the LOC increased to eight with SunTrust Bank as the Joint Lead Arranger / Administrative Agent and KeyBank, National Association is the Joint Lead Arranger / Syndication Agent. The maturity date of the facility was extended to December 15, 2019. | ||
Amounts borrowed from the banks will be used to develop oil and gas properties, acquire new oil and gas properties, and for working capital and other general corporate purposes. Amounts borrowed under the LOC are secured by substantially all of the Company's producing wells and developed oil and gas leases. The interest rate on outstanding borrowings will be based on a pricing grid, which escalates with utilization and establishes a minimum of 2.5%. | ||
Concurrent with the amendment, the Company increased its borrowings by approximately $66.2 million. Proceeds from the additional borrowings were used to fund the mineral asset acquisition described below. | ||
Acquisition of Mineral Assets | ||
On December 15, 2014, the Company completed the acquisition of certain assets. These assets consisted of the following: | ||
• | non-operated working interests in 17 horizontal wells (including 4 mid-reach laterals); | |
• | 73 operated and 11 non-operated vertical wells; | |
• | 35 permit applications for operated horizontal wells (including 20 extended reach laterals); | |
• | 5,040 gross acres (4,053 net) with rights to the Codell and Niobrara formations; | |
• | 2,400 gross acres (1,739 net) with rights to other formations, including the Sussex Shannon and J-Sands; | |
• | 3-D seismic data; and | |
• | miscellaneous equipment. | |
Working interests in the horizontal wells range from 6% to 40%. Working interests in the vertical wells range from 5% to 100%. The producing oil and gas properties are located in the Wattenberg Field, which is part of the Denver-Julesburg Basin. Preliminary estimates indicate that the undeveloped acreage will provide locations to drill 150 horizontal wells. | ||
For the acquisition of these assets, the Company paid approximately $125 million, consisting of $75 million in cash and 4,648,136 restricted shares of the Company's common stock which, for purposes of the transaction, were valued at $50 million. | ||
Exercise of Series C Warrants | ||
Subsequent to November 30, 2014, the Company issued approximately 778,000 shares pursuant to the exercise of Series C warrants and received proceeds of approximately $4.7 million. |
Organization_and_Summary_of_Si1
Organization and Summary of Significant Accounting Policies (Policies) | 3 Months Ended | ||||||||||||||||||||
Nov. 30, 2014 | |||||||||||||||||||||
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 (“SEC”) to use “plain English” in public filings, the Company will often use such terms as “we,” our,” or “us” 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. The balance sheet as of August 31, 2014 was derived from the Company's Annual Report on Form 10-K for the year ended August 31, 2014. Accordingly, 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, 2014. | ||||||||||||||||||||
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. | ||||||||||||||||||||
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 units-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. | |||||||||||||||||||||
Wells in progress represent the costs associated with the drilling of oil and gas wells that have yet to be completed as of November 30, 2014. Since the wells had not been completed as of November 30, 2014, they were classified within unevaluated oil and gas properties and were withheld from the depletion calculation and ceiling test. The costs for these wells will be transferred into proved property when the wells commence production and will become subject to depletion and the ceiling test calculation in subsequent periods. | |||||||||||||||||||||
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 depletion, depreciation, 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 unproved properties not being amortized, plus the lower of cost or estimated fair value of unproven 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 depletion, depreciation 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 either the three months ended November 30, 2014 or 2013. | |||||||||||||||||||||
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, | ||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Capitalized Overhead | $ | 503 | $ | 317 | |||||||||||||||||
Well Costs Payable | Well Costs Payable: The costs 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. | ||||||||||||||||||||
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 short-term 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 | |||||||||||||||||||||
November 30, | November 30, | ||||||||||||||||||||
Major Customers | 2014 | 2013 | |||||||||||||||||||
Company A | 68 | % | 60 | % | |||||||||||||||||
Company B | 12 | % | 15 | % | |||||||||||||||||
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 | |||||||||||||||||||
November 30, | November 30, | ||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Company A | 29 | % | 29 | % | |||||||||||||||||
Company B | -* | 16 | % | ||||||||||||||||||
Company C | -* | 10 | % | ||||||||||||||||||
* | |||||||||||||||||||||
Balance was less than 10% of total receivable balances during the period. | |||||||||||||||||||||
Lease Operating Expenses | Lease Operating Expenses: Costs incurred to operate and maintain wells and related equipment and facilities are expensed as incurred. Lease operating expenses (also referred to as production or lifting costs) include the costs of labor to operate the wells and related equipment and facilities, repairs and maintenance, materials, supplies, and fuel consumed and supplies utilized in operating the wells and related equipment and facilities, property taxes and insurance applicable to proved properties and wells and related equipment and facilities. | ||||||||||||||||||||
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 grant. See Note 11 for additional information. | ||||||||||||||||||||
Income Tax | Income Tax: 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 of 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 were identified as of any date on or before November 30, 2014. The Company's policy is to recognize interest and penalties related to uncertain tax benefits in income tax expense. As of November 30, 2014, 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 its future oil and gas 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 calculated by it 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. | ||||||||||||||||||||
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, | ||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Weighted-average shares outstanding-basic | 79,008,719 | 73,674,865 | |||||||||||||||||||
Potentially dilutive common shares from: | |||||||||||||||||||||
Stock Options | 793,270 | 551,060 | |||||||||||||||||||
Warrants | 339,163 | 1,818,680 | |||||||||||||||||||
1,132,433 | 2,369,740 | ||||||||||||||||||||
Weighted-average shares outstanding - diluted | 80,141,152 | 76,044,605 | |||||||||||||||||||
The following potentially dilutive securities outstanding for the periods presented were not included in the respective earnings per share calculation above; as such securities had an anti-dilutive effect on earnings per share: | |||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||
November 30, | November 30, | ||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Employee stock options | 523,000 | 810,000 | |||||||||||||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements: We evaluate the pronouncements of various authoritative accounting organizations to determine the impact of new pronouncements on US GAAP and the impact on us. | ||||||||||||||||||||
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), which establishes a comprehensive new revenue recognition standard designed to depict the transfer of goods or services to a customer in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. In doing so, companies may need to use more judgment and make more estimates than under current revenue recognition guidance. ASU 2014-09 allows for the use of either the full or modified retrospective transition method, and the standard will be effective for annual reporting periods beginning after December 15, 2016 including interim periods within that period. Early adoption is not permitted. The Company is currently evaluating which transition approach to use and the impact of the adoption of this standard on its consolidated financial statements. | |||||||||||||||||||||
In December 2011, the FASB issued Accounting Standards Update 2011-11, “Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”), and issued Accounting Standards Update 2013-01, “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” (“ASU 2013-01”) in January 2013. These updates require disclosures about the nature of an entity's rights of offset and related arrangements associated with its recognized derivative contracts. The new disclosure requirements, which are effective for interim and annual periods beginning on or after January 1, 2013, were implemented by the Company on September 1, 2013. The implementation of ASU 2011-11 and ASU 2013-01 had no impact on the Company's financial position or results of operations. See Note 7 for the Company's derivative disclosures. | |||||||||||||||||||||
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, 2014 | |||||||||||||||||||||
Organization and Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||
Schedule of Capitalized Overhead Expenses | Three Months Ended | ||||||||||||||||||||
November 30, | November 30, | ||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Capitalized Overhead | $ | 503 | $ | 317 | |||||||||||||||||
Schedule of Percentages of Oil and Gas Revenue Purchased By Major Customers | Three Months Ended | ||||||||||||||||||||
November 30, | November 30, | ||||||||||||||||||||
Major Customers | 2014 | 2013 | |||||||||||||||||||
Company A | 68 | % | 60 | % | |||||||||||||||||
Company B | 12 | % | 15 | % | |||||||||||||||||
Schedule of Customers With Balances Greater Than 10% of Total Receivables | Major Customers | As of | As of | ||||||||||||||||||
November 30, | November 30, | ||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Company A | 29 | % | 29 | % | |||||||||||||||||
Company B | -* | 16 | % | ||||||||||||||||||
Company C | -* | 10 | % | ||||||||||||||||||
Reconciliation of Weighted-average Shares Outstanding Basic and Diluted | Three Months Ended | ||||||||||||||||||||
November 30, | November 30, | ||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Weighted-average shares outstanding-basic | 79,008,719 | 73,674,865 | |||||||||||||||||||
Potentially dilutive common shares from: | |||||||||||||||||||||
Stock Options | 793,270 | 551,060 | |||||||||||||||||||
Warrants | 339,163 | 1,818,680 | |||||||||||||||||||
1,132,433 | 2,369,740 | ||||||||||||||||||||
Weighted-average shares outstanding - diluted | 80,141,152 | 76,044,605 | |||||||||||||||||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | Three Months Ended | ||||||||||||||||||||
November 30, | November 30, | ||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Employee stock options | 523,000 | 810,000 |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 3 Months Ended | ||||||||||||
Nov. 30, 2014 | |||||||||||||
Property and Equipment [Abstract] | |||||||||||||
Schedule of Capitalized Costs of Property and Equipment | As of | As of | |||||||||||
30-Nov-14 | 31-Aug-14 | ||||||||||||
Oil and gas properties, full cost method: | |||||||||||||
Unevaluated costs, not subject to amortization: | |||||||||||||
Lease acquisition and other costs | $ | 61,133 | $ | 41,531 | |||||||||
Wells in progress | 65,861 | 53,747 | |||||||||||
Subtotal, unevaluated costs | 126,994 | 95,278 | |||||||||||
Evaluated costs: | |||||||||||||
Producing and non-producing | 366,951 | 329,926 | |||||||||||
Total capitalized costs | 493,945 | 425,204 | |||||||||||
Less, accumulated depletion | (71,555 | ) | (54,908 | ) | |||||||||
Oil and gas properties, net | 422,390 | 370,296 | |||||||||||
Land | 4,478 | 3,898 | |||||||||||
Other property and equipment | 822 | 5,961 | |||||||||||
Less, accumulated depreciation | (451 | ) | (755 | ) | |||||||||
Other property and equipment, net | 4,849 | 9,104 | |||||||||||
Total property and equipment, net | $ | 427,239 | $ | 379,400 |
Acquisitions_Tables
Acquisitions (Tables) | 3 Months Ended | ||||
Nov. 30, 2014 | |||||
Trilogy Resources [Member] | |||||
Business Acquisition [Line Items] | |||||
Schedule of Fair Value of Acquisition | Purchase Price | November 12, | |||
2013 | |||||
Consideration Given | |||||
Cash | $ | 15,902 | |||
Synergy Resources Corp. Common Stock * | 2,896 | ||||
Total consideration given | $ | 18,798 | |||
Allocation of Purchase Price | |||||
Proved oil and gas properties | $ | 11,514 | |||
Unproved oil and gas properties | $ | 7,725 | |||
Total fair value of oil and gas properties acquired | 19,239 | ||||
Working capital | $ | (83 | ) | ||
Asset retirement obligation | (358 | ) | |||
Fair value of net assets acquired | $ | 18,798 | |||
Working capital acquired was estimated as follows: | |||||
Accounts receivable | 536 | ||||
Accrued liabilities and expenses | (619 | ) | |||
Total working capital | $ | (83 | ) | ||
Apollo Operating [Member] | |||||
Business Acquisition [Line Items] | |||||
Schedule of Fair Value of Acquisition | Purchase Price | November 13, | |||
2013 | |||||
Consideration Given | |||||
Cash | $ | 14,688 | |||
Synergy Resources Corp. Common Stock * | 5,432 | ||||
Total consideration given | $ | 20,120 | |||
Allocation of Purchase Price | |||||
Proved oil and gas properties | $ | 13,284 | |||
Unproved oil and gas properties | $ | 7,577 | |||
Total fair value of oil and gas properties acquired | 20,861 | ||||
Working capital | $ | (507 | ) | ||
Asset retirement obligation | (234 | ) | |||
Fair value of net assets acquired | $ | 20,120 | |||
Working capital acquired was estimated as follows: | |||||
Accounts receivable | 662 | ||||
Accrued liabilities and expenses | (1,169 | ) | |||
Total working capital | $ | (507 | ) |
Depletion_depreciation_and_amo1
Depletion, depreciation and amortization ("DDA") (Tables) | 3 Months Ended | ||||||||||||
Nov. 30, 2014 | |||||||||||||
Depletion, depreciation and amortization ("DDA") [Abstract] | |||||||||||||
Schedule of Depletion, Depreciation and Amortization | Three Months ended | ||||||||||||
November 30, | November 30, | ||||||||||||
(in thousands) | 2014 | 2013 | |||||||||||
Depletion | $ | 16,304 | $ | 5,490 | |||||||||
Depreciation and amortization | 150 | 101 | |||||||||||
Total DDA Expense | $ | 16,454 | $ | 5,591 |
Asset_Retirement_Obligations_T
Asset Retirement Obligations (Tables) | 3 Months Ended | |||||||||||||||||||||||||||||
Nov. 30, 2014 | ||||||||||||||||||||||||||||||
Asset Retirement Obligations [Abstract] | ||||||||||||||||||||||||||||||
Schedule of Fair Value Assumptions | For the Three Months Ended | |||||||||||||||||||||||||||||
November 30, | ||||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||||
Inflation rate | 3.9 | % | 3.9 - 4.0% | |||||||||||||||||||||||||||
Estimated asset life | 25.0 - 39.0 years | 24.0 - 40.0 years | ||||||||||||||||||||||||||||
Credit adjusted risk free interest rate | 8 | % | 8 | % | ||||||||||||||||||||||||||
Schedule of Asset Retirement Obligations | Asset retirement obligations, August 31, 2014 | $ | 4,730 | |||||||||||||||||||||||||||
Liabilities incurred | 269 | |||||||||||||||||||||||||||||
Liabilities assumed | - | |||||||||||||||||||||||||||||
Accretion expense | 110 | |||||||||||||||||||||||||||||
Asset retirement obligations, November 30, 2014 | $ | 5,109 |
Commodity_Derivative_Instrumen1
Commodity Derivative Instruments (Tables) | 3 Months Ended | ||||||||||||||||||
Nov. 30, 2014 | |||||||||||||||||||
Commodity Derivative Instruments [Abstract] | |||||||||||||||||||
Schedule of Commodity Derivative Contracts | Settlement Period | Derivative | Average Volumes | Average | Floor | Celling | |||||||||||||
Instrument | (BBls/MMBtu | Strike | Price | Price | |||||||||||||||
per month) | Price | ||||||||||||||||||
Crude Oil - NYMEX WTI | |||||||||||||||||||
Dec 1, 2014 - Dec 31, 2014 | Collar | 21,840 | - | $ | 86.83 | $ | 96.44 | ||||||||||||
Dec 1, 2014 - Dec 31, 2014 | Swap | 56,840 | $ | 87.08 | - | - | |||||||||||||
Jan 1, 2015 - Jun 30, 2015 | Collar | 7,000 | - | $ | 80 | $ | 92.5 | ||||||||||||
Jan 1, 2015 - Jun 30, 2015 | Collar | 2,500 | - | $ | 80 | $ | 95.75 | ||||||||||||
Jul 1, 2015 - Dec 31, 2015 | Collar | 9,000 | - | $ | 80 | $ | 92.25 | ||||||||||||
Jan 1, 2015 - Dec 31, 2015 | Collar | 4,500 | - | $ | 80 | $ | 99.4 | ||||||||||||
Jan 1, 2015 - Dec 31, 2015 | Collar | 6,000 | - | $ | 85 | $ | 101.3 | ||||||||||||
Jan 1, 2015 - Jun 30, 2015 | Swap | 20,000 | $ | 90.1 | - | - | |||||||||||||
Jul 1, 2015 - Dec 31, 2015 | Swap | 15,500 | $ | 89.52 | - | - | |||||||||||||
Jan 1, 2015 - Oct 31, 2015 | Swap | 14,600 | $ | 78.65 | - | - | |||||||||||||
Jan 1, 2016 - May 31, 2016 | Collar | 10,000 | - | $ | 75 | $ | 96 | ||||||||||||
Jan 1, 2016 - May 31, 2016 | Collar | 5,000 | - | $ | 80 | $ | 100.75 | ||||||||||||
Jun 1, 2016 - Aug 31, 2016 | Collar | 15,000 | - | $ | 80 | $ | 100.05 | ||||||||||||
Jan 1, 2016 - Aug 31, 2016 | Swap | 5,000 | $ | 88.55 | - | - | |||||||||||||
Sep 1, 2016 - Dec 31, 2016 | Swap | 20,000 | $ | 88.1 | - | - | |||||||||||||
Jan 1, 2016 - Oct 31, 2016 | Swap | 6,400 | $ | 78.96 | - | - | |||||||||||||
Natural Gas - NYMEX Henry Hub | |||||||||||||||||||
Dec 1, 2014 - Dec 31, 2014 | Swap | 80,000 | $ | 4.58 | - | - | |||||||||||||
Dec 1, 2014 - Dec 31, 2014 | Collar | 30,000 | - | $ | 4.07 | $ | 4.18 | ||||||||||||
Jan 1, 2015 - Dec 31, 2015 | Collar | 72,000 | - | $ | 4.15 | $ | 4.49 | ||||||||||||
Jan 1, 2016 - May 31, 2016 | Collar | 60,000 | - | $ | 4.05 | $ | 4.54 | ||||||||||||
Jun 1, 2016 - Aug 31, 2016 | Collar | 60,000 | - | $ | 3.9 | $ | 4.14 | ||||||||||||
Schedule of Fair Value of Derivatives | As of November 30, 2014 | ||||||||||||||||||
Underlying Commodity | Balance Sheet | Gross Amounts of Recognized Assets and Liabilities | Gross Amounts Offset in the Balance Sheet | Net Amounts of Assets and Liabilities Presented in the Balance Sheet | |||||||||||||||
Location | |||||||||||||||||||
Derivative contracts | Current assets | $ | 12,184 | $ | (200 | ) | $ | 11,984 | |||||||||||
Derivative contracts | Noncurrent assets | $ | 4,756 | $ | (222 | ) | $ | 4,534 | |||||||||||
Derivative contracts | Current liabilities | $ | 200 | $ | (200 | ) | $ | - | |||||||||||
Derivative contracts | Noncurrent liabilities | $ | 222 | $ | (222 | ) | $ | - | |||||||||||
As of August 31, 2014 | |||||||||||||||||||
Underlying Commodity | Balance Sheet | Gross Amounts of Recognized Assets and Liabilities | Gross Amounts Offset in the Balance Sheet | Net Amounts of Assets and Liabilities Presented in the Balance Sheet | |||||||||||||||
Location | |||||||||||||||||||
Derivative contracts | Current assets | $ | 903 | $ | (538 | ) | $ | 365 | |||||||||||
Derivative contracts | Noncurrent assets | $ | 718 | $ | (664 | ) | $ | 54 | |||||||||||
Derivative contracts | Current liabilities | $ | 840 | $ | (538 | ) | $ | 302 | |||||||||||
Derivative contracts | Noncurrent liabilities | $ | 971 | $ | (664 | ) | $ | 307 | |||||||||||
Schedule of Gain (Loss) Recognized in Statements of Operations | Three Months ended | ||||||||||||||||||
30-Nov | 30-Nov | ||||||||||||||||||
2014 | 2013 | ||||||||||||||||||
Unrealized gain on commodity derivatives | $ | 16,708 | $ | 2,636 | |||||||||||||||
Realized gain (loss) on commodity derivatives | 1,432 | (398 | ) | ||||||||||||||||
Total gain | $ | 18,140 | $ | 2,238 |
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | ||||||||||||||||||||||||||||||||||||
Nov. 30, 2014 | |||||||||||||||||||||||||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Measured on a Recurring Basis | Fair Value Measurements at November 30, 2014 | ||||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||
Financial assets and liabilities: | |||||||||||||||||||||||||||||||||||||
Commodity derivative asset | $ | - | $ | 16,518 | $ | - | $ | 16,518 | |||||||||||||||||||||||||||||
Commodity derivative liability | $ | - | $ | - | $ | - | $ | - | |||||||||||||||||||||||||||||
Fair Value Measurements at August 31, 2014 | |||||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||
Financial assets and liabilities: | |||||||||||||||||||||||||||||||||||||
Commodity derivative asset | $ | - | $ | 419 | $ | - | $ | 419 | |||||||||||||||||||||||||||||
Commodity derivative liability | $ | - | $ | 609 | $ | - | $ | 609 |
Interest_Expense_Tables
Interest Expense (Tables) | 3 Months Ended | ||||||||||||
Nov. 30, 2014 | |||||||||||||
Interest Expense [Abstract] | |||||||||||||
Schedule of the Components of Interest Expense | Three Months Ended | ||||||||||||
November 30, | November 30, | ||||||||||||
2014 | 2013 | ||||||||||||
Revolving credit facility | $ | 378 | $ | 251 | |||||||||
Amortization of debt issuance costs | 137 | 94 | |||||||||||
Less, interest capitalized | (515 | ) | (345 | ) | |||||||||
Interest expense, net | $ | - | $ | - |
Shareholders_Equity_Tables
Shareholders' Equity (Tables) | 3 Months Ended | ||||||||||||||||
Nov. 30, 2014 | |||||||||||||||||
Shareholders' Equity [Abstract] | |||||||||||||||||
Schedule of Classes of Stock | As of November 30, | As of August 31, | |||||||||||||||
2014 | 2014 | ||||||||||||||||
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 | 200,000,000 | 200,000,000 | |||||||||||||||
Common stock, par value | $ | 0.001 | $ | 0.001 | |||||||||||||
Common stock, shares issued and outstanding | 79,854,500 | 77,999,082 | |||||||||||||||
Schedule of Issued and Outstanding Common Stock Warrants | Description | Number of Warrants | Exercise Price | Remaining Contractual Life (in years) | Exercise Price times Number of Warrants | ||||||||||||
Series C | 778,330 | $ | 6 | 0.1 | $ | 4,669,980 | |||||||||||
Series D | 1,058 | $ | 1.6 | 0.1 | $ | 1,693 | |||||||||||
779,388 | $ | 4,671,673 | |||||||||||||||
Schedule of Outstanding Common Stock Warrant Activity | Number of | Weighted-Average | |||||||||||||||
Warrants | Exercise Price | ||||||||||||||||
Outstanding, August 31, 2014 | 2,562,473 | $ | 6 | ||||||||||||||
Granted | - | $ | - | ||||||||||||||
Exercised | (1,783,085 | ) | $ | 6 | |||||||||||||
Expired | - | $ | - | ||||||||||||||
Outstanding, November 30, 2014 | 779,388 | $ | 6 |
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 3 Months Ended | |||||||||||||||||||||||||||||
Nov. 30, 2014 | ||||||||||||||||||||||||||||||
Stock-Based Compensation [Abstract] | ||||||||||||||||||||||||||||||
Schedule of Stock-based Compensation Expense Recognized | Three Months ended | |||||||||||||||||||||||||||||
November 30, | November 30, | |||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||||
Stock options | $ | 500 | $ | 419 | ||||||||||||||||||||||||||
Employee stock grants | 293 | - | ||||||||||||||||||||||||||||
$ | 793 | $ | 419 | |||||||||||||||||||||||||||
Schedule of Employee Stock Options Granted During the Period | Three Months ended | |||||||||||||||||||||||||||||
November 30, | November 30, | |||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||||
Number of options to purchase common shares | 75,000 | 150,000 | ||||||||||||||||||||||||||||
Weighted-average exercise price | $ | 12.87 | $ | 9.98 | ||||||||||||||||||||||||||
Term (in years) | 10 | 10 | ||||||||||||||||||||||||||||
Vesting Period (in years) | 5 | 5 | ||||||||||||||||||||||||||||
Fair Value (in thousands) | $ | 639 | $ | 1,014 | ||||||||||||||||||||||||||
Schedule of Assumptions Used In Valuing Stock Options | Three Months Ended | |||||||||||||||||||||||||||||
November 30, | November 30, | |||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||||
Expected term | 6.5 years | 6.5 years | ||||||||||||||||||||||||||||
Expected volatility | 72 | % | 74 | % | ||||||||||||||||||||||||||
Risk free rate | 1.95 | % | 1.91 | % | ||||||||||||||||||||||||||
Expected dividend yield | 0 | % | 0 | % | ||||||||||||||||||||||||||
Forfeiture rate | 0.3 | % | 0 | % | ||||||||||||||||||||||||||
Summary of Stock Option Activity Under Stock Option and Incentive Plans | Number | Weighted-Average | ||||||||||||||||||||||||||||
of Shares | Exercise Price | |||||||||||||||||||||||||||||
Outstanding, August 31, 2014 | 2,167,000 | $ | 5.94 | |||||||||||||||||||||||||||
Granted | 75,000 | $ | 12.87 | |||||||||||||||||||||||||||
Exercised | (120,000 | ) | $ | 3.76 | ||||||||||||||||||||||||||
Forfeited | - | - | ||||||||||||||||||||||||||||
Outstanding, November 30, 2014 | 2,122,000 | $ | 6.31 | |||||||||||||||||||||||||||
Schedule of Issued and Outstanding Stock Options | Outstanding | Vested | ||||||||||||||||||||||||||||
Options | Options | |||||||||||||||||||||||||||||
Number of shares | 2,122,000 | 831,100 | ||||||||||||||||||||||||||||
Weighted-average remaining contractual life | 7.9 years | 7.1 years | ||||||||||||||||||||||||||||
Weighted-average exercise price | $ | 6.31 | $ | 4.87 | ||||||||||||||||||||||||||
Aggregate intrinsic value (in thousands) | $ | 7,958 | $ | 4,115 | ||||||||||||||||||||||||||
Schedule of Estimated Unrecognized Compensation Cost From Unvested Stock Options | Unvested Options at | |||||||||||||||||||||||||||||
November 30, | ||||||||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||||||||
Unrecognized compensation expense (in thousands) | $ | 5,533 | ||||||||||||||||||||||||||||
Remaining vesting phase | 3.4 years |
Related_Party_Transactions_Tab
Related Party Transactions (Tables) | 3 Months Ended | ||||||||||||
Nov. 30, 2014 | |||||||||||||
Related Party Transactions [Abstract] | |||||||||||||
Schedule of Rent Expense | Three Months ended | ||||||||||||
November 30, | November 30, | ||||||||||||
2014 | 2013 | ||||||||||||
Rent expense | $ | 45 | $ | 45 | |||||||||
Schedule of Royalty Expense | Three Months ended | ||||||||||||
November 30, | November 30, | ||||||||||||
2014 | 2013 | ||||||||||||
Total Royalty Payments | $ | 53 | $ | 82 |
Supplemental_Schedule_of_Infor1
Supplemental Schedule of Information to the Statements of Cash Flows (Tables) | 3 Months Ended | ||||||||||||
Nov. 30, 2014 | |||||||||||||
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, | ||||||||||||
2014 | 2013 | ||||||||||||
Supplemental cash flow information: | |||||||||||||
Interest paid | $ | 321 | $ | 251 | |||||||||
Income taxes paid | 110 | - | |||||||||||
Non-cash investing and financing activities: | |||||||||||||
Accrued well costs | $ | 69,511 | $ | 26,813 | |||||||||
Assets acquired in exchange for common stock | - | 9,898 | |||||||||||
Asset retirement costs and obligations | 269 | 692 |
Organization_and_Summary_of_Si3
Organization and Summary of Significant Accounting Policies (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Nov. 30, 2014 | Nov. 30, 2013 | |
Organization and Summary of Significant Accounting Policies [Abstract] | |||
Net cash flows, discount rate | 10.00% | ||
Capitalized overhead | $503 | $317 | |
Company A [Member] | Oil and Gas Revenues [Member] | |||
Concentration Risk [Line Items] | |||
Risk percentage | 68.00% | 60.00% | |
Company A [Member] | Tenant accounts receivable [Member] | |||
Concentration Risk [Line Items] | |||
Risk percentage | 29.00% | 29.00% | |
Company B [Member] | Oil and Gas Revenues [Member] | |||
Concentration Risk [Line Items] | |||
Risk percentage | 12.00% | 15.00% | |
Company B [Member] | Tenant accounts receivable [Member] | |||
Concentration Risk [Line Items] | |||
Risk percentage | [1] | 16.00% | |
Company C [Member] | Tenant accounts receivable [Member] | |||
Concentration Risk [Line Items] | |||
Risk percentage | [1] | 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 | ||
[1] | Balance was less than 10% of total receivable balances during the period. |
Organization_and_Summary_of_Si4
Organization and Summary of Significant Accounting Policies (Earnings Per Share) (Details) | 3 Months Ended | |
Nov. 30, 2014 | Nov. 30, 2013 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Weighted-average shares outstanding - basic | 79,008,719 | 73,674,865 |
Potentially dilutive common shares from: | ||
Stock Options | 793,270 | 551,060 |
Warrants | 339,163 | 1,818,680 |
Potentially dilutive common shares | 1,132,433 | 2,369,740 |
Weighted-average shares outstanding - diluted | 80,141,152 | 76,044,605 |
Stock Options [Member] | ||
Potentially dilutive common shares from: | ||
Potentially dilutive common shares having anti-dilutive effect on earnings per share | 523,000 | 810,000 |
Property_and_Equipment_Schedul
Property and Equipment (Schedule of Capitalized Costs of Property And Equipment) (Details) (USD $) | Nov. 30, 2014 | Aug. 31, 2014 |
In Thousands, unless otherwise specified | ||
Unevaluated costs, not subject to amortization: | ||
Unevaluated costs, not subject to amortization | $126,994 | $95,278 |
Evaluated costs: | ||
Producing and non-producing | 366,951 | 329,926 |
Total capitalized costs | 493,945 | 425,204 |
Less, accumulated depletion | -71,555 | -54,908 |
Oil and gas properties, net | 422,390 | 370,296 |
Other property and equipment: | ||
Other property and equipment, gross | 822 | 5,961 |
Less, accumulated depreciation | -451 | -755 |
Other property and equipment, net | 4,849 | 9,104 |
Property and equipment, net | 427,239 | 379,400 |
Land [Member] | ||
Other property and equipment: | ||
Other property and equipment, gross | 4,478 | 3,898 |
Lease acquisition and other costs [Member] | ||
Unevaluated costs, not subject to amortization: | ||
Unevaluated costs, not subject to amortization | 61,133 | 41,531 |
Wells in progress [Member] | ||
Unevaluated costs, not subject to amortization: | ||
Unevaluated costs, not subject to amortization | $65,861 | $53,747 |
Acquisitions_Narrative_Details
Acquisitions (Narrative) (Details) (USD $) | 1 Months Ended | |||
Nov. 13, 2013 | Nov. 12, 2013 | Nov. 30, 2013 | Nov. 30, 2014 | |
acre | ||||
Business Acquisition [Line Items] | ||||
Cash | $11,000,000 | |||
Fair value attributed to unproved properties | 15,300,000 | |||
Trilogy Resources [Member] | ||||
Business Acquisition [Line Items] | ||||
Number of wells | 21 | |||
Mineral acres, net | 800 | |||
Business acquisition, shares issued | 301,339 | |||
Business acquisition, shares issued, value | 2,900,000 | |||
Cash | 15,902,000 | |||
Apollo Operating [Member] | ||||
Business Acquisition [Line Items] | ||||
Number of wells | 38 | |||
Mineral acres, gross | 3,639 | |||
Mineral acres, net | 1,000 | |||
Business acquisition, shares issued | 550,518 | 20,626 | ||
Business acquisition, shares issued, value | 5,200,000 | 200,000 | ||
Cash | $14,688,000 | $3,700,000 | ||
Percent of entity acquired | 25.00% |
Acquisitions_Schedule_of_Fair_
Acquisitions (Schedule of Fair Value of Acquisition) (Details) (USD $) | 1 Months Ended | ||||
In Thousands, except Share data, unless otherwise specified | Nov. 13, 2013 | Nov. 12, 2013 | Nov. 30, 2013 | ||
Preliminary Purchase Price | |||||
Cash | $11,000 | ||||
Trilogy Resources [Member] | |||||
Preliminary Purchase Price | |||||
Cash | 15,902 | ||||
Synergy Resources Corp. Common Stock | 2,896 | [1] | |||
Total consideration given | 18,798 | ||||
Preliminary Allocation of Purchase Price | |||||
Proved oil and gas properties | 11,514 | ||||
Unproved oil and gas properties | 7,725 | ||||
Total fair value of oil and gas properties acquired | 19,239 | ||||
Working capital | -83 | ||||
Asset retirement obligation | -358 | ||||
Fair value of net assets acquired | 18,798 | ||||
Working capital acquired was estimated as follows: | |||||
Accounts receivable | 536 | ||||
Accrued liabilities and expenses | -619 | ||||
Total working capital | -83 | ||||
Business acquisition, shares issued | 301,339 | ||||
Closing stock price | $9.61 | ||||
Apollo Operating [Member] | |||||
Preliminary Purchase Price | |||||
Cash | 14,688 | 3,700 | |||
Synergy Resources Corp. Common Stock | 5,432 | [2] | |||
Total consideration given | 20,120 | ||||
Preliminary Allocation of Purchase Price | |||||
Proved oil and gas properties | 13,284 | ||||
Unproved oil and gas properties | 7,577 | ||||
Total fair value of oil and gas properties acquired | 20,861 | ||||
Working capital | -507 | ||||
Asset retirement obligation | -234 | ||||
Fair value of net assets acquired | 20,120 | ||||
Working capital acquired was estimated as follows: | |||||
Accounts receivable | 662 | ||||
Accrued liabilities and expenses | -1,169 | ||||
Total working capital | ($507) | ||||
Business acquisition, shares issued | 550,518 | 20,626 | |||
Closing stock price | $9.49 | $10.08 | |||
[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 prices on the measurement dates (including 550,518 shares at $9.49 per share on November 13, 2013 plus 20,626 shares at various measurement dates at an average per share price of $10.08). |
Depletion_depreciation_and_amo2
Depletion, depreciation and amortization ("DDA") (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Nov. 30, 2014 | Nov. 30, 2013 |
Depletion, depreciation and amortization ("DDA") [Abstract] | ||
Depletion | $16,304 | $5,490 |
Depreciation and amortization | 150 | 101 |
Total DDA Expense | $16,454 | $5,591 |
Asset_Retirement_Obligations_S
Asset Retirement Obligations (Schedule of Fair Value Assumptions) (Details) | 3 Months Ended | |
Nov. 30, 2014 | Nov. 30, 2013 | |
Inflation rate | 3.90% | |
Credit adjusted risk free interest rate | 8.00% | 8.00% |
Minimum [Member] | ||
Inflation rate | 3.90% | |
Estimated asset life | 25 years | 24 years |
Maximum [Member] | ||
Inflation rate | 4.00% | |
Estimated asset life | 39 years | 40 years |
Asset_Retirement_Obligations_S1
Asset Retirement Obligations (Schedule of Asset Retirement Obligations) (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Nov. 30, 2014 |
Asset Retirement Obligations [Abstract] | |
Asset retirement obligations, August 31, 2014 | $4,730 |
Liabilities incurred | 269 |
Liabilities assumed | |
Accretion | 110 |
Asset retirement obligations, November 30, 2014 | $5,109 |
Revolving_Credit_Facility_Deta
Revolving Credit Facility (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Nov. 30, 2014 | Dec. 15, 2014 |
Line of Credit Facility [Line Items] | ||
Total borrowing commitment | $300 | $500 |
Borrowing base | 110 | 230 |
Amount outstanding | 77 | |
Remaining borrowing capacity | $33 | |
Credit facility, expiration date | 29-May-19 | |
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 | 85.00% | |
Average interest rate | 2.50% | |
Minimum adjusted current ratio | 1 | |
Maximum funded debt to EBITDAX | 4 | |
Minimum [Member] | ||
Line of Credit Facility [Line Items] | ||
Revolving credit facility, additional rate over variable | 2.50% | |
Minimum [Member] | Prime Rate [Member] | ||
Line of Credit Facility [Line Items] | ||
Revolving credit facility, additional rate over variable | 0.50% | |
Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||
Line of Credit Facility [Line Items] | ||
Revolving credit facility, additional rate over variable | 1.75% | |
Maximum [Member] | Prime Rate [Member] | ||
Line of Credit Facility [Line Items] | ||
Revolving credit facility, additional rate over variable | 1.50% | |
Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||
Line of Credit Facility [Line Items] | ||
Revolving credit facility, additional rate over variable | 2.75% |
Commodity_Derivative_Instrumen2
Commodity Derivative Instruments (Schedule of Commodity Derivative Contracts) (Details) (USD $) | Nov. 30, 2014 |
Contract One [Member] | Collar [Member] | Crude Oil [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 21,840 |
Average Strike Price | |
Floor Price | $86.83 |
Ceiling Price | $96.44 |
Contract One [Member] | Collar [Member] | Natural Gas [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 30,000 |
Average Strike Price | |
Floor Price | $4.07 |
Ceiling Price | $4.18 |
Contract One [Member] | Swap [Member] | Crude Oil [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 56,840 |
Average Strike Price | $87.08 |
Floor Price | |
Ceiling Price | |
Contract One [Member] | Swap [Member] | Natural Gas [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 80,000 |
Average Strike Price | $4.58 |
Floor Price | |
Ceiling Price | |
Contract Two [Member] | Collar [Member] | Crude Oil [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 7,000 |
Average Strike Price | |
Floor Price | $80 |
Ceiling Price | $92.50 |
Contract Two [Member] | Collar [Member] | Natural Gas [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 72,000 |
Average Strike Price | |
Floor Price | $4.15 |
Ceiling Price | $4.49 |
Contract Two [Member] | Swap [Member] | Crude Oil [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 20,000 |
Average Strike Price | $90.10 |
Floor Price | |
Ceiling Price | |
Contract Three [Member] | Collar [Member] | Crude Oil [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 2,500 |
Average Strike Price | |
Floor Price | $80 |
Ceiling Price | $95.75 |
Contract Three [Member] | Collar [Member] | Natural Gas [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 60,000 |
Average Strike Price | |
Floor Price | $4.05 |
Ceiling Price | $4.54 |
Contract Three [Member] | Swap [Member] | Crude Oil [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 15,500 |
Average Strike Price | $89.52 |
Floor Price | |
Ceiling Price | |
Contract Four [Member] | Collar [Member] | Crude Oil [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 9,000 |
Average Strike Price | |
Floor Price | $80 |
Ceiling Price | $92.25 |
Contract Four [Member] | Collar [Member] | Natural Gas [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 60,000 |
Average Strike Price | |
Floor Price | $3.90 |
Ceiling Price | $4.14 |
Contract Four [Member] | Swap [Member] | Crude Oil [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 14,600 |
Average Strike Price | $78.65 |
Floor Price | |
Ceiling Price | |
Contract Five [Member] | Collar [Member] | Crude Oil [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 4,500 |
Average Strike Price | |
Floor Price | $80 |
Ceiling Price | $99.40 |
Contract Five [Member] | Swap [Member] | Crude Oil [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 5,000 |
Average Strike Price | $88.55 |
Floor Price | |
Ceiling Price | |
Contract Six [Member] | Collar [Member] | Crude Oil [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 6,000 |
Average Strike Price | |
Floor Price | $85 |
Ceiling Price | $101.30 |
Contract Six [Member] | Swap [Member] | Crude Oil [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 20,000 |
Average Strike Price | $88.10 |
Floor Price | |
Ceiling Price | |
Contract Seven [Member] | Collar [Member] | Crude Oil [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 10,000 |
Average Strike Price | |
Floor Price | $75 |
Ceiling Price | $96 |
Contract Seven [Member] | Swap [Member] | Crude Oil [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 6,400 |
Average Strike Price | $78.96 |
Floor Price | |
Ceiling Price | |
Contract Eight [Member] | Collar [Member] | Crude Oil [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 5,000 |
Average Strike Price | |
Floor Price | $80 |
Ceiling Price | $100.75 |
Contract Nine [Member] | Collar [Member] | Crude Oil [Member] | |
Derivatives, Fair Value [Line Items] | |
Average Volumes (BBls/MMBtu per month) | 15,000 |
Average Strike Price | |
Floor Price | $80 |
Ceiling Price | $100.05 |
Commodity_Derivative_Instrumen3
Commodity Derivative Instruments (Schedule of Fair Value of Derivatives) (Details) (Commodity Contract [Member], USD $) | Nov. 30, 2014 | Aug. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current Assets [Member] | Gross Amount [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Commodity derivative asset | $12,184 | $903 |
Current Assets [Member] | Gross Amount Offset [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Commodity derivative asset | -200 | -538 |
Current Assets [Member] | Net Amount [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Commodity derivative asset | 11,984 | 365 |
Noncurrent Assets [Member] | Gross Amount [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Commodity derivative asset | 4,756 | 718 |
Noncurrent Assets [Member] | Gross Amount Offset [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Commodity derivative asset | -222 | -664 |
Noncurrent Assets [Member] | Net Amount [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Commodity derivative asset | 4,534 | 54 |
Current Liabilities [Member] | Gross Amount [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Commodity derivative liability | 200 | 840 |
Current Liabilities [Member] | Gross Amount Offset [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Commodity derivative liability | -200 | -538 |
Current Liabilities [Member] | Net Amount [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Commodity derivative liability | 302 | |
Noncurrent Liabilities [Member] | Gross Amount [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Commodity derivative liability | 222 | 971 |
Noncurrent Liabilities [Member] | Gross Amount Offset [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Commodity derivative liability | -222 | -664 |
Noncurrent Liabilities [Member] | Net Amount [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Commodity derivative liability | $307 |
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, 2014 | Nov. 30, 2013 |
Commodity Derivative Instruments [Abstract] | ||
Unrealized gain on commodity derivatives | $16,708 | $2,636 |
Realized gain (loss) on commodity derivatives | 1,432 | -398 |
Total gain | $18,140 | $2,238 |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (Recurring [Member], USD $) | Nov. 30, 2014 | Aug. 31, 2014 |
In Thousands, unless otherwise specified | ||
Financial Assets: | ||
Commodity derivative asset | $16,518 | $419 |
Financial Liabilities: | ||
Commodity derivative liability | 609 | |
Level 1 [Member] | ||
Financial Assets: | ||
Commodity derivative asset | ||
Financial Liabilities: | ||
Commodity derivative liability | ||
Level 2 [Member] | ||
Financial Assets: | ||
Commodity derivative asset | 16,518 | 419 |
Financial Liabilities: | ||
Commodity derivative liability | 609 | |
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, 2014 | Nov. 30, 2013 |
Interest Expense [Abstract] | ||
Revolving credit facility | $378 | $251 |
Amortization of debt issuance costs | 137 | 94 |
Less, interest capitalized | -515 | -345 |
Interest expense, net |
Shareholders_Equity_Common_Sto
Shareholders' Equity (Common Stock Transactions) (Details) (USD $) | Nov. 30, 2014 | Aug. 31, 2014 |
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 | 200,000,000 | 200,000,000 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares issued | 79,854,500 | 77,999,082 |
Common stock, shares outstanding | 79,854,500 | 77,999,082 |
Shareholders_Equity_Common_Sto1
Shareholders' Equity (Common Stock Warrants) (Details) (USD $) | 3 Months Ended |
Nov. 30, 2014 | |
Class of Warrant or Right [Line Items] | |
Exercise Price times Number of Shares | $4,671,673 |
Outstanding, August 31, 2014 | 2,562,473 |
Granted | |
Exercised | -1,783,085 |
Expired | |
Outstanding, November 30, 2014 | 779,388 |
Weighted average exercise price, August 31, 2014 | $6 |
Weighted average exercise price, granted | |
Weighted average exercise price, exercised | $6 |
Weighted average exercise price, expired | |
Weighted average exercise price, November 30, 2014 | $6 |
Series D [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $1.60 |
Number of Shares | 1,058 |
Remaining Contractual Life | 1 month 6 days |
Exercise Price times Number of Shares | 1,693 |
Series C [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $6 |
Remaining Contractual Life | 1 month 6 days |
Exercise Price times Number of Shares | $4,669,980 |
Outstanding, November 30, 2014 | 778,330 |
StockBased_Compensation_Detail
Stock-Based Compensation (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Nov. 30, 2014 | Nov. 30, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $793 | $419 |
Term | 10 years | 10 years |
Vesting Period | 5 years | 5 years |
Fair value | 639 | 1,014 |
Summary of activity for stock options: | ||
Outstanding, August 31, 2014 | 2,167,000 | |
Granted | 75,000 | 150,000 |
Exercised | -120,000 | |
Forfeited | ||
Outstanding, November 30, 2014 | 2,122,000 | |
Outstanding, weighted average exercise price | $5.94 | |
Granted, weighted average exercise price | $12.87 | $9.98 |
Exercised, weighted average exercise price | $3.76 | |
Forfeited, weighted average exercise price | ||
Outstanding, weighted average exercise price | $6.31 | |
Weighted average remaining contractual life | 7 years 10 months 24 days | |
Aggregate intrinsic value | 7,958 | |
Assumptions used in valuing stock options: | ||
Expected term | 6 years 6 months | 6 years 6 months |
Expected volatility | 72.00% | 74.00% |
Risk free rate | 1.95% | 1.91% |
Expected dividend yield | 0.00% | 0.00% |
Forfeiture rate | 0.30% | 0.00% |
Vested Options: | ||
Number of shares | 831,100 | |
Weighted average remaining contractual life | 7 years 1 month 6 days | |
Weighted average exercise price | $4.87 | |
Aggregate intrinsic value | 4,115 | |
Unrecognized compensation expense | 5,533 | |
Remaining vesting phase | 3 years 4 months 24 days | |
Stock options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 500 | 419 |
Restricted stock grants [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $293 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Nov. 30, 2014 | Nov. 30, 2013 |
Related Party Transaction [Line Items] | ||
Royalty expense | $53 | $82 |
HS Land & Cattle, LLC [Member] | ||
Related Party Transaction [Line Items] | ||
Rent expense | $45 | $45 |
Other_Commitments_and_Continge1
Other Commitments and Contingencies (Details) (USD $) | 3 Months Ended | |
Nov. 30, 2014 | Nov. 30, 2013 | |
Long-term Purchase Commitment [Line Items] | ||
Expected future costs | $9,100,000 | |
Accrued well costs | 69,511,000 | 26,813,000 |
Future Wells [Member] | ||
Long-term Purchase Commitment [Line Items] | ||
Accrued well costs | $5,400,000 |
Supplemental_Schedule_of_Infor2
Supplemental Schedule of Information to the Statements of Cash Flows (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Nov. 30, 2014 | Nov. 30, 2013 |
Supplemental cash flow information: | ||
Interest paid | $321 | $251 |
Income taxes paid | 110 | |
Non-cash investing and financing activities: | ||
Accrued well costs | 69,511 | 26,813 |
Assets acquired in exchange for common stock | 9,898 | |
Asset retirement costs and obligations | $269 | $692 |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 3 Months Ended | 0 Months Ended |
Nov. 30, 2014 | Dec. 15, 2014 | |
Subsequent Event [Line Items] | ||
Total borrowing commitment | $300,000,000 | $500,000,000 |
Borrowing base | 110,000,000 | 230,000,000 |
Exercise of warrants, shares | 120,000 | |
Minimum [Member] | ||
Subsequent Event [Line Items] | ||
Revolving credit facility, additional rate over variable | 2.50% | |
Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Total borrowing commitment | 500,000,000 | |
Borrowing base | 230,000,000 | |
Revolving credit facility, additional rate over variable | 2.50% | |
Increase in borrowings | 66,200,000 | |
Total consideration | 125,000,000 | |
Cash payment for acquisition | 75,000,000 | |
Business acquisition, shares issued | 4,648,136 | |
Business acquisition, shares issued, value | 50,000,000 | |
Exercise of warrants, shares | 778,000 | |
Exercise of warrants, value | $4,700,000 | |
Subsequent Event [Member] | Codell And Niobrara [Member] | ||
Subsequent Event [Line Items] | ||
Mineral acres, gross | 5,040 | |
Mineral acres, net | 4,053 | |
Subsequent Event [Member] | Sussex Shannon And JSands [Member] | ||
Subsequent Event [Line Items] | ||
Mineral acres, gross | 2,400 | |
Mineral acres, net | 1,739 | |
Subsequent Event [Member] | Horizontal Wells [Member] | Minimum [Member] | ||
Subsequent Event [Line Items] | ||
Ownership interest | 6.00% | |
Subsequent Event [Member] | Horizontal Wells [Member] | Maximum [Member] | ||
Subsequent Event [Line Items] | ||
Ownership interest | 40.00% | |
Subsequent Event [Member] | Vertical Wells [Member] | Minimum [Member] | ||
Subsequent Event [Line Items] | ||
Ownership interest | 5.00% | |
Subsequent Event [Member] | Vertical Wells [Member] | Maximum [Member] | ||
Subsequent Event [Line Items] | ||
Ownership interest | 100.00% |