Exhibit 99.2
SYNERGY RESOURCES CORPORATION
PRO FORMA FINANCIAL INFORMATION
(Unaudited)
Property Acquisition
On October 23, 2012, Synergy Resources Corporation, (the "Company") entered into
a definitive purchase and sale agreement ("the Agreement"), with ▇▇▇ Energy, LLC
("▇▇▇"), for its interests in 36 producing oil and gas ▇▇▇▇▇ and approximately
3,933 gross (3,196 net) mineral acres (the "▇▇▇ Assets"). On December 5, 2012,
the Company closed the transaction for a combination of cash and stock. ▇▇▇
received 3.1 million shares of the Company's common stock valued at $13.5
million and cash consideration of approximately $28.5 million.
Unaudited Pro Forma Condensed Combined Financial Statements
The following unaudited pro forma financial statements and related footnotes
give effect to the acquisition of the ▇▇▇ Assets. The unaudited pro forma
balance sheet presents the unaudited Balance Sheet of Synergy as of November 30,
2012, combined with the impact of the ▇▇▇ acquisition that closed on December 5,
2012. The unaudited pro forma statements of operations reflect the acquisition
of the ▇▇▇ Assets as if it had occurred on September 1, 2011.
The unaudited pro forma adjustments are based upon currently available
information and certain assumptions that the Company believes to be reasonable
under the circumstances. Pursuant to Regulation S-X, Article 11, of the
Securities and Exchange Commission, pro forma adjustments include the effects of
events that are directly attributable to the acquisition and are factually
supportable. As actual adjustments may differ from pro forma adjustments, the
unaudited pro forma combined financial information has been prepared for
informational purposes only. It is not intended to be indicative of the
Company's results of operations or financial position that might have been
achieved had the acquisition been completed as of the dates presented, or the
Company's future results of operations or financial position.
These unaudited pro forma condensed combined financial statements should be read
in conjunction with the Company's Annual Report on Form 10-K for the year ended
August 31, 2012, as filed on November 14, 2012.
1
SYNERGY RESOURCES CORPORATION, ▇▇▇ ASSETS
ACQUIRED FROM ▇▇▇ ENERGY, LLC
Unaudited Pro Forma Condensed Combined Balance Sheet
As of November 30, 2012
(in thousands)
Acquired
▇▇▇
Assets
Synergy Pro Synergy
Resources Forma Resource
ASSETS Historical Adjustments Combineds
-------- ----------- --------
(Note 2)
Current assets:
Cash and cash equivalents $ 12,465 $ - $ 12,465
Accounts receivable 8,959 520 (a) 9,479
Other current assets 397 186 (a) 583
-------- --------- --------
Total current assets 21,821 706 22,527
Property and equipment
Oil and gas properties 105,952 42,064 (a) 148,016
Other property and equipment, net 262 50 (a) 312
-------- --------- --------
Property and equipment, net 106,214 42,114 148,328
Other assets 2,707 - 2,707
-------- --------- --------
Total assets $130,742 $ 42,820 $ 173,562
======== ========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 18,511 $ - $ 18,511
Other accrued expenses 248 563 (a) 811
-------- --------- --------
Total current liabilities 18,759 563 19,322
Revolving credit facility 5,486 28,538 (b) 34,024
Deferred tax liability, net 983 - 983
Asset retirement obligations 1,171 204 (a) 1,375
-------- --------- --------
Total liabilities 26,399 29,305 55,704
Shareholders' equity:
Common stock - $0.001 par value, 100,000,000 shares authorized:
Issued and outstanding: 51,740,310 shares as of November 30, 2012 and
54,868,732 after pro forma
adjustments 52 3 (c) 55
Additional paid-in capital 124,868 13,512 (c)138,380
Accumulated deficit (20,577) - (20,577)
-------- --------- --------
Total shareholders' equity 104,343 13,515 117,858
-------- --------- --------
Total liabilities and shareholders'
equity $130,742 $ 42,820 $ 173,562
======== ========= ========
See accompanying Notes to Unaudited Pro Forma Financial Statements.
2
SYNERGY RESOURCES CORPORATION, ▇▇▇ ASSETS
ACQUIRED FROM ▇▇▇ ENERGY, LLC
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended August 31, 2012
(in thousands, except share and per share data)
Synergy Acquired Synergy
Resources ▇▇▇ Pro Forma Resources
Historical Assets Adjustments Combined
---------- -------- ---------- ----------
(a) (Note 3)
Revenues:
Oil and gas revenues $ 24,969 $ 7,682 $ - $ 32,651
-
Operating
expenses: -
Oil and gas production 3,648 1,089 - 4,737
Depletion, depreciation,
and amortization 6,010 - 2,514 (b) 8,524
General and administrative 3,557 - - 3,557
---------- -------- ---------- ----------
Total Expenses 13,215 1,089 2,514 16,818
---------- -------- ---------- ----------
Operating income 11,754 6,593 (2,514) 15,833
---------- -------- ---------- ----------
Other income
Interest income (expense) 38 - (926) (c) (888)
---------- -------- ---------- ----------
Income before income taxes 11,792 6,593 (3,440) 14,945
Income tax benefit (provision) 332 - (1,167) (d) (835)
---------- -------- ---------- ----------
Net income $ 12,124 $ 6,593 $(4,607) $ 14,110
========== ======== ========== ==========
Earnings per common share:
Basic $ 0.26 $ - $ - $ 0.28
========== ======== ========== ==========
Diluted $ 0.25 $ - $ - $ 0.27
========== ======== ========== ==========
Weighted average shares
outstanding:
Basic 46,587,558 - 3,128,422 (e) 49,715,980
Diluted 48,359,905 - 3,128,422 (e) 51,488,327
See accompanying Notes to Unaudited Pro Forma Financial Statements.
3
SYNERGY RESOURCES CORPORATION, ▇▇▇ ASSETS
ACQUIRED FROM ▇▇▇ ENERGY, LLC
Unaudited Pro Forma Condensed Combined Statement of Operations
For the three months ended November 30, 2012 (in
thousands, except share and per share data)
Synergy Acquired Synergy
Resources ▇▇▇ Pro Forma Resources
Historical Assets Adjustments Combined
----------- -------- ---------- -----------
(a) (Note 4)
Revenues:
Oil and gas revenues $ 8,314 $ 1,464 $ - $ 9,778
-
Operating expenses: -
Oil and gas production 1,337 263 - 1,600
Depletion, depreciation,
and amortization 2,320 - 477 (b) 2,797
General and administrative 1,111 - - 1,111
----------- -------- ---------- -----------
Total Expenses 4,768 263 477 5,508
----------- -------- ---------- -----------
Operating income 3,546 1,201 (477) 4,270
----------- -------- ---------- -----------
Other income
Interest income (expense) 7 - (232) (c) (225)
----------- -------- ---------- -----------
Income before income taxes 3,553 1,201 (709) 4,045
Income tax provision (1,315) - (182) (d) (1,497)
----------- -------- ---------- -----------
Net income $ 2,238 $ 1,201 (891) $ 2,548
=========== ======== ========== ===========
Earnings per common share:
Basic $ 0.04 $ - $ - $ 0.05
=========== ======== ========== ===========
Diluted $ 0.04 $ - $ - $ 0.04
=========== ======== ========== ===========
Weighted average shares
outstanding:
Basic 51,661,704 - 3,128,422 (e)54,790,126
Diluted 53,616,182 - 3,128,422 (e)56,744,604
See accompanying Notes to Unaudited Pro Forma Financial Statements.
4
SYNERGY RESOURCES CORPORATION
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
Note 1 -- Financial Statement Presentation and Preliminary Purchase Price
Allocation The unaudited pro forma balance sheet presents the ▇▇▇ Assets
acquisition that closed on December 5, 2012, as if the acquisition had occurred
on November 30, 2012. The unaudited pro forma statements of operations for the
year ended August 31, 2012 and for the three months ended November 30, 2012 were
derived from the unaudited statements of revenues and direct operating expenses
of the ▇▇▇ Assets for the twelve month period ended June 30, 2012, and the three
month period ended September 30, 2012, together with pro forma adjustments to
give effect to the acquisition as if it occurred on September 1, 2011.
These unaudited pro forma combined financial statements are provided for
illustrative purposes and do not purport to represent what the Company's results
of operations or financial position would have been if such transactions had
occurred on the above mentioned dates. These statements were prepared based on
accounting principles generally accepted in the United States. The use of
estimates is required and actual results could differ from the estimates used.
The Company believes the assumptions used provide a reasonable basis for
presenting the significant effects directly attributable to the acquisition.
The following purchase price allocation for the ▇▇▇ Assets is preliminary and
includes significant use of estimates. Management has not yet had the
opportunity to complete its assessment of the fair values of the assets acquired
and liabilities assumed. Accordingly, the allocation will change as additional
information becomes available and is assessed by Management, and the impact of
such changes may be material. The following table summarizes the preliminary
purchase price and preliminary estimated values of assets acquired and
liabilities assumed (in thousands, except share data):
5
December 5,
Preliminary Purchase Price 2012
----------------
Consideration Given
Cash $ 28,538
Synergy Resources Corp. Common Stock * 13,515
----------------
Total consideration given $ 42,053
================
Preliminary Allocation of Purchase Price
Proved oil and gas properties $ 40,317
Unproved oil and gas properties 1,747
Other property and equipment, net 50
----------------
Total fair value of oil and gas properties acquired 42,114
Working capital $ 143
Asset retirement obligation (204)
----------------
Fair value of net assets acquired $ 42,053
================
Working capital acquired was estimated as follows:
Accounts receivable 520
Crude oil inventory 186
Accrued liabilities and expenses (563)
----------------
Total working capital $ 143
================
* 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 December 5, 2012. (3,128,422 shares at $4.32 per share)
Note 2 -- Adjustments to Pro Forma Condensed Combined Balance Sheet
(a) Reflects the pro forma allocation of the preliminary purchase price
for the acquired properties to the acquired net assets and assumed
liabilities based on the initial fair values, pending completion of
the valuation analysis.
(b) Reflects additional borrowings to fund the cash component of
consideration given.
(c) Reflects the issuance of common stock to ▇▇▇ as partial consideration
for
the acquired properties.
Note 3 -- Adjustments to Pro Forma Condensed Combined Statement of Operations
for the Year Ended August 31, 2012
(a) Operating revenues and direct operating expenses of the ▇▇▇ Assets for
the period July 1, 2011 to June 30, 2012.
(b) Reflects additional depletion, depreciation, and amortization expense
attributable to the ▇▇▇ Assets based on the preliminary purchase price
allocation.
(c) Reflects adjustment of interest expense based on borrowings of $28.5
million at an interest rate of 3.25% per annum for twelve months.
6
(d) Reflects adjustment to the income tax provision for the estimated
impact of the acquired properties' revenue and direct operating
expenses. Income taxes were adjusted using a combined federal and
state tax rate of 37%.
(e) Reflects the issuance of common stock to ▇▇▇ as partial consideration
for the acquired properties.
Note 4 -- Adjustments to Pro Forma Condensed Combined Statement of Operations
for the Three Months Ended November 30, 2012
(a) Operating revenues and direct operating expenses of the ▇▇▇ Assets for
the period July 1, 2012 to September 30, 2012.
(b) Reflects additional depletion, depreciation, and amortization expense
attributable to the ▇▇▇ Assets based on the preliminary purchase price
allocation.
(c) Reflects adjustment of interest expense based on borrowings of $28.5
million at an interest rate of 3.25% per annum for three months.
(d) Reflects adjustment to the income tax provision for the estimated
impact of the acquired properties' revenue and direct operating
expenses. Income taxes were adjusted using a combined federal and
state tax rate of 37%.
(e) Reflects the issuance of common stock to ▇▇▇ as partial consideration
for the acquired properties.
