Synergy Boosts Production in 2011

Synergy provided the following year-end update.

2011 Year-End Highlights

  • Reached daily production goal of 1,000 barrels of oil equivalent per day (boepd) at the end of August, 2011, an increase of approximately 300% over 2010.
  • Brought into production 108 gross wells (79 net wells), and ended the year with 132 producing wells (95 net producing wells).
  • As an operator, successfully drilled and completed 14 wells with 6 additional wells drilled and in the completion phase at year end.
  • Added 57 net wells via acquisition or participation.
  • Increased acreage position from 12,500 net acres in 2010 to 160,000 net acres in 2011.
  • Generated cash from the sale of 3,739 net undeveloped acres in the D-J Basin for approximately $8.6 million.
  • Completed a farm-in agreement for 640 acres in the Wattenberg field.
  • Synergy's common stock listed on the NYSE/AMEX on July 27, 2011

Production Growth from Drilling Activities & Acquisitions

For the fiscal year ending August 31, 2011, Synergy Resources successfully drilled 20 vertical / directional wells in the Codell, J-Sand and Niobrara formations. The Company has a 100% drilling success rate on the 56 total wells drilled to date. The 14 new wells placed on line increased Synergy's 2011 production exit rate to 1,000 boepd compared to a 2010 exit rate of 250 boepd.

In August 2011, the Company expanded its core Wattenberg Field and Niobrara development potential through its DeClar Oil and Gas Farm-In agreement. This agreement provides an immediate 42 drilling locations, as well as the potential for four horizontal Niobrara wells on the 640 acre Farm-In. The Company continues to leverage its expertise and proven track record as Synergy plans to expand its drilling program to include horizontal Niobrara wells.

Ed Holloway, Chief Executive Officer and President of Synergy, stated, "Fiscal 2011 was an excellent year at Synergy Resources. We executed on all aspects of our business model by increasing production, and expanding our acreage position in the D-J Basin, as well as the core of the Wattenberg. Looking forward to 2012, I'm confident of our Company's growth prospects. We've built a platform for growth in one of the most attractive liquid rich basins in the U.S. Our growing inventory of prospects creates compelling opportunities for 2012 and beyond."

Lease and Acreage Expansion in the D-J Basin

Since fiscal year end August 31, 2010, the Company has increased its leasehold from 12,500 net acres to more than 160,000 net acres as of August 31, 2011. Synergy will continue to target leasehold positions that fit its low cost, liquids-rich objectives. In 2011, the Company sold non-core, undeveloped oil and gas leases in the D-J Basin for $8.6 million. Proceeds from this sale were used to fund the drilling and expansion efforts in the Wattenberg field.

In May 2011, Synergy purchased from Petroleum Exploration & Management, LLC assets consisting of 88 producing oil and gas wells (40 net wells), and oil and gas leases covering approximately 6,968 gross acres (4,554 net acres) in the D-J Basin. An additional 17 net wells were purchased in other transactions during the year.

George Seward, Director and Acquisition Committee Chairman of Synergy, commented, "We feel the acquisition of 57 net wells in the heart of the Wattenberg field provides Synergy additional low risk opportunities for growth. These wells, which are great recompletion candidates, coupled with our additional acreage acquisitions in 2011, provide a platform for the company to continue to execute its objectives of growing reserves and production at a low cost to deliver shareholder value. We are also excited about the additional horizontal Niobrara potential that we have identified on our acreage.


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