PLATTEVILLE, Colo., Oct. 26, 2012 /PRNewswire/ -- Synergy Resources Corporation (NYSE Mkt: SYRG), a U.S. oil and gas exploration and production company focused on the Denver- Julesburg (D-J) Basin, has entered into a definitive agreement to purchase from Orr Energy 36 producing oil and gas wells in the Wattenberg Field of the Denver-Julesburg Basin.
Under the terms of the agreement, Synergy will pay a total consideration of $42 million, comprised of $30 million in cash and $12 million in shares of Synergy's common stock. The purchase price is subject to usual closing adjustments and conditions. The transaction is expected to close at the end of November.
The combined 36 oil and gas wells are currently producing at an average rate of 360 BOE/D, with the oldest well in the field producing since 2006. All of the wells have been drilled vertically to the Codell, Niobrara and/or J-Sand formations. Synergy will be the operator on 35 of the 36 wells.
The acquisition includes leases covering a total of approximately 3,933 gross (3,196 net) acres. 2,191 of these net acres are in the core of the Wattenberg field, adjoining or near existing Synergy leased or producing acreage. Given the 20 acre spacing for vertical wells on this acreage, there is the potential to drill approximately 75 new vertical wells, and based on 80 acre spacing for horizontal wells, there is the potential to drill 55 Codell / Niobrara horizontal wells.The other 1,005 net acres are northeast of the Wattenberg field in Grover, Colorado. Management plans to use existing seismic data acquired in the transaction to establish a drilling program for new vertical and horizontal wells on this acreage. These leases are near other operators where existing production is 85% oil.