Synergy Begins Horizontal Drilling Program in Wattenberg

Source: 5/16/2013, Location: North America

Synergy Resources Corporation, a Colorado-based oil and gas company with assets in the Denver-Julesberg Basin and Southwestern Nebraska, commenced its operated horizontal drilling program on May 16th with the rigging up of Ensign Rig #17 to begin drilling the SRC Renfroe 32-1-36NHZ well on its Renfroe lease in the Wattenberg Field. Synergy's initial plan is to drill five wells from one pad site on the Renfroe lease comprised of three Niobrara and two Codell wells.

The wells will be approximately 4,700 feet in lateral length and Synergy anticipates there will be between 16-20 frac stages per lateral. All the wells are being drilled under the terms of a turnkey contract with Ensign United States Drilling.

William Scaff, Jr., Executive Vice President of Synergy, commented, "We are excited to begin Synergy's operated horizontal drilling program at a time which we feel is ideal for the company as the returns on investment in the Wattenberg Field rival those of any other resource play in the United States. The industry is still in the early stages of unlocking the potential of the Niobrara and Codell formations in the Wattenberg Field as different spacing densities within multiple formations are still being delineated.

We remain active on a non-operated basis, having participated in ten producing horizontal wells to date. We also have a working interest in four more wells currently being drilled and have been notified on another fifty potential horizontal wells that will be drilled by other companies including Noble Energy, PDC Energy, Bill Barrett Corp., Carrizo and others. With this experience in hand, combined with utilizing service providers that have been working with the largest operators in the play, Synergy's goal is to drill and complete horizontal wells in the Wattenberg Field at lower than industry average historical costs."

Craig Rasmuson, VP of Operations, added, "Our Renfroe lease provides Synergy with the opportunity to begin its horizontal drilling within an area of the Wattenberg Field that has demonstrated a high production mix of oil and natural gas liquids. We recently participated with PDC Energy in three horizontal Codell wells on leases that are either adjacent to, or within one mile of the Renfroe lease.

These wells are currently in flow back or final stages of completion and we will watch their performance closely as we prepare for the completion of the five Renfroe wells later this summer. Synergy's non-operated working interest in the three wells is as follows: 65% in the Leffler 26Q-421, 56% in the Leffler 26T-421 and 13% in the Leffler 34-1CH. We participated with Noble Energy on the Sebastyen PC 023-63HC, a horizontal Codell well located in the Wattenberg Field that is currently in early stages of production. We have a 25% working interest in the Sebastyen well. We intend to continue our operated drilling program beyond the Renfroe wells and we have sixteen permits submitted for future horizontal wells in the Wattenberg Field and another thirty permits in process for submission."

Ed Holloway, President and CEO, commented, "While the pace of activity in the Wattenberg Field is impressive, there are also encouraging developments in the other areas where we have acreage positions. In the Northern DJ Basin area offset operators such as Whiting Petroleum and Noble Energy have announced promising results and are in the process of testing tighter spacing between the wells to determine best practices to enhance recovery rates. In this area we have participated as a non-operator in several wells in which we have fractional working interest percentages.

Thus we will gain valuable insight without a great deal of capital expenditure as we contemplate our initial operated drilling activity in this area for fiscal 2014. In summary, we are in a great position to harvest the potential of the assets we have assembled in the Wattenberg Field and the Northern DJ Basin and we look forward to keeping the public apprised of our progress in the coming months."

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