Synergy Resources is an oil and gas operator with a market capitalization of approximately $400 million. Shares have risen approximately 137% in the last 52 weeks, yet insiders are still buying in large quantities at the current market price. Synergy Resources’ oil and gas efforts are focused on the Wattenberg Field located at the Denver-Julesburg Basin in Northeast Colorado.
Two insiders have purchased a total of $674,000 worth of stock on the open market during January. Board member Rick Wilbur recently purchased 50,000 shares of stock at $5.86 per share. The total transaction value amounted to $293,000 when the stock was purchased on January 16. Wilbur’s business experience lies in the management of development stage companies and is not unique to the oil and gas industry. Wilbur co-founded Champs Sporting Goods in 1974 and also serves on the board of directors at Ultimate Software Group, a private technology company. Wilbur also served on the board of a pharmaceutical company that was sold to Watson Pharmaceuticals, the generic pharmaceutical giant. Rick Wilbur has been on Synergy Resources’ board of directors since September 2008.
Board member George Seward, an oil and gas industry veteran, purchased 15,000 shares of stock at approximately $5.88 per share. The total transaction value amounted to $88,150 when the stock was purchased on January 15 and 16.
Seward came back a week later and bought 50,000 more shares of stock at $5.86 per share on January 24. The cost of the second transaction amounted to $293,000, bringing his total purchases in January to nearly $400,000 of stock. Seward has been a board member at Synergy Resources since July 2010.
On a fundamental basis, Synergy Resources reported first quarter 2013 results on January 9. Revenue rose 86% to $8.3 million, while net income increased 38% to $2.2 million or $0.04 per share.
The mean analyst price target is $7.36, with the highest price target at $10 per share and the lowest target at $6.50. Equity research firm Northland Capital Markets has the highest price target on Wall Street, and the firm raised their price target to $10 as recently as Friday, February 1.
Revenue has grown approximately 120% in the last year at Synergy Resources, while earnings per share has exploded higher at a 150% annual growth rate. The company is continuing to expand its drilling program in the D-J Basin, which is the reason for the massive increase in earnings and revenue. Net oil and gas production increased 89% to 150,909 barrels of oil equivalent (BOE) during the first quarter of 2013, compared to the identical prior year period.