Synergy Resources Corporation (NYSEMKT:SYRG) is sending signals of strength to investors. Synergy reported a record net income during Q2 2012 of $6.1 million, or $0.13 per share. The company's net production has increased 183% from Q2 2011 and it has added 101 wells since Feb. 29, 2011.
Synergy is primed to take advantage of a bull move in oil prices or natural gas prices. Either of these energy markets can and have been impacted by unforeseen supply shocks that spike prices. Synergy is a small-cap company with a relatively large amount of reserves. A supply disruption event could send its stock price soaring.
Synergy is well positioned. Its major zones of production are the Wattenberg Field, the Niobrara shale formation, and the Dener-Julesburg Basin. The D-J Basin and the Wattenberg Field have proved themselves to be profitable over the years, and Synergy's management has over 30 years experience in the D-J Basin. Synergy's interest in the Niobrara formation will utilize horizontal drilling techniques in order to hopefully tap into the rich resources located there. In summary, Synergy is a unique blend of consistent production growth and explosive profit potential.
For numbers people, here are the reserve estimates:
Synergy has 69.56 million shares outstanding. According to its own reserve estimates as seen above, the company's net income per share is 270.444 million/69.56 million = 3.887. Even using the discount rate (-10%), the net income per share is 122.576 million / 69.56 million = 1.76. As you can see, these numbers are pre-tax, but still extremely strong fundamental indicators for the value and growth of Synergy's stock value.
Remember, foresight is the father of insight.
Disclosure: I am long SYRG.