SYRG

Publicly traded companies mentioned herein: Anadarko Petroleum Corp (APC), Bill Barrett Corporation (BBG), Noble Energy (NBL), Synergy Resources Corp (SYRG), Whiting Petroleum (WLL)

Highlights

The presenter is long shares of Synergy Resources Corp (SYRG) based on his belief that Ballot Proposal #78 (aka Initiative 78) will ultimately fail to make its way into law, and thus it will not negatively impact Oil & Gas development in the state of Colorado. The “big issue” right now is that CREED (Coloradans Resisting Extreme Energy Development) is collecting signatures in an effort to get this initiative on the ballot, and needs to reach 98,492 (5% of the votes from the last general election). This initiative is important because it would increase setbacks to 2,500 feet from occupied structures and areas of special concern (i.e., lakes, rivers, playgrounds, sports fields, etc.) and this restriction would make 90% of land in Colorado undrillable. If CREED cannot get the signatures required then presumably the Oil & Gas industry will have been successful in convincing Coloradans that the Initiative is not in the state’s best interests. In this scenario, shares of SYRG, the fastest growing operator in the Wattenberg, should see meaningful gains up to $10.25 (0.85x NAV) from present levels (~$6.50, 53% of NAV). The deadline for getting the signatures in is August 8, 3:00 PM (MT), and then the Secretary of State has until 12:00 PM on September 7 to approve whether or not Proposal 78 gets on the November 8, 2016 ballot.