In a cyclical industry in the midst of a downturn, there’s a saying that goes: “You never get killed outrunning the bear.” And along these lines, Permian-focused Diamondback Energy Inc. (NASDAQ: FANG) chose to test the equity market early this year—soon to be followed by Niobrara-focused Synergy Resources Corp. (NYSE MKT: SYRG)—with the two companies triggering what became a torrent of equity issuance by other E&Ps.

Both Diamondback and Synergy spoke at the Roth Conference in California last week, touching on the importance of maintaining a strong balance sheet, especially in an environment in which opportunistic acquisitions might arise. The two led a trend of equity issuance starting in January, with Diamondback and Synergy raising gross proceeds of about $122 million and $200 million, respectively.

“The guy that survives in the cyclical oil and gas industry is the one with a fortress balance sheet and low cost operations, and that’s what Diamondback has always positioned itself to be,” said Adam Lawlis, Diamondback’s investor relations executive.

Diamondback’s recent equity offering strengthened an already strong balance sheet, noted Lawlis, with the company’s ratio of net debt-to-EBITDA declining to 1.2x, pro forma for the equity raise and using mean analyst estimates for 2015 adjusted EBITDA. This low leverage level compares to an average of 1.9x net debt-to-estimated 2015 adjusted EBITDA for its Permian peers.

At its latest borrowing base redetermination, the borrowing base for Diamondback was raised to $750 million, but the company elected to limit its commitment amount to $500 million, Lawlis said. With cash of $30 million at year-end, and its borrowings standing at $104 million, the company had $426 million in liquidity. In addition, Diamondback has the ability to use its 88% ownership in Viper Energy Partners LP (NASDAQ: VNOM) for further liquidity; at year-end, the latter had an undrawn borrowing base of $110 million.

The overall strong financial position means Diamondback is “positioned to quickly move on meaningful accretive acquisitions of distressed assets,” according to Lawlis.

Operationally, Diamondback is returning remarkable results in its key Spanish Trail area of the Midland Basin, where 65% to 75% of its activity this year will be targeting the Lower Spraberry.

At recent West Texas Intermediate (WTI) prices of about $50 per barrel (bbl), and assuming recent well costs, Lawlis said Diamondback is generating returns of 50% and higher, based on Ryder Scott EURs of 990 Mboe, recently raised from 650 Mboe.

However, in areas where it also owns mineral rights through its Viper subsidiary, rates of return move up significantly to 100% to 125%, while breakeven costs in Spanish Trail are below $30/bbl, he said.

In addition to its Lower Spraberry acreage in Midland County, Diamondback has also achieved robust results in the play in northern Martin and northeastern Andrews counties. EURs here are put at 800 Mboe by Ryder Scott, but results are trending higher and EURs could approach those of Lower Spraberry wells in Midland County, according to Lawlis.

Even with dropping from five to three horizontal rigs, as it waits for oilfield service costs to come down further, Diamondback projects 2015 production at the midpoint of guidance to show 40% growth vs. last year, and to be generating cash flow in excess of capex in the second half of 2015.

“We’re aggressively pursuing incremental service cost concessions, and we expect to reach positive cash flow and be self-funding in the back half of this year,” said Lawlis.

Synergy also puts a priority on a strong balance sheet, with a low debt-to-market capitalization of less than 15%, pro forma for its recent equity raise and total debt outstanding as of mid-February. Bill Scaff, co-CEO at Synergy, noted the firm’s debt carried an average interest rate of less than 3%. Liquidity is put at $403 million, based on the firm’s cash as of last November, analysts’ estimates of the firm’s cash flow, availability on its borrowing base and proceeds from the equity raise.

After its recent capital raise, Synergy was “opportunity rich,” said Scaff. “It gives us a lot of opportunities on which we think we’ll be able to execute. And we’re starting to see those opportunities develop.”

In terms of returns on its drilling, focused predominately on the Niobrara, Synergy targets projects with a cash-on-cash payout of less than three years. At current strip pricing and a $3.3 million well cost, wells were paying out in 29 months, he said, with payout dropping to 22 months if well costs fall to Synergy’s targeted level of $2.9 million. He estimated the firm’s cost structure was 10% to 20% below industry levels.

Relative to a base of 39 completed horizontal wells in the Wattenberg Field, Synergy has the potential for as many as 40 additional wells to come on production by the end of its fiscal year on Aug. 1. The company is currently drilling 11 wells on its Cannon pad, due to finish in late May, while completion of 29 wells is due to begin in mid-March. This will start with the Kien/Weis pad, moving to the Geis pad in May, when the DCP Midstream-operated Lucerne plant is due to be online.

In addition to Niobrara and Codell formations in the Wattenberg Field, Synergy has plans to test the Greenhorn Formation in the Wattenberg Extension area. The test will target the lower 30 feet of a 90-foot Greenhorn section and is expected to be drilled in May. Synergy recently added 10,000 net acres to its leasehold, which has increased to 38,422 net acres following a recent transaction with its nonoperating partner. Synergy now holds a 65% working interest.

Additional upside is seen in the firm’s Nebraska conventional oil play, where Synergy has an agreement with a private operator to participate in up to 10 wells covering 8,000 net acres in Dundee County. The vertical wells are estimated to cost $550,000 to 650,000 apiece, with Synergy paying three-eighths of the well cost and retaining a 50% working interest and an overriding royalty. Activity began in January, with first results expected in about 60 days. “The play is probably 98% oil,” said Holloway.

In terms of acquisition opportunities, “what we’re really hearing is more talk of consolidations and bigger deals,” said Holloway. “There’s a lot of chatter amongst the operators about the best way to go. We’re in such a good position with our lower G&A that a lot of things are accretive to us.”

In the current environment, in which Synergy has dropped down from three rigs to one, “cash is king,” emphasized Holloway. “You’ve got to protect cash.”

But with $407 million in liquidity, Synergy has the “financial flexibility to fund opportunistic acquisitions and ramp up development when returns justify additional capital allocation,” he said.