SOURCE: Emerald Oil, Inc.

Emerald Oil, Inc. Logo

November 04, 2015 18:00 ET

Emerald Oil Reports Third Quarter 2015 Financial and Operational Results and Guidance Increase

DENVER, CO--(Marketwired - November 04, 2015) - Emerald Oil, Inc. (NYSE MKT: EOX) ("Emerald" or the "Company") today announced financial and operational results for the quarter ended September 30, 2015.

Highlights

  • Third quarter production of 523,202 BOE increased 49% as compared to 351,755 BOE in the third quarter of 2014. Daily production averaged 5,687 BOEPD, 17% above the midpoint and 14% above the high end of Emerald's third quarter 2015 guidance range;
  • 2015 fourth quarter production guidance raised 500 Boe/d to 4,700 - 5,000 Boe/d;
  • Reduction of per unit LOE costs during the third quarter of 2015 to approximately $12.96 per BOE, a decrease of 31% compared to the second quarter of 2015;
  • Third quarter oil and natural gas revenue of $17.8 million, not including effect of settled derivatives;
  • Third quarter Adjusted EBITDA of $5.9 million

Third Quarter 2015 Production

For the third quarter of 2015, Emerald's total production volumes on a BOE basis increased 49% as compared to the third quarter of 2014. During the third quarter of 2015, Emerald realized a $37.65 average price per Bbl of oil (including settled derivatives) compared to an $82.61 average price per Bbl of oil during the third quarter of 2014.

    
   Quarter Ended September 30,
   2015   2014
Sales Volume (Total)       
Oil (Bbls)   496,829    338,352  
Gas (Mcf)   158,240    80,417  
Sales volumes (Boe)   523,202    351,755  
            
Average Daily Sales           
Oil (Bbls)   5,400    3,678  
Gas (Mcf)   1,720    874  
Sales volumes (Boe)   5,687    3,823  
            
Average Sales Prices           
Oil (Bbl)  $34.92   $83.54  
Effect of Settled Oil Derivatives   2.73    (0.93 )
Oil Net of Settled Derivatives (Bbl)  $37.65   $82.61  
Gas (Mcf)  $3.13   $5.73  
Barrel of Oil Equivalent with Settled Derivatives  $36.70   $80.78  
         

Financial Results

Revenues from sales of oil and natural gas for the third quarter of 2015 were $17.8 million compared to $28.7 million for the same period in 2014. The decrease was due to lower realized crude oil prices during the third quarter of 2015. Crude oil revenue accounted for approximately 97% of oil and natural gas sales.

Lease operating expenses for the third quarter of 2015 were $6.8 million compared to $4.5 million for the same period in 2014. On a per unit basis, lease operating expenses were $12.96 per BOE in the third quarter of 2015 compared to $12.70 per BOE in the third quarter of 2014. Emerald also incurred workover expenses for the third quarter of 2015 of $1.4 million, or $2.71 per BOE.

General and administrative expenses for the third quarter of 2015 were $3.8 million compared to $5.5 million for the same period in 2014. On a per unit basis, G&A expenses (excluding non-cash stock-based compensation) were $6.50 per BOE in the third quarter of 2015 compared to $7.58 per BOE in the third quarter of 2014. Share-based compensation expenses, which are included in G&A expense, totaled $0.4 million in the third quarter of 2015 compared to $2.8 million for the same period in 2014.

Adjusted EBITDA was $5.9 million for the third quarter of 2015, as compared to $15.3 million for the same period in 2014. Adjusted Net Income (Loss) was $(12.1) million for the third quarter of 2015. Emerald recognized a $158.3 million non-cash impairment expense for the quarter ended September 30, 2015 due primarily to the substantial declines in commodity prices. Adjusted EBITDA and Adjusted Net Income (Loss) are non-GAAP financial measures. For additional information please refer to the reconciliation of these measures at the end of this news release.

Revolving Credit Facility Update

The Company and its advisors are continuing to work with the bank group regarding a payment schedule for the previously announced borrowing base deficiency of $19.6 million. Additionally, Emerald and its advisors are working with a group of second lien term providers for a term debt solution to address both the borrowing base and working capital.

Conference Call

Emerald will host a conference call on Thursday, November 5, 2015 at 9:30 a.m. Eastern Time (7:30 a.m. Mountain Time) to discuss financial and operational results for the quarter end.

 
Emerald Oil, Inc. 3Q2015 Financial and Operational Results Conference Call
Date:   Thursday, November 5, 2015
Time:   9:30 a.m. Eastern Time
  8:30 a.m. Central Time
  7:30 a.m. Mountain Time
  6:30 a.m. Pacific Time
Webcast:   Live and rebroadcast over the Internet at the Emerald Oil website
Website:   www.emeraldoil.com
Telephone Dial-In:   877-407-8831 (toll-free) and 201-493-6736 (international)
 
Telephone Replay:   Available through Thursday, November 12, 2015
  877-660-6853 (toll-free) and 201-612-7415 (international)
  Passcode: 413333
   

About Emerald

Emerald is an independent exploration and production operator that is focused on acquiring acreage and developing wells in the Williston Basin of North Dakota and Montana, targeting the Bakken and Three Forks shale oil formations and Pronghorn sand oil formation. Emerald is based in Denver, Colorado. More information about Emerald can be found at www.emeraldoil.com.

Forward-Looking Statements

This press release may include "forward-looking statements" within the meaning of the securities laws. All statements other than statements of historical facts included herein may constitute forward-looking statements. Forward-looking statements in this document may include statements regarding the Company's expectations regarding the Company's operational, exploration and development plans; expectations regarding the nature and amount of the Company's reserves; and expectations regarding production, revenues, cash flows and recoveries. When used in this press release, the words "will," "potential," "believe," "estimate," "intend," "expect," "may," "should," "anticipate," "could," "plan," "predict," "project," "profile," "model," or their negatives, other similar expressions or the statements that include those words, are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, fluctuations in oil and natural gas prices, uncertainties inherent in estimating quantities of oil and natural gas reserves and projecting future rates of production and timing of development activities, competition, operating risks, acquisition risks, liquidity and capital requirements, the effects of governmental regulation, adverse changes in the market for the Company's oil and natural gas production, dependence upon third-party vendors, and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission.

 
EMERALD OIL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
       
   September 30, 2015  December 31, 2014
ASSETS      
CURRENT ASSETS      
 Cash and Cash Equivalents  $5,068,320   $12,389,230  
 Accounts Receivable - Oil and Natural Gas Sales   4,002,942    7,203,455  
 Accounts Receivable - Joint Interest Partners   8,370,512    31,842,464  
 Other Receivables   860,980    980,317  
 Prepaid Expenses and Other Current Assets   681,581    289,061  
 Fair Value of Commodity Derivatives   6,336,057    5,044,125  
  Total Current Assets   25,320,392    57,748,652  
PROPERTY AND EQUIPMENT           
 Oil and Natural Gas Properties, Full Cost Method, at cost:           
  Proved Oil and Natural Gas Properties   697,814,220    593,472,170  
  Unproved Oil and Natural Gas Properties   141,768,220    166,708,263  
  Equipment and Facilities   15,220,754    6,086,896  
 Other Property and Equipment   4,266,762    2,583,372  
  Total Property and Equipment   859,069,956    768,850,701  
 Less - Accumulated Depreciation, Depletion and Amortization   (486,650,786 )  (149,703,417 )
  Total Property and Equipment, Net   372,419,170    619,147,284  
 Restricted Cash   -    4,000,000  
 Fair Value of Commodity Derivatives   1,375,070    -  
 Debt Issuance Costs, Net of Amortization   4,183,174    5,779,125  
 Deposits on Acquisitions   -    140,173  
 Deferred Tax Assets, Net   1,813,561    1,813,796  
 Other Non-Current Assets   329,572    430,846  
  Total Assets  $405,440,939   $689,059,876  
   LIABILITIES AND STOCKHOLDERS' EQUITY           
CURRENT LIABILITIES           
 Accounts Payable  $38,762,753   $120,136,903  
 Revolving Credit Facility   159,683,000    -  
 Convertible Senior Notes   151,500,000    -  
 Accrued Expenses   5,073,975    11,267,831  
 Advances from Joint Interest Partners   802,119    2,577,247  
 Deferred Tax Liability, Net   1,813,561    1,813,796  
  Total Current Liabilities   357,635,408    135,795,777  
LONG-TERM LIABILITIES           
 Revolving Credit Facility   -    75,000,000  
 Convertible Senior Notes   -    151,500,000  
 Asset Retirement Obligations   3,265,518    2,671,975  
 Warrant Liability   187,000    2,199,000  
 Fair Value of Commodity Derivatives   -    -  
  Total Liabilities   361,087,926    367,166,752  
            
COMMITMENTS AND CONTINGENCIES           
            
Preferred Stock - Par Value $.001; 20,000,000 Shares Authorized;           
 Series B Voting Preferred Stock - 255,732 issued and outstanding at September 30, 2015 and December 31, 2014. Liquidation preference value of $256 as of September 30, 2015 and December 31, 2014.   256    256  
            
STOCKHOLDERS' EQUITY           
 Common Stock, Par Value $.001; 500,000,000 Shares Authorized, 8,708,499 and 3,891,431 Shares Issued and Outstanding, respectively   8,709    3,891  
 Additional Paid-In Capital   507,612,218    455,087,277  
 Accumulated Deficit   (463,268,170 )  (133,198,300 )
  Total Stockholders' Equity   44,352,757    321,892,868  
  Total Liabilities and Stockholders' Equity  $405,440,939   $689,059,876  
   
 
EMERALD OIL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
       
   Three Months Ended September 30,  Nine Months Ended September 30,
   2015  2014  2015  2014
REVENUES            
 Oil Sales  $17,350,524   $28,266,332   $52,981,871   $76,989,268  
 Natural Gas Sales   494,804    460,857    1,224,667    2,061,201  
 Net Gains on Commodity Derivatives   12,699,147    11,184,716    8,148,386    3,722,780  
  Total Revenues   30,544,475    39,911,905    62,354,924    82,773,249  
OPERATING EXPENSES                     
 Production Expenses   8,201,949    6,962,450    25,972,453    13,477,176  
 Production Taxes   1,653,989    3,142,998    5,488,364    8,632,608  
 General and Administrative Expenses   3,821,473    5,483,655    12,495,471    21,609,218  
 Depletion of Oil and Natural Gas Properties   11,242,324    9,193,566    31,622,386    24,071,676  
 Impairment of Oil and Natural Gas Properties   158,278,000    -    304,903,000    -  
 Depreciation and Amortization   232,350    104,465    559,139    251,722  
 Accretion of Discount on Asset Retirement Obligations   52,500    28,037    153,007    63,837  
 Standby Rig Expense   3,800,446    -    6,173,111    -  
  Total Operating Expenses   187,283,031    24,915,171    387,366,931    68,106,237  
INCOME (LOSS) FROM OPERATIONS   (156,738,556 )  14,996,734    (325,012,007 )  14,667,012  
                      
OTHER INCOME (EXPENSE)                     
 Interest Expense   (2,735,348 )  (1,206,571 )  (7,044,901 )  (2,515,034 )
 Warrant Revaluation Gain (Expense)   221,000    216,000    2,012,000    (1,751,000 )
 Other Income (Expense)   281    (347,088 )  539    (343,041 )
  Total Other Expense, Net   (2,514,067 )  (1,337,659 )  (5,032,362 )  (4,609,075 )
                      
INCOME (LOSS) BEFORE INCOME TAXES   (159,252,623 )  13,659,075    (330,044,369 )  10,057,937  
                      
INCOME TAX PROVISION   -    -    -    -  
                      
NET INCOME (LOSS)  $(159,252,623 ) $13,659,075   $(330,044,369 ) $10,057,937  
                      
Net Income (Loss) Per Common Share - Basic  $(19.85 ) $4.11   $(52.10 ) $3.03  
                      
Net Income (Loss) Per Common Share - Diluted  $(19.85 ) $3.29   $(52.10 ) $2.89  
                      
Weight Average Shares Outstanding - Basic   8,021,992    3,324,970    6,334,549    3,316,751  
                      
Weighted Average Shares Outstanding -Diluted   8,021,992    4,419,020    6,334,549    4,093,377  
                      
 
EMERALD OIL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
    
   Nine Months Ended September 30,
   2015  2014
CASH FLOWS FROM OPERATING ACTIVITIES      
 Net Loss  $(330,044,369 ) $10,057,937  
Adjustments to Reconcile Net Loss to Net Cash Provided By Operating Activities:           
 Depletion of Oil and Natural Gas Properties   31,622,386    24,071,676  
 Impairment of Oil and Natural Gas Properties   304,903,000    -  
 Depreciation and Amortization   559,138    251,722  
 Amortization of Debt Issuance Costs   2,145,832    727,997  
 Accretion of Discount on Asset Retirement Obligations   153,007    63,837  
 Net Gains on Commodity Derivatives   (8,148,386 )  (3,722,780 )
 Net Cash Settlements Received (Paid) on Commodity Derivatives   5,481,384    (2,775,591 )
 Warrant Revaluation (Gain) Expense   (2,012,000 )  1,751,000  
 Share-Based Compensation Expense   2,710,683    9,497,044  
Changes in Assets and Liabilities:           
 Decrease (Increase) in Trade Receivables - Oil and Natural Gas Revenues   3,200,513    (1,390,582 )
 Decrease (Increase) in Accounts Receivable - Joint Interest Partners   23,471,952    (1,224,056 )
 Decrease (Increase) in Other Receivables   119,337    (1,132,418 )
 Increase in Prepaid Expenses and Other Current Assets   (392,520 )  (223,875 )
 (Increase) Decrease in Other Non-Current Assets   (35,882 )  67,463  
 (Decrease) Increase in Accounts Payable   6,585,510    2,364,168  
 Decrease in Accrued Expenses   (4,867,351 )  (7,813,470 )
 Increase in Other Non-Current Liabilities   -    198,551  
 (Decrease) Increase in Advances from Joint Interest Partners   (1,775,128 )  200,434  
Net Cash Provided By Operating Activities   33,677,105    30,969,057  
CASH FLOWS FROM INVESTING ACTIVITIES           
 Purchases of Other Property and Equipment   (1,683,390 )  (1,015,677 )
 Restricted Cash Released   4,000,000    11,000,512  
 Payments of Restricted Cash   -    (2,648,721 )
 Decrease (Increase) in Deposits for Acquisitions   140,173    (648,441 )
 Proceeds from Sale of Oil and Natural Gas Properties, Net of Transaction Costs   -    36,155,859  
 Investment in Oil and Natural Gas Properties   (175,371,888 )  (391,368,324 )
Net Cash Used For Investing Activities   (172,915,105 )  (348,524,792 )
CASH FLOWS FROM FINANCING ACTIVITIES           
 Proceeds from Issuance of Convertible Senior Notes, Net of Transaction Costs   -    166,893,211  
 Proceeds from Issuance of Common Stock, Net of Transaction Costs   48,049,115    -  
 Advances on Revolving Credit Facility   100,000,000    55,000,000  
 Payments on Revolving Credit Facility   (15,317,000 )  (35,000,000 )
 Cash Paid for Finance Costs   (265,144 )  (24,605 )
 Cash Paid for Debt Issuance Costs   (549,881 )  (1,117,871 )
 Proceeds from Exercise of Stock Options and Warrants   -    110,750  
Net Cash Provided by Financing Activities   131,917,090    185,861,485  
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   (7,320,910 )  (131,694,250 )
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD   12,389,230    144,255,438  
CASH AND CASH EQUIVALENTS - END OF PERIOD  $5,068,320   $12,561,188  
Supplemental Disclosure of Cash Flow Information           
 Cash Paid During the Period for Interest  $4,124,010   $1,867,433  
 Cash Paid During the Period for Income Taxes  $-   $-  
Non-Cash Financing and Investing Activities:           
 Oil and Natural Gas Properties Included in Accounts Payable  $19,997,664   $92,963,874  
 Stock-Based Compensation Capitalized to Oil and Natural Gas Properties  $708,600   $2,020,992  
 Asset Retirement Obligation Costs and Liabilities  $440,536   $1,669,757  
            

In addition to reporting net income (loss) as defined under GAAP, we also present net earnings before interest, income taxes, depletion, depreciation, and amortization, accretion of discount on asset retirement obligations, impairment of oil and natural gas properties, warrant revaluation (gains) and expenses, net gain (loss) from mark-to-market on commodity derivatives, cash settlements received (paid), standby rig expenses and non-cash expenses relating to share based payments recognized under ASC Topic 718 ("Adjusted EBITDA"), which is a non-GAAP performance measure. Adjusted EBITDA consists of net earnings after adjustment for those items described in the table below. Adjusted EBITDA does not represent, and should not be considered an alternative to GAAP measurements, such as net income (loss) (its most directly comparable GAAP measure), and our calculations thereof may not be comparable to similarly titled measures reported by other companies. By eliminating the items described below, we believe the measure is useful in evaluating its fundamental core operating performance. We also believe that Adjusted EBITDA is useful to investors because similar measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies in similar industries. Our management uses Adjusted EBITDA to manage our business, including in preparing our annual operating budget and financial projections. Our management does not view Adjusted EBITDA in isolation and also uses other measurements, such as net income (loss) and revenues to measure operating performance. The following table provides a reconciliation of net loss to Adjusted EBITDA for the periods presented:

       
   Three Months Ended September 30,  Nine Months Ended September 30,
   2015  2014  2015  2014
Net loss  $(159,252,623 ) $13,659,075   $(330,044,369 ) $10,057,937  
 Impairment of oil and natural gas properties   158,278,000    -    304,903,000    -  
 Interest expense   2,735,348    1,206,571    7,044,901    2,515,034  
 Accretion of discount on asset retirement obligations   52,500    28,037    153,007    63,837  
 Depletion, depreciation and amortization   11,474,674    9,298,031    32,181,525    24,323,398  
 Stock-based compensation   423,145    2,818,161    2,586,898    9,497,044  
 Warrant revaluation (gain) expense   (221,000 )  (216,000 )  (2,012,000 )  1,751,000  
 Net gains on commodity derivatives   (12,699,147 )  (11,184,716 )  (8,148,386 )  (3,722,780 )
 Net cash settlements received (paid) on commodity derivatives   1,354,804    (313,451 )  5,481,384    (2,775,591 )
 Standby rig expense   3,800,446    -    6,173,111    -  
Adjusted EBITDA  $5,946,147   $15,295,708   $18,319,071   $41,709,879  
                      

In addition to reporting net income (loss) as defined under GAAP, we also present "adjusted income (loss)", which we define as net earnings before the effect of any impairment of oil and natural gas properties, unrealized gain (loss) from mark-to-market on commodity derivatives, mark-to-market on our warrant liability, share-based compensation expense and the other items described in the table below. Adjusted income (loss) is a non-GAAP performance measure. Adjusted income (loss) does not represent, and should not be considered an alternative to GAAP measurements, such as net income (loss), and our calculations thereof may not be comparable to similarly titled measures reported by other companies. By eliminating the items described below, we believe the measure is useful in evaluating our fundamental core operating performance. We also believe that adjusted income (loss) is useful to investors because similar measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies in similar industries. Our management uses adjusted income to manage our business, including in preparing our annual operating budget and financial projections. Our management does not view adjusted income (loss) in isolation and also uses other measurements, such as net income (loss) and revenues to measure operating performance. The following table provides a reconciliation of net income (loss), to adjusted income (loss) for the periods presented:

       
   Three Months Ended September 30,  Nine Months Ended September 30,
   2015  2014  2015  2014
Net loss  $(159,252,623 ) $13,659,075   $(330,044,369 ) $10,057,937  
 Impairment of oil and natural gas properties   158,278,000    -    304,903,000    -  
 Stock-based compensation   423,145    2,818,161    2,586,898    9,497,044  
 Warrant revaluation (gain) expense   (221,000 )  (216,000 )  (2,012,000 )  1,751,000  
 Net gains on commodity derivatives   (12,699,147 )  (11,184,716 )  (8,148,386 )  (3,722,780 )
 Net cash settlements received (paid) on commodity derivatives   1,354,804    (313,451 )  5,481,384    (2,775,591 )
Adjusted net income (loss)  $(12,116,821 ) $4,763,069   $(27,233,473 ) $14,807,610  
                      
Net Adjusted Income (Loss) Per Common Share - Basic  $(1.51 ) $1.43   $(4.30 ) $4.46  
                      
Weighted Average Shares Outstanding - Basic   8,021,992    3,324,970    6,334,549    3,316,751  

Contact Information