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8-K - FORM 8-K - Emerald Oil, Inc. | v377266_8k.htm |
Exhibit 99.1
Emerald Oil Reports First Quarter 2014 Financial and Operational Results;
Increases and Updates 2014 Guidance
DENVER, CO – May 5, 2014 — Emerald Oil, Inc. (NYSE MKT: EOX) (“Emerald” or the “Company”) today announced financial and operational results for the quarter ended March 31, 2014 and increased and updated guidance for 2014.
Highlights
· | First quarter of 2014 production of 225,905 BOE, an average of approximately 2,511 BOEPD, an increase of 3% compared to the fourth quarter of 2013 and 136% compared to the first quarter of 2013; |
· | Reduction of per unit LOE costs during the first quarter of 2014 to approximately $11.59 per BOE, a decrease of 33% compared to the fourth quarter of 2013; |
· | First quarter of 2014 Adjusted EBITDA of $9.0 million; |
· | Adjusted net income attributable to common shareholders of $2.5 million or $0.04 per share (basic) for the first quarter of 2014 and net loss attributable to common shareholders of $1.7 million or $0.02 per share loss (basic); |
· | Increased 2014 drilling and completion CAPEX guidance by $68 millon to $250 million which accounts for the addition of a fourth operated rig late in the third quarter of 2014; |
· | Increased 2014 average production guidance to 3,700 BOEPD and 2014 exit rate guidance to 4,900 BOEPD; |
· | Raised Low Rider operating area type curve assumption to 600 MBOE EUR and increased Low Rider operating area downspacing assumptions to 12 wells per drilling spacing unit; |
· | Reduced Low Rider operating area well cost assumptions to $9.5 million per well |
McAndrew Rudisill, Emerald’s Chief Executive Officer, stated, “Despite extreme weather during the first quarter of 2014, our operations team delivered strong production growth while significantly reducing per unit operating costs quarter over quarter. The recent addition of a third drilling rig and second frac spread allowed Emerald to both initiate drilling operations in Easy Rider and to work through the backlog of wells waiting on completion in Low Rider. The third drilling rig and second frac spread position Emerald for a year of strong production growth. Accordingly, we are increasing 2014 production guidance to account for the completion acceleration and the continued strong performance of our wells in Low Rider. Adding a fourth rig to our operated program late in the third quarter of 2014 will allow us to accelerate converting undeveloped leasehold position to production, cash flow and reserves of which we will begin seeing the results in the first quarter of 2015. We are well positioned to fund the increase to our 2014 capital budget because of our recent convertible debt offering. Assuming we maintain a four rig program during 2015, we anticipate our drilling and completion budget will range between $350 - $375 million and allow us to drill approximately 38 net wells.”
First Quarter 2014 Production
For the first quarter of 2014, Emerald’s total production volumes on a BOE basis increased 136% as compared to the first quarter of 2013. During the first quarter of 2014, Emerald realized an $81.96 average price per Bbl of oil (including settled derivatives) compared to an $84.21 average price per Bbl of oil during the first quarter of 2013. For detailed well performance data see Emerald’s corporate presentation (available on its website, www.emeraldoil.com).
Quarter Ended March 31, | ||||||||
2014 | 2013 | |||||||
Sales Volume (Total) | ||||||||
Oil (Bbls) | 213,978 | 89,112 | ||||||
Gas (Mcf) | 71,561 | 40,195 | ||||||
Sales volumes (Boe) | 225,905 | 95,811 | ||||||
Average Daily Sales | ||||||||
Oil (Bbls) | 2,378 | 990 | ||||||
Gas (Mcf) | 795 | 447 | ||||||
Sales volumes (Boe) | 2,511 | 1,065 | ||||||
Average Sales Prices | ||||||||
Oil, Net of Settled Derivatives (Bbls) | $ | 83.56 | $ | 88.04 | ||||
Gas (Mcf) | 8.86 | 5.55 | ||||||
Barrel of Oil Equivalent with Settled Derivatives (Boe) | $ | 81.96 | $ | 84.21 |
2014 Guidance
Boe/d* | ||||||||
Previous | Updated | |||||||
2Q 2014 Average | 3,250 | 3,500 | ||||||
3Q 2014 Average | 4,000 | 4,200 | ||||||
4Q 2014 Average | 4,150 | 4,600 | ||||||
2014 Average | 3,550 | 3,700 | ||||||
2014 Exit Rate | 4,250 | 4,900 |
*Production guidance based on a 600 Mboe EUR for Low Rider and a 550 Mboe EUR for Easy Rider.
2014 Capital Expenditures ($mm) | ||||||||
Previous | Updated | |||||||
2014 Drilling and Completion Budget * | $ | 182.0 | $ | 250.0 | ||||
2014 Land Budget** | $ | 125.0 | $ | 150.0 | ||||
Estimated Well Cost | $ | 10.0 | $ | 9.5 | ||||
Net Operated Well Count | 18.2 | 25.5 |
*Approximately $56.0 mm of the total amount has been spent YTD
**Approximately $88.4 mm of the total amount has been spent YTD
Financial Results
Revenues from sales of oil and natural gas for the first quarter of 2014 were $19.1 million compared to $8.2 million for the first quarter of 2013. The increase is primarily due to higher production as a result of the Company’s well completions and its acquisition of certain properties in its Low Rider operating area. Crude oil revenue accounted for approximately 97% of oil and natural gas sales recorded during the first quarter of 2014.
Production expenses for the first quarter of 2014 were $2.6 million, or $11.59 per BOE, a 7% increase per BOE over the first quarter of 2013 and a decrease of 33% over the fourth quarter of 2013. The Company attributes the decrease in LOE for the sequential quarters to a reduction in normal well maintenance, the majority of which consisted of replacing diesel compression and generation equipment with natural gas powered equipment, and careful monitoring of weather related effects on surface equipment.
General and administrative (“G&A”) expenses for the first quarter of 2014 were $8.5 million compared to $5.4 million for the first quarter of 2013. Share-based compensation expenses are included in the employee compensation and related expenses, totaling $3.7 million in the first quarter of 2014 compared to $1.3 million in the first quarter of 2013. The increase in G&A expense is attributed primarily to the hiring of new personnel as the Company continues to expand operations.
Adjusted EBITDA was $9.0 million for the first quarter of 2014, as compared to $2.2 million for the first quarter of 2013, reflecting a 309% increase. Adjusted Net Income was $2.5 million for the first quarter of 2014, as compared to $1.1 million for the first quarter of 2013, reflecting a 127% increase. Adjusted EBITDA and Adjusted Net Income are non-GAAP financial measures. For additional information please refer to the reconciliation of these measures at the end of this news release.
Semi-Annual Credit Facility Redetermination
Effective May 1, 2014, the Company and its lending syndicate completed the semi-annual borrowing base redetermination of its revolving credit facility. Emerald and its lenders entered into an amendment which increases the Company’s borrowing base to $100 million from the previous $75 million. The facility is currently undrawn. Emerald expects the next borrowing base redetermination will take place in October of 2014.
Hedging Activity
In conjunction with its credit facility redetermination, the Company increased the hedging parameters available under the Credit Agreement, changing the notional volumes to 60% of anticipated production from proved reserves. The Company is now hedged at the maximum allowed until its scheduled October 2014 redetermination. The Company has the following outstanding commodity derivative contracts as of March 31, 2014, pro forma for additional swap contracts executed subsequent to quarter end:
Settlement Period | Oil (Bbls) | Fixed Price | ||||||
Oil Swaps | ||||||||
April 1, 2014 – December 31, 2014 | 74,818 | $ | 91.00 | |||||
April 1, 2014 – December 31, 2014 | 22,000 | 90.05 | ||||||
April 1, 2014 – December 31, 2014 | 54,000 | 94.30 | ||||||
April 1, 2014 – December 31, 2014 | 24,800 | 94.18 | ||||||
April 1, 2014 – December 31, 2014 | 226,080 | 97.38 | ||||||
May 1, 2014 – December 31, 2014 | 471,000 | 96.83 | ||||||
2014 Total/Average | 872,698 | $ | 96.07 | |||||
January 1, 2015 – February 28, 2015 | 13,876 | $ | 91.00 | |||||
January 1, 2015 – February 28, 2015 | 5,000 | 90.05 | ||||||
January 1, 2015 – February 28, 2015 | 10,000 | 94.30 | ||||||
January 1, 2015 – February 28, 2015 | 8,100 | 94.18 | ||||||
January 1, 2015 – March 31, 2015 | 30,000 | 93.50 | ||||||
January 1, 2015 – March 31, 2015 | 15,000 | 93.63 | ||||||
January 1, 2015 – March 31, 2015 | 15,000 | 94.25 | ||||||
2015 Total/Average | 96,976 | $ | 93.24 |
White Deer Energy Share and Warrant Registration
In accordance with certain registration rights connected with previous offerings, the Company is planning to file a shelf registration statement registering the shares of the Company’s common stock and the shares of common stock issuable upon exercise of the warrants held by White Deer Energy. White Deer is a long-term shareholder in Emerald and is increasing its funds liquidity by placing its shares in a standard prime brokerage account.
Conference Call
Emerald will host a conference call on Tuesday, May 6, 2014 at 9:00 a.m. Eastern Time (7:00 a.m. Mountain Time) to discuss financial and operational results for the quarter and year end.
Emerald Oil, Inc. Q1 2014 Financial and Operational Results Conference Call | ||
Date: | Tuesday, May 6, 2014 | |
Time: | 9:00 a.m. Eastern Time | |
8:00 a.m. Central Time | ||
7:00 a.m. Mountain Time | ||
6:00 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 Tuesday, May 13, 2014 | |
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)
March 31, 2014 | December 31, 2013 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and Cash Equivalents | $ | 195,962,712 | $ | 144,255,438 | ||||
Restricted Cash | 6,000,000 | 15,000,512 | ||||||
Accounts Receivable – Oil and Natural Gas Sales | 8,811,512 | 8,715,821 | ||||||
Accounts Receivable – Joint Interest Partners | 30,846,505 | 31,523,204 | ||||||
Other Receivables | 245,754 | 577,409 | ||||||
Prepaid Expenses and Other Current Assets | 358,627 | 206,299 | ||||||
Total Current Assets | 242,225,110 | 200,278,683 | ||||||
PROPERTY AND EQUIPMENT | ||||||||
Oil and Natural Gas Properties, Full Cost Method, at cost: | ||||||||
Proved Oil and Natural Gas Properties | 301,018,391 | 211,015,067 | ||||||
Unproved Oil and Natural Gas Properties | 117,014,820 | 57,015,315 | ||||||
Equipment and Facilities | 3,509,922 | 1,837,744 | ||||||
Other Property and Equipment | 1,279,887 | 890,811 | ||||||
Total Property and Equipment | 422,823,020 | 270,758,937 | ||||||
Less – Accumulated Depreciation, Depletion and Amortization | (54,519,514 | ) | (48,176,522 | ) | ||||
Total Property and Equipment, Net | 368,303,506 | 222,582,415 | ||||||
Restricted Cash | 4,000,000 | 6,000,000 | ||||||
Fair Value of Commodity Derivatives | — | 68,396 | ||||||
Debt Issuance Costs, Net of Amortization | 5,803,472 | 475,157 | ||||||
Deposits on Acquisitions | 362,770 | 125,368 | ||||||
Other Non-Current Assets | 227,207 | 357,644 | ||||||
Total Assets | $ | 620,922,065 | $ | 429,887,663 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts Payable | $ | 79,263,138 | $ | 63,168,422 | ||||
Fair Value of Commodity Derivatives | 1,098,474 | 921,401 | ||||||
Accrued Expenses | 12,149,221 | 11,821,729 | ||||||
Advances from Joint Interest Partners | 3,138,800 | 2,205,538 | ||||||
Total Current Liabilities | 95,649,633 | 78,117,090 | ||||||
LONG-TERM LIABILITIES | ||||||||
Convertible Senior Notes | 172,500,000 | — | ||||||
Asset Retirement Obligations | 1,083,597 | 692,137 | ||||||
Warrant Liability | 15,899,000 | 15,703,000 | ||||||
Other Non-Current Liabilities | 51,123 | 56,327 | ||||||
Total Liabilities | 285,183,353 | 94,568,554 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
Preferred Stock – Par Value $.001; 20,000,000 Shares Authorized; | ||||||||
Series B Voting Preferred Stock – 5,114,633 issued and outstanding at March 31, 2014 and December 31, 2013. Liquidation preference value of $5,115 as of March 31, 2014 and December 31, 2013. | 5,000 | 5,000 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Common Stock, Par Value $.001; 500,000,000 Shares Authorized, 66,283,464 and 65,840,370 Shares Issued and Outstanding, respectively | 66,283 | 65,840 | ||||||
Additional Paid-In Capital | 418,371,593 | 416,301,344 | ||||||
Accumulated Deficit | (82,704,164 | ) | (81,053,075 | ) | ||||
Total Stockholders’ Equity | 335,733,712 | 335,314,109 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 620,922,065 | $ | 429,887,663 |
EMERALD OIL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
REVENUES | ||||||||
Oil Sales | $ | 18,434,808 | $ | 7,993,902 | ||||
Natural Gas Sales | 634,064 | 223,079 | ||||||
Net Losses on Commodity Derivatives | (798,853 | ) | (767,604 | ) | ||||
Total Revenues | 18,270,019 | 7,449,377 | ||||||
OPERATING EXPENSES | ||||||||
Production Expenses | 2,617,244 | 1,039,532 | ||||||
Production Taxes | 2,088,736 | 701,856 | ||||||
General and Administrative Expenses | 8,492,004 | 5,388,813 | ||||||
Depletion of Oil and Natural Gas Properties | 6,277,232 | 3,156,978 | ||||||
Depreciation and Amortization | 65,760 | 22,995 | ||||||
Accretion of Discount on Asset Retirement Obligations | 15,720 | 6,212 | ||||||
Total Operating Expenses | 19,556,696 | 10,316,386 | ||||||
LOSS FROM OPERATIONS | (1,286,677 | ) | (2,867,009 | ) | ||||
OTHER INCOME (EXPENSE) | ||||||||
Interest Expense | (172,086 | ) | (179,490 | ) | ||||
Warrant Revaluation Expense | (196,000 | ) | (3,439,000 | ) | ||||
Other Income | 3,676 | 676 | ||||||
Total Other Expense, Net | (364,410 | ) | (3,617,814 | ) | ||||
LOSS BEFORE INCOME TAXES | (1,651,087 | ) | (6,484,823 | ) | ||||
INCOME TAX PROVISION | — | — | ||||||
NET LOSS | (1,651,087 | ) | (6,484,823 | ) | ||||
Less: Preferred Stock Dividends and Deemed Dividends | — | (616,438 | ) | |||||
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | (1,651,087 | ) | $ | (7,101,261 | ) | |||
Net Loss Per Common Share – Basic and Diluted | $ | (0.02 | ) | $ | (0.28 | ) | ||
Weighted Average Shares Outstanding – Basic and Diluted | 66,171,875 | 25,692,532 |
EMERALD OIL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net Loss | $ | (1,651,087 | ) | $ | (6,484,823 | ) | ||
Adjustments to Reconcile Net Loss to Net Cash Provided By Operating Activities: | ||||||||
Depletion of Oil and Natural Gas Properties | 6,277,232 | 3,156,978 | ||||||
Depreciation and Amortization | 65,760 | 22,995 | ||||||
Amortization of Debt Issuance Costs | 60,433 | 22,203 | ||||||
Accretion of Discount on Asset Retirement Obligations | 15,720 | 6,212 | ||||||
Net Losses on Commodity Derivatives | 798,853 | 767,604 | ||||||
Net Cash Settlements Paid on Commodity Derivatives | (553,383 | ) | (149,208 | ) | ||||
Warrant Revaluation Expense | 196,000 | 3,439,000 | ||||||
Share-Based Compensation Expense | 3,695,303 | 1,307,986 | ||||||
Changes in Assets and Liabilities: | ||||||||
(Increase) Decrease in Trade Receivables – Oil and Natural Gas Revenues | (95,691 | ) | 1,330,271 | |||||
(Increase) Decrease in Accounts Receivable – Joint Interest Partners | 676,699 | (7,023,135 | ) | |||||
Decrease in Other Receivables | 331,655 | 903,198 | ||||||
(Increase) in Prepaid Expenses and Other Current Assets | (152,328 | ) | (25,813 | ) | ||||
(Decrease) in Other Non-Current Assets | 130,437 | 85,675 | ||||||
Increase in Accounts Payable | 1,437,236 | 531,714 | ||||||
Increase (Decrease) in Accrued Expenses | (1,933,484 | ) | 407,417 | |||||
Increase in Other Non-Current Liabilities | (5,204 | ) | — | |||||
Increases in Advances from Joint Interest Partners | 933,262 | 1,414,686 | ||||||
Increase in Deposits Received for Assets Available for Sale | — | 664,862 | ||||||
Net Cash Provided By Operating Activities | 10,227,413 | 377,822 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchases of Other Property and Equipment | (389,076 | ) | (73,480 | ) | ||||
Restricted Cash Released | 11,000,512 | — | ||||||
Payments of Restricted Cash | (2,648,721 | ) | ||||||
Increase in Deposits for Acquisitions | (237,402 | ) | — | |||||
Use of Prepaid Drilling Costs | — | 98,155 | ||||||
Proceeds from Sale of Oil and Natural Gas Properties, Net of Transaction Costs | 238,069 | 9,673,953 | ||||||
Investment in Oil and Natural Gas Properties | (133,570,168 | ) | (22,718,360 | ) | ||||
Net Cash Used For Investing Activities | (125,606,786 | ) | (13,019,732 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from Issuance of Preferred Stock, Net of Transaction Costs | — | 47,183,994 | ||||||
Proceeds from Issuance of Convertible Senior Notes, Net of Transaction Costs | 167,111,252 | — | ||||||
Advances on Revolving Credit Facility and Term Loan | 35,000,000 | — | ||||||
Payments on Revolving Credit Facility | (35,000,000 | ) | (8,323,650 | ) | ||||
Preferred Stock Dividends and Deemed Dividends | — | (616,438 | ) | |||||
Cash Paid for Finance Costs | (24,605 | ) | — | |||||
Net Cash Provided by Financing Activities | 167,086,647 | 38,243,906 | ||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 51,707,274 | 26,601,996 | ||||||
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD | 144,255,438 | 10,192,379 | ||||||
CASH AND CASH EQUIVALENTS – END OF PERIOD | $ | 195,962,712 | $ | 35,794,375 | ||||
Supplemental Disclosure of Cash Flow Information | ||||||||
Cash Paid During the Period for Interest | $ | — | $ | 163,663 | ||||
Cash Paid During the Period for Income Taxes | $ | — | $ | — | ||||
Non-Cash Financing and Investing Activities: | ||||||||
Oil and Natural Gas Properties Included in Account Payable | $ | 74,798,660 | $ | 31,784,701 | ||||
Stock-Based Compensation Capitalized to Oil and Natural Gas Properties | $ | 660,969 | $ | 99,552 | ||||
Asset Retirement Obligation Costs and Liabilities | $ | 375,740 | $ | 47,141 | ||||
Common Stock Issued for Oil and Natural Gas Properties | $ | — | $ | 6,736,935 |
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, net gain on acquisition of business, net gain on sale of oil and natural gas properties, net gain (loss) from mark-to-market on commodity derivatives, less cash settlements received (paid) 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 March 31, | ||||||||
2014 | 2013 | |||||||
Net loss | $ | (1,651,087 | ) | $ | (6,484,823 | ) | ||
Less: Preferred stock dividends and deemed dividends | — | (616,438 | ) | |||||
Net loss attributable to common stockholders | (1,651,087 | ) | (7,101,261 | ) | ||||
Add: Interest expense | 172,086 | 179,490 | ||||||
Accretion of discount on asset retirement obligations | 15,720 | 6,212 | ||||||
Depletion, depreciation and amortization | 6,342,992 | 3,179,973 | ||||||
Stock-based compensation | 3,695,303 | 1,307,986 | ||||||
Warrant revaluation expense | 196,000 | 3,439,000 | ||||||
Preferred stock dividends | — | 616,438 | ||||||
Net losses on commodity derivatives | 798,853 | 767,604 | ||||||
Less: Net cash settlements paid on commodity derivatives | (553,383 | ) | (149,208 | ) | ||||
Adjusted EBITDA | $ | 9,016,484 | $ | 2,246,234 |
In addition to reporting net income (loss) as defined under GAAP, Emerald also presents net earnings before the effect of any unrealized gain (loss) from mark-to-market on commodity derivatives, mark-to-market on Emerald’s warrant liability (“adjusted income (loss)”), and share based compensation expense, which is a non-GAAP performance measure. Adjusted income (loss) consists of net earnings after adjustment for those items described in the table below. Adjusted income (loss) does not represent, and should not be considered an alternative to GAAP measurements, such as net income (loss), and Emerald’s calculations thereof may not be comparable to similarly titled measures reported by other companies. By eliminating the items described below, Emerald believes the measure is useful in evaluating Emerald’s fundamental core operating performance. The Company also believes 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. Emerald’s management uses adjusted income to manage Emerald’s business, including in preparing Emerald’s annual operating budget and financial projections. Emerald’s 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 March 31, | ||||||||
2014 | 2013 | |||||||
Net loss | $ | (1,651,087 | ) | $ | (6,484,823 | ) | ||
Less: Preferred stock dividends and deemed dividends | — | (616,438 | ) | |||||
Net loss attributable to common stockholders | (1,651,087 | ) | (7,101,261 | ) | ||||
Net losses on commodity derivatives | 798,853 | 767,604 | ||||||
Net cash settlements paid on commodity derivatives | (553,383 | ) | (149,208 | ) | ||||
Warrant revaluation expense | 196,000 | 3,439,000 | ||||||
Stock based compensation expense | 3,695,303 | 1,307,986 | ||||||
Adjusted income (loss) | $ | 2,485,686 | $ | (1,735,879 | ) | |||
Adjusted income (loss) per share – basic | $ | 0.04 | $ | (0.07 | ) | |||
Weighted average shares outstanding – basic | 66,171,875 | 25,692,535 |
Corporate Contact:
Emerald Oil, Inc.
Ryan Smith
Vice President of Capital Markets & Strategy
(303) 323-0008
info@emeraldoil.com
www.emeraldoil.com