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| 8-K - 8-K - Emerald Oil, Inc. | v404064_8k.htm |
EXHIBIT 99.1
Emerald Oil Reports Fourth Quarter and Year End 2014 Financial and Operational Results
DENVER, CO – March 10, 2015 --- Emerald Oil, Inc. (NYSE MKT: EOX) (“Emerald” or the “Company”) today announced financial and operational results for the quarter and year ended December 31, 2014.
Highlights
| · | Increased fourth quarter production to 377,250 BOE, an average of approximately 4,101 BOEPD, an increase of 7% compared to the third quarter of 2014 and 71% compared to the fourth quarter of 2013; |
| · | Increased annual production to 1,295,230 BOE, an average of 3,549 BOEPD, an increase of 110% compared to 2013; |
| · | Increased total proved reserves to 26.3 MMBOE, an increase of 99% compared to 2013; |
| · | Increased oil and natural gas sales to $101.2 million in 2014, an increase of 87% compared to 2013; |
| · | Adjusted EBITDA of $15.0 million or $0.23 per share (basic) for the fourth quarter of 2014 and $56.8 million or $0.85 per share (basic) for 2014, and; |
| · | Adjusted Net Income attributable to common shareholders of $2.0 million or $0.03 per share (basic) for the fourth quarter of 2014 and $16.8 million or $0.25 per share (basic) for the year 2014. |
McAndrew Rudisill, Emerald’s Chief Executive Officer, stated, “2014 was a year of tremendous reserve and production growth at Emerald Oil. We reacted swiftly in the fourth quarter of 2014 to falling oil prices and cut capital spending quickly to put Emerald in a strong financial position if oil prices remain low. We have made great strides in streamlining the efficiency of our entire Bakken production base through the diligent efforts of our operations team. We are seeing the benefits of our rod pump installation across Low Rider with increased enterprise run time and lower operating costs. On the drilling and completion side of the business we’ve seen meaningful declines in our costs to develop new oil wells and we are in a position to reaccelerate production growth if the oil market permits. We feel comfortable managing the current oil price environment for a prolonged period with our low cost balance sheet and substantial liquidity.”
2014 Production
For 2014, Emerald’s total production volumes on a BOE basis increased 110% as compared to 2013. Production increased due to the addition of 24.19 net productive operated Bakken/Three Forks wells in 2014. During 2014, Emerald realized an $84.01 average price per Bbl of oil (including settled derivatives) compared to an $87.16 average price per Bbl of oil during 2013. For detailed well performance data see Emerald’s corporate presentation (available on its website, www.emeraldoil.com).
| Year Ended December 31, | ||||||||
| 2014 | 2013 | |||||||
| Sales Volume (Total) | ||||||||
| Oil (Bbls) | 1,238,807 | 580,797 | ||||||
| Gas (Mcf) | 338,536 | 211,608 | ||||||
| Sales volumes (Boe) | 1,295,230 | 616,065 | ||||||
| Average Daily Sales | ||||||||
| Oil (Bbls) | 3,394 | 1,591 | ||||||
| Gas (Mcf) | 927 | 580 | ||||||
| Sales volumes (Boe) | 3,549 | 1,688 | ||||||
| Average Sales Prices | ||||||||
| Oil, Net of Settled Derivatives (Bbls) | $ | 84.01 | $ | 87.16 | ||||
| Gas (Mcf) | 7.79 | 6.48 | ||||||
| Barrel of Oil Equivalent with Settled Derivatives (Boe) | $ | 82.39 | $ | 84.40 | ||||
2014 Year End Reserves
As of December 31, 2014, Emerald had total proved reserves of approximately 26.3 MMBoe, all of which were located in the Williston Basin. Emerald’s proved reserves increased approximately 99% during 2014 primarily as a result of our successful operated well program. The proved reserves total had a pre-tax PV10% value of $535.1 million.
| As of December 31, | ||||||||
| 2014 | 2013 | |||||||
| Proved Developed Oil Reserves (MBbls) | 13,194.1 | 5,881.0 | ||||||
| Proved Undeveloped Oil Reserves (MBbls) | 9,632.1 | 5,764.6 | ||||||
| Total Proved Oil Reserves (MBbls) | 22,826.3 | 11,575.6 | ||||||
| Proved Developed Gas Reserves (MMcf) | 11,670.5 | 5,770.6 | ||||||
| Proved Undeveloped Gas Reserves (MMcf) | 9,399.4 | 4,231.6 | ||||||
| Total Proved Gas Reserves (MMcf) | 21,069.9 | 10,002.2 | ||||||
| Total Proved Oil Equivalents (MBoe) | 26,337.9 | 13,242.8 | ||||||
| Present Value of Estimated Future Net Revenues Before Income Taxes, Discounted at 10% (In thousands) | $ | 535,086.6 | $ | 237,422.2 | ||||
Financial Results
Revenues from sales of oil and natural gas for the quarter ended December 31, 2014 were $22.1 million compared to $17.9 million for the same period in 2013. Revenues, not considering the effect of derivatives, for the year ended December 31, 2014 were $101.2 million compared to $54.0 million for the same period in 2013. The increase is primarily due to higher production as a result of the Company’s well completions and its acquisition of certain properties throughout its core operating areas.
Lease operating expenses for the quarter ended December 31, 2014 were $5.1 million compared to $3.8 million for the same period in 2013. On a per unit basis, lease operating expenses decreased from $17.20 per BOE in 4Q2013 to $13.50 per BOE in 4Q2014. Emerald also incurred non-recurring workover expenses for the quarter ended December 31, 2014 of $2.0 million, or $5.28 per BOE. The workover expense was associated with the completion of rod pump installation throughout the entirety of Emerald’s producing acreage position.
Production taxes for the quarter ended December 31, 2014 were $2.4 million compared to $2.1 million for the same period in 2013. On a per unit basis, production taxes decreased from $9.39 per BOE in 4Q2013 to $6.30 per BOE in 4Q2014.
General and administrative expenses (“G&A”), excluding share based compensation, for the quarter ended December 31, 2014 were $1.6 million compared to $6.6 million for the same period in 2013. On a per unit basis, G&A decreased from $29.88 per BOE in 4Q2013 to $4.28 per BOE in 4Q2014. Share-based compensation expenses totaled $1.9 million in 4Q2014 compared to $6.4 million 4Q2013.
Depreciation, depletion and amortization expenses (“DD&A”) for the quarter ended December 31, 2014 were $10.7 million compared to $6.1 million for the same period in 2013. On a per unit basis, DD&A increased from $27.50 per BOE in the fourth quarter of 2013 to $28.43 per BOE in the fourth quarter of 2014. Emerald recognized a $66.4 million non-cash impairment expense for the quarter ended December 31, 2014 due primarily to the substantial declines in commodity prices.
Adjusted EBITDA was $15.0 million for the quarter ended December 31, 2014, as compared to $5.0 million for the same period in 2013. For the year ended December 31, 2014, Adjusted EBITDA was $56.8 million, as compared to $20.2 million for 2013. Adjusted Net Income was $2.0 million for the quarter ended December 31, 2014 as compared to a loss of $1.1 million in the same period in 2013. For the year ended December 31, 2014, Adjusted Net Income was $16.8 million, as compared to $2.4 million for 2013. Adjusted EBITDA and Adjusted Net Income are non-GAAP financial measures. For additional information please refer to the reconciliation of this measure at the end of this news release.
Conference Call
Emerald will host a conference call on Wednesday, March 11, 2015 at 10:00 a.m. Eastern Time (8:00 a.m. Mountain Time) to discuss financial and operational results for the quarter and year end.
| Emerald Oil, Inc. 4Q and Year End 2014 Financial and Operational Results Conference Call | ||
| Date: | Wednesday, March 11, 2015 | |
| Time: | 10:00 a.m. Eastern Time | |
| 9:00 a.m. Central Time | ||
| 8:00 a.m. Mountain Time | ||
| 7:00 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 Wednesday, March 18, 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.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31,
| December 31, 2014 | December 31, 2013 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and Cash Equivalents | $ | 12,389,230 | $ | 144,255,438 | ||||
| Restricted Cash | — | 15,000,512 | ||||||
| Accounts Receivable – Oil and Natural Gas Sales | 7,203,455 | 8,715,821 | ||||||
| Accounts Receivable – Joint Interest Partners | 31,842,464 | 31,523,204 | ||||||
| Other Receivables | 980,317 | 577,409 | ||||||
| Prepaid Expenses and Other Current Assets | 289,061 | 206,299 | ||||||
| Fair Value of Commodity Derivatives | 5,044,125 | — | ||||||
| Total Current Assets | 57,748,652 | 200,278,683 | ||||||
| PROPERTY AND EQUIPMENT | ||||||||
| Oil and Natural Gas Properties, Full Cost Method, at cost: | ||||||||
| Proved Oil and Natural Gas Properties | 593,472,170 | 211,015,067 | ||||||
| Unproved Oil and Natural Gas Properties | 166,708,263 | 57,015,315 | ||||||
| Equipment and Facilities | 6,086,896 | 1,837,744 | ||||||
| Other Property and Equipment | 2,583,372 | 890,811 | ||||||
| Total Property and Equipment | 768,850,701 | 270,758,937 | ||||||
| Less – Accumulated Depreciation, Depletion and Amortization | (149,703,417 | ) | (48,176,522 | ) | ||||
| Total Property and Equipment, Net | 619,147,284 | 222,582,415 | ||||||
| Restricted Cash | 4,000,000 | 6,000,000 | ||||||
| Fair Value of Commodity Derivatives | — | 68,396 | ||||||
| Debt Issuance Costs, Net of Amortization | 5,779,125 | 475,157 | ||||||
| Deposits on Acquisitions | 140,173 | 125,368 | ||||||
| Deferred Tax Asset, Net | 1,813,796 | — | ||||||
| Other Non-Current Assets | 430,846 | 357,644 | ||||||
| Total Assets | $ | 689,059,876 | $ | 429,887,663 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts Payable | $ | 120,136,903 | $ | 63,168,422 | ||||
| Fair Value of Commodity Derivatives | — | 921,401 | ||||||
| Accrued Expenses | 11,267,831 | 11,821,729 | ||||||
| Advances from Joint Interest Partners | 2,577,247 | 2,205,538 | ||||||
| Deferred Tax Liability, Net | 1,813,796 | — | ||||||
| Total Current Liabilities | 135,795,777 | 78,117,090 | ||||||
| LONG-TERM LIABILITIES | ||||||||
| Revolving Credit Facility | 75,000,000 | — | ||||||
| Convertible Senior Notes | 151,500,000 | — | ||||||
| Asset Retirement Obligations | 2,671,975 | 692,137 | ||||||
| Warrant Liability | 2,199,000 | 15,703,000 | ||||||
| Other Non-Current Liabilities | — | 56,327 | ||||||
| Total Liabilities | 367,166,752 | 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 December 31, 2014 and December 31, 2013. Liquidation preference value of $5,115 as of December 31, 2014 and December 31, 2013. | 5,000 | 5,000 | ||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Common Stock, Par Value $.001; 500,000,000 Shares Authorized, 77,828,613 and 65,840,370 Shares Issued and Outstanding, respectively | 77,828 | 65,840 | ||||||
| Additional Paid-In Capital | 455,008,596 | 416,301,344 | ||||||
| Accumulated Deficit | (133,198,300 | ) | (81,053,075 | ) | ||||
| Total Stockholders’ Equity | 321,888,124 | 335,314,109 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 689,059,876 | $ | 429,887,663 | ||||
EMERALD OIL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| Year Ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| REVENUES | ||||||||||||
| Oil Sales | $ | 98,532,131 | $ | 52,609,790 | $ | 27,264,526 | ||||||
| Natural Gas Sales | 2,636,460 | 1,371,250 | 865,459 | |||||||||
| Net Gain (Losses) on Commodity Derivatives | 11,439,240 | (2,656,535 | ) | (215,439 | ) | |||||||
| Total Revenues | 112,607,831 | 51,324,505 | 27,914,546 | |||||||||
| OPERATING EXPENSES | ||||||||||||
| Production Expenses | 20,559,423 | 8,520,414 | 2,727,133 | |||||||||
| Production Taxes | 11,010,300 | 5,702,521 | 2,955,015 | |||||||||
| General and Administrative Expenses | 25,186,682 | 30,507,114 | 12,903,845 | |||||||||
| Depletion of Oil and Natural Gas Properties | 34,798,218 | 17,310,059 | 12,770,718 | |||||||||
| Impairment of Oil and Natural Gas Properties | 66,430,000 | — | 61,900,692 | |||||||||
| Depreciation and Amortization | 389,551 | 144,492 | 53,818 | |||||||||
| Accretion of Discount on Asset Retirement Obligations | 104,803 | 32,449 | 14,988 | |||||||||
| Acquisition Costs | 409,712 | — | — | |||||||||
| Early Rig Termination Expense | 4,286,906 | — | — | |||||||||
| Gain on Sale of Oil and Natural Gas Properties | — | (7,371,804 | ) | — | ||||||||
| Total Operating Expenses | 163,175,595 | 54,845,245 | 93,326,209 | |||||||||
| LOSS FROM OPERATIONS | (50,567,764 | ) | (3,520,740 | ) | (65,411,663 | ) | ||||||
| OTHER INCOME (EXPENSE) | ||||||||||||
| Interest Expense | (4,675,475 | ) | (287,934 | ) | (2,614,240 | ) | ||||||
| Warrant Revaluation Gain (Expense) | 13,504,000 | (7,077,000 | ) | — | ||||||||
| Debt Conversion Expense | (10,438,080 | ) | — | — | ||||||||
| Gain on Acquisition of Business, Net | — | — | 5,758,048 | |||||||||
| Other Income (Expense) | 32,094 | 2,779 | (28,244 | ) | ||||||||
| Total Other Income (Expense), Net | (1,577,461 | ) | (7,362,155 | ) | 3,115,564 | |||||||
| LOSS BEFORE INCOME TAXES | (52,145,225 | ) | (10,882,895 | ) | (62,296,099 | ) | ||||||
| INCOME TAX PROVISION | — | — | — | |||||||||
| NET LOSS | (52,145,225 | ) | (10,882,895 | ) | (62,296,099 | ) | ||||||
| Less: Preferred Stock Dividends and Deemed Dividends | — | (20,279,197 | ) | — | ||||||||
| NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | (52,145,225 | ) | $ | (31,162,092 | ) | $ | (62,296,099 | ) | |||
| Net Loss Per Common Share – Basic and Diluted | $ | (0.78 | ) | $ | (0.75 | ) | $ | (4.91 | ) | |||
| Weighted Average Shares Outstanding – Basic and Diluted | 66,772,458 | 41,383,277 | 12,699,544 | |||||||||
EMERALD OIL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year Ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
| Net Loss | $ | (52,145,225 | ) | $ | (10,882,895 | ) | $ | (62,296,099 | ) | |||
| Adjustments to Reconcile Net Loss to Net Cash Provided By (Used For) Operating Activities: | ||||||||||||
| Depletion of Oil and Natural Gas Properties | 34,798,218 | 17,310,059 | 12,770,718 | |||||||||
| Impairment of Oil and Natural Gas Properties | 66,430,000 | — | 61,900,692 | |||||||||
| Depreciation and Amortization | 389,551 | 144,492 | 53,818 | |||||||||
| Amortization of Debt Issuance Costs | 1,711,171 | 127,857 | 1,929,561 | |||||||||
| Accretion of Discount on Asset Retirement Obligations | 104,803 | 32,449 | 14,988 | |||||||||
| Net (Gains) Losses on Commodity Derivatives | (11,439,240 | ) | 2,656,535 | 215,439 | ||||||||
| Net Cash Settlements Received (Paid) on Commodity Derivatives | 5,542,110 | (1,984,778 | ) | (34,191 | ) | |||||||
| Gain on Sale of Oil and Natural Gas Properties, Net | — | (7,371,804 | ) | — | ||||||||
| Gain on Acquisition of Business | — | — | (7,213,835 | ) | ||||||||
| Warrant Revaluation Expense (Gain) | (13,504,000 | ) | 7,077,000 | — | ||||||||
| Share-Based Compensation Expense | 11,459,431 | 12,885,209 | 7,318,690 | |||||||||
| Debt Conversion Expense | 10,438,080 | — | — | |||||||||
| Changes in Assets and Liabilities: | ||||||||||||
| (Increase) Decrease in Trade Receivables – Oil and Natural Gas Revenues | 1,512,366 | (200,956 | ) | (5,267,453 | ) | |||||||
| Increase in Accounts Receivable – Joint Interest Partners | (319,260 | ) | (27,464,913 | ) | (4,058,291 | ) | ||||||
| (Increase) Decrease in Other Receivables | (402,908 | ) | 556,440 | (1,133,849 | ) | |||||||
| Increase in Prepaid Expenses and Other Current Assets | (82,762 | ) | (103,126 | ) | (54,843 | ) | ||||||
| Increase in Other Non-Current Assets | (73,201 | ) | (96,869 | ) | (100,100 | ) | ||||||
| Increase in Accounts Payable | 9,152,337 | 2,831,342 | 30,123 | |||||||||
| Increase (Decrease) in Accrued Expenses | (7,055,970 | ) | 8,412,533 | 214,399 | ||||||||
| Increase (Decrease) in Other Non-Current Liabilities | (56,327 | ) | 56,327 | — | ||||||||
| Increases in Advances from Joint Interest Partners | 371,709 | 2,205,538 | — | |||||||||
| Net Cash Provided By Operating Activities | 56,830,883 | 6,190,440 | 4,289,767 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
| Purchases of Other Property and Equipment | (1,692,561 | ) | (505,788 | ) | (172,785 | ) | ||||||
| Restricted Cash Released | 17,000,512 | — | — | |||||||||
| Restricted Cash Received | — | (21,000,512 | ) | — | ||||||||
| Payments of Restricted Cash | (2,648,721 | ) | — | — | ||||||||
| Increase in Deposits for Acquisitions | (14,805 | ) | (125,368 | ) | — | |||||||
| Use of (Payments for) Prepaid Drilling Costs | — | 100,193 | (67,030 | ) | ||||||||
| Proceeds from Sale of Oil and Natural Gas Properties, Net of Transaction Costs | 36,155,859 | 129,432,743 | — | |||||||||
| Investment in Oil and Natural Gas Properties | (478,068,380 | ) | (182,901,806 | ) | (66,212,818 | ) | ||||||
| Net Cash Used For Investing Activities | (429,268,096 | ) | (75,000,538 | ) | (66,452,633 | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
| Proceeds from the Issuance of Convertible Notes, Net of Transactions Costs | 166,893,211 | — | — | |||||||||
| Proceeds from Issuance of Common Stock, Net of Transaction Costs | — | 238,354,687 | 72,167,012 | |||||||||
| Proceeds from Issuance of Preferred Stock, Net of Transaction Costs | — | 47,183,994 | — | |||||||||
| Payments on Preferred Stock | — | (50,000,000 | ) | — | ||||||||
| Advances on Revolving Credit Facility and Term Loan | 110,000,000 | — | 56,530,730 | |||||||||
| Payments on Revolving Credit Facility | (35,000,000 | ) | (23,500,000 | ) | (33,030,730 | ) | ||||||
| Payments of Senior Secured Promissory Notes | — | — | (15,000,000 | ) | ||||||||
| Payment of Assumed Liabilities | — | — | (20,303,903 | ) | ||||||||
| Cash Paid for Finance Costs | (24,605 | ) | (333,333 | ) | (1,935,131 | ) | ||||||
| Preferred Stock Dividends and Deemed Dividends | — | (8,832,191 | ) | — | ||||||||
| Cash Paid for Debt Issuance Costs | (1,408,351 | ) | — | — | ||||||||
| Proceeds from Exercise of Stock Options and Warrants | 110,750 | — | — | |||||||||
| Net Cash Provided by Financing Activities | 240,571,005 | 202,873,157 | 58,427,978 | |||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (131,866,208 | ) | 134,063,059 | (3,734,888 | ) | |||||||
| CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD | 144,255,438 | 10,192,379 | 13,927,267 | |||||||||
| CASH AND CASH EQUIVALENTS – END OF PERIOD | $ | 12,389,230 | $ | 144,255,438 | $ | 10,192,379 | ||||||
| Supplemental Disclosure of Cash Flow Information | ||||||||||||
| Cash Paid During the Period for Interest | $ | 2,121,184 | $ | 255,776 | $ | 1,154,943 | ||||||
| Cash Paid During the Period for Income Taxes | $ | — | $ | — | $ | — | ||||||
| Non-Cash Financing and Investing Activities: | ||||||||||||
| Oil and Natural Gas Properties Included in Account Payable | $ | 107,957,324 | $ | 60,141,180 | $ | 38,973,137 | ||||||
| Stock-Based Compensation Capitalized to Oil and Natural Gas Properties | $ | 2,273,656 | $ | 1,193,960 | $ | 582,040 | ||||||
| Accretion on Preferred Stock Issuance Discount | $ | — | $ | 8,626,000 | $ | — | ||||||
| Accretion of Preferred Stock Issuance Costs | $ | — | $ | 2,816,000 | $ | — | ||||||
| Asset Retirement Obligation Costs and Liabilities | $ | 1,966,907 | $ | 676,240 | $ | 164,967 | ||||||
| Asset Retirement Obligations Associated With Properties Sold | $ | 19,317 | $ | 312,625 | $ | — | ||||||
| Asset Retirement Obligations Settled through P&A | $ | 72,556 | $ | — | $ | — | ||||||
| Common Stock Issued for Oil and Natural Gas Properties | $ | — | $ | 6,736,935 | $ | — | ||||||
| Debt Extinguished in Conversion of Convertible Notes | $ | 21,000,000 | $ | — | $ | — | ||||||
| Purchases through Issuance of Common Stock or Assumption of Liabilities: | ||||||||||||
| Oil and Natural Gas Properties | $ | — | $ | — | $ | 40,787,238 | ||||||
| Other Property and Equipment | $ | — | $ | — | $ | 36,000 | ||||||
| Other Non-Current Assets | $ | — | $ | — | $ | 75,000 | ||||||
| Non-Cash Acquisition of Business Amounts: | ||||||||||||
| Fair Market Value of Common Stock Issued | $ | — | $ | — | $ | 13,380,501 | ||||||
| Debt Assumed | $ | — | $ | — | $ | 20,303,903 | ||||||
EMERALD OIL, INC.
CONSOLIDATED STATEMENTS
OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012
| Common Stock | ||||||||||||||||||||
| Shares | Amount | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||
| Balance – December 31, 2011 | 8,264,062 | $ | 8,264 | $ | 87,007,758 | $ | (7,874,081 | ) | $ | 79,141,941 | ||||||||||
| Common Shares Issued as Compensation | 910,296 | 910 | 3,837,212 | — | 3,838,122 | |||||||||||||||
| Restricted Stock Grants | 74,285 | 74 | (74 | ) | — | — | ||||||||||||||
| Restricted Stock Forfeited | (53,572 | ) | (53 | ) | 53 | — | — | |||||||||||||
| Restricted Stock Grant Compensation | — | — | 1,178,559 | — | 1,178,559 | |||||||||||||||
| Compensation Related to Stock Option Grants | — | — | 1,779,901 | — | 1,779,901 | |||||||||||||||
| Director Fees Related to Stock Option Grants | — | — | 1,104,147 | — | 1,104,147 | |||||||||||||||
| Issuance of Common Shares for the Acquisition of Emerald Oil North America, Inc. | 1,662,174 | 1,662 | 13,378,839 | — | 13,380,501 | |||||||||||||||
| Net Proceeds from Equity Offering | 13,877,555 | 13,878 | 72,153,134 | — | 72,167,012 | |||||||||||||||
| Reverse Split Reconciliation Due to Fractional Shares | (157 | ) | — | — | — | — | ||||||||||||||
| Net Loss | — | — | — | (62,296,099 | ) | (62,296,099 | ) | |||||||||||||
| Balance – December 31, 2012 | 24,734,643 | 24,735 | 180,439,530 | (70,170,180 | ) | 110,294,085 | ||||||||||||||
| Common shares issued for oil and natural gas properties | 1,165,015 | 1,165 | 6,735,770 | — | 6,736,935 | |||||||||||||||
| Stock-based compensation | — | — | 13,378,158 | — | 13,378,158 | |||||||||||||||
| Restricted Stock Vesting, Net of Tax Withholding | 1,012,260 | 1,012 | (2,288,675 | ) | — | (2,287,663 | ) | |||||||||||||
| Equity offering | 38,928,452 | 38,928 | 238,315,759 | — | 238,354,687 | |||||||||||||||
| Redemption of Preferred Stock and Accretion of Issuance Discount | — | — | (17,697,007 | ) | — | (17,697,007 | ) | |||||||||||||
| Preferred Stock Dividends Paid | — | — | (2,582,191 | ) | — | (2,582,191 | ) | |||||||||||||
| Net loss | — | — | — | (10,882,895 | ) | (10,882,895 | ) | |||||||||||||
| Balance – December 31, 2013 | 65,840,370 | 65,840 | 416,301,344 | (81,053,075 | ) | 335,314,109 | ||||||||||||||
| Stock-based compensation | — | — | 11,283,929 | — | 11,283,929 | |||||||||||||||
| Restricted Stock Vesting, Net of Tax Withholding | — | — | (4,011,910 | ) | — | (4,011,910 | ) | |||||||||||||
| Restricted Stock Grants | 1,266,419 | 1,266 | (1,266 | ) | — | — | ||||||||||||||
| Common shares issued to extinguish convertible debt | 10,721,824 | 10,722 | 31,427,358 | — | 31,438,080 | |||||||||||||||
| Transaction costs related to prior year offering | — | — | 33,746 | — | 33,746 | |||||||||||||||
| Stock option exercise | — | — | (24,605 | ) | — | (24,605 | ) | |||||||||||||
| Net loss | — | — | — | (52,145,225 | ) | (52,145,225 | ) | |||||||||||||
| Balance – December 31, 2014 | 77,828,613 | $ | 77,828 | $ | 455,008,596 | $ | (133,198,300 | ) | $ | 321,888,124 | ||||||||||
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:
| Year Ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| Net loss | $ | (52,145,225 | ) | $ | (10,882,895 | ) | $ | (62,296,099 | ) | |||
| Less: Preferred stock dividends and deemed dividends | — | (20,279,197 | ) | — | ||||||||
| Net loss attributable to common stockholders | (52,145,225 | ) | (31,162,092 | ) | (62,296,099 | ) | ||||||
| Add: Impairment of oil and natural gas properties | 66,430,000 | — | 61,900,692 | |||||||||
| Interest expense | 4,675,475 | 287,934 | 2,614,240 | |||||||||
| Accretion of discount on asset retirement obligations | 104,803 | 32,449 | 14,988 | |||||||||
| Depletion, depreciation and amortization | 35,187,769 | 17,454,551 | 12,824,536 | |||||||||
| Stock-based compensation | 11,459,431 | 12,885,236 | 7,318,690 | |||||||||
| Warrant revaluation expense (gain) | (13,504,000 | ) | 7,077,000 | — | ||||||||
| Preferred stock dividends | — | 2,582,191 | — | |||||||||
| Preferred stock redemption premium | — | 6,250,000 | — | |||||||||
| Accretion of preferred stock issuance discount | — | 11,447,006 | — | |||||||||
| Debt conversion expense | 10,438,080 | — | — | |||||||||
| Net (gains) losses on commodity derivatives | (11,439,240 | ) | 2,656,535 | 215,439 | ||||||||
| Gain on sale of oil and natural gas properties, net | — | (7,371,804 | ) | — | ||||||||
| Gain on acquisition of business, net | — | — | (5,758,048 | ) | ||||||||
| Net cash settlements received (paid) on commodity derivatives | 5,542,110 | (1,984,778 | ) | (34,191 | ) | |||||||
| Adjusted EBITDA | $ | 56,749,203 | $ | 20,154,228 | $ | 16,800,247 | ||||||
In addition to reporting net income as defined under GAAP, Emerald also presents net earnings before the effect of any unrealized gain from mark-to-market on commodity derivatives, mark-to-market on Emerald’s warrant liability (“adjusted income”), and share based compensation expense, which is a non-GAAP performance measure. Adjusted income consists of net earnings after adjustment for those items described in the table below. Adjusted income does not represent, and should not be considered an alternative to GAAP measurements, such as net income, 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 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 in isolation and also uses other measurements, such as net income and revenues to measure operating performance. The following table provides a reconciliation of net income, to adjusted income for the period presented:
| Three Months Ended December 31, 2014 | Year Ended December 31, 2014 | |||||||
| Net income | $ | (62,203,162 | ) | (52,145,225 | ) | |||
| Net gains on commodity derivatives | (7,716,460 | ) | (11,439,240 | ) | ||||
| Net cash settlements paid on commodity derivatives | 8,317,701 | 5,542,110 | ||||||
| Warrant revaluation income | (15,255,000 | ) | (13,504,000 | ) | ||||
| Stock based compensation expense | 1,962,387 | 11,459,431 | ||||||
| Impairment of oil and natural gas properties | 66,430,000 | 66,430,000 | ||||||
| Debt conversion expense | 10,438,080 | 10,438,080 | ||||||
| Adjusted income | $ | 1,974,546 | $ | 16,781,156 | ||||
| Adjusted income per share – basic | $ | 0.03 | $ | 0.25 | ||||
| Weighted average shares outstanding – basic | 68,070,494 | 66,772,458 | ||||||
Corporate Contact:
Emerald Oil, Inc.
Mitch Ayer
Vice President of Finance & Investor Relations
(303) 595-5600
info@emeraldoil.com
www.emeraldoil.com