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 November 3, 2014 - 4:30 PM EST
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Emerald Oil Reports Third Quarter 2014 Financial and Operational Results; Establishes 2015 Production and CAPEX Guidance

DENVER, CO--(Marketwired - Nov 3, 2014) - Emerald Oil, Inc. (NYSE MKT: EOX) ("Emerald" or the "Company") today announced financial and operational results for the quarter ended September 30, 2014 and established production and CAPEX guidance for 2015.

Highlights

  • Production of 351,755 BOE during the third quarter of 2014, an average of approximately 3,855 BOEPD, an increase of 3% compared to the second quarter of 2014 and 104% compared to the third quarter of 2013;
  • EBITDA of $26.2 million; Adjusted EBITDA of $15.3 million for the third quarter of 2014;
  • Net income attributable to common shareholders of $13.7 million or $0.21 per share (basic) for the third quarter of 2014 and adjusted net income attributable to common shareholders of of $5.3 million or $0.08 per share (basic) for the third quarter of 2014;
  • LOE costs during the third quarter of 2014 of approximately $12.70 per BOE;

Production

For the third quarter of 2014, Emerald's total production volumes on a BOE basis increased 104% compared to the third quarter of 2013. Production increased due to the addition of 5.69 net wells and the acquisition of 18.5 net operated Bakken/Three Forks wells during the third quarter of 2014. Emerald missed third quarter 2014 production guidance by 8% because of North Dakota mandated road shut downs due to heavy rains during the months of August and September. This resulted in completion scheduling delays, artificial lift installation deferrals and shut-ins of producing wells. The previously scheduled third quarter completion jobs will be completed during the fourth quarter of 2014 as well as scheduled artificial lift installations. Due to the temporary downtime associated with the artificial lift installations, Emerald is reducing its fourth quarter of 2014 average production guidance by approximately 6.5% to 4,300 BOEPD and exit rate guidance to 4,600 BOEPD. We elected to swap out electric submersible pumps to install rod pumps on multiple wells in Q3 and Q4 2014 in order to drive lifting costs down in 2015. Emerald realized an $82.61 average price per Bbl of oil (including settled derivatives) in the third quarter of 2014 compared to a $95.32 average price per Bbl of oil during the third quarter of 2013. For detailed well performance data see Emerald's corporate presentation (available on its website, www.emeraldoil.com).

      Quarter Ended September 30,
      2014     2013
Sales Volume (Total)            
Oil (Bbls)     338,352     164,570
Gas (Mcf)     80,417     48,648
Sales volumes (Boe)     351,755     172,678
             
Average Daily Sales            
Oil (Bbls)     3,708     1,803
Gas (Mcf)     881     533
Sales volumes (Boe)     3,855     1,892
             
Average Sales Prices            
Oil, Net of Settled Derivatives (Bbls)   $ 82.61   $ 95.32
Gas (Mcf)     5.73     7.48
Barrel of Oil Equivalent with Settled Derivatives (Boe)   $ 80.78   $ 92.96

Financial Results

Revenues from sales of oil and natural gas for the third quarter of 2014 were $28.7 million compared to $17.3 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 in its Low Rider project area. Crude oil revenue accounted for approximately 98% of oil and gas sales recorded during the third quarter 2014.

Lease operating expenses for the third quarter of 2014 were $4.5 million, or $12.70 per BOE. Emerald also incurred non-recurring workover expenses associated with recently acquired properties of $2.5 million, or $7.10 per BOE. Workovers were focused on repairing rod pumps and artificial lift on recently acquired wells. Maintenance was required to restart wells due to the state mandated weather related road closures during the months of August and September which caused multiple days of shut-ins to existing producing wells. Weather related shut-ins should diminish in the first quarter of 2015 once the midstream gathering installation is complete because the company will be less reliant on trucks to transport oil and liquids. Emerald expects the construction of both the Low Rider core electrical and midstream system to be complete by February 1, 2015.

General and administrative expenses for the third quarter of 2014 were $5.5 million compared to $6.2 million in the third quarter 2013. G&A decreased 28% from the second quarter of 2014. Share-based compensation expenses are included in the employee compensation and related expenses, totaling $2.8 million in the third quarter of 2014 compared to $4.2 million in the third quarter of 2013. The decrease in G&A expense is attributed to realized and ongoing corporate and operational expense reductions targeting increased EBITDA margins.

Adjusted EBITDA was $15.3 million for the third quarter of 2014, compared to $10.1 million for the same period in 2013, reflecting a 52% increase. Adjusted Net Income was $5.3 million for the third quarter of 2014. 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.

2015 Development Plan

Emerald based its 2015 development plan upon a range of commodity price forecasts due to recent volatility in the price of oil. The initial 2015 production and CAPEX guidance is based upon a more conservative 2.25 rig program that assumes moving to a two-rig program in the late first quarter of 2015. Management will make a definitive decision whether or not the company will continue drilling with 3 rigs or move to a 2.25 rig program in the first quarter of 2015. Under a revised 2.25 rig program for 2015, the company will focus the majority of its development activies on holding undeveloped acreage in McKenzie County, ND and will reduce infill drilling activity in order to accelerate the HBP (Held by Production) process for all of Emerald's leasehold. This 2.25 rig drilling program will hold approximately 85% of Emerald's undeveloped acreage by the end of 2015 and 100% by the second quarter of 2016. If realized oil prices (net of Bakken differentials) and the forward oil curve rebound, then Emerald has the flexibility to maintain its current three-rig operated program and hold all undeveloped acreage by the end of 2015. Both the 2.25 and three-rig operated drilling programs sequences are provided below.

2015 Production and CAPEX Guidance

Assumes Emerald's currently anticipated 2.25 rig program for 2015.

    Boe/d Range    
    Low End     High End    
1Q 2015 Average   4,500     4,800    
2Q 2015 Average   5,400     5,700    
3Q 2015 Average   5,800     6,250    
4Q 2015 Average   6,000     6,400    
               
               
2015 Average   5,425     5,800    
Year over year average production growth   50 %   60 %  
2015 Exit Rate   6,200     6,600    
Year over year average Exit Rate growth   35 %   43 %  
    2015 Capital Expenditures Range ($mm)  
    Low End   High End  
2015 Drilling and Completion Budget   $ 210.0   $ 240.0  
2015 Land Budget   $ 5.0   $ 20.0  
               
               
Net Operated Well Count     22.1     25.2  

Credit Facility Update

The Company and its lending syndicate are currently in the final stages of completing the semi-annual borrowing base redetermination of its revolving credit facility. Emerald expects the borrowing base to increase by $50 million to $250 million upon completion of the current redetermination. Emerald and its lenders expect this process to be finalized in the coming weeks. The Company will announce the borrowing base increase upon completion. Emerald expects the next borrowing base redetermination will take place in March 2015.

Management Comments

McAndrew Rudisill the Chief Executive Officer of Emerald stated "Emerald is well positioned to weather the current oil price environment. Despite the recent drop in the price of oil, our borrowing base is pending to increase upon completion of the current redetermination. Based upon our currently planned 2.25 rig program in 2015, Emerald is fully financed to fund our entire 2015 capital expenditure program without requiring access to debt or equity capital markets. Our borrowing base is going to continue to grow as we add new reserves in currently undeveloped drilling spacing units. Our 2015 development efforts are focused on HBPing our entire McKenzie County, ND position. We expect to drive both LOE and differentials down further through improved midstream infrastructure solutions across all of our leasehold. Our midstream and electrical infrastructure is progressing on schedule and will be complete in February 2015. We are prepared for further volatility in the oil markets and have retained the optionality to maintain the current 3 rig development plans if the opportunity presents. I am pleased to note that our first 90 stage coil tubing completion job in the Pronghorn Sand on Lloyd Christmas 4 resulted in a 24 hour initial production rate of 1337 BOE/d and an average 30 day production rate of 696 BOE/d." 

Hedging Activity

The following table reflects open commodity swap contracts as of September 30, 2014, the associated volumes and the corresponding weighted average NYMEX reference price:

Settlement Period   Oil (Bbls)     Fixed Price
Range
Oil Swaps          
October 1, 2014 - December 31, 2014   29,468   $ 90.00 - 93.00
October 1, 2014 - December 31, 2014   21,600     93.01 - 96.00
October 1, 2014 - December 31, 2014   251,985     96.01 - 99.00
October 1, 2014 - December 31, 2014   82,612     99.01 - 102.00
2014 Total/Average   385,665   $ 97.16
           
January 1, 2015 - April 30, 2015   18,876   $ 90.00 - 93.00
January 1, 2015 - April 30, 2015   93,100     93.01 - 96.00
January 1, 2015 - April 30, 2015   341,251     96.01 - 99.00
2015 Total/Average   453,227   $ 96.24
           

On October 3, 2014, the Company partially settled outstanding NYMEX West Texas Intermediate oil derivative swap contracts on a total of 396,000 barrels of oil, resulting in an estimated cash settlement of $3,499,880.

Conference Call

Emerald will host a conference call on Tuesday, November 4, 2014 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. 3Q2014 Financial and Operational Results Conference Call
Date:   Tuesday, November 4, 2014
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:   http://www.emeraldoil.com/
Telephone Dial-In:   877-407-8831 (toll-free) and 201-493-6736 (international)
 
Telephone Replay:   Available through Tuesday, November 11, 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.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
             
    September 30, 2014     December 31, 2013  
ASSETS                
CURRENT ASSETS                
Cash and Cash Equivalents   $ 12,561,188     $ 144,255,438  
Restricted Cash     6,000,000       15,000,512  
Accounts Receivable - Oil and Natural Gas Sales     10,106,403       8,715,821  
Accounts Receivable - Joint Interest Partners     32,747,260       31,523,204  
Other Receivables     1,709,827       577,409  
Prepaid Expenses and Other Current Assets     430,174       206,299  
Fair Value of Commodity Derivatives     5,645,366       --  
Total Current Assets     69,200,218       200,278,683  
PROPERTY AND EQUIPMENT                
Oil and Natural Gas Properties, Full Cost Method, at cost:                
Proved Oil and Natural Gas Properties     491,003,344       211,015,067  
Unproved Oil and Natural Gas Properties     168,263,288       57,015,315  
  Equipment and Facilities     4,976,122       1,837,744  
Other Property and Equipment     1,906,488       890,811  
Total Property and Equipment     666,149,242       270,758,937  
Less - Accumulated Depreciation, Depletion and Amortization     (72,499,921 )     (48,176,522 )
Total Property and Equipment, Net     593,649,321       222,582,415  
Restricted Cash     4,000,000       6,000,000  
Fair Value of Commodity Derivatives     --       68,396  
Debt Issuance Costs, Net of Amortization     6,471,820       475,157  
Deposits on Acquisitions     773,809       125,368  
Other Non-Current Assets     290,181       357,644  
Total Assets   $ 674,385,349     $ 429,887,663  
LIABILITIES AND STOCKHOLDERS' EQUITY                
CURRENT LIABILITIES                
Accounts Payable   $ 98,355,284     $ 63,168,422  
Fair Value of Commodity Derivatives     --       921,401  
Accrued Expenses     8,575,206       11,821,729  
  Advances from Joint Interest Partners     2,405,972       2,205,538  
Total Current Liabilities     109,336,462       78,117,090  
LONG-TERM LIABILITIES                
Revolving Credit Facility     20,000,000       --  
Convertible Senior Notes     172,500,000       --  
Asset Retirement Obligations     2,425,731       692,137  
Warrant Liability     17,454,000       15,703,000  
Other Non-Current Liabilities     254,878       56,327  
Total Liabilities     321,971,071       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 September 30, 2014 and December 31, 2013. Liquidation preference value of $5,115 as of September 30, 2014 and December 31, 2013.     5,000       5,000  
                 
STOCKHOLDERS' EQUITY                
Common Stock, Par Value $.001; 500,000,000 Shares Authorized, 66,619,355 and 65,840,370 Shares Issued and Outstanding, respectively     66,619       65,840  
Additional Paid-In Capital     423,337,799       416,301,344  
Accumulated Deficit     (70,995,140 )     (81,053,075 )
Total Stockholders' Equity     352,409,278       335,314,109  
Total Liabilities and Stockholders' Equity   $ 674,385,349     $ 429,887,663  
                 
                 
EMERALD OIL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
  2014   2013   2014     2013  
REVENUES                          
Oil Sales $ 28,266,332     $ 16,952,644     $ 76,989,268     $ 35,287,288  
Natural Gas Sales   460,857       363,914       2,061,201       821,069  
Net Gains (Losses) on Commodity Derivatives   11,184,716       (2,720,160 )     3,722,780       (2,822,427 )
Total Revenues   39,911,905       14,596,398       82,773,249       33,285,930  
OPERATING EXPENSES                              
Production Expenses   6,962,450       2,087,635       13,477,176       4,723,520  
Production Taxes   3,142,998       1,879,160       8,632,608       3,629,557  
General and Administrative Expenses   5,483,655       6,194,202       21,609,218       17,562,754  
Depletion of Oil and Natural Gas Properties   9,193,566       4,497,002       24,071,676       11,238,783  
Depreciation and Amortization   104,465       40,631       251,722       94,665  
Accretion of Discount on Asset Retirement Obligations   28,037       7,502       63,837       21,564  
Gain on Sale of Oil and Natural Gas Properties   --       (8,892,344 )     --       (8,892,344 )
  Total Operating Expenses   24,915,171       5,813,788       68,106,237       28,378,499  
                               
INCOME FROM OPERATIONS   14,996,734       8,782,610       14,667,012       4,907,431  
                               
OTHER INCOME (EXPENSE)                              
Interest Expense   (1,206,571 )     (21,437 )     (2,515,034 )     (276,113 )
Warrant Revaluation Income (Expense)   216,000       (506,000 )     (1,751,000 )     (4,587,000 )
Other Income (Expense)   (347,088 )     3,332       (343,041 )     6,230  
Total Other Expense, Net   (1,337,659 )     (524,105 )     (4,609,075 )     (4,856,883 )
                               
INCOME BEFORE INCOME TAXES   13,659,075       8,258,505       10,057,937       50,548  
                               
INCOME TAX PROVISION   --       --       --       --  
                               
NET INCOME   13,659,075       8,258,505       10,057,937       50,548  
Less: Preferred Stock Dividends and Deemed Dividends   --       (13,997,089 )     --       (20,279,197 )
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 13,659,075     $ (5,738,584 )   $ 10,057,937     $ (20,228,649 )
                               
Net Income (Loss) Per Common Share - Basic $ 0.21     $ (0.13 )   $ 0.15     $ (0.60 )
                               
Net Income (Loss) Per Common Share - Diluted $ 0.16     $ (0.13 )   $ 0.14     $ (0.60 )
                               
Weighted Average Shares Outstanding - Basic   66,499,397       42,725,711       66,335,025       33,738,417  
                               
Weighted Average Shares Outstanding -Diluted   88,380,397       42,725,711       81,867,545       33,738,417  
                               
                               
EMERALD OIL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
    Nine Months Ended September 30,  
    2014   2013
CASH FLOWS FROM OPERATING ACTIVITIES                
Net Income   $ 10,057,937     $ 50,548  
Adjustments to Reconcile Net Loss to Net Cash Provided By Operating Activities:                
Depletion of Oil and Natural Gas Properties     24,071,676       11,238,783  
Depreciation and Amortization     251,722       94,665  
Amortization of Debt Issuance Costs     727,997       75,618  
Accretion of Discount on Asset Retirement Obligations     63,837       21,564  
Gain on Sale of Oil and Natural Gas Properties     --       (8,892,344 )
Net (Gains) Losses on Commodity Derivatives     (3,722,780 )     2,822,427  
Net Cash Settlements Paid on Commodity Derivatives     (2,775,591 )     (1,597,536 )
Warrant Revaluation Expense     1,751,000       4,587,000  
Share-Based Compensation Expense     9,497,044       6,538,319  
Changes in Assets and Liabilities:                
Decrease (Increase) in Trade Receivables - Oil and Natural Gas Revenues     (1,390,582 )     7,650,021  
Increase in Accounts Receivable - Joint Interest Partners     (1,224,056 )     (22,095,552 )
Decrease (Increase) in Other Receivables     (1,132,418 )     1,061,301  
Increase in Prepaid Expenses and Other Current Assets     (223,875 )     (332,718 )
Decrease (Increase) in Other Non-Current Assets     67,463       (305,272 )
Increase in Accounts Payable     2,364,168       1,631,558  
Increase (Decrease) in Accrued Expenses     (7,813,470 )     5,537,377  
Increase in Other Non-Current Liabilities     198,551       --  
Increases in Advances from Joint Interest Partners     200,434       1,452,969  
Net Cash Provided By Operating Activities     30,969,057       9,538,728  
CASH FLOWS FROM INVESTING ACTIVITIES                
Purchases of Other Property and Equipment     (1,015,677 )     (343,287 )
Restricted Cash Released     11,000,512       --  
Restricted Cash Received     --       (21,000,000 )
Payments of Restricted Cash     (2,648,721 )     --  
Increase in Deposits for Acquisitions     (648,441 )     (2,500,000 )
Use of Prepaid Drilling Costs     --       98,565  
Proceeds from Sale of Oil and Natural Gas Properties, Net of Transaction Costs     36,155,859       134,627,306  
Investment in Oil and Natural Gas Properties     (391,368,324 )     (138,610,383 )
Net Cash Used For Investing Activities     (348,524,792 )     (27,727,799 )
CASH FLOWS FROM FINANCING ACTIVITIES                
Proceeds from Issuance of Common Stock, Net of Transaction Costs     --       95,977,763  
Proceeds from Issuance of Preferred Stock, Net of Transaction Costs     --       47,183,994  
Proceeds from Issuance of Convertible Senior Notes, Net of Transaction Costs     166,893,211       --  
Advances on Revolving Credit Facility     55,000,000       --  
Payments on Preferred Stock     --       (35,000,000 )
Payments on Revolving Credit Facility     (35,000,000 )     (23,500,000 )
Preferred Stock Dividends and Deemed Dividends     --       (6,899,657 )
Proceeds from Exercise of Stock Options and Warrants     110,750       --  
Cash Paid for Debt Issuance Costs     (1,117,871 )     --  
Cash Paid for Finance Costs     (24,605 )     (237,500 )
Net Cash Provided by Financing Activities     185,861,485       77,524,600  
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     (131,694,250 )     59,335,529  
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD     144,255,438       10,192,379  
CASH AND CASH EQUIVALENTS - END OF PERIOD   $ 12,561,188     $ 69,527,908  
Supplemental Disclosure of Cash Flow Information                
Cash Paid During the Period for Interest   $ 1,867,433     $ 255,776  
Cash Paid During the Period for Income Taxes   $ --     $ --  
Non-Cash Financing and Investing Activities:                
Oil and Natural Gas Properties Included in Accounts Payable   $ 92,963,874     $ 38,646,242  
Stock-Based Compensation Capitalized to Oil and Natural Gas Properties   $ 2,020,992     $ 624,325  
Accretion on Preferred Stock Issuance Discount   $ --     $ 8,626,000  
Accrued Preferred Stock Dividend and Deemed Dividend   $ --     $ 1,932,534  
Asset Retirement Obligation Costs and Liabilities   $ 1,669,757     $ 116,471  
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 September 30,
      2014       2013  
Net income   $ 13,659,075     $ 8,258,505  
Less: Preferred stock dividends and deemed dividends     --       (13,997,089 )
Net income (loss) attributable to common stockholders     13,659,075       (5,738,584 )
Add: Interest expense     1,206,571       21,437  
    Accretion of discount on asset retirement obligations     28,037       7,502  
    Depletion, depreciation and amortization     9,298,031       4,537,633  
    Stock-based compensation     2,818,161       4,172,522  
    Warrant revaluation expense     --       506,000  
     Preferred stock dividends     --       764,383  
    Preferred stock redemption premium     --       4,375,000  
    Accretion of preferred stock issuance discount     --       8,857,706  
    Net losses on commodity derivatives     --       2,720,160  
Less: Net cash settlements paid on commodity derivatives     (313,451 )     (1,264,755 )
    Net gains on commodity derivatives     (11,184,716 )     --  
    Gain on sale of oil and natural gas properties     --       (8,892,344 )
    Warrant revaluation income     (216,000 )     --  
Adjusted EBITDA   $ 15,295,708     $ 10,066,660  

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 September 30, 2014  
Net income   $ 13,569,075  
Net gains on commodity derivatives     (11,184,716 )
Net cash settlements paid on commodity derivatives     313,451  
Warrant revaluation income     (216,000 )
Stock based compensation expense     2,818,161  
Adjusted income   $ 5,299,971  
         
Adjusted income per share - basic   $ 0.08  
         
Adjusted income per share - diluted   $ 0.07  
         
Weighted average shares outstanding - basic     66,499,397  
         
Weighted average shares outstanding - diluted     88,380,397  
         
         

Corporate Contact:

Emerald Oil, Inc.
Mitch Ayer
Vice President of Finance & Investor Relations
(303) 595-5626
info@emeraldoil.com
www.emeraldoil.com


Source: Marketwired (November 3, 2014 - 4:30 PM EST)

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