Emerald Oil Reports Fourth Quarter and Year End 2014 Financial and Operational Results

DENVER, CO--(Marketwired - 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).

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.

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.

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.

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:

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: