November 5, 2014 - 10:15 AM EST
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Update: Emerald Oil Earnings

In a previous article, I stated I was not worried about Emerald Oil (NYSEMKT:EOX) and the company's third quarter results solidify that belief. The company reported EPS of 8 cents, that beat analysts' estimates by 1 cent, and reported revenue of $39.9M, which was 22% higher than estimates and was an increase of 175% from Q3 2013. Production did not meet expectations however with the company producing an average of 3,855 boe/d versus its estimate of 4,200 boe/d. Emerald attributed this miss to heavy rainfall in August and September that led to mandated road shut downs which resulted in delays and slow downs. Production guidance was cut as well for Q4 because of these results but is still estimated to grow 11.5% from current levels.

It definitely came off that the main focus of the Q3 conference call was to better elaborate on the company's 2015 strategy. The company was supposed to be in fact adding a fourth rig to its drilling program this past quarter but has opted out of it. The new 2015 drilling program entails a 2.25 rig program, assuming the current oil price uncertainty remains. It has 3 rigs until March when one of the contracts expires. That contract can be renewed then, but the company will not renew it if the current oil environment remains. The 2 rigs that remain would be running continuously for 2015. McAndrew said on the call they would not have to tap either the debt or equity markets in 2015, unless they opt to keep the 3rd rig in which case he said they would tap the debt…

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Source: SeekingAlpha (November 5, 2014 - 10:15 AM EST)

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