Emerald Oil Reports Third Quarter 2015 Financial and Operational Results and Guidance Increase
/EINPresswire.com/ -- DENVER, CO--(Marketwired - November 04, 2015) - Emerald Oil, Inc. (NYSE MKT: EOX) ("Emerald" or the "Company") today announced financial and operational results for the quarter ended September 30, 2015.
Highlights
- Third quarter production of 523,202 BOE increased 49% as compared to 351,755 BOE in the third quarter of 2014. Daily production averaged 5,687 BOEPD, 17% above the midpoint and 14% above the high end of Emerald's third quarter 2015 guidance range;
- 2015 fourth quarter production guidance raised 500 Boe/d to 4,700 - 5,000 Boe/d;
- Reduction of per unit LOE costs during the third quarter of 2015 to approximately $12.96 per BOE, a decrease of 31% compared to the second quarter of 2015;
- Third quarter oil and natural gas revenue of $17.8 million, not including effect of settled derivatives;
- Third quarter Adjusted EBITDA of $5.9 million
Third Quarter 2015 Production
For the third quarter of 2015, Emerald's total production volumes on a BOE basis increased 49% as compared to the third quarter of 2014. During the third quarter of 2015, Emerald realized a $37.65 average price per Bbl of oil (including settled derivatives) compared to an $82.61 average price per Bbl of oil during the third quarter of 2014.
Quarter Ended September 30,
-----------------------------
2015 2014
-------------- --------------
Sales Volume (Total)
Oil (Bbls) 496,829 338,352
Gas (Mcf) 158,240 80,417
-------------- --------------
Sales volumes (Boe) 523,202 351,755
Average Daily Sales
Oil (Bbls) 5,400 3,678
Gas (Mcf) 1,720 874
-------------- --------------
Sales volumes (Boe) 5,687 3,823
Average Sales Prices
Oil (Bbl) $ 34.92 $ 83.54
Effect of Settled Oil Derivatives 2.73 (0.93)
-------------- --------------
Oil Net of Settled Derivatives (Bbl) $ 37.65 $ 82.61
Gas (Mcf) $ 3.13 $ 5.73
Barrel of Oil Equivalent with Settled
Derivatives $ 36.70 $ 80.78
Financial Results
Revenues from sales of oil and natural gas for the third quarter of 2015 were $17.8 million compared to $28.7 million for the same period in 2014. The decrease was due to lower realized crude oil prices during the third quarter of 2015. Crude oil revenue accounted for approximately 97% of oil and natural gas sales.
Lease operating expenses for the third quarter of 2015 were $6.8 million compared to $4.5 million for the same period in 2014. On a per unit basis, lease operating expenses were $12.96 per BOE in the third quarter of 2015 compared to $12.70 per BOE in the third quarter of 2014. Emerald also incurred workover expenses for the third quarter of 2015 of $1.4 million, or $2.71 per BOE.
General and administrative expenses for the third quarter of 2015 were $3.8 million compared to $5.5 million for the same period in 2014. On a per unit basis, G&A expenses (excluding non-cash stock-based compensation) were $6.50 per BOE in the third quarter of 2015 compared to $7.58 per BOE in the third quarter of 2014. Share-based compensation expenses, which are included in G&A expense, totaled $0.4 million in the third quarter of 2015 compared to $2.8 million for the same period in 2014.
Adjusted EBITDA was $5.9 million for the third quarter of 2015, as compared to $15.3 million for the same period in 2014. Adjusted Net Income (Loss) was $(12.1) million for the third quarter of 2015. Emerald recognized a $158.3 million non-cash impairment expense for the quarter ended September 30, 2015 due primarily to the substantial declines in commodity prices. Adjusted EBITDA and Adjusted Net Income (Loss) are non-GAAP financial measures. For additional information please refer to the reconciliation of these measures at the end of this news release.
Revolving Credit Facility Update
The Company and its advisors are continuing to work with the bank group regarding a payment schedule for the previously announced borrowing base deficiency of $19.6 million. Additionally, Emerald and its advisors are working with a group of second lien term providers for a term debt solution to address both the borrowing base and working capital.
Conference Call
Emerald will host a conference call on Thursday, November 5, 2015 at 9:30 a.m. Eastern Time (7:30 a.m. Mountain Time) to discuss financial and operational results for the quarter end.
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Emerald Oil, Inc. 3Q2015 Financial and Operational Results Conference Call
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Date: Thursday, November 5, 2015
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Time: 9:30 a.m. Eastern Time
8:30 a.m. Central Time
7:30 a.m. Mountain Time
6:30 a.m. Pacific Time
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Live and rebroadcast over the Internet at the Emerald Oil
Webcast: website
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Website: www.emeraldoil.com
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Telephone
Dial-In: 877-407-8831 (toll-free) and 201-493-6736 (international)
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Telephone
Replay: Available through Thursday, November 12, 2015
877-660-6853 (toll-free) and 201-612-7415 (international)
Passcode: 413333
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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)
September 30, December 31,
2015 2014
-------------- --------------
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 5,068,320 $ 12,389,230
Accounts Receivable - Oil and Natural Gas
Sales 4,002,942 7,203,455
Accounts Receivable - Joint Interest
Partners 8,370,512 31,842,464
Other Receivables 860,980 980,317
Prepaid Expenses and Other Current Assets 681,581 289,061
Fair Value of Commodity Derivatives 6,336,057 5,044,125
-------------- --------------
Total Current Assets 25,320,392 57,748,652
PROPERTY AND EQUIPMENT
Oil and Natural Gas Properties, Full Cost
Method, at cost:
Proved Oil and Natural Gas Properties 697,814,220 593,472,170
Unproved Oil and Natural Gas Properties 141,768,220 166,708,263
Equipment and Facilities 15,220,754 6,086,896
Other Property and Equipment 4,266,762 2,583,372
-------------- --------------
Total Property and Equipment 859,069,956 768,850,701
Less - Accumulated Depreciation, Depletion
and Amortization (486,650,786) (149,703,417)
-------------- --------------
Total Property and Equipment, Net 372,419,170 619,147,284
Restricted Cash - 4,000,000
Fair Value of Commodity Derivatives 1,375,070 -
Debt Issuance Costs, Net of Amortization 4,183,174 5,779,125
Deposits on Acquisitions - 140,173
Deferred Tax Assets, Net 1,813,561 1,813,796
Other Non-Current Assets 329,572 430,846
-------------- --------------
Total Assets $ 405,440,939 $ 689,059,876
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 38,762,753 $ 120,136,903
Revolving Credit Facility 159,683,000 -
Convertible Senior Notes 151,500,000 -
Accrued Expenses 5,073,975 11,267,831
Advances from Joint Interest Partners 802,119 2,577,247
Deferred Tax Liability, Net 1,813,561 1,813,796
-------------- --------------
Total Current Liabilities 357,635,408 135,795,777
LONG-TERM LIABILITIES
Revolving Credit Facility - 75,000,000
Convertible Senior Notes - 151,500,000
Asset Retirement Obligations 3,265,518 2,671,975
Warrant Liability 187,000 2,199,000
Fair Value of Commodity Derivatives - -
-------------- --------------
Total Liabilities 361,087,926 367,166,752
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COMMITMENTS AND CONTINGENCIES
Preferred Stock - Par Value $.001; 20,000,000
Shares Authorized;
Series B Voting Preferred Stock - 255,732
issued and outstanding at September 30,
2015 and December 31, 2014. Liquidation
preference value of $256 as of September
30, 2015 and December 31, 2014. 256 256
STOCKHOLDERS' EQUITY
Common Stock, Par Value $.001; 500,000,000
Shares Authorized, 8,708,499 and 3,891,431
Shares Issued and Outstanding, respectively 8,709 3,891
Additional Paid-In Capital 507,612,218 455,087,277
Accumulated Deficit (463,268,170) (133,198,300)
-------------- --------------
Total Stockholders' Equity 44,352,757 321,892,868
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Total Liabilities and Stockholders' Equity $ 405,440,939 $ 689,059,876
============== ==============
EMERALD OIL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended September Nine Months Ended September
30, 30,
----------------------------- -----------------------------
2015 2014 2015 2014
-------------- -------------- -------------- --------------
REVENUES
Oil Sales $ 17,350,524 $ 28,266,332 $ 52,981,871 $ 76,989,268
Natural Gas
Sales 494,804 460,857 1,224,667 2,061,201
Net Gains on
Commodity
Derivatives 12,699,147 11,184,716 8,148,386 3,722,780
-------------- -------------- -------------- --------------
Total
Revenues 30,544,475 39,911,905 62,354,924 82,773,249
-------------- -------------- -------------- --------------
OPERATING
EXPENSES
Production
Expenses 8,201,949 6,962,450 25,972,453 13,477,176
Production
Taxes 1,653,989 3,142,998 5,488,364 8,632,608
General and
Administrativ
e Expenses 3,821,473 5,483,655 12,495,471 21,609,218
Depletion of
Oil and
Natural Gas
Properties 11,242,324 9,193,566 31,622,386 24,071,676
Impairment of
Oil and
Natural Gas
Properties 158,278,000 - 304,903,000 -
Depreciation
and
Amortization 232,350 104,465 559,139 251,722
Accretion of
Discount on
Asset
Retirement
Obligations 52,500 28,037 153,007 63,837
Standby Rig
Expense 3,800,446 - 6,173,111 -
-------------- -------------- -------------- --------------
Total
Operating
Expenses 187,283,031 24,915,171 387,366,931 68,106,237
-------------- -------------- -------------- --------------
INCOME (LOSS)
FROM OPERATIONS (156,738,556) 14,996,734 (325,012,007) 14,667,012
OTHER INCOME
(EXPENSE)
Interest
Expense (2,735,348) (1,206,571) (7,044,901) (2,515,034)
Warrant
Revaluation
Gain
(Expense) 221,000 216,000 2,012,000 (1,751,000)
Other Income
(Expense) 281 (347,088) 539 (343,041)
-------------- -------------- -------------- --------------
Total Other
Expense,
Net (2,514,067) (1,337,659) (5,032,362) (4,609,075)
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
INCOME (LOSS)
BEFORE INCOME
TAXES (159,252,623) 13,659,075 (330,044,369) 10,057,937
INCOME TAX
PROVISION - - - -
-------------- -------------- -------------- --------------
NET INCOME
(LOSS) $(159,252,623) $ 13,659,075 $(330,044,369) $ 10,057,937
============== ============== ============== ==============
Net Income
(Loss) Per
Common Share -
Basic $ (19.85) $ 4.11 $ (52.10) $ 3.03
============== ============== ============== ==============
Net Income
(Loss) Per
Common Share -
Diluted $ (19.85) $ 3.29 $ (52.10) $ 2.89
============== ============== ============== ==============
Weight Average
Shares
Outstanding -
Basic 8,021,992 3,324,970 6,334,549 3,316,751
============== ============== ============== ==============
Weighted Average
Shares
Outstanding
-Diluted 8,021,992 4,419,020 6,334,549 4,093,377
============== ============== ============== ==============
EMERALD OIL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September
30,
-----------------------------
2015 2014
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(330,044,369) $ 10,057,937
Adjustments to Reconcile Net Loss to Net Cash
Provided By Operating Activities:
Depletion of Oil and Natural Gas Properties 31,622,386 24,071,676
Impairment of Oil and Natural Gas Properties 304,903,000 -
Depreciation and Amortization 559,138 251,722
Amortization of Debt Issuance Costs 2,145,832 727,997
Accretion of Discount on Asset Retirement
Obligations 153,007 63,837
Net Gains on Commodity Derivatives (8,148,386) (3,722,780)
Net Cash Settlements Received (Paid) on
Commodity Derivatives 5,481,384 (2,775,591)
Warrant Revaluation (Gain) Expense (2,012,000) 1,751,000
Share-Based Compensation Expense 2,710,683 9,497,044
Changes in Assets and Liabilities:
Decrease (Increase) in Trade Receivables -
Oil and Natural Gas Revenues 3,200,513 (1,390,582)
Decrease (Increase) in Accounts Receivable -
Joint Interest Partners 23,471,952 (1,224,056)
Decrease (Increase) in Other Receivables 119,337 (1,132,418)
Increase in Prepaid Expenses and Other
Current Assets (392,520) (223,875)
(Increase) Decrease in Other Non-Current
Assets (35,882) 67,463
(Decrease) Increase in Accounts Payable 6,585,510 2,364,168
Decrease in Accrued Expenses (4,867,351) (7,813,470)
Increase in Other Non-Current Liabilities - 198,551
(Decrease) Increase in Advances from Joint
Interest Partners (1,775,128) 200,434
-------------- --------------
Net Cash Provided By Operating Activities 33,677,105 30,969,057
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of Other Property and Equipment (1,683,390) (1,015,677)
Restricted Cash Released 4,000,000 11,000,512
Payments of Restricted Cash - (2,648,721)
Decrease (Increase) in Deposits for
Acquisitions 140,173 (648,441)
Proceeds from Sale of Oil and Natural Gas
Properties, Net of Transaction Costs - 36,155,859
Investment in Oil and Natural Gas Properties (175,371,888) (391,368,324)
-------------- --------------
Net Cash Used For Investing Activities (172,915,105) (348,524,792)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Issuance of Convertible Senior
Notes, Net of Transaction Costs - 166,893,211
Proceeds from Issuance of Common Stock, Net
of Transaction Costs 48,049,115 -
Advances on Revolving Credit Facility 100,000,000 55,000,000
Payments on Revolving Credit Facility (15,317,000) (35,000,000)
Cash Paid for Finance Costs (265,144) (24,605)
Cash Paid for Debt Issuance Costs (549,881) (1,117,871)
Proceeds from Exercise of Stock Options and
Warrants - 110,750
-------------- --------------
Net Cash Provided by Financing Activities 131,917,090 185,861,485
-------------- --------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (7,320,910) (131,694,250)
CASH AND CASH EQUIVALENTS - BEGINNING OF
PERIOD 12,389,230 144,255,438
-------------- --------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 5,068,320 $ 12,561,188
============== ==============
Supplemental Disclosure of Cash Flow
Information
Cash Paid During the Period for Interest $ 4,124,010 $ 1,867,433
============== ==============
Cash Paid During the Period for Income Taxes $ - $ -
============== ==============
Non-Cash Financing and Investing Activities:
Oil and Natural Gas Properties Included in
Accounts Payable $ 19,997,664 $ 92,963,874
============== ==============
Stock-Based Compensation Capitalized to Oil
and Natural Gas Properties $ 708,600 $ 2,020,992
============== ==============
Asset Retirement Obligation Costs and
Liabilities $ 440,536 $ 1,669,757
============== ==============
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, warrant revaluation (gains) and expenses, net gain (loss) from mark-to-market on commodity derivatives, cash settlements received (paid), standby rig expenses 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 Nine Months Ended September
30, 30,
----------------------------- -----------------------------
2015 2014 2015 2014
-------------- -------------- -------------- --------------
Net loss $(159,252,623) $ 13,659,075 $(330,044,369) $ 10,057,937
Impairment of
oil and
natural gas
properties 158,278,000 - 304,903,000 -
Interest
expense 2,735,348 1,206,571 7,044,901 2,515,034
Accretion of
discount on
asset
retirement
obligations 52,500 28,037 153,007 63,837
Depletion,
depreciation
and
amortization 11,474,674 9,298,031 32,181,525 24,323,398
Stock-based
compensation 423,145 2,818,161 2,586,898 9,497,044
Warrant
revaluation
(gain)
expense (221,000) (216,000) (2,012,000) 1,751,000
Net gains on
commodity
derivatives (12,699,147) (11,184,716) (8,148,386) (3,722,780)
Net cash
settlements
received
(paid) on
commodity
derivatives 1,354,804 (313,451) 5,481,384 (2,775,591)
Standby rig
expense 3,800,446 - 6,173,111 -
-------------- -------------- -------------- --------------
Adjusted EBITDA $ 5,946,147 $ 15,295,708 $ 18,319,071 $ 41,709,879
============== ============== ============== ==============
In addition to reporting net income (loss) as defined under GAAP, we also present "adjusted income (loss)", which we define as net earnings before the effect of any impairment of oil and natural gas properties, unrealized gain (loss) from mark-to-market on commodity derivatives, mark-to-market on our warrant liability, share-based compensation expense and the other items described in the table below. Adjusted income (loss) is a non-GAAP performance measure. Adjusted income (loss) does not represent, and should not be considered an alternative to GAAP measurements, such as net income (loss), 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 our fundamental core operating performance. We also believe 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. Our management uses adjusted income to manage our business, including in preparing our annual operating budget and financial projections. Our 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 September Nine Months Ended September
30, 30,
----------------------------- -----------------------------
2015 2014 2015 2014
-------------- -------------- -------------- --------------
Net loss $(159,252,623) $ 13,659,075 $(330,044,369) $ 10,057,937
Impairment of
oil and
natural gas
properties 158,278,000 - 304,903,000 -
Stock-based
compensation 423,145 2,818,161 2,586,898 9,497,044
Warrant
revaluation
(gain)
expense (221,000) (216,000) (2,012,000) 1,751,000
Net gains on
commodity
derivatives (12,699,147) (11,184,716) (8,148,386) (3,722,780)
Net cash
settlements
received
(paid) on
commodity
derivatives 1,354,804 (313,451) 5,481,384 (2,775,591)
-------------- -------------- -------------- --------------
Adjusted net
income (loss) $ (12,116,821) $ 4,763,069 $ (27,233,473) $ 14,807,610
-------------- -------------- -------------- --------------
Net Adjusted
Income (Loss)
Per Common
Share - Basic $ (1.51) $ 1.43 $ (4.30) $ 4.46
============== ============== ============== ==============
Weighted Average
Shares
Outstanding -
Basic 8,021,992 3,324,970 6,334,549 3,316,751
============== ============== ============== ==============
Corporate Contact:
Emerald Oil, Inc.
Mitch Ayer
Vice President - Finance & Investor Relations
(303) 595-5600
info@emeraldoil.com
www.emeraldoil.com
