Exhibit 99.1
Emerald Oil Reports Second Quarter 2014 Financial and Operational Results; Announces Acquisition of Core Williston Basin Properties
DENVER, CO – August 4, 2014 --- Emerald Oil, Inc. (NYSE MKT: EOX) (“Emerald” or the “Company”) today announced financial and operational results for the quarter ended June 30, 2014 and that it has entered into a definitive agreement to acquire core Williston Basin properties.
Highlights
· | Second quarter production of 340,320 BOE, an average of approximately 3,781 BOEPD, an increase of 51% compared to the first quarter quarter of 2014 and 168% compared to the second quarter of 2013; |
· | Second quarter oil and gas revenue of $31.3 million, an increase of 64% compared to the first quarter of 2014 and 196% compared to the second quarter of 2013; |
· | Second quarter per unit LOE costs of $11.45 per BOE, a decrease of 1% compared to the first quarter of 2014 and 9% compared to the second quarter of 2013; |
· | Adjusted 2Q14 EBITDA of $17.4 million; |
· | Adjusted net income attributable to common stockholders of $7.6 million or $0.11 per share (basic) for 2Q14 and net loss attributable to common stockholders of $1.9 million or $0.03 per share loss (basic); and |
· | Entered into a definitive agreement with Liberty Resources II, LLC to acquire 31,500 net acres and 400 BOEPD of production in conjunction with divesting 4,175 net acres in Williams County, North Dakota. The transaction is expected to close in the third quarter of 2014. |
Second Quarter 2014 Production
For the second quarter of 2014, Emerald’s total production volumes on a BOE basis increased 168% as compared to the second quarter of 2013. Production increased due to the addition of 7.73 net productive operated Bakken/Three Forks wells in the second quarter of 2014. During the second quarter of 2014, Emerald realized an $87.42 average price per Bbl of oil (including settled derivatives) compared to an $83.56 average price per Bbl of oil during the first quarter of 2014. For detailed well performance data see Emerald’s corporate presentation (available on its website, www.emeraldoil.com).
Quarter Ended June 30, | ||||||||
2014 | 2013 | |||||||
Sales Volume (Total) | ||||||||
Oil (Bbls) | 324,617 | 119,366 | ||||||
Gas (Mcf) | 94,217 | 44,500 | ||||||
Sales volumes (Boe) | 340,320 | 126,783 | ||||||
Average Daily Sales | ||||||||
Oil (Bbls) | 3,607 | 1,326 | ||||||
Gas (Mcf) | 1,047 | 84 | ||||||
Sales volumes (Boe) | 3,781 | 1,410 | ||||||
Average Sales Prices | ||||||||
Oil (Bbl) | $ | 93.30 | $ | 86.63 | ||||
Effect of Settled Oil Derivatives | (5.88 | ) | (1.54 | ) | ||||
Oil Net of Settled Derivatives (Bbl) | $ | 87.42 | $ | 85.09 | ||||
Gas (Mcf) | $ | 10.26 | $ | 5.26 | ||||
Barrel of Oil Equivalent with Settled Derivatives | $ | 86.23 | $ | 81.96 |
Financial Results
Revenues from sales of oil and natural gas for the second quarter of 2014 were $31.3 million compared to $10.6 million for the same period in 2013. The increase is primarily due to higher production as a result of the Company’s well completions. Crude oil revenue accounted for approximately 97% of oil and natural gas sales recorded during the second quarter of 2014.
Production expenses for the second quarter of 2014 were $3.9 million, or $11.45 per BOE, compared to $1.6 million, or $12.59 per BOE, for the same period in 2013. The decrease on a per unit basis is primarily due to continued efficiency gains as the Company further develops wells and associated production infrastructure in the Low Rider area.
General and administrative expenses for the second quarter of 2014 were $7.6 million compared to $6.0 million for the same period in 2013. Share-based compensation expenses, which are included in G&A expense, totaled $3.0 million in the second quarter of 2014 compared to $1.1 million for the same period in 2013. The increase in G&A expense is attributed primarily to the hiring of new personnel as the Company continues to expand operations.
Adjusted EBITDA was $17.4 million for the second quarter of 2014, as compared to $2.8 million for the same period in 2013, reflecting a 521% increase. Adjusted Net Income was $7.6 million for the second quarter of 2014, as compared to Adjusted Net Loss of $7.6 million for the same period in 2013. 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.
Acquisition of Williston Basin Properties
· | Approximately 31,500 net acres highly contiguous to Emerald’s Low Rider and Lewis & Clark operating areas in McKenzie, Billings and Dunn Counties, North Dakota; 13,325 net acres in Low Rider and 18,227 net acres in Lewis & Clark; |
· | Approximately 400 Boe/d of estimated current net production; |
· | 2.0 Mmboe of proved reserves and $51.5 million of PV-10; |
· | 23 new operated Drilling Spacing Units; 6 DSUs in Low Rider and 17 DSUs in Lewis & Clark; |
· | Increased working interests in 13 Drilling Spacing Units; 12 DSUs in Low Rider and 1 DSU in Lewis & Clark; |
· | 157 drilling locations; 72 drilling locations in Low Rider and 85 drilling locations in Lewis & Clark; |
· | Approximately 95% of acreage is held by production and 75% is operated; |
· | Transaction valued at approximately $110 million, subject to customary adjustments to reflect the operation of the properties prior to closing; Emerald will transfer approximately 4,175 net acres in Williams County, North Dakota and pay approximately $78.4 million in cash on hand; |
· | No external capital required; and |
· | No material change to 2014 financial or operational guidance. |
Pre- Transaction | Post- Transaction | |||||||
Net Acres | 93,000 | 120,400 | ||||||
% Operated | 75 | % | 75 | % | ||||
Operated DSUs | 81 | 104 | ||||||
Drilling Locations | 697 | 854 | ||||||
% of Acreage Held By Production | 37 | % | 53 | % | ||||
2014 Drilling and Completion Budget ($mm) | 250 | 250 | ||||||
2014 Land Budget ($mm)1 | 150 | 200 | ||||||
2015 Land Budget ($mm) | 150 | 50 | ||||||
Liquidity ($mm)2 | $ | 234 | $ | 256 |
1 Approximately $174 million of the 2014 budgeted amount has been spent year to date
2 Liquidity calculated as cash on hand and available borrowing capacity
Increase to Senior Credit Facility and Update to Hedging Activity
In conjunction with the closing of the transaction, Emerald and its lending syndicate will enter into an amendment to the Company’s credit facility to increase the borrowing base under the credit facility from $100 million to $200 million. This redetermination will reflect both Emerald’s year-to-date completion activities and the transaction. The facility is currently undrawn. Emerald expects the next borrowing base redetermination to take place in October 2014.
Oil volume hedges were increased for the balance of 2014 and early 2015 due to the rise in oil prices during the quarter. Emerald is currently hedged through the first quarter of 2015 at the maximum capacity allowed under the revised borrowing base.
Settlement Period | Oil (Bbls) | Fixed Price Range | ||||||
Oil Swaps | ||||||||
July 1, 2014 – December 31, 2014 | 61,330 | $90.00 – 93.00 | ||||||
July 1, 2014 – December 31, 2014 | 47,300 | 93.01 – 96.00 | ||||||
July 1, 2014 – December 31, 2014 | 503,970 | 96.01 – 99.00 | ||||||
July 1, 2014 – December 31, 2014 | 82,612 | 99.01 – 102.00 | ||||||
2014 Total/Average | 695,212 | $ | 96.70 | |||||
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 |
Management Comments
McAndrew Rudisill, Emerald’s Chief Executive Officer, stated, “Emerald posted its strongest quarter since inception. Production exceeded guidance by 8% while costs were maintained at expected levels as we continue to build out infrastructure in the area. The transaction with Liberty Resources II further solidifies our strategic position in both our Low Rider and Lewis & Clark focus areas, bringing our net acreage position in this core operating area to more than 108,000 net acres. This deal allows us to reduce our projected land budget for 2015 while keeping our current 2014 drilling and completion constant due to nearly all of the acquired acreage being held by production. Our borrowing base will be increased by $100 million in connection with the closing of the transaction primarily due to the increase in Emerald operated proved reserves. We expect subsequent borrowing bases increases in the third and fourth quarters of 2014. We are excited about bringing our first Pronghorn wells online during the third quarter and we plan to test a slick water, cemented liner completion in our Low Rider area during the Fall of 2014.”
Conference Call
Emerald will host a conference call on Tuesday, August 5, 2014 at 10:00 a.m. Eastern Time (8:00 a.m. Mountain Time) to discuss financial and operational results for the quarter end.
Emerald Oil, Inc. 2Q2014 Financial and Operational Results Conference Call | ||
Date: | Tuesday, August 5, 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: | www.emeraldoil.com | |
Telephone Dial-In: | 877-407-8831 (toll-free) and 201-493-6736 (international) | |
Telephone Replay: | Available through Tuesday, August 12, 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 atwww.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.
Corporate Contact:
Emerald Oil, Inc.
Ryan Smith
Vice President of Capital Markets & Strategy
(303) 595-5600
info@emeraldoil.com
www.emeraldoil.com
EMERALD OIL, INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31,
(Unaudited)
June 30, 2014 | December 31, 2013 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and Cash Equivalents | $ | 134,171,667 | $ | 144,255,438 | ||||
Restricted Cash | 6,000,000 | 15,000,512 | ||||||
Accounts Receivable – Oil and Natural Gas Sales | 9,352,780 | 8,715,821 | ||||||
Accounts Receivable – Joint Interest Partners | 36,396,745 | 31,523,204 | ||||||
Other Receivables | 1,600,141 | 577,409 | ||||||
Prepaid Expenses and Other Current Assets | 534,430 | 206,299 | ||||||
Total Current Assets | 188,055,763 | 200,278,683 | ||||||
PROPERTY AND EQUIPMENT | ||||||||
Oil and Natural Gas Properties, Full Cost Method, at cost: | ||||||||
Proved Oil and Natural Gas Properties | 378,486,735 | 211,015,067 | ||||||
Unproved Oil and Natural Gas Properties | 122,067,454 | 57,015,315 | ||||||
Equipment and Facilities | 4,109,546 | 1,837,744 | ||||||
Other Property and Equipment | 1,645,303 | 890,811 | ||||||
Total Property and Equipment | 506,309,038 | 270,758,937 | ||||||
Less – Accumulated Depreciation, Depletion and Amortization | (63,201,890 | ) | (48,176,522 | ) | ||||
Total Property and Equipment, Net | 443,107,148 | 222,582,415 | ||||||
Restricted Cash | 4,000,000 | 6,000,000 | ||||||
Fair Value of Commodity Derivatives | — | 68,396 | ||||||
Debt Issuance Costs, Net of Amortization | 6,204,848 | 475,157 | ||||||
Deposits on Acquisitions | 304,335 | 125,368 | ||||||
Other Non-Current Assets | 227,207 | 357,644 | ||||||
Total Assets | $ | 641,899,301 | $ | 429,887,663 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts Payable | $ | 91,416,789 | $ | 63,168,422 | ||||
Fair Value of Commodity Derivatives | 5,852,801 | 921,401 | ||||||
Accrued Expenses | 13,238,341 | 11,821,729 | ||||||
Advances from Joint Interest Partners | 3,723,910 | 2,205,538 | ||||||
Total Current Liabilities | 114,231,841 | 78,117,090 | ||||||
LONG-TERM LIABILITIES | ||||||||
Convertible Senior Notes | 172,500,000 | — | ||||||
Asset Retirement Obligations | 1,243,136 | 692,137 | ||||||
Warrant Liability | 17,670,000 | 15,703,000 | ||||||
Other Non-Current Liabilities | 265,660 | 56,327 | ||||||
Total Liabilities | 305,910,637 | 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 June 30, 2014 and December 31, 2013. Liquidation preference value of $5,115 as of June 30, 2014 and December 31, 2013. | 5,000 | 5,000 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Common Stock, Par Value $.001; 500,000,000 Shares Authorized, 66,471,276 and 65,840,370 Shares Issued and Outstanding, respectively | 66,471 | 65,840 | ||||||
Additional Paid-In Capital | 420,571,408 | 416,301,344 | ||||||
Accumulated Deficit | (84,654,215 | ) | (81,053,075 | ) | ||||
Total Stockholders’ Equity | 335,983,664 | 335,314,109 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 641,899,301 | $ | 429,887,663 |
EMERALD OIL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
REVENUES | ||||||||||||||||
Oil Sales | $ | 30,288,128 | $ | 10,340,742 | $ | 48,722,936 | $ | 18,334,644 | ||||||||
Natural Gas Sales | 966,280 | 234,076 | 1,600,344 | 457,155 | ||||||||||||
Net Gains (Losses) on Commodity Derivatives | (6,663,083 | ) | 665,337 | (7,461,936 | ) | (102,267 | ) | |||||||||
Total Revenues | 24,591,325 | 11,240,155 | 42,861,344 | 18,689,532 | ||||||||||||
OPERATING EXPENSES | ||||||||||||||||
Production Expenses | 3,897,482 | 1,596,353 | 6,514,726 | 2,635,885 | ||||||||||||
Production Taxes | 3,400,874 | 1,048,541 | 5,489,610 | 1,750,397 | ||||||||||||
General and Administrative Expenses | 7,633,559 | 5,979,739 | 16,125,563 | 11,368,552 | ||||||||||||
Depletion of Oil and Natural Gas Properties | 8,600,878 | 3,584,803 | 14,878,110 | 6,741,781 | ||||||||||||
Depreciation and Amortization | 81,497 | 31,039 | 147,257 | 54,034 | ||||||||||||
Accretion of Discount on Asset Retirement Obligations | 20,080 | 7,850 | 35,800 | 14,062 | ||||||||||||
Total Operating Expenses | 23,634,370 | 12,248,325 | 43,191,066 | 22,564,711 | ||||||||||||
INCOME (LOSS) FROM OPERATIONS | 956,955 | (1,008,170 | ) | (329,722 | ) | (3,875,179 | ) | |||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||
Interest Expense | (1,136,377 | ) | (75,186 | ) | (1,308,463 | ) | (254,676 | ) | ||||||||
Warrant Revaluation Expense | (1,771,000 | ) | (642,000 | ) | (1,967,000 | ) | (4,081,000 | ) | ||||||||
Other Income | 371 | 2,222 | 4,047 | 2,898 | ||||||||||||
Total Other Expense, Net | (2,907,006 | ) | (714,964 | ) | (3,271,416 | ) | (4,332,778 | ) | ||||||||
LOSS BEFORE INCOME TAXES | (1,950,051 | ) | (1,723,134 | ) | (3,601,138 | ) | (8,207,957 | ) | ||||||||
INCOME TAX PROVISION | — | — | — | — | ||||||||||||
NET LOSS | (1,950,051 | ) | (1,723,134 | ) | (3,601,138 | ) | (8,207,957 | ) | ||||||||
Less: Preferred Stock Dividends and Deemed Dividends | — | (5,665,670 | ) | — | (6,282,108 | ) | ||||||||||
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | (1,950,051 | ) | $ | (7,388,804 | ) | $ | (3,601,138 | ) | $ | (14,490,065 | ) | ||||
Net Income (Loss) Per Common Share – Basic and Diluted | $ | (0.03 | ) | $ | (0.23 | ) | $ | (0.05 | ) | $ | (0.50 | ) | ||||
Weighted Average Shares Outstanding – Basic and Diluted | 66,323,228 | 32,602,115 | 66,251,632 | 29,166,411 |
EMERALD OIL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30, | ||||||||
2014 | 2013 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net Loss | $ | (3,601,138 | ) | $ | (8,207,957 | ) | ||
Adjustments to Reconcile Net Loss to Net Cash Provided By Operating Activities: | ||||||||
Depletion of Oil and Natural Gas Properties | 14,878,110 | 6,741,781 | ||||||
Depreciation and Amortization | 147,257 | 54,034 | ||||||
Amortization of Debt Issuance Costs | 377,463 | 44,573 | ||||||
Accretion of Discount on Asset Retirement Obligations | 35,800 | 14,062 | ||||||
Net Losses on Commodity Derivatives | 7,461,936 | 102,267 | ||||||
Net Cash Settlements Paid on Commodity Derivatives | (2,462,140 | ) | (332,781 | ) | ||||
Warrant Revaluation Expense | 1,967,000 | 4,081,000 | ||||||
Share-Based Compensation Expense | 6,678,883 | 2,365,797 | ||||||
Changes in Assets and Liabilities: | ||||||||
Increase in Trade Receivables – Oil and Natural Gas Revenues | (636,959 | ) | (755,866 | ) | ||||
Increase in Accounts Receivable – Joint Interest Partners | (4,873,541 | ) | (4,976,709 | ) | ||||
Increase in Other Receivables | (1,022,732 | ) | (246,392 | ) | ||||
Increase in Prepaid Expenses and Other Current Assets | (328,131 | ) | (214,497 | ) | ||||
Decrease in Other Non-Current Assets | 130,437 | 85,675 | ||||||
Increase in Accounts Payable | 1,888,872 | 1,069,554 | ||||||
Increase (Decrease) in Accrued Expenses | (2,474,083 | ) | 1,557,119 | |||||
Increase in Other Non-Current Liabilities | 209,333 | — | ||||||
Increases in Advances from Joint Interest Partners | 1,518,372 | 834,639 | ||||||
Net Cash Provided By Operating Activities | 19,894,739 | 2,216,299 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchases of Other Property and Equipment | (754,492 | ) | (201,657 | ) | ||||
Restricted Cash Released | 11,000,512 | — | ||||||
Payments of Restricted Cash | (2,648,721 | ) | — | |||||
Increase in Deposits for Acquisitions | (178,967 | ) | (1,050,000 | ) | ||||
Use of Prepaid Drilling Costs | — | 98,565 | ||||||
Proceeds from Sale of Oil and Natural Gas Properties, Net of Transaction Costs | 238,069 | 15,160,206 | ||||||
Investment in Oil and Natural Gas Properties | (204,113,902 | ) | (54,689,661 | ) | ||||
Net Cash Used For Investing Activities | (196,457,501 | ) | (40,682,547 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from Issuance of Common Stock, Net of Transaction Costs | — | 95,973,701 | ||||||
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 | 35,000,000 | — | ||||||
Payments on Preferred Stock | — | (15,000,000 | ) | |||||
Payments on Revolving Credit Facility | (35,000,000 | ) | (23,500,000 | ) | ||||
Preferred Stock Dividends and Deemed Dividends | — | (3,692,808 | ) | |||||
Proceeds from Exercise of Stock Options and Warrants | 110,750 | — | ||||||
Cash Paid for Debt Issuance Costs | (500,365 | ) | — | |||||
Cash Paid for Finance Costs | (24,605 | ) | — | |||||
Net Cash Provided by Financing Activities | 166,478,991 | 100,964,887 | ||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (10,083,771 | ) | 62,498,639 | |||||
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD | 144,255,438 | 10,192,379 | ||||||
CASH AND CASH EQUIVALENTS – END OF PERIOD | $ | 134,171,667 | $ | 72,691,018 | ||||
Supplemental Disclosure of Cash Flow Information | ||||||||
Cash Paid During the Period for Interest | $ | 84,933 | $ | 255,776 | ||||
Cash Paid During the Period for Income Taxes | $ | — | $ | — | ||||
Non-Cash Financing and Investing Activities: | ||||||||
Oil and Natural Gas Properties Included in Account Payable | $ | 86,500,675 | $ | 37,344,286 | ||||
Stock-Based Compensation Capitalized to Oil and Natural Gas Properties | $ | 1,396,362 | $ | 310,264 | ||||
Accretion on Preferred Stock Issuance Discount | $ | — | $ | 2,589,300 | ||||
Asset Retirement Obligation Costs and Liabilities | $ | 515,199 | $ | 122,013 | ||||
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 Adjusted EBITDA, which we define as 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 and the other items described in the table below. Adjusted EBITDA is a non-GAAP performance measure. 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 our 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 June 30, | ||||||||
2014 | 2013 | |||||||
Net loss | $ | (1,950,051 | ) | $ | (1,723,134 | ) | ||
Less: Preferred stock dividends and deemed dividends | — | (5,665,670 | ) | |||||
Net loss attributable to common stockholders | (1,950,051 | ) | (7,388,804 | ) | ||||
Add: Interest expense | 1,136,377 | 75,186 | ||||||
Accretion of discount on asset retirement obligations | 20,080 | 7,850 | ||||||
Depletion, depreciation and amortization | 8,682,375 | 3,615,842 | ||||||
Stock-based compensation | 2,983,580 | 1,057,811 | ||||||
Warrant revaluation expense | 1,771,000 | 642,000 | ||||||
Preferred stock dividends | — | 1,201,370 | ||||||
Preferred stock redemption premium | — | 1,875,000 | ||||||
Accretion of preferred stock issuance discount | — | 2,589,300 | ||||||
Net losses on commodity derivatives | 6,663,083 | — | ||||||
Less: Net cash settlements paid on commodity derivatives | (1,908,756 | ) | (183,539 | ) | ||||
Net gains on commodity derivatives | — | (665,337 | ) | |||||
Adjusted EBITDA | $ | 17,397,688 | $ | 2,826,679 |
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 unrealized gain (loss) from mark-to-market on commodity derivatives, mark-to-market on ourwarrant 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 June 30, | ||||||||
2014 | 2013 | |||||||
Net loss | $ | (1,950,051 | ) | $ | (1,723,134 | ) | ||
Less: Preferred stock dividends and deemed dividends | — | (5,665,670 | ) | |||||
Net loss attributable to common stockholders | (1,950,051 | ) | (7,388,804 | ) | ||||
Net losses on commodity derivatives | 6,663,083 | (665,337 | ) | |||||
Net cash settlements paid on commodity derivatives | (1,908,757 | ) | (183,573 | ) | ||||
Warrant revaluation expense | 1,771,000 | 642,000 | ||||||
Stock based compensation expense | 2,983,580 | |||||||
Adjusted income (loss) | $ | 7,558,855 | $ | (7,595,714 | ) | |||
Adjusted income (loss) per share – basic | $ | 0.11 | $ | (0.23 | ) | |||
Weighted average shares outstanding – basic | 66,323,228 | 32,602,115 |