Emerald Oil (EOGSF) 8-K Emerald Oil Reports Third Quarter 2015 Financial and Operational Results and Guidance Increase

Exhibit 99.1

 

Emerald Oil Reports Third Quarter 2015 Financial and Operational Results and Guidance Increase

DENVER, CO – November 4, 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.

Emerald Oil, Inc. 3Q2015 Financial and Operational Results Conference Call
Date:	Thursday, November 5, 2015
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
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 Thursday, November 12, 2015
	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.

Mitch Ayer

Vice President - Finance & Investor Relations

(303) 595-5600

info@emeraldoil.com

www.emeraldoil.com

EMERALD OIL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30, 2015			December 31, 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
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
Total Liabilities and Stockholders’ Equity	$	405,440,939		$	689,059,876

EMERALD OIL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited) 

	Three Months Ended September 30,						Nine Months Ended September 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 Administrative 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
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	)
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 30,						Nine Months Ended September 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 30,						Nine Months Ended September 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