No later than May 26, 2015, the Company intends, subject to definitive documentation and NYSE MKT approval, to enter into privately negotiated exchange agreements with four separate holders (the “Noteholders”) of the Convertible Notes to exchange upon completion of the offering (the “Exchange Transactions”) approximately $32.0 million in aggregate principal amount of the Convertible Notes (plus accrued and unpaid interest to the exchange date) for (a) approximately $8.0 million in shares of the Company's common stock to be issued at the issue price of the offering and (b) approximately $24.0 million in shares of Series C Convertible Preferred Stock (“Preferred Stock”), provided that the shares of common stock issued in the Exchange Transactions do not exceed 19.9% of the Company’s issued and outstanding common stock upon the completion of the offering.
The Company estimates that the net proceeds from the offering will be approximately $75.4 million after deducting underwriting discounts and commissions and estimated offering expenses, or approximately $86.7 million if the underwriters’ option to purchase additional shares is exercised in full.
The Company intends to use the net proceeds from this offering to fund the consideration for the previously announced acquisition of approximately 10,746 net (12,901 gross) oil and gas leasehold acreage located in Eddy and Lea counties in New Mexico for approximately $75.2 million (the “Acquisition”) and to use the remaining proceeds for working capital and general corporate purposes. Prior to these uses, however, the Company may use some or all of the net proceeds from this offering to repay borrowings under its revolving credit facility. The Company may at any time reborrow amounts repaid under its revolving credit facility subject to the covenants thereunder limiting its ability to incur secured indebtedness.
The common stock being offered by the Company has been reduced from the previously announced size of $150,000,000 of the Company’s common stock (not including any exercise by the underwriters of their option to purchase additional shares) to $80,000,000 of the Company’s common stock (not including any exercise by the underwriters of their option to purchase additional shares).
"back out of the deal- penalty in millions I think not sure!"
From the filing...
We may not be able to consummate the Acquisition.
On May 11, 2015, we entered into a purchase and sale agreement with Yates Petroleum Corporation to acquire oil and natural gas leaseholds in the Delaware Basin. The consummation of the Acquisition is subject to certain closing conditions, including but not limited to title and environmental due diligence and other closing conditions, including conditions that must be met by Yates Petroleum Corporation and which are beyond our control. In addition, under certain circumstances, we or Yates Petroleum Corporation are able to terminate the proposed purchase and sale agreement. There can be no assurances that the Acquisition will be consummated in the anticipated timeframe or at all. If the Acquisition is not consummated, we will be required to forfeit a deposit equal to approximately $750,000. Furthermore, our stock price could be negatively impacted if we fail to complete the Acquisition.
"When asked whether Emerald had a corporate takeover defense such as a poison pill, or would look to add such measures, Rudisill declined to comment."
Anti-Takeover Provisions of our Articles of Incorporation and Bylaws
The provisions of Montana law and our articles of incorporation and bylaws we summarize below may have an anti-takeover effect and may delay, defer or prevent a tender offer or takeover attempt that a shareholder might consider in his or her best interest, including those attempts that might result in a premium over the market price for the common stock.
Written Consent of Shareholders . Our bylaws provide that any action required or permitted to be taken by our shareholders may be taken at a duly called meeting of shareholders or by the written consent of 100% of the outstanding voting power.
Special Meetings of Shareholders . Our bylaws provide that special meetings of the shareholders may be called by our board of directors or at the written demand of 10% of the shares outstanding and entitled to vote.
Advance Notice Procedure for Shareholder Proposals . Our bylaws establish an advance notice procedure for the nomination of candidates for election as directors as well as for shareholder proposals to be considered at annual meetings of shareholders. These procedures may operate to limit the ability of shareholders to bring business before a shareholders’ meeting, including with respect to the nomination of directors or considering any transaction that could result in a change of control.
Limitation of Liability of Directors . Our articles of incorporation provides that no director shall be personally liable to the company or its shareholders for monetary damages for breach of fiduciary duty as a director to the fullest extent permitted under Montana law. The effect of these provisions is to eliminate ours and our shareholders’ rights, through derivative suits on our behalf, to recover monetary damages against a director
for a breach of fiduciary duty as a director.
One of our existing stockholders beneficially owns common stock and warrants to purchase a significant percentage of our common stock, and its interests may conflict with those of our other stockholders.
As of May 15, 2015, White Deer Energy L.P. beneficially owned approximately 24.3% of our outstanding common stock on a fully diluted basis, consisting of 21,921,309 shares of our common stock, a warrant to purchase 5,114,633 shares of our common stock and convertible notes that are presently convertible into 472,542 shares of our common stock. White Deer owns 5,114,633 shares of our Series B Voting Preferred Stock, which have one vote per share and vote together with shares of our common stock. In addition, Ben A. Guill, a principal of White Deer is a member of our board of directors. As a result, White Deer is able to exercise significant influence over matters requiring stockholder approval, including the election of directors, the adoption or amendment of provisions in our charter and bylaws, the approval of mergers and other significant corporate transactions. The exercise price of the warrant to purchase 5,114,633 shares of our common stock held by White Deer is subject to adjustment in the event we issue common stock at a price lower than the exercise price of the warrant, which is currently $1.34 per share. Assuming an offering price of $0.59 per share, which is the last reported sales price of our common stock on the NYSE MKT on May 15, 2015, the exercise price of the warrant would be reduced to $0.95 per share as a result of this offering. The interests of White Deer with respect to matters potentially or actually involving or affecting us, such as future acquisitions, financings and other corporate opportunities, may conflict with the interests of our other stockholders.
It's quite possible they are part of it with a current 24.3% ownership....and probably higher at present...
Speculating.....It would not take much of a commitment to the new offering for them to exceed 50% with Thomas J. Edelman (also on the board of Noble energy) or Ben Guill becoming Chairman of the Board....
An accredited M & A News Letter (Subscription Only)has recently indicated EOX may be in play..Excerpts only as copywrite protected..
"Emerald Oil (NYSE: EOX) is expected to emerge from the downturn in an attractive position to be taken out, two industry bankers said. They noted that if oil hit USD 65 per barrel again, the company could revamp its previous M&A process and attract strategic exploration and production players."
"Meanwhile, White Deer affiliates recently increased its stake in Emerald to 32% from 20% from participating in the target’s recent ATM offering, regulatory filings show.
When asked whether Emerald had a corporate takeover defense such as a poison pill, or would look to add such measures, Rudisill declined to comment."
"According to an industry banker, “everyone saw the recent equity raises and dilution that came with it as a necessary evil, but there is a sense that it is going to affect deal valuations when M&A activity picks up."
This filing was anticipated from the recent 10Q...
Overview of Liquidity and Capital Resources
At March 31, 2015, we had $4.0 million in cash and cash equivalents and our working capital deficit (current assets minus current liabilities) was $3.9 million. As discussed below in "Capital Resources and Capital Requirements", we project that our capital resources at March 31, 2015 will be sufficient to fund our operations and capital projects through the balance of 2015. Given the size of our potential commitments related to our existing inventory of drilling projects, however, our requirements for capital could increase significantly over the next several months if, among other things, we make acquisitions or elect to participate in any currently unanticipated drilling of additional wells. As a result, we may consider borrowing more than currently anticipated on our revolving credit facility, selling or joint venturing an interest in some of our oil and gas assets, or accessing the capital markets or other alternatives, as we determine how to best fund our capital program.
The principal recurring uncertainty which affects the Company is variable prices for oil and gas. Significant price swings can have adverse or positive effects on our business of exploring for, developing and producing oil and gas. Availability of drilling and completion equipment and crews fluctuates with the market prices for oil and natural gas and thereby affects the cost of drilling and completing wells. When prices are low there is typically less exploration activity and the cost of drilling and completing wells is generally reduced. Conversely, when prices are high there is generally more exploration activity and the cost of drilling and completing wells generally increases.
"The accompanying prospectus was filed as part of our registration statement on Form S-3 (registration no. 333-192251) with the Securities and Exchange Commission (the “SEC”) which was declared effective on December 27, 2013, as part of a “shelf” registration process. Under the shelf registration process, we may offer to sell common stock, preferred stock, debt securities, warrants, and units, from time to time, in one or more offerings, up to a total dollar amount of $500,000,000."
"Following the consummation of the proposed reverse stock split and the completion of this offering and assuming an offering price of $0.59 per share, which is the last reported sales price of our common stock on the NYSE MKT on May 15, 2015, we will have approximately 18,040,723 shares outstanding, or approximately 19,947,503 shares outstanding if the underwriters exercise their option to purchase additional shares of our common stock in full."
If the offering price is 59 cents pre-split....they use $172,500,000 ($150,000,000 plus $22,500,000 allotment) of the $500,000,000 to raise $162.8 million...with only approx 19,947,503 post split shares outstanding...
"We estimate that our net proceeds from this offering will be approximately $141.5 million after deducting underwriting discounts and commissions and estimated offering expenses, or approximately $162.8 million if the underwriters’ option to purchase additional shares is exercised in full."
Gee...With so few shares outstanding....that leaves them $327.5 million for another offering later this year, to further expand their Delaware Basin acreage, plus salaries, options, etc.
These guys are good!!
Now look for a Press Release indicating the imminent Stock Offering of ?? shares for $150,000,000... at the adjusted post split share price...sure to drive the price even lower...creating a possible trading opportunity..??
On May 20, 2015, the Company filed the Certificate of Amendment with the Secretary of State of the State of Delaware to effect the Reverse Stock Split. The Certificate of Amendment became effective as of 4:15 p.m., Eastern Time, on May 20, 2015 (the “Effective Time”). At the Effective Time, (a) every 20 outstanding shares of the Company’s common stock were combined automatically into one share of the Company’s common stock and (b) every 20 outstanding shares of the Company’s Series B Voting Preferred Stock (the “Series B Preferred Stock”) were combined automatically into one share of the Company’s Series B Preferred Stock. Each stockholder’s percentage ownership in the Company and proportional voting power remained unchanged after the Reverse Stock Split, except for minor changes and adjustments resulting from the treatment of fractional shares. The total number of shares of Company’s common stock and Series B Preferred Stock authorized under the Company’s Certificate of Incorporation and the par value of the Company’s common stock and Series B Preferred Stock were not affected by the Reverse Stock Split. The Certificate of Amendment is filed as Exhibits 3.1 hereto and is incorporated herein by reference.
The Company’s common stock will begin to trade on the NYSE MKT on the post-split basis on May 21, 2015. The new CUSIP number for the Company’s common stock following the Reverse Stock Split is 29101U 407.
With the shares about to reflect an adjusted 1 for 20 reverse split probably on the opening Thursday....what a legacy the Market has established for these Aussie Crooks...to have the share price determined at the ALL TIME CLOSING LOW of 54 cents ($10.80 split adjusted)!!!
Case in point...NOG at $17 in August tumbled to below $5....only as a result of the oil price decline, and not rising fundamentals...
Fair enough...you have a good point and don't need to exaggerate for validation....but tying up capital for 18 months...waiting for a collapse in oil prices to realize a gain is not my cup of tea....
With out the oil price's steep decline many E&P's including EOX would still be close or even higher to their prices in late august 2014...as production was rising dramatically....
All the best...
"after the first RS as it emerged post split at 3$,ran to 8$ and then dribbled down relentlessly to 50 cents"
Wrong..!! The situation is mind-boggling I agree.....however your exaggerating again....
The 1 for 7 reverse split ( Voyager Oil VOG) was Oct 22 2012, when the stock opened at .76 cents...reached an intra-day low of .71 cents....a high of .76 cents... and closed after the split at $5.425.
As oil prices ( WTI ) slid from near $100 to near $83 on November 15 2012...VOG reached it's post split intra-day low of $3.90....closing at $4.04...
By the end of 2012...the price had risen to $5.24...approx the post split adjusted price.
Through 2013 when it reached $9.20 and into September of 2014 reaching $8.63...it was a great trading stock with very predictable support / resistance points..
"The relentless dribble to 50 cents"..... has been from September 2014, when WTI started it's collapse..
A frequent successful trader of EOX after the 1 for 7 split in late 2012 through July of 2014...still on the sidelines waiting for post (1 for 20 split followed by another offering) share price to settle in before any re-entry as
With the stock price decimated further...I had a dream...
The scenario...For the balance of 2015 they follow through with the reduced capex to drill and complete the 13 Bakken Wells (8 already drilled) where cost has been reduced.....while successfully ?? drilling the 5 Delaware Basin wells where costs are much lower...
They never made any money in the Bakken with oil at $100 plus...so as oil rebounds....sell off the Bakken properties....pay off most or all of their expensive debt, and beg Yates to sell them additional acreage in the Delaware Basin where money can be made.."Delaware Basin assets can deliver returns above the cost of capital at existing commodity prices"...
The Executive Management gets even richer...as White Dear, Eldleman and Board Member Guill get filthy rich, and I make a ton of money trading the stock...
Then I woke up !!
Latest settlement filing date 4/30/2015..
Settlement Date Short Interest Avg Daily Share Volume Days To Cover
4/30/2015 12,758,746 1,842,129 6.926087
4/15/2015 12,221,378 3,223,435 3.791414