Emerald Oil Reports Fourth Quarter and Year End 2013 Financial and Operational Results

Marketwired

DENVER, CO --(Marketwired - March 12, 2014) - Emerald Oil, Inc. (NYSE MKT: EOX) ("Emerald" or the "Company") today announced financial and operational results for the quarter and year ended December 31, 2013.

Highlights

  • Increased fourth quarter production to 220,793 BOE, an average of approximately 2,430 BOEPD, an increase of 29% compared to the third quarter of 2013 and 101% compared to the fourth quarter of 2012;
  • Increased annual production to 616,065 BOE, an average of 1,688 BOEPD, an increase of 80% compared to 2012;
  • Increased total proved reserves to 13.2 MMBOE, an increase of 147% compared to 2012;
  • Increased oil and natural gas sales to $54.0MM in 2013, an increase of 92% compared to 2012;
  • Adjusted EBITDA of $5.0 million or $0.08 per share (basic) for 4Q13 and $20.2 million or $0.49 per share (basic) for FY13, and;
  • Net loss attributable to common shareholders of $10.9 million or $(0.17) per share (basic) for 4Q13 and $31.2 million or $(0.75) per share (basic) for FY13.

McAndrew Rudisill, Emerald's Chief Executive Officer, stated, "2013 was a transformational year for Emerald. We successfully drilled and completed multiple Middle Bakken and Three Forks wells, tripled our operated acreage position and monetized the majority of our non-operated assets. In 2014, our production will continue to grow as we add a third rig to our drilling program. The third rig is currently moving to location in our Easy Rider focus area and will soon begin drilling, earlier than originally anticipated. Due to the strong performance of our Low Rider Middle Bakken wells and positive indications from our Low Rider Three Forks wells, we are actively reviewing increased downspacing assumptions and raising our stated Low Rider type curve. We are very focused in 2014 on lowering operating expenses and driving greater drilling and completion cost effenciencies."

2013 Production

For 2013, Emerald's total production volumes on a BOE basis increased 80% as compared to 2012. Production increased due to the addition of 10.58 net productive operated Bakken/Three Forks wells in 2013. During 2013, Emerald realized an $87.16 average price per Bbl of oil (including settled derivatives) compared to an $85.05 average price per Bbl of oil during 2012. For detailed well performance data see Emerald's corporate presentation (available on its website, www.emeraldoil.com ).

     
    Year Ended December 31,
    2013   2012
Sales Volume (Total)            
Oil (Bbls)     580,797     320,147
Gas (Mcf)     211,608     129,648
Sales volumes (Boe)     616,065     341,755
 
Average Daily Sales            
Oil (Bbls)     1,591     877
Gas (Mcf)     580     355
Sales volumes (Boe)     1,688     936
 
Average Sales Prices            
Oil, Net of Settled Derivatives (Bbls)   $ 87.16   $ 85.05
Gas (Mcf)     6.48     6.68
Barrel of Oil Equivalent with Settled Derivatives (Boe)   $ 84.40   $ 82.21
             
             

2013 Year End Reserves

As of December 31, 2013, Emerald had total proved reserves of approximately 13.2 MMBoe, all of which were located in the Williston Basin. Emerald's proved reserves increased approximately 147% during 2013 primarily as a result of our successful operated well program. Emerald sold substantially all of its year end 2012 reserves, which were comprised of non-operated assets, in September 2013.

       
      As of December 31,
      2013     2012
Proved Developed Oil Reserves (MBbls)     5,811.0     1,788.2
Proved Undeveloped Oil Reserves (MBbls)     5,764.6     3,081.1
Total Proved Oil Reserves (MBbls)     11,575.6     4,869.3
Proved Developed Gas Reserves (MMcf)     5,770.6     1,014.2
Proved Undeveloped Gas Reserves (MMcf)     4,231.6     1,894.3
Total Proved Gas Reserves (MMcf)     10,002.2     2,908.5
Total Proved Oil Equivalents (MBoe)     13,242.8     5,354.1
Present Value of Estimated Future Net            
Revenues After Income Taxes, Discounted at 10% (In thousands)   $ 198,371.5   $ 85,284.8
             
             

Financial Results

Revenues from sales of oil and natural gas for the quarter ended December 31, 2013 were $17.9 million compared to $9.2 million for the same period in 2012. Revenues, not considering the effect of derivatives, for the year ended December 31, 2013 were $54.0 million compared to $28.1 million for the same period in 2012. The increase is primarily due to higher production as a result of the Company's well completions and its acquisition of certain properties in its Low Rider project area.

Production expenses for the quarter ended December 31, 2013 were $3.8 million compared to $1.1 million for the same period in 2012. On a per unit basis, production expenses increased from $9.88 per BOE in 4Q2012 to $17.20 per BOE in 4Q2013. Production expenses for the year ended December 31, 2013 were $8.5 million compared to $2.7 million for the same period in 2012. On a per unit basis, production expenses increased from $7.98 per BOE sold in 2012 to $13.83 per BOE in 2013. This increase was primarily due to the costs associated with operating an increased number of producing wells and associated produced fluid volumes as a result of the Company's well completions. Emerald experienced increases in operating expenses as we added new wells and maintained production from existing properties. Increased costs are primarily related to workovers, electronic submersible pump installation and gas lift installation, all of which have improved operational performance and reduced downtime in the Company's wells. The Company continues efforts to decrease operating costs by centralizing all infield infrastructure. Emerald remains comfortable with its annual 2014 cost guidance of $11.00 per BOE.

General and administrative expenses for the quarter ended December 31, 2013 were $12.9 million compared to $7.2 million for the same period in 2012. Share-based compensation expenses are included in the employee compensation and related expenses, totaling $6.4 million in 4Q2013 compared to $4.6 million 4Q2012. General and administrative expenses for the year ended December 31, 2013 were $30.5 million compared to $12.9 million for the same period in 2012. Share-based compensentation expenses totaled $12.9 million in 2013 compared to $7.3 million in 2012. The increase is due to the Company's change in corporate strategy to add operating capabilities to develop Emerald's operated wells in the Williston Basin and the corresponding increases in personnel and infrastructure. This strategic change allows Emerald the opportunity to significantly grow production by using industry best practices and to control well design and capital expenditures to maximize its return on capital. Approximately $2.8 million of the share-based compensation expense during the year ended December 31, 2013 related to the one-time modification and accelerated vesting of equity grants associated with severance to a prior officer of the Company.

Adjusted EBITDA was $5.0 million for the fourth quarter 2013, as compared to $4.5 million in the same period in 2012, reflecting a 11% increase. For the full year ended December 31, 2013, Adjusted EBITDA was $20.2 million, as compared to $16.8 million for 2012, representing a 20% increase. Adjusted EBITDA is a non-GAAP financial measure. For additional information please refer to the reconciliation of this measure at the end of this news release.

During the quarter ended December 31, 2013, the Company recognized an unrealized non-cash loss on its warrant liability of $2.5 million. For the year ended December 31, 2013, the Company recognized an unrealized non-cash loss on its warrant liability of $7.1 million. This mark-to-market charge relates to the warrants attached to the preferred stock issued to White Deer Energy in February 2013. The warrant liability will correlate with Emerald share price movement on a quarterly basis. Each quarter going forward the Company will mark-to-market the warrants and adjust for the change in the statement of operations as a non-cash charge until the warrant is exercised or modifications are made to the warrants such that liability accounting is no longer required.

Conference Call

Emerald will host a conference call on Thursday, March 13, 2014 at 10:00 a.m. Eastern Time (8:00 a.m. Mountain Time) to discuss financial and operational results for the quarter and year end.

Emerald Oil, Inc. 4Q and Year End 2013 Financial and Operational Results   Conference Call  

Date:  Thursday, March 13, 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 Wednesday, March 20, 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 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.  
CONSOLIDATED BALANCE SHEETS  
AS OF DECEMBER 31,  
(Unaudited)      
   
    2013     2012  
ASSETS                
CURRENT ASSETS                
  Cash and Cash Equivalents   $ 144,255,438     $ 10,192,379  
  Restricted Cash     15,000,512       -  
  Accounts Receivable - Oil and Natural Gas Sales     8,715,821       8,514,865  
  Accounts Receivable - Joint Interest Partners     31,523,204       4,058,291  
  Other Receivables     577,409       1,133,849 
  Prepaid Expenses and Other Current Assets   206,299    103,173  
    Total Current Assets   200,278,683    24,002,557  
PROPERTY AND EQUIPMENT           
  Oil and Natural Gas Properties, Full Cost Method, at cost:           
   Proved Oil and Natural Gas Properties   211,015,067    167,618,422  
   Unproved Oil and Natural Gas Properties   57,015,315    61,454,831  
   Equipment and Facilities   1,837,744    -  
  Other Property and Equipment   890,811    385,023  
    Total Property and Equipment   270,758,937    229,458,276  
  Less - Accumulated Depreciation, Depletion and Amortization   (48,176,522 )  (80,230,517 )
    Total Property and Equipment, Net   222,582,415    149,227,759  
Restricted Cash   6,000,000    -  
Prepaid Drilling Costs   -    100,193  
Fair Value of Commodity Derivatives   68,396    25,397  
Debt Issuance Costs, Net of Amortization   475,157    269,681  
Deposits on Acquisitions   125,368    -  
Other Non-Current Assets   357,644    260,775  
    Total Assets  $429,887,663   $173,886,362  
LIABILITIES AND STOCKHOLDERS' EQUITY           
CURRENT LIABILITIES           
  Accounts Payable  $63,168,422   $39,169,037  
  Fair Value of Commodity Derivatives   921,401    206,645  
  Accrued Expenses   11,821,729    420,521  
  Advances from Joint Interest Partners   2,205,538    -  
    Total Current Liabilities   78,117,090    39,796,203  
LONG-TERM LIABILITIES           
  Revolving Credit Facility     --       23,500,000  
  Asset Retirement Obligations     692,137       296,074  
  Warrant Liability     15,703,000       --  
  Other Non-Current Liabilities     56,327       --  
      Total Liabilities     94,568,554       63,592,277  
   
COMMITMENTS AND CONTINGENCIES           
   
Preferred Stock - Par Value $.001; 20,000,000 Shares Authorized;           
  Series B Voting Preferred Stock - 5,114,633 and 0 issued and outstanding at December 31, 2013 and December 31, 2012, respectively. Liquidation preference value of $5,115 and $0, as of December 31, 2013 and December 31, 2012, respectively.   5,000    --  
   
STOCKHOLDERS' EQUITY           
  Common Stock, Par Value $.001; 500,000,000 Shares Authorized, 65,840,370 and 24,734,643 Shares Issued and Outstanding, respectively   65,840    24,735  
  Additional Paid-In Capital   416,301,344    180,439,530  
  Accumulated Deficit   (81,053,075 )  (70,170,180 )
    Total Stockholders' Equity   335,314,109    110,294,085  
    Total Liabilities and Stockholders' Equity  $429,887,663   $173,886,362  
                       
                       
   
EMERALD OIL, INC.  
(FORMERLY VOYAGER OIL & GAS, INC.)  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(Unaudited)  
   
   Year Ended December 31,  
   2013   2012   2011  
REVENUES               
  Oil and Natural Gas Sales  53,981,040   $28,129,985   $8,426,129  
  Net Losses on Commodity Derivatives  (2,656,535 )  (215,439 )  -  
   Total Revenues  51,324,505    27,914,546    8,426,129  
OPERATING EXPENSES               
  Production Expenses  8,520,414    2,727,133    726,946  
  Production Taxes  5,702,521    2,955,015    717,440  
  General and Administrative Expenses  30,507,114    12,903,845    2,686,176  
  Depletion of Oil and Natural Gas Properties  17,310,059    12,770,718    3,546,466  
  Impairment of Oil and Natural Gas Properties  -    61,900,692    -  
  Depreciation and Amortization  144,492    53,818    30,831  
  Accretion of Discount on Asset Retirement  32,449    14,988    4,882  
  Obligations               
  Gain on Sale of Oil and Natural Gas Properties  (7,371,804 )  --    --  
   Total Operating Expenses  54,845,245    93,326,209    7,712,741  
   
INCOME (LOSS) FROM OPERATIONS  (3,520,740 )  (65,411,663 )  713,388  
   
OTHER INCOME (EXPENSE)               
  Interest Expense  (287,934 )  (2,614,240 )  (2,036,032 )
  Warrant Revaluation Expense  (7,077,000 )  -    -  
  Gain on Acquisition of Business, Net  -    5,758,048    -  
  Other Income (Expense)  2,779    (28,244 )  (22,410 )
   Total Other Income (Expense), Net  (7,362,155 )  3,115,564    (2,058,442 )
   
LOSS BEFORE INCOME TAXES  (10,882,895 )  (62,296,099 )  (1,345,054 )
   
INCOME TAX PROVISION  --    --    --  
NET LOSS   (10,882,895 )     (62,296,099 )     (1,345,054 )
Less: Preferred Stock Dividends and Deemed Dividends   (20,279,197 )     --       --  
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS   (31,162,092 )   $ (62,296,099 )   $ (1,345,054 )
                       
Net Loss Per Common Share - Basic and Diluted   (0.75 )   $ (4.91 )   $ (0.17 )
                       
Weighted Average Shares Outstanding - Basic and Diluted   41,383,277       12,699,544       8,012,158  
                       
                       
 
EMERALD OIL, INC.
 (FORMERLY VOYAGER OIL & GAS, INC.) 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
              
   Year Ended December 31,  
   2013   2012   2011  
CASH FLOWS FROM OPERATING ACTIVITIES                
  Net Loss  $(10,882,895 ) $(62,296,099 ) $(1,345,054 )
  Adjustments to Reconcile Net Loss to Net Cash Provided By (Used For) Operating Activities:                
  Depletion of Oil and Natural Gas Properties   17,310,059    12,770,718    3,546,466  
  Impairment of Oil and Natural Gas Properties       61,900,692      
  Depreciation and Amortization   144,492    53,818    30,831  
  Amortization of Debt Discount           163,356  
  Amortization of Debt Issuance Costs   127,857    1,929,561    82,191  
  Accretion of Discount on Asset Retirement Obligations   32,449    14,988    4,882  
  Net Losses on Commodity Derivatives   2,656,535    215,439      
  Net Cash Settlements Paid on Commodity Derivatives   (1,984,778 )  (34,191 )    
  Gain on Sale of Oil and Natural Gas Properties, Net   (7,371,804 )        
  Gain on Acquisition of Business       (7,213,835 )    
  Warrant Revaluation Expense   7,077,000          
  Share-Based Compensation Expense   12,885,209    7,318,690    728,546  
  Changes in Assets and Liabilities:                
   Increase in Trade Receivables – Oil and Natural Gas Revenues   (200,956 )  (5,267,453 )  (2,951,591 )
   Increase in Accounts Receivable – Joint Interest Partners   (27,464,913 )  (4,058,291 )    
   (Increase) Decrease in Other Receivables   556,440    (1,133,849 )    
   (Increase) Decrease in Prepaid Expenses and Other Current Assets   (103,126 )  (54,843 )  90,123  
   Increase in Other Non-Current Assets   (96,869 )  (100,100 )    
   Increase (Decrease) in Accounts Payable   2,831,342    30,123    (319,349 )
   Increase (Decrease) in Accrued Expenses   8,412,533    214,399    (183,557 )
   Increase in Other Non-Current Liabilities   56,327          
   Increases in Advances from Joint Interest Partners   2,205,538          
    Net Cash Provided By (Used For) Operating Activities   6,190,440    4,289,767    (153,156 )
CASH FLOWS FROM INVESTING ACTIVITIES                
  Purchases of Other Property and Equipment   (505,788 )  (172,785 )  (157,892 )
  Restricted Cash Deposited   (21,000,512 )        
  Increase in Deposits for Acquisitions   (125,368 )        
  Use of (Payments for) Prepaid Drilling Costs   100,193    (67,030 )  460,497  
  Proceeds from Sale of Oil and Natural Gas Properties, Net of Transaction Costs   129,432,743          
  Proceeds from Sales of Available for Sale Securities           242,070  
  Investment in Oil and Natural Gas Properties   (182,901,806 )  (66,212,818 )  (44,052,953 )
  Net Cash Used For Investing Activities   (75,000,538 )  (66,452,633 )  (43,508,278 )
CASH FLOWS FROM FINANCING ACTIVITIES                
  Proceeds from Issuance of Common Stock, Net of Transaction Costs   238,354,687    72,167,012    46,602,251  
  Proceeds from Issuance of Preferred Stock, Net of Transaction Costs   47,183,994          
  Payments on Preferred Stock   (50,000,000 )        
  Advances on Revolving Credit Facility and Term Loan       56,530,730      
  Payments on Revolving Credit Facility   (23,500,000 )  (33,030,730 )    
  Payments of Senior Secured Promissory Notes       (15,000,000 )    
  Payment of Assumed Liabilities       (20,303,903 )    
  Cash Paid for Finance Costs   (333,333 )  (1,935,131 )  (389,030 )
  Preferred Stock Dividends and Deemed Dividends   (8,832,191 )        
  Proceeds from Exercise of Stock Options and Warrants           16,960  
  Net Cash Provided by Financing Activities   202,873,157    58,427,978    46,230,181  
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   134,063,059    (3,734,888 )  2,568,747  
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD   10,192,379    13,927,267    11,358,520  
CASH AND CASH EQUIVALENTS – END OF PERIOD  $144,255,438   $10,192,379   $13,927,267  
Supplemental Disclosure of Cash Flow Information                
  Cash Paid During the Period for Interest  $255,776   $1,154,943   $1,800,000  
  Cash Paid During the Period for Income Taxes  $   $   $  
   Non-Cash Financing and Investing Activities:                
    Oil and Natural Gas Properties Included in Account Payable  $60,141,180   $38,973,137   $10,252,407  
    Stock-Based Compensation Capitalized to Oil and Natural Gas Properties  $1,193,960   $582,040   $418,414  
    Accretion on Preferred Stock Issuance Discount  $8,626,000   $   $  
    Accretion of Preferred Stock Issuance Costs  $2,816,000   $   $  
    Accrued Preferred Stock Dividend and Deemed Dividend  $   $   $  
    Asset Retirement Obligation Costs and Liabilities  $676,240   $164,967   $100,715  
    Asset Retirement Obligations Associated With Properties Sold  $312,625   $   $  
    Common Stock Issued for Oil and Natural Gas Properties  $6,736,935   $   $  
    Purchases through Issuance of Common Stock or Assumption of Liabilities:                
    Oil and Natural Gas Properties  $   $40,787,238   $  
    Other Property and Equipment  $   $36,000   $  
    Other Non-Current Assets  $   $75,000   $  
    Non-Cash Acquisition of Business Amounts:                
    Fair Market of Common Stock Issued  $   $13,380,501   $  
    Debt Assumed  $   $20,303,903   $  
                 
                 
   
EMERALD OIL, INC.  
(FORMERLY VOYAGER OIL & GAS, INC.)  
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)  
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011  
(Unaudited)  
   
   Common Stock            
   Shares  Amount  Additional Paid-in Capital  Accumulated Deficit   Total Stockholders' Equity  
Balance – December 31, 2010  6,477,776  $6,477  $39,243,374  $(6,529,027 ) $32,720,824  
  Issuance Pursuant to Exercise of Options  572   1   16,959       16,960  
  Net Proceeds from Equity Offering  1,785,714   1,786   46,600,465       46,602,251  
  Restricted Stock Grant Compensation        226,318       226,318  
  Compensation Related to Stock Warrant and Option Grants        649,694       649,694  
  Director Fees Related to Stock Option Grants        270,948       270,948  
  Net Loss           (1,345,054 )  (1,345,054 )
Balance – December 31, 2011  8,264,062   8,264   87,007,758   (7,874,081 )  79,141,941  
  Common Shares Issued as Compensation  910,296   910   3,837,212       3,838,122  
  Restricted Stock Grants  74,285   74   (74 )       
  Restricted Stock Forfeited  (53,572 ) (53 ) 53         
  Restricted Stock Grant Compensation        1,178,559       1,178,559  
  Compensation Related to Stock Option Grants        1,779,901       1,779,901  
  Director Fees Related to Stock Option Grants        1,104,147       1,104,147  
  Issuance of Common Shares for the Acquisition of Emerald Oil North America, Inc.  1,662,174   1,662   13,378,839       13,380,501  
  Net Proceeds from Equity Offering  13,877,555   13,878   72,153,134       72,167,012  
  Reverse Split Reconciliation Due to Fractional Shares  (157 )             
  Net Loss           (62,296,099 )  (62,296,099 )
Balance – December 31, 2012  24,734,643   24,735   180,439,530   (70,170,180 )  110,294,085  
  Common shares issued for oil and natural gas properties  1,165,015   1,165   6,735,770       6,736,935  
  Stock-based compensation        13,378,158       13,378,158  
  Restricted Stock Vesting, Net of Tax Withholding  1,012,260   1,012   (2,288,675 )     (2,287,663 )
  Equity offering  38,928,452   38,928   238,315,759       238,354,687  
  Issuance of Preferred Stock                 
  Redemption of Preferred Stock and Accretion of Issuance Discount        (17,697,007 )     (17,697,007 )
  Preferred Stock Dividends Paid        (2,582,191 )     (2,582,191 )
  Net loss           (10,882,895 )  (10,882,895 )
Balance – December 31, 2013  65,840,370  $65,840  $416,301,344  $(81,053,075 ) $335,314,109  
                 
                       

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, 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 ("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:

   
ADJUSTED EBITDA  
   
   Year Ended December 31,  
   2013   2012   2011  
Net loss  $(10,882,895 ) $(62,296,099 ) $(1,345,054 )
Less: Preferred stock dividends and deemed dividends   (20,279,197 )  -    -  
Net income (loss) attributable to common stockholders   (31,162,092 )  (62,296,099 )  (1,345,054 )
Add: Impairment of oil and natural gas properties   -    61,900,692    -  
  Interest expense   287,934    2,614,240    2,036,032  
  Accretion of discount on asset retirement obligations   32,449    14,988    4,882  
  Depletion, depreciation and amortization   17,454,551    12,824,536    3,577,297  
  Stock-based compensation   12,885,236    7,318,690    728,546  
  Warrant revaluation expense   7,077,000    -    -  
  Preferred stock dividends   2,582,191    -    -  
  Preferred stock redemption premium   6,250,000    -    -  
  Accretion of preferred stock issuance discount   11,447,006    -    -  
  Net losses on commodity derivatives   2,656,535    215,439    -  
Less: Gain on sale of oil and natural gas properties, net   (7,371,804 )  -    -  
  Gain on acquisition of business, net   -    (5,758,048 )  -  
  Net cash settlements paid on commodity derivatives   (1,984,778 )  (34,191 )  -  
Adjusted EBITDA  $20,154,228   $16,800,247   $5,001,703  
                         
                         
Contact:
Corporate
Emerald Oil, Inc.
Ryan Smith
Vice President of Capital Markets & Strategy 
(303) 323-0008
info@emeraldoil.com
www.emeraldoil.com

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