Emerald Oil, Inc. Reports Financial and Operational Results for Its Third Quarter Ended September 30, 2012

DENVER, CO--(Marketwire - Nov 8, 2012) - Emerald Oil, Inc. (NYSE MKT: EOX) ("Emerald" or the "Company") announces it has added record oil production for the third quarter ended September 30, 2012. Emerald will file its quarterly report on Form 10-Q with the SEC on or about November 8, 2012.

Third Quarter 2012 Highlights

• Third Williston Basin operating area added in Richland County, Montana, with working interests consolidated into nine operable drilling spacing units (DSUs);

• Record quarterly oil production of 89,383 barrels of oil equivalent (BOE), or an average of 972 barrels of oil equivalent per day (BOEPD). Third quarter production was up 5% from 85,363 BOE (938 BOEPD) in the previous quarter ended June 30, 2012;

• Record quarterly oil and natural gas sales of $7,111,569 (97% of which is attributable to the sale of crude oil), up 5% from $6,763,429 in the second quarter ending June 30, 2012;

• Adjusted EBITDA* of $4,006,808 for the quarter ended September 30, 2012; and

• Net income as defined under GAAP of $1,994,842 or $0.20 per share (basic and diluted) and an adjusted loss* of $2,260,108 or $0.23 per share (basic and diluted) for the three months ended September 30, 2012.

* Non-GAAP financial measure. Please see Adjusted EBITDA and Adjusted Income (Loss) tables later in this earnings release for a reconciliation of these measures to their nearest comparable GAAP measure.

Operating Acreage Increased For Potential Third Williston Basin Operating Area

Emerald's land team has been successful in consolidating non-operated acreage into potentially operable acreage and has converted 4,600 net acres of the previously targeted 6,800 net acres in Richland County, Montana. The 4,600 net acres represents nine potential operated DSUs on 1,280-acre units, laying the foundation for a third operating area for the Company. Emerald's land team executed the conversion utilizing cashless trades of acreage with other operators in which lower working interest acres were traded for acres that add to Emerald's operable DSUs. Emerald's total operable acreage is approximately 16,000 net acres in the Williston Basin. Of Emerald's current 48,800 net acres in the Williston Basin, approximately 32,800 net acres are non-operated, and approximately 2,200 net acres remain targeted for conversion to operable DSUs.

Third Quarter 2012 Financial and Operational Results

For the quarter ended September 30, 2012, oil and natural gas sales were $7,111,569, which represents an increase of 5% from $6,763,429 for the second quarter ending June 30, 2012 and an increase of 148% from $2,872,674 in the year ago quarter ended September 30, 2011. This increase in revenue is due primarily to production from 181 gross (8.25 net) wells producing in the Bakken and Three Forks formations as of September 30, 2012, compared to 150 gross (6.56 net) wells and 46 gross (1.66 net) wells producing in the same formations as of June 30, 2012 and September 30, 2011, respectively. Crude oil represented 97% of revenue and 93% of production (based on barrels of equivalent of 6 Mcf per barrel) during the third quarter 2012. Emerald continues to benefit from growth in production from its non-operated wells and expects significant growth in 2013 from its recently commenced operated program.

		September 30, 2012				September 30, 2011
Williston Basin Wells		Gross		Net		Gross		Net
Wells at Beginning of Quarter		150		6.56		24		1.13
Wells Added to Production During the Quarter		31		1.69		22		0.53
Producing Wells at Quarter End		181		8.25		46		1.66
Drilling, Awaiting Completion, or Completing at Quarter End		21		1.08		56		1.79
Participating Wells at Quarter End		202		9.33		102		3.45

As of September 30, 2012, Emerald had interests in a total of 202 gross (9.33 net) wells in the Bakken and Three Forks formations, of which 181 gross (8.25 net) wells were producing and 21 gross (1.08 net) wells were in the process of being drilled or completed. Permits continue to be issued for drilling units in which Emerald has acreage interests within North Dakota and Montana, and activity in the Williston Basin remains strong as well permits issued in North Dakota hit a new record high during the third quarter of 2012.

Adjusted EBITDA for the third quarter 2012 was $4,006,808, down from $4,811,883 during the second quarter ended June 30, 2012 and up 95% from $2,053,397 during the third quarter ended September 30, 2011. The decrease in Adjusted EBITDA from the most recent quarter was driven by increased general and administrative expenses related to and following the acquisition of Emerald Oil in July 2012, which was partially offset by increased oil and natural gas sales. Adjusted EBITDA per BOE for the quarter ended September 30, 2012 was $44.83, compared to $56.37 during the second quarter ended June 30, 2012 and $61.63 during the year ago quarter ended September 30, 2011. Adjusted EBITDA per BOE during the third quarter 2012 was lower than second quarter 2012 due mostly to an increase in general and administrative expenses, along with a decrease in realized sale price for crude oil and an increase in production expenses and taxes.

		Three Months Ended
		Sep. 30,				Jun. 30,				Mar. 31,				Dec. 31,				Sep. 30,
		2012				2012				2012				2011				2011
Oil and Natural Gas Sales ($000s)		$	7,112			$	6,763			$	5,098			$	3,054			$	2,873
Net Production:
Crude Oil (Barrels)			82,775				81,323				54,735				35,569				32,088
Crude Oil Mix			93	%			95	%			96	%			97	%			96	%
Natural Gas and Other Liquids (Mcf)			39,648				24,237				12,777				5,971				7,387
Total Net Production (BOE)			89,383				85,363				56,865				36,564				33,319
Quarter-Over-Quarter Increase			5	%			50	%			56	%			10	%			86	%
Average Daily Production (BOEPD)			972				938				625				397				362
Quarter-Over-Quarter Increase			4	%			50	%			57	%			10	%			84	%
Average Sales Prices:
Crude Oil Per Barrel		$	83.56			$	82.34			$	91.79			$	83.98			$	87.83
Effect of Settled Oil Derivatives Per Barrel		$	(1.46	)		$	1.09			$	(0.50	)			--				--
Crude Oil Net of Settled Derivatives Per Barrel		$	82.10			$	83.43			$	91.29			$	83.98			$	87.83
Natural Gas and Other Liquids Per Mcf		$	4.91			$	2.78			$	5.81			$	11.29			$	7.35
Realized Price Per BOE (a)		$	78.21			$	80.27			$	89.17			$	83.53			$	86.22
Average Per BOE:
Production Expenses		$	7.69			$	5.68			$	8.21			$	8.40			$	6.65
Production Taxes		$	9.05			$	8.54			$	8.90			$	6.25			$	7.25
G&A Expenses, Excl. Shared-Based Comp.		$	16.34			$	9.55			$	10.80			$	16.63			$	10.76
Total		$	33.08			$	23.77			$	27.91			$	31.28			$	24.66
Adjusted EBITDA per BOE		$	44.83			$	56.37			$	61.26			$	52.32			$	61.63
Williston Basin Acreage:
Total Net Acres at End of Period (b)			44,373				33,031				32,823				31,957				30,821
Net Acres Added			11,342				208				866				1,136				30,821
Average Cost / Acre Acquired During Period (c)		$	1,272			$	2,000			$	2,100			$	2,116			$	1,441

(a) Realized Price includes realized gains or losses on cash settlements for commodity derivatives.

(b) Following the McKenzie County acquisition in October 2012, Emerald held 48,826 net acres.

(c) Average Cost for 3Q2012 would be about $1,800 per net acre on a pro forma basis to include the McKenzie County acquisition in October 2012.

Well Development and Acreage Activity

During third quarter 2012, Emerald invested $20.5 million in oil and natural gas properties. Emerald added 1.69 net non-operated Bakken and Three Forks wells to production during the quarter and added about 700 net acres in the Williston Basin in addition to the 10,600 net acres in Dunn County, North Dakota it acquired with the July 2012 acquisition of Emerald Oil. On October 5, 2012, Emerald closed the acquisition of 4,453 net acres in McKenzie County, North Dakota, which brought its total acreage in the Williston Basin to 48,800 net acres.

Emerald has seven wells permitted in McKenzie County, North Dakota and anticipates receiving two additional permits in the near future on its nine operated DSUs. Two well pads are completed, one of which includes tank batteries. Emerald has contracted a single drilling rig that is now on location and recently began drilling our first well. The Company initially plans to drill two horizontal Bakken wells from a single dual-pad, which will hold two separate 1,280-acre DSUs. Emerald anticipates drilling the third well from a single well pad. The first three wells will be batch completed and initial results will be available after these wells are producing.

15-Month Capital Spending Plans

Emerald maintains its previously stated 18-month capital budget. For the remaining 15-month period ending December 31, 2013, Emerald plans to spend approximately $72.5 million on well development in the Williston Basin. Specifically, Emerald plans to spend approximately $55.0 million to drill 5.0 net operated wells at an average estimated cost of $11.0 million per well and approximately $17.5 million to participate in 1.9 net non-operated wells at an average estimated cost of $9.2 million per well. During the third quarter 2012 we elected to participate in more non-operated well authorization for expenditures (AFEs) due to the quality of operators, proposed well completions, and geology of acreage being developed. The activity levels in the Williston Basin remain robust. We will continue to analyze the non-operated AFEs as we receive them and make appropriate spending or monetization decisions relative to our capital budget.

The following table presents summary data for Emerald's Williston Basin project area as of November 8, 2012:

						Planned Capital Expenditures*
		Net Acres		Net Identified Drilling Locations		Net Wells		Drilling Capex
Operated		16,000		88		5.0		$	55.0
Non-Operated		32,800		179		1.9		$	17.5
	Total Williston Basin	48,800		267		6.9		$	72.5

* October 1, 2012 through December 31, 2013

Liquidity and Shares Outstanding

As of September 30, 2012, Emerald had $33,282,601 in cash and total debt outstanding of $15,000,000 under its credit facility. On October 5, 2012, Emerald closed the 4,453 acre acquisition in McKenzie County for $15.4 million cash. Emerald raised $75.0 million in gross proceeds pursuant to an equity offering the Company closed in September 2012, and another approximate $2.5 million of net proceeds from the underwriters' exercise of its over-allotment option in October 2012. Subsequent to these events, Emerald's pro forma cash balance was approximately $20.4 million and 23,874,347 shares of common stock were outstanding.

As of September 30, 2012, $15,000,000 was outstanding under Tranche A of the credit facility. As of September 30, 2012, $7.7 million was undrawn and available pursuant to an approved development plan under Tranche B of the credit facility. The $15 million initial borrowing base on Tranche A was based on Emerald's December 31, 2011 proved reserves. Multiple lenders are in the process of reviewing Emerald's proved reserves and well development plans for a revised borrowing base following the McKenzie County acreage acquisition in October 2012. Emerald anticipates the borrowing base under the current or a new credit facility will be increased above the current availability based on its updated mid-year proved reserves, additions to its Williston Basin acreage and updated operated well development plans. Emerald believes its cash on hand, cash flow from operations and additional borrowing capacity will adequately fund its capital program.

Loss on Commodity Derivatives

Realized commodity derivative losses were $120,706 and $59,681, for the three and nine months ended September 30, 2012, respectively. Unrealized commodity derivative losses were $1,514,729 and $236,646, for the three and nine months ended September 30, 2012, respectively. Emerald did not have any commodity derivatives losses for the three and nine months ended September 30, 2011. Emerald does not designate derivatives for hedge accounting and accounts for derivatives using the mark-to-market accounting method, whereby gains and losses from changes in the fair value of derivative instruments are recognized immediately into earnings. Mark-to-market accounting treatment creates volatility in Emerald's revenues as unrealized gains and losses from derivatives are included in total revenues and are not included in accumulated other comprehensive income in the accompanying balance sheets. As commodity prices increase or decrease, such changes will have an opposite effect on the mark-to-market value of the derivatives. Future derivative gains will be offset by lower future wellhead revenues. Conversely, future derivative losses will be offset by higher future wellhead revenues based on the value at the settlement date. At September 30, 2012, all of Emerald's derivative contracts are recorded at their fair value, which was a net liability of $236,646. Emerald did not incur any net asset or liability with respect to derivative contracts prior to January 1, 2012.

		Three Months Ended September 30,							Nine Months Ended September 30,
		2012				2011			2012				2011
Net Revenues:
Total Oil and Natural Gas Sales		$	7,111,569			$	2,872,674		$	18,973,331			$	5,371,830
Realized Loss on Commodity Derivatives			(120,706	)			-			(59,681	)			-
Unrealized Loss on Commodity Derivatives			(1,514,729	)			-			(236,646	)			-
Revenues		$	5,476,134			$	2,872,674		$	18,677,004			$	5,371,830

Gain on Acquisition of Business and Interest Paid

For the third quarter 2012, Emerald reported a net gain on the July 2012 acquisition of Emerald Oil of $5,769,679. The consideration for the Emerald Oil acquisition consisted of 19.9% of the then outstanding common stock of the Company, and the gain resulted from the decrease in the Company's common stock price between the announcement of the acquisition on July 10, 2012 and the close date on July 26, 2012. During third quarter 2012, the Company incurred $1,444,156 of acquisition costs that were netted against the gain. These gains and costs are non-recurring and have been excluded in the calculation of adjusted EBITDA and adjusted income (loss). In addition, cash paid during third quarter 2012 for interest expense was $493,479 compared to $1,388,912 reported in the statement of operations, which included adjustments for unamortized financing costs and capitalized interest. Cash paid for interest expense during the second quarter 2012 and third quarter 2011 was $189,412 and $450,000, respectively.

Non-GAAP Financial Measures

Adjusted EBITDA

In addition to reporting net income (loss) as defined under GAAP, Emerald also presents net earnings before interest, income taxes, depreciation, depletion, and amortization, accretion of discount on asset retirement obligations, impairment of oil and natural gas properties, acquisition costs, gain on acquisition of Emerald Oil, unrealized gain (loss) from mark-to-market on commodity derivatives 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 the calculations thereof may not be comparable to similarly titled measures reported by other companies. By eliminating the items described below, Emerald believes the measure is useful in evaluating its fundamental core operating performance. The Company also believes 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. Emerald's management uses Adjusted EBITDA to manage its business, including in preparing its annual operating budget and financial projections. 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 income (loss) to Adjusted EBITDA for the periods presented:

		Three Months Ended
		September 30,			June 30,				March 31,				December 31,				September 30,
		2012			2012				2012				2011				2011
Net income (loss)		$	1,994,842		$	(6,960,908	)		$	(256,370	)		$	(46,097	)		$	55,874
Impairment of oil and natural gas properties			-			10,191,234				-				-				-
Interest expense			1,388,912			169,445				515,790				525,616				508,841
Accretion of discount on asset retirement obligation			4,037			3,423				2,567				1,576				1,717
Depletion, depreciation and amortization			2,830,995			3,171,512				2,009,129				1,264,437				1,335,620
Stock-based compensation expense			2,042,972			400,152				327,725				167,434				151,345
Unrealized loss (gain) on commodity derivatives			1,514,729			(2,162,975	)			884,892				-				-
Gain on acquisition of business, net			(5,769,679	)		-				-				-				-
Adjusted EBITDA		$	4,006,808		$	4,811,883			$	3,483,733			$	1,912,966			$	2,053,397

Adjusted Income (Loss)

In addition to reporting net income (loss) as defined under GAAP, Emerald also presents net earnings before the impairment of oil and natural gas properties, acquisition costs, gain on acquisition of Emerald Oil, and the effect of unrealized gain (loss) from mark-to-market on commodity derivatives ("adjusted income (loss)"), which is a non-GAAP performance measure. Adjusted income (loss) consists of net earnings after adjustment for those items described in the table below. 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, Emerald believes the measure is useful in evaluating its fundamental core operating performance. The Company also believes 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. Emerald's management uses adjusted income (loss) to manage its business, including in preparing its annual operating budget and financial projections. 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,
	2012				2011			2012				2011
Net income (loss)	$	1,994,842			$	55,874		$	(5,222,436	)		$	(1,298,957	)
Impairment of oil and natural gas properties		-				-			10,191,234				-
Gain on acquisition of business, net		(5,769,679	)			-			(5,758,048	)			-
Unrealized loss on commodity derivatives		1,514,729				-			236,646				-
Adjusted income (loss)	$	(2,260,108	)		$	55,874		$	(552,604	)		$	(1,298,957	)
Adjusted income (loss) per share - basic	$	(0.23	)		$	0.01		$	(0.06	)		$	(0.16	)
Adjusted income (loss) per share - diluted	$	(0.23	)		$	0.01		$	(0.06	)		$	(0.16	)
Weighted average shares outstanding - basic		9,969,005				8,197,074			8,844,032				7,948,370
Weighted average shares outstanding - diluted		9,969,005				8,402,238			8,844,032				7,948,370

Derivative Instruments and Price Risk Management

Emerald utilizes commodity swap contracts and costless collars (purchased put options and written call options) to (i) reduce the effects of volatility in price changes on the oil commodities it produces and sells, (ii) reduce commodity price risk and (iii) provide a base level of cash flow in order to assure it can execute at least a portion of its capital spending.

All derivative positions are carried at their fair value on the condensed balance sheet and are marked-to-market at the end of each period. Both the unrealized and realized gains and losses resulting from the contract settlement of derivatives are recorded in the loss on commodity derivatives line on the condensed consolidated statement of operations.

The following table reflects open commodity swap contracts as of September 30, 2012, the associated volumes and the corresponding weighted average NYMEX reference price.

Settlement Period		Oil (Barrels)		Fixed Price		Weighted Avg NYMEX Reference Price
Oil Swaps
October 1, 2012 - January 31, 2015		157,205		88.00		92.70

Costless collars are used to establish floor and ceiling prices on anticipated oil and natural gas production. There were no premiums paid or received by Emerald related to the costless collar agreements. The following table reflects open costless collar agreements as of September 30, 2012.

Term		Oil (Barrels)		Price		Basis
Costless Collars
October 1, 2012 - February 28, 2015		159,722		$90.00-$103.50		NYMEX

Conference Call

Emerald will host a conference call on Friday, November 9, 2012 at 10:00 a.m. Eastern Time (8:00 a.m. Mountain Time) to discuss financial and operational results for the quarter.

Emerald Oil, Inc. 3Q 2012 Financial and Operational Results Conference Call
Date:		Friday, November 9, 2012
		10:00 a.m. Eastern Time
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 Emerald Oil website
Website:		www.emeraldoil.com
Telephone Dial-In:		877-407-0668 (toll-free) and 201-689-8558 (International)
		Available through Friday, November 16, 2012
Telephone Replay:		877-660-6853 (toll-free) and 201-612-7415 (International)
		Passcode: 403122

About Emerald

Emerald is a Denver-based independent exploration and production company focused primarily on the development of its approximate 48,800 net acres in the Williston Basin in North Dakota and Montana, prospective for oil in the Bakken and Three Forks formations. Emerald also has accumulated 45,000 net acres in the Sandwash Basin in northwest Colorado and southwest Wyoming, prospective for oil in the Niobrara formation, and 33,500 net acres in central Montana, prospective for oil in the Heath formation.

Forward-Looking Statements

This press release includes "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 include statements regarding the Company's conversion of non-operated acreage, the Company's expectations and anticipated benefits from its acquisition of Emerald Oil and the acquisition of acreage in McKenzie County, North Dakota, the timing, scope and costs of the Company's drilling plans, the Company's capital budget plans, cash balance, availability and uses of credit and expected borrowing base, the Company's expected use and effects of commodity derivatives, the Company's expectations regarding the Company's operational, exploration and development plans, the Company's expectations regarding the nature and amount of the Company's reserves and expectations regarding production, revenues, cash flows and recoveries. 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, 2012				December 31, 2011
ASSETS
CURRENT ASSETS
	Cash and Cash Equivalents			$	33,282,601			$	13,927,267
	Trade Receivables				6,215,270				3,247,412
	Prepaid Expenses				137,804				48,330
		Total Current Assets			39,635,675				17,223,009
PROPERTY AND EQUIPMENT
	Oil and Natural Gas Properties, Full Cost Method
		Proved Oil and Natural Gas Properties			128,411,987				60,425,243
		Unproved Oil and Natural Gas Properties			67,562,346				32,180,217
	Other Property and Equipment				277,415				176,238
		Total Property and Equipment			196,251,748				92,781,698
	Less - Accumulated Depreciation, Depletion and Amortization				(23,708,158	)			(5,505,288	)
		Total Property and Equipment, Net			172,543,590				87,276,410
	Prepaid Drilling Costs				315,986				33,163
	Fair Value of Commodity Derivatives				61,794				-
	Debt Issuance Costs, Net of Amortization				389,334				306,839
	Other Assets				75,000				-
		Total Assets		$	213,021,379			$	104,839,421
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
	Accounts Payable			$	37,057,965			$	10,375,239
	Fair Value of Commodity Derivatives				298,440				-
	Accrued Expenses				9,911				206,122
		Total Current Liabilities			37,366,316				10,581,361
LONG-TERM LIABILITIES
	Revolving Credit Facility				15,000,000				-
	Senior Secured Promissory Notes				-				15,000,000
	Asset Retirement Obligations				238,315				116,119
		Total Liabilities			52,604,631				25,697,480
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
	Preferred Stock - Par Value $.001; 20,000,000 Shares Authorized;None Issued or Outstanding				-				-
	Common Stock, Par Value $.001; 200,000,000 Shares Authorized, 23,389,649 and 8,264,061 Shares Issued and Outstanding, respectively				23,390				8,264
	Additional Paid-In Capital				173,489,875				87,007,758
	Accumulated Deficit				(13,096,517	)			(7,874,081	)
		Total Stockholders' Equity			160,416,748				79,141,941
		Total Liabilities and Stockholders' Equity		$	213,021,379			$	104,839,421

EMERALD OIL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2012				2011				2012				2011
REVENUES
Oil and Natural Gas Sales		$	7,111,569			$	2,872,674			$	18,973,331			$	5,371,830
Loss on Commodity Derivatives			(1,635,435	)			-				(296,327	)			-
			5,476,134				2,872,674				18,677,004				5,371,830
OPERATING EXPENSES
Production Expenses			687,646				221,509				1,639,105				419,822
Production Taxes			809,062				241,412				2,043,671				488,793
General and Administrative Expenses			3,503,273				509,893				5,660,622				1,910,824
Depletion of Oil and Natural Gas Properties			2,818,650				1,324,771				7,977,077				2,293,099
Impairment of Oil and Natural Gas Properties			-				-				10,191,234				-
Depreciation and Amortization			12,345				10,849				34,559				19,761
Accretion of Discount on Asset Retirement Obligations			4,037				1,717				10,027				3,306
Total Expenses			7,835,013				2,310,151				27,556,295				5,135,605
INCOME (LOSS) FROM OPERATIONS			(2,358,879	)			562,523				(8,879,291	)			236,225
OTHER INCOME (EXPENSE)
Interest Expense			(1,388,912	)			(508,841	)			(2,074,147	)			(1,510,416	)
Gain on Acquisition of Business, Net			5,769,679				-				5,758,048				-
Other Income (Expense), Net			(27,046	)			2,192				(27,046	)			(24,766	)
Total Other Income (Expense), Net			4,353,721				(506,649	)			3,656,855				(1,535,182	)
INCOME (LOSS) BEFORE INCOME TAXES			1,994,842				55,874				(5,222,436	)			(1,298,957	)
INCOME TAX EXPENSE			-				-				-				-
NET INCOME (LOSS)		$	1,994,842			$	55,874			$	(5,222,436	)		$	(1,298,957	)
Net Income (Loss) Per Common Share - Basic and Diluted		$	0.20			$	0.01			$	(0.59	)		$	(0.16	)
Weighted Average Shares Outstanding - Basic			9,969,005				8,197,074				8,844,032				7,948,370
Weighted Average Shares Outstanding - Diluted			10,027,934				8,402,238				8,844,032				7,948,370

EMERALD OIL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
						Nine Months Ended September 30,
						2012				2011
CASH FLOWS FROM OPERATING ACTIVITIES
	Net Loss					$	(5,222,436	)		$	(1,298,957	)
	Adjustments to Reconcile Net Loss to Net Cash Provided By (Used For) Operating Activities:
		Depletion of Oil and Natural Gas Properties					7,977,077				2,293,099
		Impairment of Oil and Natural Gas Properties					10,191,234				-
		Depreciation and Amortization					34,559				19,761
		Amortization of Debt Discount					-				163,356
		Amortization of Finance Costs					1,494,013				6,575
		Accretion of Discount on Asset Retirement Obligations					10,027				3,306
		Unrealized Loss on Derivative Instruments					236,646				-
		Gain on Acquisition of Business					(7,213,835	)			-
		Share-Based Compensation Expense					2,770,849				561,114
		Changes in Assets and Liabilities, net of impact of acquisitions:
			Increase in Trade Receivables				(2,967,858	)			(2,091,660	)
			(Increase) Decrease in Prepaid Expenses				(89,474	)			36,323
			Increase (Decrease) in Accounts Payable				998,360				(499,607	)
			Decrease in Accrued Expenses				(196,211	)			(225,237	)
				Net Cash Provided By (Used For) Operating Activities			8,022,951				(1,031,927	)
CASH FLOWS FROM INVESTING ACTIVITIES
	Purchases of Other Property and Equipment						(65,177	)			(154,770	)
	Prepaid Drilling Costs						(282,823	)			(264,264	)
	Proceeds from Sales of Available for Sale Securities						-				242,070
	Investment in Oil and Natural Gas Properties						(36,292,015	)			(34,242,379	)
		Net Cash Used For Investing Activities					(36,640,015	)			(34,419,343	)
CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds from Issuance of Common Stock - Net of Issuance Costs						69,852,809				46,602,251
	Advances on Revolving Credit Facility and Term Loan						33,030,730				-
	Payments on Revolving Credit Facility and Term Loan						(18,030,730	)			-
	Payments of Senior Secured Promissory Notes						(15,000,000	)			-
	Payment of Assumed Debt						(20,303,903	)			-
	Cash Paid for Finance Costs						(1,576,508	)			(300,000	)
	Proceeds from Exercise of Stock Options and Warrants						-				16,960
		Net Cash Provided by Financing Activities					47,972,398				46,319,211
NET INCREASE IN CASH AND CASH EQUIVALENTS							19,355,334				10,867,941
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD							13,927,267				11,358,520
CASH AND CASH EQUIVALENTS - END OF PERIOD						$	33,282,601			$	22,226,461
Supplemental Disclosure of Cash Flow Information
	Cash Paid During the Period for Interest					$	1,107,293			$	1,350,000
	Cash Paid During the Period for Income Taxes					$	-			$	-
		Non-Cash Financing and Investing Activities:
			Oil and Natural Gas Properties Property Accrual in Accounts Payable			$	35,936,773			$	4,327,968
			Stock-Based Compensation Capitalized to Oil and Natural Gas Properties			$	493,085			$	289,277
			Capitalized Asset Retirement Obligations			$	112,169			$	72,365
			Non-Cash Business Acquisitions
				Oil and Natural Gas Properties		$	40,787,238			$	-
				Other Property and Equipment		$	36,000			$	-
				Other Assets		$	75,000			$	-
				Fair Market Value of Common Stock Issued		$	13,380,500			$	-
				Debt Assumed		$	20,303,903			$	-