UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
August 4, 2015
EMERALD OIL, INC.
(Exact name of registrant as specified in
its charter)
| Delaware |
|
1-35097 |
|
77-0639000 |
(State or other jurisdiction of
incorporation) |
|
(Commission File Number) |
|
(IRS Employer
Identification No.) |
200 Columbine Street, Suite 500
Denver, CO 80206
(Address of principal executive offices,
including zip code)
(303) 595-5600
(Registrant’s telephone number, including
area code)
(Former name or former address, if changed
since last report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
| ¨ | Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02. | Results of Operations and Financial Conditions |
On August 4, 2015, Emerald Oil, Inc. (the “Company”)
issued a press release announcing results for the fiscal quarter ended June 30, 2015. A copy of the press release is attached hereto
as Exhibit 99.1 and incorporated herein by reference.
The Company’s press release announcing its financial results
for the fiscal quarter ended June 30, 2015 contains non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical
measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not
normally excluded or included in the most directly comparable measure calculated and presented in accordance with United States
generally accepted accounting principles, or GAAP. Pursuant to the requirements of Regulation G, the Company has provided quantitative
reconciliations within the press release of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
In accordance with General Instruction B.2 of Form 8-K, the
information in this report, including the exhibit attached hereto, shall not be deemed “filed” for purposes of Section
18 of the Securities Exchange Act of 1934, as amended (“the Exchange Act”), nor shall such information be deemed incorporated
by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set
forth by specific reference in such a filing.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
The following exhibits are filed in accordance with the provisions
of Item 601 of Regulation S-K:
| Exhibit No. |
Description |
| |
|
| 99.1 |
Press Release of Emerald Oil, Inc., dated August 4, 2015. |
SIGNATURE
Pursuant to the requirements
of the Securities Exchange Act of 1934, the Company has duly caused this report on Form 8-K to be signed on its behalf by the undersigned
hereunto duly authorized.
| |
|
EMERALD OIL, INC.
|
|
| |
|
|
|
| |
|
|
|
| Date: August 4, 2015 |
By: |
/s/ Ryan Smith |
|
| |
|
Ryan Smith |
|
| |
|
Chief Financial Officer |
|
EXHIBIT INDEX
| Exhibit No. |
Description |
| |
|
| 99.1 |
Press Release of Emerald Oil, Inc., dated August 4, 2015. |
Exhibit 99.1
Emerald Oil Reports Second Quarter 2015
Financial and Operational Results, Guidance
Increase, Credit Facility and Term Loan Facility Update
DENVER, CO – August 4, 2015 ---
Emerald Oil, Inc. (NYSE MKT: EOX) (“Emerald” or the “Company”) today announced financial and operational
results for the quarter ended June 30, 2015, 2015 guidance increase, and Revolving Credit Facility (“Credit Facility”)
and Senior Secured Second Lien Term Loan Facility (“Term Loan Facility”) updates.
Highlights
| · | Second quarter production of 453,495 BOE increased 33% as compared to 340,320 BOE in the second
quarter of 2014. Daily production averaged 4,983 BOEPD, 7% above the midpoint and 4% above the high end of Emerald’s second
quarter 2015 guidance range; |
| · | 2015 third and fourth quarter production guidance raised 400 Boe/d and 200 Boe/d, to
4,700-5,000 Boe/d and 4,200-4,500 Boe/d, respectively; |
| · | Second quarter oil and gas revenue of $21.8 million; |
| · | Second quarter Adjusted EBITDA of $5.0 million; |
| · | Fall 2015 Credit Facility borrowing base redetermination resulting
in an elected commitment of $135 million and a new covenant structure; and |
| · | $100 million Term Loan Facility, with a $75 million initial draw, provided by Angelo, Gordon Energy
Capital, LLC and affiliates (“Angelo Gordon”), expected to close in the third quarter in conjunction with the borrowing
base redetermination. |
Second Quarter 2015 Production
For the second quarter of 2015, Emerald’s
total production volumes on a BOE basis increased 33% as compared to the second quarter of 2014. During the second quarter of 2015,
Emerald realized a $48.60 average price per Bbl of oil (including settled derivatives) compared to an $87.42 average price per
Bbl of oil during the second quarter of 2014.
| | |
Quarter Ended June 30, | |
| | |
2015 | | |
2014 | |
| Sales Volume (Total) | |
| | |
| |
| Oil (Bbls) | |
| 419,461 | | |
| 324,617 | |
| Gas (Mcf) | |
| 204,203 | | |
| 94,217 | |
| Sales volumes (Boe) | |
| 453,495 | | |
| 340,320 | |
| | |
| | | |
| | |
| Average Daily Sales | |
| | | |
| | |
| Oil (Bbls) | |
| 4,609 | | |
| 3,567 | |
| Gas (Mcf) | |
| 2,244 | | |
| 1,035 | |
| Sales volumes (Boe) | |
| 4,983 | | |
| 3,740 | |
| | |
| | | |
| | |
| Average Sales Prices | |
| | | |
| | |
| Oil (Bbl) | |
$ | 51.44 | | |
$ | 93.30 | |
| Effect of Settled Oil Derivatives | |
| (2.84 | ) | |
| (5.88 | ) |
| Oil Net of Settled Derivatives (Bbl) | |
$ | 48.60 | | |
$ | 87.42 | |
| Gas (Mcf) | |
$ | 1.30 | | |
$ | 10.26 | |
| Barrel of Oil Equivalent with Settled Derivatives | |
$ | 45.53 | | |
$ | 86.23 | |
Financial Results
Revenues from sales of oil and natural
gas for the second quarter of 2015 were $21.8 million compared to $31.3 million for the same period
in 2014. The decrease was due to lower realized crude oil prices during the second quarter of 2015. Crude oil revenue accounted
for approximately 99% of oil and natural gas sales.
Lease operating expenses for the second
quarter of 2015 were $8.5 million compared to $3.4 million for the same period in 2014. On a per unit basis, lease operating expenses
were $18.68 per BOE in the second quarter of 2015 compared to $9.90 per BOE in the second quarter of 2014. This increase on a
per unit basis compared to 2014 was primarily due to regulatory and compliance related costs associated with gas capture and air
emissions, and costs associated with increased production water hauling from new pads that were brought online further from disposal
facilities. These two items that drove LOE higher in the second quarter are no longer relevant to our business due to the
completion of the Low Rider midstream system. Emerald also incurred workover expenses for the second quarter of 2015 of $1.6
million, or $3.47 per BOE.
General and administrative
expenses for the second quarter of 2015 were $3.9 million compared to $7.6 million for the same period in 2014. On a per unit
basis, G&A expenses (excluding non-cash stock-based compensation) were $7.38 per BOE in the second quarter of 2015
compared to $13.66 per BOE in the second quarter of 2014. Share-based compensation expenses, which are included in G&A
expense, totaled $0.5 million in the second quarter of 2015 compared to $3.0 million for the same period in 2014.
Adjusted EBITDA was $5.0 million for the
second quarter of 2015, as compared to $17.4 million for the same period in 2014. Adjusted Net Income (Loss) was $(8.7) million
for the second quarter of 2015. Emerald recognized a $61.4 million non-cash impairment expense
for the quarter ended June 30, 2015 due primarily to the substantial declines in commodity prices. Adjusted EBITDA and Adjusted
Net Income (Loss) are non-GAAP financial measures. For additional information please refer to the reconciliation of these measures
at the end of this news release.
Updated 2015 Production and CAPEX
Guidance
Assumes Emerald’s variable one rig
program for 2015.
| | |
Previous Boe/d Range | | |
Updated Boe/d Range | |
| | |
Low End | | |
High End | | |
Low End | | |
High End | |
| 1Q 2015 Average | |
| 4,000 | | |
| 4,300 | | |
| 4,715 | | |
| 4,715 | |
| 2Q 2015 Average | |
| 4,500 | | |
| 4,800 | | |
| 4,983 | | |
| 4,983 | |
| 3Q 2015 Average | |
| 4,300 | | |
| 4,600 | | |
| 4,700 | | |
| 5,000 | |
| 4Q 2015 Average | |
| 4,000 | | |
| 4,300 | | |
| 4,200 | | |
| 4,500 | |
| | |
| | | |
| | | |
| | | |
| | |
| 2015 Average | |
| 4,200 | | |
| 4,500 | | |
| 4,650 | | |
| 4,800 | |
| Year over year average production growth | |
| 18 | % | |
| 27 | % | |
| 24 | % | |
| 35 | % |
| | |
2015 Capital Expenditures Range ($mm) | |
| | |
Previous Range | | |
Updated Range | |
| | |
Low End | | |
High End | | |
Low End | | |
High End | |
| 2015 Drilling and Completion Budget* | |
$ | 52.0 | | |
$ | 71.0 | | |
$ | 62.0 | | |
$ | 81.0 | |
| 2015 Land Budget | |
$ | 1.0 | | |
$ | 5.0 | | |
$ | 1.0 | | |
$ | 5.0 | |
* Drilling and Completion CAPEX through
June 30, 2015 was $61.9 million.
Credit Facility, Term Loan Facility
and Liquidity Update
Upon closing of the Term Loan, Emerald’s
lending syndicate has approved an amendment to the Company’s Credit Facility. The amendment will include an
updated senior secured debt to EBITDA covenant of 2.5x through March 31, 2016, and 1.5x for the remainder of 2016, a new total
secured debt to EBITDA covenant of 4.5x through December 31, 2015, 4.0x through June 30, 2016, and 3.0x through the remainder of
2016, a new interest coverage covenant of 2.5x through 2016, and eliminated the total debt to EBITDA covenant through 2016. Additionally,
as part of the Fall 2015 borrowing base redetermination, the banks approved a $135 million borrowing base. The next scheduled redetermination
is Spring 2016.
In conjunction with the lending
syndicate’s new covenant structure and borrowing base redetermination, a $100 million delayed draw Term Loan Facility,
provided by Angelo Gordon, is expected to close during the third quarter, subject to customary closing conditions. At
closing, $75 million in proceeds shall be used to repay borrowings under Emerald’s Credit Facility, and an additional
$25 million in funds may be made available to meet future requirements. The Term Loan Facility has a three year
maturity and bears interest at LIBOR plus 8.25 percent with a one percent LIBOR floor.
As of June 30, 2015, the Company has classified
the balance of both the Credit Facility and the Convertible Notes as current liabilities. Upon closing the amendment to the Credit
Facility during the third quarter of 2015, the Company expects to reclassify both the Credit Facility and the Convertible Notes
back to long term liabilities.
| Secured Debt & Liquidity Overview | |
6/30/2015 ($mm) | | |
Pro Forma Balance* ($mm) | |
| Cash and Cash Equivalents** | |
$ | 19.1 | | |
$ | 10.0 | |
| Revolving Credit Facility | |
$ | 159.7 | | |
$ | 51.2 | |
| Second Lien Term Loan | |
| N/A | | |
$ | 75.0 | |
* Pro Forma for Koch Exploration transaction of approximately
$24.4 million and $75.0 million Second Lien Term Loan
** Cash swept into revolving credit facility |
Conference Call
Emerald will host a conference call on
Wednesday, August 5, 2015 at 10:00 a.m. Eastern Time (8:00 a.m. Mountain Time) to discuss financial and operational results for
the quarter end.
| Emerald Oil, Inc. 2Q2015 Financial and Operational Results Conference Call |
| Date: |
|
Wednesday, August 5, 2015 |
| 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, August 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 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.
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)
| | |
June 30, 2015 | | |
December 31, 2014 | |
| ASSETS | |
| | | |
| | |
| CURRENT ASSETS | |
| | | |
| | |
| Cash and Cash Equivalents | |
$ | 19,116,956 | | |
$ | 12,389,230 | |
| Restricted Cash | |
| 2,000,000 | | |
| — | |
| Accounts Receivable – Oil and Natural Gas Sales | |
| 9,107,331 | | |
| 7,203,455 | |
| Accounts Receivable – Joint Interest Partners | |
| 14,296,377 | | |
| 31,842,464 | |
| Other Receivables | |
| 304,624 | | |
| 980,317 | |
| Prepaid Expenses and Other Current Assets | |
| 776,292 | | |
| 289,061 | |
| Fair Value of Commodity Derivatives | |
| — | | |
| 5,044,125 | |
| Total Current Assets | |
| 45,601,580 | | |
| 57,748,652 | |
| PROPERTY AND EQUIPMENT | |
| | | |
| | |
| Oil and Natural Gas Properties, Full Cost Method, at cost: | |
| | | |
| | |
| Proved Oil and Natural Gas Properties | |
| 678,944,015 | | |
| 593,472,170 | |
| Unproved Oil and Natural Gas Properties | |
| 149,994,517 | | |
| 166,708,263 | |
| Equipment and Facilities | |
| 17,223,706 | | |
| 6,086,896 | |
| Other Property and Equipment | |
| 4,644,900 | | |
| 2,583,372 | |
| Total Property and Equipment | |
| 850,807,138 | | |
| 768,850,701 | |
| Less – Accumulated Depreciation, Depletion and Amortization | |
| (317,035,267 | ) | |
| (149,703,417 | ) |
| Total Property and Equipment, Net | |
| 533,771,871 | | |
| 619,147,284 | |
| Restricted Cash | |
| — | | |
| 4,000,000 | |
| Debt Issuance Costs, Net of Amortization | |
| 5,433,819 | | |
| 5,779,125 | |
| Deposits on Acquisitions | |
| — | | |
| 140,173 | |
| Deferred Tax Assets, Net | |
| 1,813,561 | | |
| 1,813,796 | |
| Other Non-Current Assets | |
| 426,873 | | |
| 430,846 | |
| Total Assets | |
$ | 587,047,704 | | |
$ | 689,059,876 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | | |
| | |
| CURRENT LIABILITIES | |
| | | |
| | |
| Accounts Payable | |
$ | 59,492,828 | | |
$ | 120,136,903 | |
| Revolving Credit Facility | |
| 159,683,000 | | |
| — | |
| Convertible Senior Notes | |
| 151,500,000 | | |
| — | |
| Fair Value of Commodity Derivatives | |
| 3,167,271 | | |
| — | |
| Accrued Expenses | |
| 4,546,468 | | |
| 11,267,831 | |
| Advances from Joint Interest Partners | |
| 2,020,760 | | |
| 2,577,247 | |
| Deferred Tax Liability, Net | |
| 1,813,561 | | |
| 1,813,796 | |
| Total Current Liabilities | |
| 382,223,888 | | |
| 135,795,777 | |
| LONG-TERM LIABILITIES | |
| | | |
| | |
| Revolving Credit Facility | |
| — | | |
| 75,000,000 | |
| Convertible Senior Notes | |
| — | | |
| 151,500,000 | |
| Asset Retirement Obligations | |
| 3,141,859 | | |
| 2,671,975 | |
| Warrant Liability | |
| 408,000 | | |
| 2,199,000 | |
| Fair Value of Commodity Derivatives | |
| 465,945 | | |
| — | |
| Total Liabilities | |
| 386,239,692 | | |
| 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 June 30, 2015 and December 31, 2014. Liquidation preference value of $256 as of June 30, 2015 and December 31, 2014. | |
| 256 | | |
| 256 | |
| | |
| | | |
| | |
| STOCKHOLDERS’ EQUITY | |
| | | |
| | |
| Common Stock, Par Value $.001; 500,000,000 Shares Authorized, 7,856,325 and 3,891,431 Shares Issued and Outstanding, respectively | |
| 7,856 | | |
| 3,891 | |
| Additional Paid-In Capital | |
| 504,815,447 | | |
| 455,087,277 | |
| Accumulated Deficit | |
| (304,015,547 | ) | |
| (133,198,300 | ) |
| Total Stockholders’ Equity | |
| 200,807,756 | | |
| 321,892,868 | |
| Total Liabilities and Stockholders’ Equity | |
$ | 587,047,704 | | |
$ | 689,059,876 | |
EMERALD OIL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | |
Three Months Ended June 30, | | |
Six Months Ended June 30, | |
| | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| REVENUES | |
| | |
| | |
| | |
| |
| Oil Sales | |
$ | 21,575,315 | | |
$ | 30,288,128 | | |
$ | 35,631,347 | | |
$ | 48,722,936 | |
| Natural Gas Sales | |
| 264,691 | | |
| 966,280 | | |
| 729,863 | | |
| 1,600,344 | |
| Net Losses on Commodity Derivatives | |
| (4,823,936 | ) | |
| (6,663,083 | ) | |
| (4,550,761 | ) | |
| (7,461,936 | ) |
| Total Revenues | |
| 17,016,070 | | |
| 24,591,325 | | |
| 31,810,449 | | |
| 42,861,344 | |
| OPERATING EXPENSES | |
| | | |
| | | |
| | | |
| | |
| Production Expenses | |
| 10,048,350 | | |
| 3,897,482 | | |
| 17,770,504 | | |
| 6,514,726 | |
| Production Taxes | |
| 2,251,080 | | |
| 3,400,874 | | |
| 3,834,375 | | |
| 5,489,610 | |
| General and Administrative Expenses | |
| 3,878,473 | | |
| 7,633,559 | | |
| 8,673,998 | | |
| 16,125,563 | |
| Depletion of Oil and Natural Gas Properties | |
| 10,034,956 | | |
| 8,600,878 | | |
| 20,380,062 | | |
| 14,878,110 | |
| Impairment of Oil and Natural Gas Properties | |
| 61,361,000 | | |
| — | | |
| 146,625,000 | | |
| — | |
| Depreciation and Amortization | |
| 167,634 | | |
| 81,497 | | |
| 326,789 | | |
| 147,257 | |
| Accretion of Discount on Asset Retirement Obligations | |
| 50,928 | | |
| 20,080 | | |
| 100,507 | | |
| 35,800 | |
| Standby Rig Expense | |
| 826,061 | | |
| — | | |
| 2,372,665 | | |
| — | |
| Total Operating Expenses | |
| 88,618,482 | | |
| 23,634,370 | | |
| 200,083,900 | | |
| 43,191,066 | |
| INCOME (LOSS) FROM OPERATIONS | |
| (71,602,412 | ) | |
| 956,955 | | |
| (168,273,451 | ) | |
| (329,722 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| OTHER INCOME (EXPENSE) | |
| | | |
| | | |
| | | |
| | |
| Interest Expense | |
| (2,616,000 | ) | |
| (1,136,377 | ) | |
| (4,309,552 | ) | |
| (1,308,463 | ) |
| Warrant Revaluation Gain (Expense) | |
| 1,089,000 | | |
| (1,771,000 | ) | |
| 1,791,000 | | |
| (1,967,000 | ) |
| Other Income | |
| — | | |
| 371 | | |
| 257 | | |
| 4,047 | |
| Total Other Expense, Net | |
| (1,527,000 | ) | |
| (2,907,006 | ) | |
| (2,518,295 | ) | |
| (3,271,416 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| LOSS BEFORE INCOME TAXES | |
| (73,129,412 | ) | |
| (1,950,051 | ) | |
| (170,791,746 | ) | |
| (3,601,138 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| INCOME TAX PROVISION | |
| — | | |
| — | | |
| — | | |
| — | |
| | |
| | | |
| | | |
| | | |
| | |
| NET LOSS | |
$ | (73,129,412 | ) | |
$ | (1,950,051 | ) | |
$ | (170,791,746 | ) | |
$ | (3,601,138 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net Loss Per Common Share – Basic and Diluted | |
$ | (11.70 | ) | |
$ | (0.59 | ) | |
$ | (31.18 | ) | |
$ | (1.09 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Weighted Average Shares Outstanding – Basic and Diluted | |
| 6,248,310 | | |
| 3,316,161 | | |
| 5,476,843 | | |
| 3,312,582 | |
EMERALD OIL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| |
Six Months Ended June 30, | |
| | |
2015 | | |
2014 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | |
| | |
| |
| Net Loss | |
$ | (170,791,746 | ) | |
$ | (3,601,138 | ) |
| Adjustments to Reconcile Net Loss to Net Cash Provided By Operating Activities: | |
| | | |
| | |
| Depletion of Oil and Natural Gas Properties | |
| 20,380,062 | | |
| 14,878,110 | |
| Impairment of Oil and Natural Gas Properties | |
| 146,625,000 | | |
| — | |
| Depreciation and Amortization | |
| 326,788 | | |
| 147,257 | |
| Amortization of Debt Issuance Costs | |
| 1,045,217 | | |
| 377,463 | |
| Accretion of Discount on Asset Retirement Obligations | |
| 100,507 | | |
| 35,800 | |
| Net Losses on Commodity Derivatives | |
| 4,550,761 | | |
| 7,461,936 | |
| Net Cash Settlements Received (Paid) on Commodity Derivatives | |
| 4,126,580 | | |
| (2,462,140 | ) |
| Warrant Revaluation (Gain) Expense | |
| (1,791,000 | ) | |
| 1,967,000 | |
| Share-Based Compensation Expense | |
| 2,163,753 | | |
| 6,678,883 | |
| Changes in Assets and Liabilities: | |
| | | |
| | |
| Increase in Trade Receivables – Oil and Natural Gas Revenues | |
| (1,903,876 | ) | |
| (636,959 | ) |
| Decrease (Increase) in Accounts Receivable – Joint Interest Partners | |
| 17,546,087 | | |
| (4,873,541 | ) |
| Decrease (Increase) in Other Receivables | |
| 675,693 | | |
| (1,022,732 | ) |
| Increase in Prepaid Expenses and Other Current Assets | |
| (487,231 | ) | |
| (328,131 | ) |
| Decrease in Other Non-Current Assets | |
| 3,972 | | |
| 130,437 | |
| (Decrease) Increase in Accounts Payable | |
| (2,963,252 | ) | |
| 1,888,872 | |
| Decrease in Accrued Expenses | |
| (5,462,417 | ) | |
| (2,474,083 | ) |
| Increase in Other Non-Current Liabilities | |
| — | | |
| 209,333 | |
| (Decrease) Increase in Advances from Joint Interest Partners | |
| (556,487 | ) | |
| 1,518,372 | |
| Net Cash Provided By Operating Activities | |
| 13,588,411 | | |
| 19,894,739 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | |
| | | |
| | |
| Purchases of Other Property and Equipment | |
| (2,061,528 | ) | |
| (754,492 | ) |
| Restricted Cash Released | |
| 2,000,000 | | |
| 11,000,512 | |
| Payments of Restricted Cash | |
| — | | |
| (2,648,721 | ) |
| Increase (Decrease) in Deposits for Acquisitions | |
| 140,173 | | |
| (178,967 | ) |
| Proceeds from Sale of Oil and Natural Gas Properties, Net of Transaction Costs | |
| — | | |
| 238,069 | |
| Investment in Oil and Natural Gas Properties | |
| (136,601,645 | ) | |
| (204,113,902 | ) |
| Net Cash Used For Investing Activities | |
| (136,523,000 | ) | |
| (196,457,501 | ) |
| 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 | |
| 45,753,027 | | |
| — | |
| Advances on Revolving Credit Facility | |
| 100,000,000 | | |
| 35,000,000 | |
| Payments on Revolving Credit Facility | |
| (15,317,000 | ) | |
| (35,000,000 | ) |
| Cash Paid for Finance Costs | |
| (73,801 | ) | |
| (24,605 | ) |
| Cash Paid for Debt Issuance Costs | |
| (699,911 | ) | |
| (500,365 | ) |
| Proceeds from Exercise of Stock Options and Warrants | |
| — | | |
| 110,750 | |
| Net Cash Provided by Financing Activities | |
| 129,662,315 | | |
| 166,478,991 | |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | |
| 6,727,726 | | |
| (10,083,771 | ) |
| CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD | |
| 12,389,230 | | |
| 144,255,438 | |
| CASH AND CASH EQUIVALENTS – END OF PERIOD | |
$ | 19,116,956 | | |
$ | 134,171,667 | |
| Supplemental Disclosure of Cash Flow Information | |
| | | |
| | |
| Cash Paid During the Period for Interest | |
$ | 1,375,758 | | |
$ | — | |
| Cash Paid During the Period for Income Taxes | |
$ | — | | |
$ | — | |
| Non-Cash Financing and Investing Activities: | |
| | | |
| | |
| Oil and Natural Gas Properties Included in Accounts Payable | |
$ | 50,276,501 | | |
$ | 86,500,675 | |
| Stock-Based Compensation Capitalized to Oil and Natural Gas Properties | |
$ | 630,210 | | |
$ | 1,396,362 | |
| Asset Retirement Obligation Costs and Liabilities | |
$ | 369,377 | | |
$ | 515,199 | |
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 June 30, | | |
Six Months Ended June 30, | |
| | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| Net loss | |
$ | (73,129,412 | ) | |
$ | (1,950,051 | ) | |
$ | (170,791,746 | ) | |
$ | (3,601,138 | ) |
| Impairment of oil and natural gas properties | |
| 61,361,000 | | |
| — | | |
| 146,625,000 | | |
| — | |
| Interest expense | |
| 2,616,000 | | |
| 1,136,377 | | |
| 4,309,552 | | |
| 1,308,463 | |
| Accretion of discount on asset retirement obligations | |
| 50,928 | | |
| 20,080 | | |
| 100,507 | | |
| 35,800 | |
| Depletion, depreciation and amortization | |
| 10,202,590 | | |
| 8,682,375 | | |
| 20,706,851 | | |
| 15,025,367 | |
| Stock-based compensation | |
| 530,173 | | |
| 2,983,580 | | |
| 2,163,753 | | |
| 6,678,883 | |
| Warrant revaluation (gain) expense | |
| (1,089,000 | ) | |
| 1,771,000 | | |
| (1,791,000 | ) | |
| 1,967,000 | |
| Net losses on commodity derivatives | |
| 4,823,936 | | |
| 6,663,083 | | |
| 4,550,761 | | |
| 7,461,936 | |
| Net cash settlements received (paid) on commodity derivatives | |
| (1,190,720 | ) | |
| (1,908,756 | ) | |
| 4,126,580 | | |
| (2,462,140 | ) |
| Standby rig expense | |
| 826,061 | | |
| — | | |
| 2,372,665 | | |
| — | |
| Adjusted EBITDA | |
$ | 5,001,556 | | |
$ | 17,397,688 | | |
$ | 12,372,923 | | |
$ | 26,414,171 | |
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 June 30, | | |
Six Months Ended June 30, | |
| | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| Net loss | |
$ | (73,129,412 | ) | |
$ | (1,950,051 | ) | |
$ | (170,791,746 | ) | |
$ | (3,601,138 | ) |
| Impairment of oil and natural gas properties | |
| 61,361,000 | | |
| — | | |
| 146,625,000 | | |
| — | |
| Stock-based compensation | |
| 530,173 | | |
| 2,983,580 | | |
| 2,163,753 | | |
| 6,678,883 | |
| Warrant revaluation (gain) expense | |
| (1,089,000 | ) | |
| 1,771,000 | | |
| (1,791,000 | ) | |
| 1,967,000 | |
| Net losses on commodity derivatives | |
| 4,823,936 | | |
| 6,663,083 | | |
| 4,550,761 | | |
| 7,461,936 | |
| Net cash settlements received (paid) on commodity derivatives | |
| (1,190,720 | ) | |
| (1,908,756 | ) | |
| 4,126,580 | | |
| (2,462,140 | ) |
| Adjusted net income (loss) | |
$ | (8,694,023 | ) | |
$ | 7,558,856 | | |
$ | (15,116,652 | ) | |
$ | 10,044,541 | |
| | |
| | | |
| | | |
| | | |
| | |
| Net Adjusted Income (Loss) Per Common Share – Basic | |
$ | (1.39 | ) | |
$ | 2.28 | | |
$ | (2.76 | ) | |
$ | 3.03 | |
| | |
| | | |
| | | |
| | | |
| | |
| Weighted Average Shares Outstanding – Basic | |
| 6,248,310 | | |
| 3,316,161 | | |
| 5,476,843 | | |
| 3,312,582 | |