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Emerald Oil Reports Second Quarter 2014 Financial and Operational Results; Announces Acquisition of Core Williston Basin Properties

DENVER, CO--(Marketwired - August 04, 2014) - Emerald Oil, Inc. (NYSE MKT: EOX) ("Emerald" or the "Company") today announced financial and operational results for the quarter ended June 30, 2014 and that it has entered into a definitive agreement to acquire core Williston Basin properties.

Highlights

  • Second quarter production of 340,320 BOE, an average of approximately 3,781 BOEPD, an increase of 51% compared to the first quarter quarter of 2014 and 168% compared to the second quarter of 2013;
  • Second quarter oil and gas revenue of $31.3 million, an increase of 64% compared to the first quarter of 2014 and 196% compared to the second quarter of 2013;
  • Second quarter per unit LOE costs of $11.45 per BOE, a decrease of 1% compared to the first quarter of 2014 and 9% compared to the second quarter of 2013;
  • Adjusted 2Q14 EBITDA of $17.4 million;
  • Adjusted net income attributable to common stockholders of $7.6 million or $0.11 per share (basic) for 2Q14 and net loss attributable to common stockholders of $1.9 million or $0.03 per share loss (basic); and
  • Entered into a definitive agreement with Liberty Resources II, LLC to acquire 31,500 net acres and 400 BOEPD of production in conjunction with divesting 4,175 net acres in Williams County, North Dakota. The transaction is expected to close in the third quarter of 2014.

Second Quarter 2014 Production

For the second quarter of 2014, Emerald's total production volumes on a BOE basis increased 168% as compared to the second quarter of 2013. Production increased due to the addition of 7.73 net productive operated Bakken/Three Forks wells in the second quarter of 2014. During the second quarter of 2014, Emerald realized an $87.42 average price per Bbl of oil (including settled derivatives) compared to an $83.56 average price per Bbl of oil during the first quarter of 2014. For detailed well performance data see Emerald's corporate presentation (available on its website, www.emeraldoil.com).

                                                                            
                                                     Quarter Ended June 30, 
                                                     ---------------------- 
                                                        2014        2013    
                                                     ----------  ---------- 
Sales Volume (Total)                                                        
Oil (Bbls)                                              324,617     119,366 
Gas (Mcf)                                                94,217      44,500 
                                                     ----------  ---------- 
Sales volumes (Boe)                                     340,320     126,783 
                                                                            
Average Daily Sales                                                         
Oil (Bbls)                                                3,607       1,326 
Gas (Mcf)                                                 1,047          84 
                                                     ----------  ---------- 
Sales volumes (Boe)                                       3,781       1,410 
                                                                            
Average Sales Prices                                                        
Oil (Bbl)                                            $    93.30  $    86.63 
Effect of Settled Oil Derivatives                         (5.88)      (1.54)
                                                     ----------  ---------- 
Oil Net of Settled Derivatives (Bbl)                 $    87.42  $    85.09 
Gas (Mcf)                                            $    10.26  $     5.26 
Barrel of Oil Equivalent with Settled Derivatives    $    86.23  $    81.96 
                                                                            

Financial Results

Revenues from sales of oil and natural gas for the second quarter of 2014 were $31.3 million compared to $10.6 million for the same period in 2013. The increase is primarily due to higher production as a result of the Company's well completions. Crude oil revenue accounted for approximately 97% of oil and natural gas sales recorded during the second quarter of 2014.

Production expenses for the second quarter of 2014 were $3.9 million, or $11.45 per BOE, compared to $1.6 million, or $12.59 per BOE, for the same period in 2013. The decrease on a per unit basis is primarily due to continued efficiency gains as the Company further develops wells and associated production infrastructure in the Low Rider area.

General and administrative expenses for the second quarter of 2014 were $7.6 million compared to $6.0 million for the same period in 2013. Share-based compensation expenses, which are included in G&A expense, totaled $3.0 million in the second quarter of 2014 compared to $1.1 million for the same period in 2013. The increase in G&A expense is attributed primarily to the hiring of new personnel as the Company continues to expand operations.

Adjusted EBITDA was $17.4 million for the second quarter of 2014, as compared to $2.8 million for the same period in 2013, reflecting a 521% increase. Adjusted Net Income was $7.6 million for the second quarter of 2014, as compared to Adjusted Net Loss of $7.6 million for the same period in 2013. Adjusted EBITDA and Adjusted Net Income are non-GAAP financial measures. For additional information please refer to the reconciliation of these measures at the end of this news release.

Acquisition of Williston Basin Properties

  • Approximately 31,500 net acres highly contiguous to Emerald's Low Rider and Lewis & Clark operating areas in McKenzie, Billings and Dunn Counties, North Dakota; 13,325 net acres in Low Rider and 18,227 net acres in Lewis & Clark;
  • Approximately 400 Boe/d of estimated current net production;
  • 2.0 Mmboe of proved reserves and $51.5 million of PV-10;
  • 23 new operated Drilling Spacing Units; 6 DSUs in Low Rider and 17 DSUs in Lewis & Clark;
  • Increased working interests in 13 Drilling Spacing Units; 12 DSUs in Low Rider and 1 DSU in Lewis & Clark;
  • 157 drilling locations; 72 drilling locations in Low Rider and 85 drilling locations in Lewis & Clark;
  • Approximately 95% of acreage is held by production and 75% is operated;
  • Transaction valued at approximately $110 million, subject to customary adjustments to reflect the operation of the properties prior to closing; Emerald will transfer approximately 4,175 net acres in Williams County, North Dakota and pay approximately $78.4 million in cash on hand;
  • No external capital required; and
  • No material change to 2014 financial or operational guidance.
                                                                            
                                                   -----------  ----------- 
                                                       Pre-        Post-    
                                                   Transaction  Transaction 
                                                   -----------  ----------- 
Net Acres                                               93,000      120,400 
% Operated                                                  75%          75%
Operated DSUs                                               81          104 
Drilling Locations                                         697          854 
% of Acreage Held By Production                             37%          53%
                                                                            
2014 Drilling and Completion Budget ($mm)                  250          250 
2014 Land Budget ($mm)(1)                                  150          200 
2015 Land Budget ($mm)                                     150           50 
Liquidity ($mm)(2)                                 $       234  $       256 
                                                                            

1 Approximately $174 million of the 2014 budgeted amount has been spent year to date
2 Liquidity calculated as cash on hand and available borrowing capacity

Increase to Senior Credit Facility and Update to Hedging Activity

In conjunction with the closing of the transaction, Emerald and its lending syndicate will enter into an amendment to the Company's credit facility to increase the borrowing base under the credit facility from $100 million to $200 million. This redetermination will reflect both Emerald's year-to-date completion activities and the transaction. The facility is currently undrawn. Emerald expects the next borrowing base redetermination to take place in October 2014.

Oil volume hedges were increased for the balance of 2014 and early 2015 due to the rise in oil prices during the quarter. Emerald is currently hedged through the first quarter of 2015 at the maximum capacity allowed under the revised borrowing base.

                                                                            
                                                               Fixed Price  
                Settlement Period                 Oil (Bbls)      Range     
------------------------------------------------- ---------- ---------------
Oil Swaps                                                                   
July 1, 2014 - December 31, 2014                      61,330 $ 90.00 - 93.00
July 1, 2014 - December 31, 2014                      47,300   93.01 - 96.00
July 1, 2014 - December 31, 2014                     503,970   96.01 - 99.00
July 1, 2014 - December 31, 2014                      82,612  99.01 - 102.00
                                                  ---------- ---------------
2014 Total/Average                                   695,212 $         96.70
                                                  ---------- ---------------
                                                                            
January 1, 2015 - April 30, 2015                      18,876 $ 90.00 - 93.00
January 1, 2015 - April 30, 2015                      93,100   93.01 - 96.00
January 1, 2015 - April 30, 2015                     341,251   96.01 - 99.00
                                                  ---------- ---------------
2015 Total/Average                                   453,227 $         96.24
                                                  ---------- ---------------
                                                                            

Management Comments

McAndrew Rudisill, Emerald's Chief Executive Officer, stated, "Emerald posted its strongest quarter since inception. Production exceeded guidance by 8% while costs were maintained at expected levels as we continue to build out infrastructure in the area. The transaction with Liberty Resources II further solidifies our strategic position in both our Low Rider and Lewis & Clark focus areas, bringing our net acreage position in this core operating area to more than 108,000 net acres. This deal allows us to reduce our projected land budget for 2015 while keeping our current 2014 drilling and completion constant due to nearly all of the acquired acreage being held by production. Our borrowing base will be increased by $100 million in connection with the closing of the transaction primarily due to the increase in Emerald operated proved reserves. We expect subsequent borrowing bases increases in the third and fourth quarters of 2014. We are excited about bringing our first Pronghorn wells online during the third quarter and we plan to test a slick water, cemented liner completion in our Low Rider area during the Fall of 2014."

Conference Call

Emerald will host a conference call on Tuesday, August 5, 2014 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. 2Q2014 Financial and Operational Results Conference Call 
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Date:              Tuesday, August 5, 2014                                  
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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                                   
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                   Live and rebroadcast over the Internet at the Emerald Oil
Webcast:           website                                                  
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Website:           www.emeraldoil.com                                       
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Telephone Dial-In: 877-407-8831 (toll-free) and 201-493-6736 (international)
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Telephone Replay:  Available through Tuesday, August 12, 2014               
                   877-660-6853 (toll-free) and 201-612-7415 (international)
                   Passcode: 413333                                         
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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)                                 
                                                                            
                                                               December 31, 
                                               June 30, 2014       2013     
                                               -------------  ------------- 
ASSETS                                                                      
CURRENT ASSETS                                                              
  Cash and Cash Equivalents                    $ 134,171,667  $ 144,255,438 
  Restricted Cash                                  6,000,000     15,000,512 
  Accounts Receivable - Oil and Natural Gas                                 
   Sales                                           9,352,780      8,715,821 
  Accounts Receivable - Joint Interest                                      
   Partners                                       36,396,745     31,523,204 
  Other Receivables                                1,600,141        577,409 
  Prepaid Expenses and Other Current Assets          534,430        206,299 
                                               -------------  ------------- 
      Total Current Assets                       188,055,763    200,278,683 
PROPERTY AND EQUIPMENT                                                      
  Oil and Natural Gas Properties, Full Cost                                 
   Method, at cost:                                                         
    Proved Oil and Natural Gas Properties        378,486,735    211,015,067 
    Unproved Oil and Natural Gas Properties      122,067,454     57,015,315 
    Equipment and Facilities                       4,109,546      1,837,744 
  Other Property and Equipment                     1,645,303        890,811 
                                               -------------  ------------- 
      Total Property and Equipment               506,309,038    270,758,937 
  Less - Accumulated Depreciation, Depletion                                
   and Amortization                              (63,201,890)   (48,176,522)
                                               -------------  ------------- 
      Total Property and Equipment, Net          443,107,148    222,582,415 
Restricted Cash                                    4,000,000      6,000,000 
Fair Value of Commodity Derivatives                        -         68,396 
Debt Issuance Costs, Net of Amortization           6,204,848        475,157 
Deposits on Acquisitions                             304,335        125,368 
Other Non-Current Assets                             227,207        357,644 
                                               -------------  ------------- 
      Total Assets                             $ 641,899,301  $ 429,887,663 
                                               =============  ============= 
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
CURRENT LIABILITIES                                                         
  Accounts Payable                             $  91,416,789  $  63,168,422 
  Fair Value of Commodity Derivatives              5,852,801        921,401 
  Accrued Expenses                                13,238,341     11,821,729 
  Advances from Joint Interest Partners            3,723,910      2,205,538 
                                               -------------  ------------- 
      Total Current Liabilities                  114,231,841     78,117,090 
LONG-TERM LIABILITIES                                                       
  Convertible Senior Notes                       172,500,000              - 
  Asset Retirement Obligations                     1,243,136        692,137 
  Warrant Liability                               17,670,000     15,703,000 
  Other Non-Current Liabilities                      265,660         56,327 
                                               -------------  ------------- 
      Total Liabilities                          305,910,637     94,568,554 
                                                                            
COMMITMENTS AND CONTINGENCIES                                               
                                                                            
Preferred Stock - Par Value $.001; 20,000,000                               
 Shares Authorized;                                                         
  Series B Voting Preferred Stock - 5,114,633                               
   issued and outstanding at June 30, 2014 and                              
   December 31, 2013. Liquidation preference                                
   value of $5,115 as of June 30, 2014 and                                  
   December 31, 2013.                                  5,000          5,000 
                                                                            
STOCKHOLDERS' EQUITY                                                        
  Common Stock, Par Value $.001; 500,000,000                                
   Shares Authorized, 66,471,276 and                                        
   65,840,370 Shares Issued and Outstanding,                                
   respectively                                       66,471         65,840 
  Additional Paid-In Capital                     420,571,408    416,301,344 
  Accumulated Deficit                            (84,654,215)   (81,053,075)
                                               -------------  ------------- 
      Total Stockholders' Equity                 335,983,664    335,314,109 
                                               -------------  ------------- 
      Total Liabilities and Stockholders'                                   
       Equity                                  $ 641,899,301  $ 429,887,663 
                                               =============  ============= 
                                                                            
                                                                            
                             EMERALD OIL, INC.                              
                   CONSOLIDATED STATEMENTS OF OPERATIONS                    
                                (Unaudited)                                 
                                                                            
                           Three Months Ended         Six Months Ended      
                                June 30,                   June 30,         
                        ------------------------  ------------------------- 
                            2014         2013         2014         2013     
                        -----------  -----------  -----------  ------------ 
REVENUES                                                                    
  Oil Sales             $30,288,128  $10,340,742  $48,722,936  $ 18,334,644 
  Natural Gas Sales         966,280      234,076    1,600,344       457,155 
  Net Gains (Losses) on                                                     
   Commodity                                                                
   Derivatives           (6,663,083)     665,337   (7,461,936)     (102,267)
                        -----------  -----------  -----------  ------------ 
    Total Revenues       24,591,325   11,240,155   42,861,344    18,689,532 
                        -----------  -----------  -----------  ------------ 
OPERATING EXPENSES                                                          
Production Expenses       3,897,482    1,596,353    6,514,726     2,635,885 
Production Taxes          3,400,874    1,048,541    5,489,610     1,750,397 
General and                                                                 
 Administrative                                                             
 Expenses                 7,633,559    5,979,739   16,125,563    11,368,552 
Depletion of Oil and                                                        
 Natural Gas Properties   8,600,878    3,584,803   14,878,110     6,741,781 
Depreciation and                                                            
 Amortization                81,497       31,039      147,257        54,034 
Accretion of Discount                                                       
 on Asset Retirement                                                        
 Obligations                 20,080        7,850       35,800        14,062 
                        -----------  -----------  -----------  ------------ 
  Total Operating                                                           
   Expenses              23,634,370   12,248,325   43,191,066    22,564,711 
                        -----------  -----------  -----------  ------------ 
                                                                            
INCOME (LOSS) FROM                                                          
 OPERATIONS                 956,955   (1,008,170)    (329,722)   (3,875,179)
                                                                            
OTHER INCOME (EXPENSE)                                                      
  Interest Expense       (1,136,377)     (75,186)  (1,308,463)     (254,676)
  Warrant Revaluation                                                       
   Expense               (1,771,000)    (642,000)  (1,967,000)   (4,081,000)
  Other Income                  371        2,222        4,047         2,898 
                        -----------  -----------  -----------  ------------ 
    Total Other                                                             
     Expense, Net        (2,907,006)    (714,964)  (3,271,416)   (4,332,778)
                        -----------  -----------  -----------  ------------ 
                                                                            
LOSS BEFORE INCOME                                                          
 TAXES                   (1,950,051)  (1,723,134)  (3,601,138)   (8,207,957)
                                                                            
INCOME TAX PROVISION              -            -            -             - 
                        -----------  -----------  -----------  ------------ 
                                                                            
NET LOSS                 (1,950,051)  (1,723,134)  (3,601,138)   (8,207,957)
Less: Preferred Stock                                                       
 Dividends and Deemed                                                       
 Dividends                        -   (5,665,670)           -    (6,282,108)
                        -----------  -----------  -----------  ------------ 
NET LOSS ATTRIBUTABLE                                                       
 TO COMMON STOCKHOLDERS $(1,950,051) $(7,388,804) $(3,601,138) $(14,490,065)
                        ===========  ===========  ===========  ============ 
                                                                            
Net Income (Loss) Per                                                       
 Common Share - Basic                                                       
 and Diluted            $     (0.03) $     (0.23) $     (0.05) $      (0.50)
                                                                            
                                                                            
Weighted Average Shares                                                     
 Outstanding - Basic                                                        
 and Diluted             66,323,228   32,602,115   66,251,632    29,166,411 
                        ===========  ===========  ===========  ============ 
                                                                            
                                                                            
                             EMERALD OIL, INC.                              
                   CONSOLIDATED STATEMENTS OF CASH FLOWS                    
                                (Unaudited)                                 
                                                                            
                                                 Six Months Ended June 30,  
                                               ---------------------------- 
                                                    2014           2013     
                                               -------------  ------------- 
CASH FLOWS FROM OPERATING ACTIVITIES                                        
Net Loss                                       $  (3,601,138) $  (8,207,957)
Adjustments to Reconcile Net Loss to Net Cash                               
 Provided By Operating Activities:                                          
Depletion of Oil and Natural Gas Properties       14,878,110      6,741,781 
Depreciation and Amortization                        147,257         54,034 
Amortization of Debt Issuance Costs                  377,463         44,573 
Accretion of Discount on Asset Retirement                                   
 Obligations                                          35,800         14,062 
Net Losses on Commodity Derivatives                7,461,936        102,267 
Net Cash Settlements Paid on Commodity                                      
 Derivatives                                      (2,462,140)      (332,781)
Warrant Revaluation Expense                        1,967,000      4,081,000 
Share-Based Compensation Expense                   6,678,883      2,365,797 
Changes in Assets and Liabilities:                                          
Increase in Trade Receivables - Oil and                                     
 Natural Gas Revenues                               (636,959)      (755,866)
Increase in Accounts Receivable - Joint                                     
 Interest Partners                                (4,873,541)    (4,976,709)
Increase in Other Receivables                     (1,022,732)      (246,392)
Increase in Prepaid Expenses and Other Current                              
 Assets                                             (328,131)      (214,497)
Decrease in Other Non-Current Assets                 130,437         85,675 
Increase in Accounts Payable                       1,888,872      1,069,554 
Increase (Decrease) in Accrued Expenses           (2,474,083)     1,557,119 
Increase in Other Non-Current Liabilities            209,333              - 
Increases in Advances from Joint Interest                                   
 Partners                                          1,518,372        834,639 
                                               -------------  ------------- 
Net Cash Provided By Operating Activities         19,894,739      2,216,299 
                                               -------------  ------------- 
CASH FLOWS FROM INVESTING ACTIVITIES                                        
Purchases of Other Property and Equipment           (754,492)      (201,657)
Restricted Cash Released                          11,000,512              - 
Payments of Restricted Cash                       (2,648,721)             - 
Increase in Deposits for Acquisitions               (178,967)    (1,050,000)
Use of Prepaid Drilling Costs                              -         98,565 
Proceeds from Sale of Oil and Natural Gas                                   
 Properties, Net of Transaction Costs                238,069     15,160,206 
Investment in Oil and Natural Gas Properties    (204,113,902)   (54,689,661)
                                               -------------  ------------- 
Net Cash Used For Investing Activities          (196,457,501)   (40,682,547)
                                               -------------  ------------- 
CASH FLOWS FROM FINANCING ACTIVITIES                                        
Proceeds from Issuance of Common Stock, Net of                              
 Transaction Costs                                         -     95,973,701 
Proceeds from Issuance of Preferred Stock, Net                              
 of Transaction Costs                                      -     47,183,994 
Proceeds from Issuance of Convertible Senior                                
 Notes, Net of Transaction Costs                 166,893,211              - 
Advances on Revolving Credit Facility             35,000,000              - 
Payments on Preferred Stock                                -    (15,000,000)
Payments on Revolving Credit Facility            (35,000,000)   (23,500,000)
Preferred Stock Dividends and Deemed Dividends             -     (3,692,808)
Proceeds from Exercise of Stock Options and                                 
 Warrants                                            110,750              - 
Cash Paid for Debt Issuance Costs                   (500,365)             - 
Cash Paid for Finance Costs                          (24,605)             - 
                                               -------------  ------------- 
Net Cash Provided by Financing Activities        166,478,991    100,964,887 
                                               -------------  ------------- 
NET INCREASE (DECREASE) IN CASH AND CASH                                    
 EQUIVALENTS                                     (10,083,771)    62,498,639 
CASH AND CASH EQUIVALENTS - BEGINNING OF                                    
 PERIOD                                          144,255,438     10,192,379 
                                               -------------  ------------- 
CASH AND CASH EQUIVALENTS - END OF PERIOD      $ 134,171,667  $  72,691,018 
                                               =============  ============= 
Supplemental Disclosure of Cash Flow                                        
 Information                                                                
Cash Paid During the Period for Interest       $      84,933  $     255,776 
                                               =============  ============= 
Cash Paid During the Period for Income Taxes   $           -  $           - 
                                               =============  ============= 
Non-Cash Financing and Investing Activities:                                
Oil and Natural Gas Properties Included in                                  
 Account Payable                               $  86,500,675  $  37,344,286 
                                               =============  ============= 
Stock-Based Compensation Capitalized to Oil                                 
 and Natural Gas Properties                    $   1,396,362  $     310,264 
                                               =============  ============= 
Accretion on Preferred Stock Issuance Discount $           -  $   2,589,300 
                                               =============  ============= 
Asset Retirement Obligation Costs and                                       
 Liabilities                                   $     515,199  $     122,013 
                                               =============  ============= 
Common Stock Issued for Oil and Natural Gas                                 
 Properties                                    $           -  $   6,736,935 
                                               =============  ============= 
                                                                            

In addition to reporting net income (loss) as defined under GAAP, we also present Adjusted EBITDA, which we define as 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 and the other items described in the table below. Adjusted EBITDA is a non-GAAP performance measure. 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 our 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, 
                                               ---------------------------- 
                                                    2014           2013     
                                               -------------  ------------- 
Net loss                                       $  (1,950,051) $  (1,723,134)
Less: Preferred stock dividends and deemed                                  
 dividends                                                 -     (5,665,670)
                                               -------------  ------------- 
Net loss attributable to common stockholders      (1,950,051)    (7,388,804)
Add:  Interest expense                             1,136,377         75,186 
      Accretion of discount on asset                                        
       retirement obligations                         20,080          7,850 
      Depletion, depreciation and amortization     8,682,375      3,615,842 
      Stock-based compensation                     2,983,580      1,057,811 
      Warrant revaluation expense                  1,771,000        642,000 
      Preferred stock dividends                            -      1,201,370 
      Preferred stock redemption premium                   -      1,875,000 
      Accretion of preferred stock issuance                                 
       discount                                            -      2,589,300 
      Net losses on commodity derivatives          6,663,083              - 
Less: Net cash settlements paid on commodity                                
       derivatives                                (1,908,756)      (183,539)
      Net gains on commodity derivatives                   -       (665,337)
                                               -------------  ------------- 
Adjusted EBITDA                                $  17,397,688  $   2,826,679 
                                               =============  ============= 
                                                                            

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 unrealized gain (loss) from mark-to-market on commodity derivatives, mark-to-market on ourwarrant 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,           
                                               ---------------------------- 
                                                    2014           2013     
                                               -------------  ------------- 
Net loss                                       $  (1,950,051) $  (1,723,134)
Less: Preferred stock dividends and deemed                                  
 dividends                                                 -     (5,665,670)
                                               -------------  ------------- 
Net loss attributable to common stockholders      (1,950,051)    (7,388,804)
Net losses on commodity derivatives                6,663,083       (665,337)
Net cash settlements paid on commodity                                      
 derivatives                                      (1,908,757)      (183,573)
Warrant revaluation expense                        1,771,000        642,000 
Stock based compensation expense                   2,983,580                
                                               -------------  ------------- 
Adjusted income (loss)                         $   7,558,855  $  (7,595,714)
                                               =============  ============= 
                                                                            
Adjusted income (loss) per share - basic       $        0.11  $       (0.23)
                                               =============  ============= 
                                                                            
Weighted average shares outstanding - basic       66,323,228     32,602,115 
                                               =============  ============= 
                                                                            

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"We are a monitoring company. We work with Salesforce, BBC, and quite a few other big logos. We basically provide monitoring for them, structure for their cloud services and we fit into the DevOps world" explained David Gildeh, Co-founder and CEO of Outlyer, in this SYS-CON.tv interview at DevOps Summit at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
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