Each one in plain English, with the numbers worked through for a shareholder.
1 June 2016material agreement▼ BadMajor
On May 26, 2016 the company signed a stalking horse agreement to sell substantially all its assets for about $73.0M (subject to adjustments) to a buyer formed by CL Energy Opportunity Fund (Crestline affiliate) and SSC Emerald LP (Sole Source Capital affiliate). The bid can be topped at an auction tentatively set for July 11, 2016 in New York, and any sale needs Bankruptcy Court approval. The filing does not name Latium, which the March press release named as the earlier proposed stalking horse, nor say why the buyer differs (not explained in this filing). It also attaches monthly operating reports for March 22-31 (cash rose from about $3.5M to about $4.35M) and says the company has suspended regular 10-K and 10-Q filings, while continuing to file 8-Ks on material developments. The text does not say what the sale means for common shareholders.
NYSE MKT told the company on March 23, 2016 that it is no longer suitable for listing because of the Chapter 11 filing, suspended trading that day, and will begin delisting. The company does not plan to appeal, so delisting is expected. The stock now trades on the OTC Pink market as EOXLQ, with no assurance that quotes or adequate trading volume will continue. This follows directly from the bankruptcy filing.
On March 22, 2016, Emerald Oil and four subsidiaries (Emerald WB, Emerald NWB, EOX Marketing, Emerald DB) filed for Chapter 11 bankruptcy in Delaware (Case No. 16-10704), which is the outcome the February 2016 revolver default had warned of. The filing automatically made the Wells Fargo revolver and the 2.00% convertible notes due 2019 immediately due, but creditors' collection efforts are stayed. The company has arranged $20M of debtor-in-possession financing (subject to court approval) and signed a non-binding term sheet with Latium Enterprises to buy substantially all assets as a 'stalking horse' bidder in a court-run sale, with competing bids to be solicited. The filing does not say what shareholders would receive; the press release speaks of a 'path for potential recovery for Company stakeholders' without specifics.
8 Feb 2016material agreement termination▼ BadMajor
After the default, Bank of Nova Scotia ended its hedging agreement with the company on Feb 3, 2016 and applied $17.5M of proceeds to the revolver. With that and other transactions, the borrowing base deficiency is cured: the base is $113M with about $111M outstanding. The company is still in default on covenants, and no credit is available. The filing says liquidity continues to deteriorate and the company may still become bankrupt or insolvent.
The lenders' forbearance on the Wells Fargo revolver, which began Nov 5, 2015 and was extended Dec 18, ran out on Jan 29, 2016, so the company is now in default. The defaults cited are missed reporting for the June and September 2015 quarters, the unpaid borrowing base deficiency, and a possible cross-default with the convertible notes. The lenders had not sent a notice, but they could accelerate the debt and sell collateral, and the company says it could become bankrupt or insolvent. It is in talks with lenders and has added Kirkland & Ellis to its advisers. This worsens the borrowing base problem of Oct 2015.
The Angelus sale of about 9,750 net acres and some non-operated production closed for $9.75M, with the press release dating closing to January 11, 2016. The company says all proceeds went to repay the revolver. This completes the sale announced in December 2015.
On Dec 18, 2015 the company agreed to sell Angelus Private Equity Group about 9,750 net acres of undeveloped leasehold in Montana and North Dakota, plus some production from non-operated wells, for about $9.75M. All proceeds are meant to repay the revolver. This continues the asset sales used to pay down bank debt after the Koch deal. The filing gives an expected closing of January 22, 2015, which appears to be a typo for 2016.
On Oct 22, 2015 the company agreed with one holder to swap about $3M of its 2.00% convertible notes due 2019 for common stock, expected to be about 880,000 shares, priced at a 15% discount to a 15-day average share price, with accrued interest paid in cash. About $148.5M of the notes will remain outstanding. Debt falls by $3M, but existing shareholders are diluted, and the final share count depends on the price.
Wells Fargo, the revolver agent, cut the borrowing base from $200M to $120M effective Oct 6, 2015, leaving a shortfall of about $19.6M that the company has to deal with. The company said a previously announced term loan was not completed. It is negotiating a repayment schedule with the banks and talking to second-lien lenders, and has hired Opportune, Intrepid Partners and Mayer Brown to advise on its capital structure. This reverses the spring 2015 redetermination, which had come with easier covenants.
On July 31, 2015 the company agreed to sell Koch Exploration (a Koch Industries subsidiary) a 30% working interest in its undeveloped southern McKenzie County, ND acreage (~25,000 net acres) for about $16.6M, plus ~4,500 net acres of Richland County, MT leasehold for about $0.9M. The filing puts the total deal at ~$24.7M (the press release says ~$24.4M), with closing expected around Sept 30, 2015. All proceeds are to repay the revolving credit facility, which had been drawn since spring 2015. The two companies will drill two wells in 2016 and split future leasehold and drilling costs in a shared area. A press release also reports two southern McKenzie wells and a signed term sheet for a midstream joint venture, expected to be finalized by year end.
29 May 2015material agreement termination▼ BadMajor
The Yates Delaware Basin purchase was not completed: the company said on May 26, 2015 it would not proceed with its stock offering because of the market environment and dilution to shareholders, and so would not close the deal. The agreement expired May 28, 2015. The company paid a deposit of about $7.5M, of which the seller may keep 10% and must return the rest within three days of termination. It went back to its original Williston Basin plans, citing the spring borrowing base redetermination and easier debt covenants, and restated 2015 guidance with a $65M capex budget, $42M already spent.
On May 11, 2015 the company agreed to buy about 10,746 net acres of Delaware Basin acreage in Lea and Eddy Counties, New Mexico, from Yates Petroleum for about $75.2M cash, with closing expected around May 28, 2015. This would have been a move beyond the Williston Basin into a second region. The company raised its 2015 production guidance (average 4,350-4,650 Boe/d) and planned $33-38M of Delaware drilling, and said it was weighing debt and equity financing to fund the deal.
On April 2, 2015 the company set up at-the-market sales agreements with MLV & Co. and USCA Securities, letting it sell up to $100M of common stock over time on the open market. Proceeds are for general corporate purposes, possibly including repaying part of the revolving credit facility, which the filing says has been and may continue to be drawn. That contrasts with the zero balance reported in Sept 2014, so the revolver has been drawn since then. Any shares sold would dilute existing holders; the filing does not say how many will be sold.
On Feb 5, 2015 the company agreed to sell 24,553,571 new common shares at $1.12 each through Johnson Rice, closing Feb 11 for net proceeds of about $26.0M, to be used for working capital and general corporate purposes. Underwriters also had a 30-day option for up to 3,683,036 more shares; the filing does not say whether it was used. The price is far below the $6.70 paid in the Sept 2013 offering and the roughly $8.78 conversion price on the 2019 notes, and the new shares dilute existing holders.
This amendment to the Sept 4 filing raises the cash paid for the Liberty assets from about $70.2M to about $71.2M to reflect purchase price adjustments (the filing does not itemise them), alongside the 4,300 net Williams County acres handed over. It adds the sellers' financial statements: the acquired assets had operating revenues of $11.3M and revenues over direct operating costs of $8.1M in 2013, and $9.1M and $6.4M in the first half of 2014. The assets cover about 30,500 net acres with 18.26 net producing wells and about 400 Boe/day as of May 1, 2014. Ryan Smith now signs as Chief Financial Officer, replacing Paul Wiesner who signed the Sept 2014 filing.
On Sept 2, 2014 the company closed its purchase of oil and gas properties in McKenzie, Billings and Dunn Counties, North Dakota, from an unrelated third party (the Liberty entities, per the exhibit list). It paid about $70.2M cash plus the handover of about 4,300 net acres in Williams County. Alongside it, Wells Fargo and the lenders raised the credit facility's borrowing base from $100M to $200M, and the company said nothing was drawn on it. This follows the Aug 4 10-Q agreement and adds to the company's North Dakota Williston Basin acreage; the zero drawn balance is notable because the March 2014 note proceeds were meant to repay revolver borrowings.
24 Mar 2014capital raising announcement● NeutralMajor
On March 18, 2014 the company agreed to sell $140M of 2.00% convertible senior notes due 2019 to initial purchasers (Credit Suisse, Barclays); the $32.5M over-allotment was exercised in full on March 20, so $172.5M closed on March 24. Net proceeds are about $166.8M, expected to repay all borrowings under the Wells Fargo revolving credit facility and fund drilling, development and possible acquisitions. Notes are convertible at about $8.78 per share (113.9601 shares per $1,000), mature April 1, 2019, and the company cannot redeem them early; the Wells Fargo credit agreement was amended to allow the notes. This is the company's first debt of this kind in this record and could dilute shareholders if converted. The filing implies borrowings were outstanding on the revolver, which the Sept 2013 context said was undrawn (inference: drawn to fund acquisitions).
13 Feb 2014asset acquisition disposition▲ GoodMajor
On Feb 13, 2014 the company completed the Kodiak Oil & Gas (USA) acquisition announced Jan 10, covering operated interests in about 19,500 net acres in Williams and McKenzie Counties, ND, for about $69.2M cash, versus $68.3M originally agreed (the filing does not explain the difference). Acquired production is about 300 BOE/d as of Feb 12, 2014, down from about 350 BOE/d quoted as of Dec 1, 2013. The filing says the date as 2013 in the text, which appears to be a typo for 2014 (inference).
On Jan 9, 2014 the company and a subsidiary agreed to buy Kodiak Oil & Gas (USA) Inc.'s properties in Williams and McKenzie Counties, North Dakota, including operated working interests in about 19,500 net acres, for about $68.3M cash. Production is about 350 BOE/d as of Dec 1, 2013, the effective date is Jan 1, 2014, and closing is expected around Feb 13, 2014. The price can be adjusted down for title and environmental defects. This adds operated Williston Basin acreage, in line with the company's 2013 expansion of operated acreage.
17 Oct 2013capital raising announcement● NeutralMajor
On Oct 17, 2013 the company closed the private sale to White Deer entities announced Sept 23, issuing 5,092,852 common shares for about $32.5M, and signed Amendment No. 2 to the Feb 19, 2013 registration rights agreement. The share count is higher than the roughly 4,645,102 shares described on Sept 23, which the earlier filing said was subject to adjustment (the filing does not explain the increase). The money, with the recent public offering proceeds, is for growth, leasing, acquisitions and capital spending. These are new shares, so existing holders are diluted.
On Sept 26, 2013 the company agreed with Credit Suisse and other underwriters to sell 15,000,000 common shares at $6.70, with an option for up to 2,250,000 more. Net proceeds are about $95.4M, and closing is expected Oct 1, 2013 (the press release says Oct 2). The money is for development and growth plans, acquisitions, capital spending and general purposes. This prices the offering announced Sept 23 and dilutes existing holders.
On Sept 23, 2013 the company agreed to sell about 4,645,102 new common shares to White Deer entities (WDE Emerald Holdings LLC and White Deer Energy FI L.P.) at the public offering price less underwriting discounts, closing within 15 business days after a concurrent public offering; the deal can end if not closed by Oct 31, 2013. Press releases the same day announced 33,851 newly leased net operated Williston Basin acres for about $24.7M cash, a third rig in 2014, a preliminary 2014 drilling budget of about $182.0M for 18.2 net wells, 2014 production guidance of 3,300 BOE/d (versus 1,590 BOE/d for 2013), and a 15,000,000-share public offering. The leasing follows the Sept 2013 sale of non-operated assets, and the new shares dilute existing holders. The release also says President Mike Krzus will retire at year-end.
On Sept 6, 2013 the company and subsidiary Emerald WB LLC sold substantially all its non-operated North Dakota and Montana properties to USG Properties Bakken II, LLC for about $110M cash, effective April 1, 2013. The buyer put $11M in escrow while title and environmental checks run to Dec 31, 2013, so the price could be adjusted. This is the largest part of the roughly $113M of sales announced Sept 9. Pro forma figures show cash of about $182.8M at June 30, 2013 and a larger loss for the first half of 2013 without those properties' revenue.
On Sept 9, 2013 the company announced it sold substantially all its non-operated Williston Basin assets (about 26,580 net acres, 850 Boe/d) in two sales for about $113M. It raised guidance for its remaining operated properties to 1,600 Boe/d in Q3, 2,300 in Q4 and a 2,400 exit rate (adjusted for the sale), kept the $75M borrowing base, and said it redeemed another $20M of preferred stock on Aug 30 and plans to redeem the rest by year-end. It reports about $120M cash and nothing drawn on the credit facility. The CEO calls this a move to a pure-play Williston operator. Planned 2013 drilling spending is now $125.2M.
On Aug 9, 2013 Wells Fargo raised the company's borrowing base under its existing credit facility from $27.5M to $75M in the regular semi-annual review. Nothing was drawn as of Aug 9, so the full amount was available. Other credit facility terms were unchanged.
4 June 2013capital raising announcement● NeutralMajor
On June 4, 2013 the company closed the private sale to White Deer entities announced in May: 2,785,600 common shares for about $16.2M after about $0.2M of placement fees. An amendment to the February 19, 2013 registration rights agreement was signed at the same time. The share count is higher than the roughly 2,029,400 shares described in May. Proceeds go toward the 2013 capital budget, and the shares are new, so existing holders are diluted.
On May 16, 2013 the company agreed with underwriters (Canaccord Genuity and Johnson Rice) to sell 12,000,000 common shares at $6.10 each, up from the 10,000,000 announced earlier, with a 30-day option for 1,800,000 more. Net proceeds are about $69.2M and closing is expected May 22, 2013. The money, together with cash, the White Deer placement, cash flow, asset sales and credit facility borrowings, is to fund the 2013 capital budget. This carries out the May offering and dilutes existing holders.
15 May 2013capital raising announcement● NeutralMajor
On May 13, 2013 the company agreed to sell about 2,029,400 common shares to White Deer at the public offering price less 80% of the underwriting discount, closing within ten business days after a concurrent public offering of common stock (10,000,000 shares announced, with an option for more). In the same filing it announced a second drilling rig starting in June 2013, raising its 2013 drilling budget from $90.1M to $127.6M and total 2013 capital spending to $148M from $100M, with 12.0 net operated wells targeted (from 8.2) and production guidance raised to 1,800 BOEPD on average. The offering will fund this budget. The press release also names McAndrew Rudisill as CEO, which differs from the earlier context listing Mike Krzus as CEO. More shares will be issued to fund the larger spending plan, diluting existing holders.
On March 28, 2013 the company completed the sale of its 45% interest in about 31,000 net acres of Sand Wash Basin leases to East Management Services for about $10.1M cash. This closes the deal announced Jan 7 (about $10.0M expected) and removes most of the company's Sand Wash acreage.
