Providing coverage of Alaska and northern Canada's oil and gas industry
June 2015

Vol. 1, No. 5 Week of June 14, 2015

Emerald backs away from stock offering while reiterating guidance

In mid-May, Bakken operator Emerald Oil announced a public offering of $150 million in the company’s common stock, only reverse that decision a week later.

Emerald had planned to use the proceeds to fund an acquisition of approximately 10,750 net acres in the Delaware Basin in New Mexico. The Delaware Basin acreage was prospective for oil-weighted multi-stacked pay zones in the Wolfcamp and Avalon shales as well as the Bone Spring sand.

In a press release announcing the decision not to proceed with the stock offering, Emerald said the decision was based on “the current market environment and associated dilution to existing shareholders,” and consequently the company was “not taking action to close the previously announced Delaware Basin acquisition.”

However, Emerald has reiterated its previously announced 2015 capex and production guidance. Based on a variable one-rig drilling program, Emerald is looking to average between 4,200 and 4,500 barrels of oil equivalent per day over the year representing production growth of between 18 and 27 percent. The company has earmarked $52 million to $71 million for Williston Basin drilling and completions and has a land capex of between $1 million and $5 million. As of the end of May, the company had spent $42 million.

With the recently completed spring borrowing base redetermination and easing of debt covenants, Emerald will continue developing its Williston Basin leasehold position based upon original plans, the company said. “With current upper-teens well returns the Company remains committed to completing its 2015 capital expenditures program in a financially conservative manner designed to hold its acreage position while maintaining year-over-year growth in production.”

- Mike Ellerd






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