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)
March 23, 2016 (March 22, 2016)
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 1.03 | Bankruptcy or Receivership. |
On March 22, 2016, Emerald Oil, Inc. (the “Company”) and certain of its subsidiaries, including Emerald WB, LLC, Emerald NWB, LLC, EOX Marketing, LLC, and Emerald DB, LLC (collectively, the “Filing Subsidiaries” and, together with the Company, the “Debtors”), filed voluntary petitions (the “Bankruptcy Petitions”) for reorganization under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Court”). The Debtors have filed a motion with the Court seeking joint administration of their Chapter 11 cases under the caption In re Emerald Oil, Inc., et al, Case No. 16-10704. The Debtors will continue to operate their businesses as “debtors-in-possession” under the jurisdiction of the Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court.
| Item 2.04 | Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement. |
The filing of the Bankruptcy Petitions described in Item 1.03 above constitutes an event of default that accelerated the Company’s obligations under the following debt instruments (the “Debt Instruments”):
| · | Second Amended and Restated Credit Agreement, dated as of May 1, 2014, by and among the Company, Wells Fargo Bank, N.A., as administrative agent, and the lenders party thereto; |
| · | 2.00% Senior Notes due April 2019, issued pursuant to the Indenture, dated as of March 24, 2019, by and among the Company, U.S. Bank National Association as trustee, and the guarantors party thereto; |
The Debt Instruments provide that as a result of the Bankruptcy Petitions the principal and interest due thereunder shall be immediately due and payable. Any efforts to enforce such payment obligations under the Debt Instruments are automatically stayed as a result of the Bankruptcy Petitions, and the creditors’ rights of enforcement in respect of the Debt Instruments are subject to the applicable provisions of the Bankruptcy Code.
| ITEM 7.01. | Regulation FD Disclosure. |
On March 23, 2016, the Company issued a press release announcing the filing of the Chapter 11 cases, as described above in Item 1.03. The press release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K.
The information included in this Current Report on Form 8-K under Item 7.01 and Exhibit 99.1 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liabilities of that Section, unless the registrant specifically states that the information is to be considered “filed” under the Exchange Act or incorporates it by reference into a filing under the Exchange Act or the Securities Act of 1933, as amended.
| ITEM 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| Exhibit | Description | |
| 99.1 | March 23, 2016 Press Release. |
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: March 23, 2016 | By: | /s/ Ryan Smith | |
| Ryan Smith | |||
| Chief Financial Officer | |||
Exhibit 99.1
Emerald Oil, Inc. Announces Fast Track Restructuring and
Files Voluntary Chapter 11 to Implement 363 Sale
DENVER, CO -- (Marketwired) -- 03/23/16 – Emerald Oil, Inc. (the “Company” or “Emerald”) (NYSE MKT: EOX) announced today that the Company and its subsidiaries filed voluntary Chapter 11 petitions in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”), initiating a process intended to preserve value and accommodate an eventual going-concern sale of Emerald’s business operations.
Emerald has obtained $20 million in post-petition debtor in possession financing, which, subject to Bankruptcy Court approval, will provide the Company with liquidity to maintain its operations in the ordinary course of business during the Chapter 11 process.
Prior to the Chapter 11 filing, Emerald executed a Non-Binding Term Sheet with Latium Enterprises, Inc. (“Latium”) pursuant to which Latium has proposed to purchase substantially all of Emerald’s assets and, subject to lender and Bankruptcy Court approval, would serve as a “stalking horse” in a sale process under section 363 of the Bankruptcy Code. The Term Sheet is non-binding and such transaction is subject to, among other things, Latium’s performance of certain due diligence analysis and the parties negotiating mutually acceptable terms of definitive transaction agreements. Emerald intends for such a sale, if consummated, to ensure a smooth and swift transition of the business and operations to Latium, which would be supported by a stronger balance sheet due to a significantly lower debt burden. If acquired by Latium as part of the anticipated transaction, the Emerald business would expect to be able to remain committed to continued operations in North Dakota. In accordance with the sale process under section 363 of the Bankruptcy Code, notice of the proposed sale to Latium would be given to third parties and competing bids solicited. An independent committee of Emerald’s board of directors will be established to, in consultation with an independent investment bank and a financial advisor, manage the bidding process and evaluate bids.
The Company intends to continue its normal business operations throughout the sale process and has asked the Bankruptcy Court to approve certain Company requests to protect employees, trade creditors, vendors and suppliers, thereby allowing for its operations to continue uninterrupted during the Bankruptcy Court supervised sale process.
McAndrew Rudisill, President and Chief Executive Officer of Emerald, said, “The plan we are announcing today will provide for continuity in Emerald’s current and future business operations. This process is the only path going forward and should enable the business to execute a turnaround in the current low oil price environment. Importantly, Emerald’s plan and the Latium transaction would allow the business to continue to operate and would provide a sound path for potential recovery for Company stakeholders.”
Like many other exploration and production companies, Emerald’s operations have been significantly impacted by the dramatic decline in oil prices, the continued low prices of oil and natural gas, and the general uncertainty in the energy markets. These macro-economic factors, coupled with Emerald’s substantial debt obligations, resulted in the Company’s decision to explore strategic restructuring alternatives to reduce its debt and achieve a sustainable capital structure. Over the last nine months the Company explored and presented multiple solutions to its lenders to solve the Company’s current financial condition, however the Company was unable to obtain the requisite lender consent. Emerald continues to evaluate and discuss alternatives with its stakeholders and believes that an in-court sale process will maximize value and position Emerald for future profitability.
Court filings and other information related to the restructuring proceedings are available at a website administered by the Company’s claims agent, Donlin Recano, at www.donlinrecano.com/emerald.
Intrepid Partners, LLC is serving as investment banker for Emerald, Kirkland & Ellis LLP is serving as legal counsel, and Opportune LLP is serving as financial advisor with Wade Stubblefield of Opportune serving as Chief Restructuring Officer.
About Emerald Oil, Inc.
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.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release may include “forward-looking statements” within the meaning of the U.S. Private Litigation Securities Reform Act of 1995. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements include, but are not limited to forward-looking statements about acquisitions, divestitures and trades, potential strategic alliances, timing and payment of dividends, the availability of capital, and the expectations of plans, strategies, objectives and anticipated financial and operating results of the Company, including the Company’s drilling program, production, hedging activities, capital expenditure levels and other guidance that may be included in this press release. These statements are based on certain assumptions made by the Company based on management’s experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. 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. These include risks relating to the Company’s financial performance and results, availability of sufficient cash flow to execute its business plan, prices and demand for oil, natural gas and natural gas liquids, the ability to replace reserves and efficiently develop current reserves, the ability to access the capital markets and finance operations. See “Risk Factors” in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other public filings and press releases.
Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.
CONTACT
Corporate Contact:
Mitch Ayer
VP of Finance and Investor Relations
Emerald Oil, Inc.
(303) 595-5600
info@emeraldoil.com
www.emeraldoil.com
Source: Emerald Oil, Inc.
Released March 23, 2016