White Deer Invests $50 Million in Emerald Oil, Inc.

By Darryl L. Flowers

Published: Tuesday, February 5, 2013 1:04 PM CST

Emerald Oil, Inc., based in Denver, Colorado, this week announced the company had signed a definitive letter of agreement with White Deer Energy, a private energy equity firm with offices in Houston and New York. Emerald will issue and sell $50 million of Perpetual Preferred Stock to White Deer.

According to a statement from Emerald, the Preferred Investment will be structured as follows:

• 10% Perpetual Preferred Stock.

• Detachable warrants, exercisable for 5,114,633 shares of Emerald common stock, attached to voting rights for approximately 19.9% (approximately 16.6% pro forma following the Preferred Investment) of Emerald’s outstanding common stock. The warrants are exercisable at $5.77 per share, the 10-day volume weighted average price of Emerald’s common stock prior to entering into the definitive agreement.

• Upon closing the investment, Thomas J. Edelman (see Bio below), a Managing Partner at White Deer, will be added to Emerald’s Board of Directors, which will expand from 7 to 8 members.

• White Deer has agreed not to enter into any short sales or hedge transactions relating to the Emerald common stock.

• Closing and funding is scheduled to occur on February 19, 2013.

• Johnson Rice & Company L.L.C. acted as advisor to Emerald.

Thomas J. Edelman, a co-founder of White Deer, will join the Emerald Board of Directors upon closing of the Preferred Investment. Prior to forming White Deer, Mr. Edelman founded or co-founded a series of independent energy companies including Snyder Oil Corporation (now part of Devon Energy), Range Resources and Patina Oil and Gas (now part of Noble Energy). He also co-founded Bear Paw Energy (now part of ONEOK Partners) and Bear Cub Energy (now part of Regency Energy Partners), two mid-stream companies based in Denver.

Emerald has land and leasing offices in Billings.

In the Williston Basin region, the company has leases in North Dakota as well as Richland County, Montana.

In Musselshell, Petroleum, Garfield and Fergus Counties of Montana, Emerald holds 33,500 net acres in the “Heath Play.” In the Heath Shale play, Cirque Resources LP (partnered with Statoil), Fidelity Exploration and Production Company, Endeavour Exploration, LLC, Central Montana Resources LLC and True Oil LLC are the most active players around Emerald’s acreage.

In Hill, Chouteau, Blaine and Fergus Counties in Montana, Emerald has 74,700 net acres in the “Tiger Ridge” area, which has been in production since the 1960’s.

Emerald is also active in plays in Colorado and Wyoming.