EMERALD OIL AND GAS NL ACN 009 795 046

NOTICE OF GENERAL MEETING

AND

EXPLANATORY MEMORANDUM

IMPORTANT INFORMATION This is an important document that should be read in its entirety. If you do not understand it you should consult your professional advisers without delay.

If you wish to discuss any aspect of this document with the Company please contact Mr Graeme Smith on telephone (+61 8) 9389 2111.

EMERALD OIL & GAS NL ACN 009 795 046

NOTICE OF GENERAL MEETING

Notice is hereby given that a General Meeting of the Shareholders of Emerald Oil & Gas NL will be held at 52 Ord Street, West Perth, Western Australia at 2.15 pm (WST) on 24 May 2013 to conduct the following business and to consider, and if thought fit, to pass the following Resolutions.

AGENDA

RESOLUTION 1 – REDUCTION OF CAPITAL AND DISTRIBUTION IN SPECIE

To consider, and if thought fit, to pass with or without amendment, the following resolution as an ordinary resolution:

"That, subject to the passage of Resolution 2, and the Class Ruling being successfully obtained, for the purposes of sections 256B and 256C of the Corporations Act 2001 (Cth) and the Company's Constitution, Shareholders approve that:

(a) the Company will effect a reduction in the issued share capital of the Company, without cancelling any shares, by an amount equal to the market value of all EOX Shares held by the Company on the Distribution Date and recognising in the Income Statement a loss on disposal of the EOX Shares, being excess of the book value over the market value of the EOX Shares; and
(b) the reduction in issued share capital be satisfied by distributing and transferring the EOX Shares in specie to Eligible Shareholders pro rata in accordance with each Eligible Shareholder's holding in the Company on the Record Date and otherwise on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice of Meeting."

Voting Exclusion Statement: The Company will disregard any votes cast on this Resolution cast (in any capacity), by or on behalf of, a related party of the Company to whom the Resolution would permit a financial benefit to be given (except a benefit solely in the capacity of a holder of ordinary securities), or an associate of such a related party. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the proxy form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

RESOLUTION 2 – APPROVAL FOR PROVISION OF A FINANCIAL BENEFIT TO RELATED PARTIES

To consider, and if thought fit, to pass with or without amendment, the following resolution as an ordinary resolution:

"That, subject to the passage of Resolution 1, for the purpose of section 208 of the Corporations Act 2001 (Cth), and for all other purposes, Shareholders approve the giving of a financial benefit to Mike Krzus and McAndrew Rudisill (or entities controlled by them), both Directors of the Company, pursuant to the reduction of the exercise price of the Options held by entities controlled by Messrs Krzus and Rudisill as a result of completion of the In Specie Distribution on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice of Meeting"

DATED THIS 10th DAY OF APRIL 2013

BY ORDER OF THE BOARD

GRAEME SMITH COMPANY SECRETARY

Notes:

Definitions

Terms which are used in this Notice and which are defined in Section 4 of the Explanatory Memorandum have the meanings ascribed to them therein.

Note

If you have recently changed your address or if there is any error in the name and address used for this notice please notify the Company Secretary. In the case of a corporation, notification is to be signed by a director or company secretary.

Proxies

A Shareholder who is entitled to vote at this Meeting has a right to appoint a proxy and should use the proxy form enclosed with this notice. The proxy need not be a Shareholder of the Company and can be an individual or a body corporate.

A body corporate appointed as a Shareholder's proxy may appoint a representative to exercise any of the powers the body may exercise as a proxy at the Meeting. The representative should bring to the Meeting evidence of this appointment, including any authority under which the appointment is signed, unless it has previously been given to the Company.

A Shareholder who is entitled to cast 2 or more votes may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise. If a Shareholder appoints 2 proxies and the appointment does not specify the proportion or number of the Shareholder's votes each proxy may exercise, section 249X of the Corporations Act will take effect so that each proxy may exercise half of the votes (ignoring fractions).

A proxy's authority to speak and vote for a Shareholder at the meeting is suspended if the Shareholder is present at the meeting.

The proxy form must be signed and dated by the Shareholder or the Shareholder's attorney. Joint Shareholders must each sign.

Proxy forms and the original or a certified copy of the power of attorney (if the proxy form is signed by an attorney) must be received:

x at PO Box 535, Applecross WA 6953; or
x on facsimile number +61 8 9315 2233,

not later than 2.15 pm (WST) on 22 May 2013.

Pursuant to regulation 7.11.37 of the Corporations Regulations, the Board has determined that the shareholding of each Shareholder for the purposes of ascertaining the voting entitlements for the Meeting will be as it appears in the share register at 2.15 pm (WST) on 22 May 2013.

Bodies Corporate

A body corporate may appoint an individual as its representative to exercise any of the powers the body may exercise at meetings of a company's shareholders. The appointment may be a standing one.

Unless the appointment states otherwise, the representative may exercise all of the powers that the appointing body could exercise at a meeting or in voting on a resolution.

The representative should bring to the Meeting evidence of his or her appointment, including any authority under which the appointment is signed, unless it has previously been given to the Company.

EMERALD OIL & GAS NL ACN 009 795 046

EXPLANATORY MEMORANDUM

This Explanatory Memorandum forms part of a Notice convening a General Meeting of Shareholders of Emerald Oil & Gas NL to be held at 52 Ord Street, West Perth, Western Australia at 2.15pm (WST) on 24 May 2013. This Explanatory Memorandum is to assist Shareholders in understanding the background to and the legal and other implications of the Notice and the reasons for the Resolutions proposed. Certain terms used in this Explanatory Memorandum are defined in Section 4.

1. RESOLUTION 1 - REDUCTION OF CAPITAL AND DISTRIBUTION IN SPECIE

1.1 Background

The Company holds shares in Emerald Oil Inc. (NYSE MKT : EOX), a publicly listed company in the USA. On 11 July 2012 the Company announced that it had entered into an agreement with Voyager Oil and Gas Inc (renamed Emerald Oil Inc.), to acquire the then subsidiary of the Company, Emerald Oil Inc., which holds various oil shale assets.

The consideration for the acquisition of Emerald Oil Inc. by Voyager Oil and Gas Inc. comprised, a 19.9% shareholding in Voyager Oil and Gas Inc. (which, at the time, represented by approximately 11.6 million EOX Shares) and US\$2.5 million which was returned to the Company as part of a separate, preexisting inter-company arrangement between the Company and the then subsidiary company.

On 25 September 2012, EOX completed an equity raising of US\$75 million at an issue price of US\$0.80 per share. The Company's shareholding in EOX was diluted as a result.

As announced by EOX on 22 October 2012 EOX conducted a 7 for 1 reverse share split thereby reducing the number of EOX Shares held by the Company from 11.6 million to the current holding of 1,662,174 EOX Shares.

The EOX Shares not required to operate the business will be distributed by the Company as part of a business restructure to allow the Company to concentrate on its exploration and development projects. Further, since the Company was issued the EOX Shares, the Company has received several requests and enquiries from Shareholders holding significant numbers of Shares and their advisers to have a resolution put to Shareholders that the distribution in specie of the EOX Shares be made pro rata to Shareholders.

Given the holding in EOX and the enquiries from Shareholders, the Board decided to have the required resolutions put to Shareholders in relation to the possible distribution in specie of the EOX Shares to Shareholders.

The Directors' recommendations on how to vote on Resolutions 1 and 2 are included in Section 3.

If Shareholder approval for Resolutions 1 and 2 is obtained, and the Class Ruling successfully obtained, the Board will make the In Specie Distribution of EOX Shares to Shareholders on a pro rata basis by way of equal capital reduction.

If Shareholder approval for Resolutions 1 and 2 is obtained, and the Class Ruling successfully obtained, the Board will determine a Record Date. In any event, notice of the Record Date will be given by the Company at least 7 days prior to the Record Date.

1.2 Legal Requirements – Capital Reduction

Corporations Act

Section 256B(1) of the Corporations Act provides that a company may reduce its share capital if the reduction:

(a) is fair and reasonable to the company's shareholders as a whole;
(b) does not materially prejudice the company's ability to pay its creditors; and
(c) is approved by shareholders under section 256C of the Corporations Act.

The proposed capital reduction is an equal reduction as:

(a) it relates only to ordinary Shares;
(b) it applies to each holder of ordinary Shares in proportion to the number of ordinary Shares they hold; and
(c) the terms of the reduction are the same for each holder of ordinary Shares.

As the proposed capital reduction is an equal reduction, section 256C of the Corporations Act requires Shareholder approval of the proposed reduction by way of an ordinary resolution.

The Directors consider that the proposed reduction of capital by the In Specie Distribution of all EOX Shares held by the Company on a pro rata basis to the Shareholders of the Company:

(a) does not materially prejudice the Company ability to pay its creditors;
(b) will not result in the Company being insolvent at the time of the capital reduction or become insolvent as a result of the capital reduction; and
(c) is fair and reasonable to Shareholders as a whole because Eligible Shareholders are all treated in the same manner as the distribution of EOX Shares is on a pro rata basis.

The effect of the In Specie Distribution will be to transfer the EOX Shares as previously held by the Company pro rata to Eligible Shareholders thereby changing each Eligible Shareholder's interest from an indirect interest to a direct interest.

Listing Rule 7.20

In accordance with Listing Rule 7.20, the following information is provided:

(a) As a result of the proposed In Specie Distribution, the number of Shares on issue in the Company will not change.
(b) In determining the number of EOX Shares an Eligible Shareholder will receive, fractional entitlements arising on the reduction of capital will be rounded down.
(c) Holders of Options will not be entitled to participate in the proposed reduction of capital. However, Options may be exercised prior to the Record Date to enable participation in the In- Specie Distribution. Further details in relation to the treatment of Options on issue in the Company is provided in section 1.6 of the Explanatory Memorandum.

1.3 Effect of Reduction of Capital on the Company

If Shareholder approval is obtained for the reduction of capital and In Specie Distribution implemented, it will have the effect of reducing the Company's total and net assets and reducing the Company's total equity by the dollar amount of the market value (at the Distribution Date) of the EOX Shares which, at the date of this Notice (based upon the latest EOX share price as quoted on the NYSE AMEX stock exchange being US\$6.45), is approximately \$10.2 million. The Company has estimated a capital reduction of approximately 1.1 cents per Share (based on the number of Shares on issue as at the date of the Notice of Meeting). The exact amount of the return of capital per Share may vary depending on the market value of the EOX shares on the Distribution Date and in the event that Options are exercised prior to the Record Date.

A pro forma consolidated statement of financial position of the Company following completion of the In Specie Distribution is set out below. The pro forma statement of financial position below is provided to Shareholders for illustration purposes and includes information on the assets and liabilities of the Company and pro-forma assets and liabilities of the Company following completion of the In Specie Distribution as noted below. This statement of financial position should be read in conjunction with the half yearly report for the period ended 31 December 2012.

Emerald Oil & Gas NL

Pro-Forma Statement of Financial Position

As at 31 December 2012

	Actual	Adjustments	Proforma
Current Assets
Cash and cash equivalents	744,480		744,480
Trade and other receivables	145,778		145,778
Financial assets at fair value	8,396,238	- 8,396,238	0
Total Current Assets	9,286,496	- 8,396,238	890,258

Non-Current Assets
Property, plant and equipment	160,292		160,292
Exploration and evaluation expenditure	354,782		354,782
Oil and gas assets	509,382		509,382
Total Non-Current Assets	1,024,456		1,024,456
Total Assets	10,310,952	- 8,396,238	1,914,714

Current Liabilities
Trade and other payables	75,364		75,364
Total Current Liabilities	75,364		75,364
Total Liabilities	75,364		75,364
Net Assets	10,235,588	- 8,396,238	1,839,350

Equity
Issued capital	46,356,181	- 8,396,238	37,959,943
Reserves	949,536		949,536
Accumulated losses	- 37,190,077		- 37,190,077
Total equity attributable to owners of the
parent Non-controlling interest	10,115,640 119,948	- 8,396,238	1,719,402 119,948

Total Equity Notes:	10,235,588	- 8,396,238	1,839,350

The financial assets at fair value represents the book value of the EOX Shares as set out in the audited financial statements for the Company for the half year ended 31 December 2012. The total market value of the EOX Shares based upon the EOX share price as quoted on the NYSE AMEX stock exchange on the date of this Notice (US\$6.45) is approximately \$10.2 million.

1.4 Directors' Interests

The following table sets out the Directors' interests in Shares as at the date of the Notice of Meeting and the number of EOX Shares which they (or their associated parties) will receive pursuant to the In Specie Distribution, in their capacity as Shareholders, if the Conditions satisfied, and the In Specie Distribution implemented:

Director	Shares	Number of EOX Shares to be received on the assumption that the number of Shares on issue as at the date of the Notice does not change prior to the Record Date
Jeremy Shervington	8,331,915	14,676
Mike Krzus	5,709,226	10,056
McAndrew Rudisill	14,750,000	25,981
Davide Bosio	NIL	NIL
Dino DiCosta	NIL	NIL

Final number of EOX Shares may vary depending on exercise of any Options prior to the Record Date, the issue of further Shares, or the acquisition of Shares whether on market or otherwise.

1.5 Advantages and Disadvantages of the Proposal

The Board considers that the In Specie Distribution has the following (non-exhaustive) advantages and disadvantages.

Advantages

The Board considers that the following are advantages of approving the In Specie Distribution:

(a) The In Specie Distribution will allow Shareholders to extract face value from EOX by individually selling if they wish, whereas at the date of this Notice the Company is trading at a discount to the see through value of the EOX Shares so selling Shares will not obtain the same value as selling EOX.
(b) The In Specie Distribution will divest the Company of the EOX Shares which are surplus to the requirements of the Company and allow the Company to concentrate on its exploration and development projects.
(c) Shareholders will retain their current percentage ownership in the capital of the Company.

Disadvantages

The Board considers that the following are potential disadvantages of the In Specie Distribution to Shareholders:

(a) The total asset position of the Company will be reduced significantly as a result of the In Specie Distribution, and as remaining Shareholders this may be disadvantageous.
(b) Shareholders may incur brokerage and other costs associated with disposing of EOX Shares they receive under the In Specie Distribution.
(c) Details of the general taxation effects of the In Specie Distribution are set out in Section 1.7.
(d) The Company's share price will decline as a result of the In Specie Distribution to reflect the asset disbursement to the Eligible Shareholders.

1.6 Effect of Capital Reduction and In Specie Distribution

(a) Effect on Shares

The Company currently has 943,651,304 Shares on issue. The number of Shares on issue will remain unchanged as a result of the proposed capital reduction.

(b) Effect on Options

The impact of the In Specie Distribution on Shareholders will depend on the number (if any) of Options exercised prior to the Record Date. As at the date of this Notice, the Company currently has on issue:

(a) 5,000,000 unlisted options with an exercise price of \$0.10 expiring on 31 March 2014;
(b) 117,600,000 unlisted options with an exercise price of \$0.05 expiring on 30 April 2014; and
(c) 50,000,000 unlisted options with an exercise price of \$0.05 expiring on 28 June 2014.

Listing Rule 7.22

In accordance with Listing Rule 7.22.3, the number of Options on issue will remain the same however, the Options are required to have their exercise price per Option reduced by the same amount as the amount returned in respect of each Share. At the date of this Notice the Company has estimated a capital reduction of approximately 1.1 cents per Share (based on the number of Shares on issue and the market value of the EOX Shares as at the date of the Notice).

1.7 Tax Implications

Each Shareholder should seek and rely on its own professional taxation advice, specific to its particular circumstances, in relation to the taxation consequences of the proposed transaction the subject of this Notice. Neither the Company, nor any of its officers or advisers, accepts liability or responsibility with respect to such consequences or the reliance by any Shareholder on any part of the following summary.

The following is a general summary of the Australian taxation consequences for Shareholders who receive EOX Shares in respect of the In Specie Distribution based on the applicable taxation law, and independent advice received, at the date of this Notice. The Company is in the process of seeking a Class Ruling from the Australian Taxation Office (ATO) to confirm that the Commissioner of Taxation will not determine that all or any part of the In Specie Distribution will be an unfranked dividend in accordance with section 45B of the Income Tax Assessment Act 1936 (Cth) (Section 45B). The Company will update Shareholders accordingly and in due course.

The following summary only applies to Shareholders who hold their Shares on capital account for tax purposes, and not on revenue account. The application of tax legislation can vary according to the individual circumstances of each Shareholder. This summary is not intended, and should not be relied upon, as specific taxation advice to any particular Shareholder. The comments in this summary are of a general nature only, may not apply to your specific circumstances and cannot be relied upon for accuracy or completeness.

Australian taxation implications for Australian resident Shareholders if Class Ruling application is successful

The following comments are subject to confirmation by the ATO by the issuing of a Class Ruling in relation to the In Specie Distribution.

The In Specie Distribution of EOX Shares to Shareholders will reduce the cost base of the Shareholder's Shares (but not below nil) and will give rise to a capital gain if the capital reduction amount is more than the cost base of the Shares.

There is a risk that the Commissioner of Taxation may deem the In Specie Distribution to be an unfranked dividend in accordance with Section 45B. In such event, the conditions required to make the In Specie Distribution will not be satisfied, and the In Specie Distribution will not be made by the Company.

Australian taxation implications for non-resident Shareholders

Each non-resident Shareholder should seek and rely on its own professional taxation advice, specific to its particular circumstances, in relation to the taxation consequences of the In Specie Distribution. Neither the Company, nor any of its officers or advisers, accepts liability or responsibility with respect to any taxation consequences of the In Specie Distribution on any Shareholder.

Australian taxation implications for the Company

The In Specie Distribution will give rise to a capital loss to the Company to the extent that the cost base of the EOX Shares exceeds the capital proceeds deemed to be received by the Company. If the Company makes the In Specie Distribution for no consideration, the "market value substitution" rule in section 116-30 of the Income Tax Assessment Act 1997 will apply to deem the Company to receive the market value of the EOX Shares as consideration for the In Specie Distribution.

At the date of this Notice, the In Specie Distribution in respect of the share capital reduction is not expected to have any adverse CGT implications for the Company.

1.8 Risk Factors Associated with EOX

On completion of the In Specie Distribution Shareholders will become shareholders of EOX and should be aware of general and specific risk factors which may affect EOX and the value of its securities.

An extract of the risk factors associated with EOX, namely the risks related to the business and industry of EOX as included in EOX's annual report for the period ended 31 December 2012 is attached as Annexure A.

In addition to the risk factors as set out in Annexure A, upon completion of the In Specie Distribution Shareholders will become direct holders of EOX Shares, being securities regulated in accordance with the laws of the USA (principally those laws governed by the US Securities and Exchange Commission) and the rules of the NYSE. These laws and rules are different to the laws and rules in Australia that apply to the Company, and as such, there is the risk that the holding of these foreign securities may involve higher risks, and be less favourable, than investment in Australian securities.

Further information in relation to EOX can be found on EOX's website at http://www.emeraldoil.com and EOX's announcements can be found at http://ir.emeraldoil.com/sec-filings (free of charge).

1.9 Rights and Liabilities Attaching to EOX Shares

An extract of the rights and liabilities attaching the EOX Shares as included in EOX's prospectus supplement dated 25 September 2012 is attached as Annexure B.

Further information in relation to EOX can be found on EOX's website at http://www.emeraldoil.com and EOX's announcements can be found at http://ir.emeraldoil.com/sec-filings (free of charge).

1.10 Financial Position of EOX

An extract of the audited financial statements of EOX as included in EOX's annual report for the period ended 31 December 2012 is attached as Annexure C.

Further information in relation to EOX can be found on EOX's website at http://www.emeraldoil.com and EOX's announcements can be found at http://ir.emeraldoil.com/sec-filings (free of charge).

1.11 Overview of EOX's Business

EOX 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. EOX is based in Denver, Colorado. Assets outside of the Williston Basin are being monetized to focus capital deployment to the Williston Basin. These include the Sand Wash Basin- Niobrara Project, Heath Shale Oil Project, D-J Basin Niobrara Project, and Tiger Ridge Project.

EOX have identified approximately 279 net potential drilling locations on its acreage prospective for oil in the Bakken and Three Forks formations assuming 4 Bakken wells and 3 Three Forks wells per 1,280 acre spacing unit. The majority of EOX's capital expenditures are expected to be directed toward

drilling operated Bakken and Three Forks wells. EOX are currently operating a continuous 1-rig drilling program on our operated acreage in McKenzie County, North Dakota.

EOX was formerly known as Voyager Oil and Gas Inc which (as announced on 11 July 2012) had entered into an agreement with the Company, to acquire the then subsidiary of the Company, Emerald Oil Inc., which held various oil shale assets. This transaction was subsequently completed, and the EOX Shares issued to the Company as part of the consideration under the transaction.

An extract from EOX's annual report for the period ended 31 December 2012 comprising an overview of EOX's business is attached as Annexure D.

Further information about EOX can be found on EOX's website at http://www.emeraldoil.com and EOX's announcements can be found at http://ir.emeraldoil.com/sec-filings (free of charge).

The following continuous disclosure notices have been given by EOX since the lodgement of EOX's annual report for the period ended 31 December 2012 (such notices can be found at http://ir.emeraldoil.com/sec-filings (free of charge)):

Date Lodged	Description
3/04/2013	Current report filing
29/03/2013	Notice of Effectiveness
21/03/2013	Registration of statement for specified transactions of certain issuers

The Chairman intends to vote all available proxies AGAINST Resolution 1.

2. RESOLUTION 2 - Chapter 2E of the Corporations Act

Chapter 2E of the Corporations Act regulates the provision of financial benefits to related parties by a public company. Section 208 of the Corporations Act prohibits a public company from giving a financial benefit to a related party unless one of the exceptions to Section 208 applies or shareholders have approved the giving of that benefit to the related party.

A "financial benefit" is defined in the Corporations Act in broad terms and includes a public company, issuing securities, and buying an asset from a related party.

For the purposes of this Meeting, a "related party" includes an entity controlled by the Directors of the Company. Pelagic Capital Investments Ltd is controlled by Mr McAndrew Rudisill, who is a director of the Company. PBTL Lifetime Superannuation Fund Pty Ltd is controlled by Mr Mike Krzus who is a director of the Company. Accordingly, both Pelagic and PBTL are related parties of the Company.

Given that the In Specie Distribution will result in the reduction of the exercise price of the Options held by both Pelagic and PBTL the In Specie Distribution involves the provision of a financial benefit to a related party of the Company.

Section 210 of the Corporations Act provides that a company does not need to obtain shareholder approval to give a financial benefit to a related party if the giving of the financial benefit would be reasonable in the circumstances if the party and the entity were dealing at arm's length (or on terms less favourable than arm's length).

Notwithstanding the above, the Board is of the view that it is prudent to seek Shareholder approval under Section 208 of the Corporations Act for In Specie Distribution given that it will result in the reduction of the exercise price of the Options held by both Pelagic and PBTL pursuant to Listing Rule 7.22.3.

Section 208 of the Corporations Act provides that for a public company to give a financial benefit to a related party of that company, the public company must:

(a) obtain the approval of members in the way set out in Section 217 and 227; and
(b) give the benefit within 15 months after the approval.

In accordance with Chapter 2E, and in particular Section 219 of the Corporations Act, the following information is provided to Shareholders to allow them to assess the proposed effect of the In Specie Distribution as it effects those Options held by Pelagic and PBTL:

The related parties to whom the Resolutions would permit the financial benefit to be given.

The related parties are Pelagic and PBTL. Pelagic is an entity controlled by Mr McAndrew Rudisill, a director of the Company. PBTL is an entity controlled by Mr Mike Krzus, a director of the Company.

Trading history

In the last 12 months before the date of this Notice, the highest, lowest and latest trading prices (as at the date of this Notice) of the listed Shares on ASX are as set out below:

	Shares (ASX: EMR)
Highest (16 April 2012)	\$0.032
Lowest (4 December 2012)	\$0.007
Latest (10 April 2013)	\$0.009

The nature of the financial benefit

The financial benefit proposed to be given is the reduction in the exercise price of those Options held by both Pelagic and PBTL pursuant to Listing Rule 7.22.3.

Directors' recommendation and basis of recommendation

The Directors' recommendations are set out in Section 3.

Directors' interest in the outcome

Mr Rudisill's interest in the outcome of the Resolutions is the reduction of the exercise price of the Options held by Pelagic in accordance with Listing Rule 7.22.3, as well as the receipt of EOX Shares as a result of the In Specie Distribution in accordance with Pelagic's shareholding in the Company as described in Section 1.4.

Mr Krzus' interest in the outcome of the Resolutions is the reduction of the exercise price of the Options held by PBTL in accordance with Listing Rule 7.22.3, as well as the receipt of EOX Shares as a result of the In Specie Distribution in accordance with Mr Krzus' shareholding in the Company as described in Section 1.4.

The other Directors do not have a material interest in the outcome of the Resolutions other than to the extent that the In Specie Distribution will result in the Directors receiving EOX Shares in accordance with their Shareholdings as at the Record Date.

Relevant Director's remuneration package

Mr Rudisill and Mr Krzus have received annual remuneration (inclusive of superannuation) for the last 2 financial years as set out below:

Remuneration received in Remuneration received in
------------------------------------------------------

	financial year ending 30 June 2011	financial year ending 30 June 2012
McAndrew Rudisill	NIL	\$229,022
Mike Krzus	\$314,999	\$337,311

Related party's existing interest

Mr Rudisill and Mr Krzus currently has an interest in the following securities of the Company:

	Shares	Options exercisable for 5 cents each on or before 30 April 2014	Options exercisable for 5 cents each on or before 28 June 2014	Options exercisable for 10 cents each on or before 31 March 2014
McAndrew Rudisill	14,750,000	3,920,000	25,000,000	NIL
Mike Krzus	5,709,226	NIL	NIL	5,000,000

Valuation of financial benefit

The financial benefit which is being provided by the Company to Pelagic and PBTL and requires approval under Resolution 2 is the reduction in the exercise price of the Options held by Pelagic.

The Directors (having obtained a valuation of the each of the classes of Options at a valuation date of 6 March 2013 and on the basis that the exercise price of each of the Options if reduced by 1.1 cents) consider the financial benefit being given to Pelagic and PBTL to be the increase in the indicative theoretical value of the Options held by Pelagic and PBTL as a result of the In Specie Distribution being implemented and the resultant reduction of the exercise price of the Options pursuant to Listing Rule 7.22.3.

The value of the financial benefits on the above basis are set out in the table below:

Related Party	Value of Financial Benefit
Pelagic (McAndrew Rudisill)	\$8,109
PBTL (Mike Krzus)	\$500

The Black and Scholes option valuation methodology was used as the basis for the calculation.
The Share price as at the valuation date of 6 March 2013 was \$0.008.
The risk free interest rate used was 2.7% (based on the implied yield of Treasury Fixed Coupon Bonds at the valuation date, with a life approximating to the expected life of the Options).
A volatility factor of 112% (based on a 1.25 year price history) was used.
There are no vesting conditions.
The expected dividend yield is 0%.

The Chairman intends to vote all available proxies AGAINST Resolution 2.

3. Directors' Recommendation

Jeremy Shervington recommends that Shareholders do not vote in favour of the Resolutions. The reason for this is that he considers it will be in the best interests of the Company and its Shareholders in the longer term if the Company retains the EOX shares and at some time in the future liquidates them for cash.

Mr Shervington considers that if the EOX Shares are distributed, the share price of the Company will likely trade at or around \$0.001. Based on the current market value of EOX shares the "value" that is attributable to each EMR share by reason of the Company's holding in EOX is approximately \$0.011. Even if the EOX holding was liquidated at today's market value and the Company's shares traded at cash backing its share price should be around 1 cent per share.

The Company is in the process of seeking out assets and transactions to rebuild value into its share price. Mr Shervington considers that rebuilding value from a base of \$0.001 per share will be a far more difficult task than building from the considerably higher base that should be attainable if the EOX Shares are retained and disposed of at some future time for a price equal to, or hopefully, greater than, the current market price of EOX shares.

In addition, retaining the EOX shares will provide the Company with a source of cash that will avoid the need, at least for the immediate and near term, for further dilution of the Company's existing share capital.

Notwithstanding the advantages of a distribution as outlined above in Section 1.5, on balance, Mr Shervington believes that Shareholders interests are better served by retaining the EOX Shares and he intends to vote the Shares he controls against the Resolutions.

Davide Bosio supports the reasons and recommendations of Mr Shervington, and recommends that Shareholders do not vote in favour of the Resolutions.

In addition to the Mr Shervington's reasons to not vote in favour of the Resolutions, Mr Bosio considers that many Australian Shareholders will not benefit from receiving a direct interest in EOX, and will not benefit from having to sell the EOX Shares distributed to them via a US broker, and in accordance with the administrative processes and procedures required to sell the EOX Shares via the US market.

EMR currently has in excess of approximately 1300 Shareholders who do not hold a parcel of Shares valued at \$500 or more. Accordingly, Mr Bosio considers that by the time Shareholders received their entitlement under the In Specie Distribution, set up accounts with US brokers, pay the individual brokerage and commissions required, there may not be any return on the sale of the EOX Shares.

Mr Dino Di Costa supports the reasons and recommendations of Mr Shervington, and recommends that Shareholders do not vote in favour of the Resolutions.

Messrs Mike Krzus and McAndrew Rudisill do not make a recommendation given that they have a material personal interest in the outcome of the Resolutions as described in Section 2, and because they are also directors of EOX.

4. DEFINITIONS

In this Explanatory Memorandum and the Notice, the following terms have the following meanings unless the context otherwise requires:

ASX	means ASX Ltd ABN 98 008 624 691 and, where the context requires, the Australian Securities Exchange operated by ASX Ltd.
ATO	the Australian Taxation Office.
Board	means the board of Directors of the Company.
CGT	means capital gains tax.
Class Ruling	means a class ruling given by the ATO confirming that the In Specie Distribution will not be treated as an unfranked dividend in accordance with Section 45B.
Company	means Emerald Oil and Gas NL ACN 009 795 046.
Conditions	means collectively: (a) Shareholder approval being obtained for the Resolutions; and (b) the Class Ruling being successfully obtained.
Constitution	the constitution of the Company.
Corporations Act	means Corporations Act 2001 (Cth).
Director	means a director of the Company.
Distribution Date	means the date on which the In Specie Distribution occurs.
EOX Shares	means the common stock in the capital of EOX as held by the Company at the date of this Notice.
EOX	means Emerald Oil Inc (NYSE MKT: EOX).
Eligible Shareholder	a Shareholder on the Record Date who is therefore entitled to participate in the In Specie Distribution.
Explanatory Memorandum	means the explanatory memorandum attached to the Notice.
In Specie Distribution	means the in specie distribution of 1,662,174 EOX Shares held by the Company to Eligible Shareholders to be distributed in the ratio that 1,662,174 EOX Shares bears to the total number of Shares on issue at the Record Date, by way of equal capital reduction;
Income Statement	means the income statement for the relevant financial reporting periods as applicable.
Listing Rules	means the listing rules of ASX.
Meeting	the meeting of the Company the subject of this Notice.
Notice or Notice of Meeting	means the Notice of General Meeting accompanying this Explanatory Memorandum.

Proxy Form	means the proxy form attached to this Notice.
Option	means an option to acquire an ordinary fully paid share in the capital of the Company
PBTL	means PBTL Superannuation Fund Pty Ltd.
Pelagic	means Pelagic Capital Investments Limited.
Record Date	means the record date to determine the Eligible Shareholders for the In Specie Distribution to be determined and announced by the Company.
Resolution	means a resolution contained in the Notice.
Section 45B	has the meaning given to it in Section 1.7.
Share	means a fully paid ordinary share in the capital of the Company.
Shareholder	means the holder of a share.

ANNEXURE A - RISK FACTORS ASSOCIATED WITH EOX

Item 1A. Risk Factors

Described below are certain risks that we believe are applicable to our business and the oil and gas industry in which we operate. You should carefully consider the risks, uncertainties and other factors described below and all other information set forth in this Annual Report on Form 10-K, Any of the factors could materially and adversely affect our business, financial condition, operating results and prospects and cauld negatively impact the market price of our common stock. Also, you should be aware that the risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties, of which we are not yet aware, or that we currently consider to be immaterial may also impair our business operations.

We have a limited operating history, and may not be successful in sustaining profitable business operations.

We have a limited operating history. The business of acquiring, exploring for, developing and producing hydrocarbon reserves is inherently risky. We have a limited operating history for you to consider in evaluating our business and prospects. Our operations are therefore subject to all of the risks inherent in acquiring, exploring for, developing and producing hydrocarbon reserves, particularly in light of our limited experience in undertaking such activities. We may never overcome these obstacles.

Our business is speculative and dependent upon the implementation of our business plan and our ability to enter into agreements with third parties for the rights to exploit potential oil and natural gas reserves on terms that will be commercially viable for us.

Our lack of diversification will increase the risk of an investment in us and our financial condition and results of operations may deteriorate if we fall to diversify.

Our business is focused primarily on a limited number of properties in North Dakota and Montana. We may choose to limit our focus to a single geographic area such as the Williston Basin, which could limit our flexibility. We previously committed to joint ventures with third parties to acquire and develop acreage; we may continue to participate in joint ventures in the future, although we intend to focus on operating our own properties. Our required capital commitments may grow if the opportunity presents itself and depend upon the results of initial testing and development activities. Larger companies have the ability to manage their risk by diversification. However, we lack diversification in terms of both the nature and geographic scope of our business. As a result, we will likely be impacted more acutely by factors affecting our industry or the regions in which we operate than if our business were more diversified enhancing our risk profile. If we cannot diversify our operations, our financial condition and results of operations could deteriorate.

We have a history of losses which may continue and negatively impact our ability to achieve our business objectives.

We incurred net losses of \$62,296,099, \$1,345,054 and \$4,268,569 for the fiscal years ended December 31, 2012, 2011 and 2010, respectively. We cannot assure you that we can achieve or sustain profitability on a quarterly or amount basis in the future. Our operations are subject to the risks and competition inherent in the oil and natural gas industry. We cannot assure you that future operations will be profitable. Revenues and profits, if any, will depend upon various factors, including whether we will be able to increase our revenues. We may not achieve our business objectives and the failure to achieve such goals would have an adverse Impact on our business, financial condition and result of operations.

Strategic relationships upon which we may rely are subject to change, which may diminish our ability to conduct our operations.

Our ability to successfully acquire additional properties, to discover reserves, to participate in exploration opportunities and to dentify and enter into commercial arrangements with customers depend on developing and maintaining close working relationships with industry participants, our ability to select and evaluate suitable properties and to consummate transactions in a highly competitive environment. These realities are subject to change and may impair our ability to grow.

To further develop our business, we will endeavor to use the business relationships of our management to enter into strategic relationships, which may take the form of joint ventures with other private parties and contractual arrangements with other oil and natural gas comparies, including those that supply equipment and other resources that we will use in our business. Our ability to successfully operate joint ventures depends on a variety of factors, many of which will be entirely outside our control. We may not be able to establish strategic relationships, or if established, we may not be able to maintain them. In addition, the dynamics of our relationships with strategic partners may require us to incur expenses or undertake activities we would not otherwise be inclined to undertake in order to fulfill our obligations to these partners or maintain our relationships. If our strategic relationships are not established or maintained, our business prospects may be fimited, which could diminish our ability to conduct our operations.

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We own a significant amount of operated and non-operated acreage. Our development of successful operations on our operated acreage depends on the technical expertise of our team and is inherently affected by the geology of each prospect. Our non-operated acreage relies extensively on third-parties who, if not successful, could have a material adverse effect on our results of operation.

To date, we have only produced oil and natural gas from wells operated by third parties. As a result, we do not control the timing or success of the development, exploitation, production and exploration activities relating to our non-operated leasehold interests. If our consultants and drilling partners are not successful in such activities relating to our leasehold interests or are unable or unwilling to perform, our financial condition and results of operation could be materially adversely affected.

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Competition in obtaining rights to explore and develop oil and natural gas reserves and to market our production may impair our business.

The oil and natural gas industry is highly competitive. Other oil and natural gas companies may seek to acquire oil and natural gas leases and other properties and services we intend to target with our investments. This competition is increasingly intense as prices of oil and natural gas on the commodities markets rise. Additionally, other companies engaged in our line of business may compete with us from time to time in obtaining capital from investors or in funding joint ventures with our prospective partners. Competitors include a variety of potential investors and larger companies, which, in particular, may have access to greater resources, may be more successful in the recruitment and retention of qualified employees and may conduct their own refining and petroleum marketing operations, which may give them a competitive advantage. In addition, actual or potential competitors may be strengthened through the acquisition of additional assets and interests. If we are unable to compete effectively or adequately respond to competitive pressures, this inability may materially adversely affect our results of operation and financial condition.

We may not be able to effectively manage our growth, which may harm our profitability.

Our strategy envisions expanding our business. If we fail to effectively manage our growth, our financial results could be adversely affected. Growth may place a strain on our management systems and resources. We must continue to refine and expand our business development capabilities, our systems and processes and our access to financing sources. As we grow, we must continue to hire, train, supervise and manage new employees. We may not be able to:

* meet our capital needs;
· = expand our systems effectively or efficiently or in a timely manner;
· allocate our human resources optimally;
· I identify and hire qualified employees or retain valued employees; or
· incorporate effectively the components of any business that we may acquire in our effort to achieve growth.

If we are unable to marage our growth, our operations and our financial results could be adversely affected by inefficiency, which could diminish our profitability.

Our business may suffer if we do not attract and retain talented personnel.

Our success will depend in large measure on the abilities, expertise, judgment, discretion, integrity and good faith of our management and other personnel in conducting our business. We have a small management team, and the loss of key individuals or the inability to attract suitably qualified staff could materially adversely impact our business.

Our success depends on the ability of our management, employees and exploration partners to interpret market and geological data correctly and to interpret and respond to economic market and other conditions in order to locate and adopt appropriate investment opportunities, monitor such investments, and ultimately, if required, to successfully divest such investments.

Lower oil and natural gas prices, decreases in value of undeveloped acreage, lease expirations and material changes to our plans of development may cause us to record celling test write-downs.

We use the full cost method of accounting to account for our oil and natural gas operations. Accordingly, we capitalize the cost to acquire, explore for and develop oil and natural gas properties. Under full cost accounting rules, the net capitalized costs of oil and natural gas properties may not exceed a "full cost ceiling" which is based upon the present value of estimated future net cash flows. from proved reserves, including the effect of hedges in place, discounted at 10%, plus the lower of cost or fair market value of unproved properties. If at the end of any fiscal period we determine that the net capitalized costs of oil and natural gas properties exceed the full cost ceiling, we must charge the amount of the excess to carnings in the period then ended. This is called a "ceiling test. write-down." This charge does not impact cash flow from operating activities, but does reduce our net income and stockholders' equity. We recognized a ceiling test write-down for the year ended December 31, 2012 of approximately \$61.9 million and we may recognize write-downs in the future if commodity prices decline or if we experience substantial downward adjustments to our estimated proved reserves.

Our hedging activities could result in financial losses or could reduce our net income or increase our net loss, which may adversely affect our business.

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In order to manage our exposure to price risks in the marketing of our oil and natural gas production, we may enter into oil and natural gas price hedging arrangements with respect to a portion of expected production that we fund. Such transactions may limit our potential gains and increase our potential losses if oil and natural gas prices were to rise substantially over the price established by the hedge. In addition, such transactions may expose us to the risk of loss in certain circumstances, including instances in which:

· production is less than expected;

there is a widening of price differentials between delivery points for our production and the delivery point assumed in the hedge arrangement; or

the counterparties to our hedging agreements fail to perform under the contracts.

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Exploration for oil and natural gas is risky and may not be commercially successful, and the advanced technologies we and our operating partners use cannot eliminate exploration risk, which could impair our ability to generate revenues from our operations.

Our future success will depend on the success of our exploration, development and production program. Oil and natural gas exploration involves a high degree of risk. These risks are more acute in the early stages of exploration. Our ability to generate a return on our investments, revenues and our resulting financial performance are significantly affected by the prices we receive for oil and ratural gas produced from wells on our acreage. Especially in recent years, the prices at which oil and natural gas trade in the open market have experienced significant volatility, and will likely continue to fluctuate in the foresceable future due to a variety of influences including, but not limited to, the following:

domestic and foreign demand for oil and mannal gas by both refineries and end users;
the introduction of alternative forms of fuel to replace or compete with oil and natural uns;
domestic and foreign reserves and supply of oil and natural gas;
competitive measures implemented by our competitors and domestic and foreign governmental bodies;
weather conditions; and
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A significant decrease in oil and natural gas prices could also adversely impact our ability to raise additional capital to parsoe funre drilling activities.

Our expenditures on exploration may not result in new discoveries of oil or natural gas in commercially viable quantities. It is difficult to project the costs of implementing an exploratory drilling program due to the inherent uncertainties of drilling in unknown formations, the costs associated with encountering various drilling conditions, such as over-pressured zones and tools lost in the hole, and changes in drilling plans and locations as a result of prior exploratory wells or additional seismic data and interpretations thereof.

Even when used and properly interpreted, three-dimensional (3-D) seismic data and visualization techniques only assist geoscientists in identifying subsurface structures and hydrocarbon indicators. They do not allow the interpreter to know conclusively if hydrocarbors are present or economically producible. In addition, the use of 3-D seismic data becomes less reliable when used at increasing depths. We could incur losses as a result of expenditures on unsuccessful wells. If exploration costs exceed estimates, or if exploration efforts do not produce results which meet expectations, the exploration efforts may not be commercially successful, which could adversely impact our ability to generate revenues from our operations.

We may not be able to develop oil and natural gas reserves on an economically viable basis, and our reserves and production may decline as a result.

If we succeed in discovering oil and/or natural gas reserves, these reserves may not be capable of the production levels we project or in sufficient quantities to be commercially viable. On a long-term basis, our viability depends on our ability to find or acquire, develop and commercially produce additional oil and natural gas reserves. Without the addition of reserves through acquisition, exploration or development activities, our reserves and production will decline over time as reserves are produced. Our future reserves will depend not only on our ability to develop then-existing properties, but also on our operating partners' ability to identify and acquire additional suitable producing properties or prospects, to find markets for the oil and natural gas we may develop and to effectively distribute our production.

Future oil and natural gas exploration may involve unprofitable efforts, not only from dry wells, but from wells that are productive but do not produce sufficient net revenues to return a profit after drilling, operating and other costs. Completion of a well does not assure a profit on the investment or recovery of drilling, completion and operating costs. In addition, drilling hazards or environmental damage could greatly increase the cost of operations, and various field operating conditions may adversely affect the production from successful wells. These conditions include delays in obtaining governmental approvals or consents, shut-downs of connected wells resulting from extreme weather conditions, problems in storage and distribution and adverse geological and mechanical conditions. We will not be able to eliminate these conditions completely in any case. Therefore, these conditions could diminish our revenue and eash flow levels and result in the impairment of our oil and natural gas interests.

We may not be able to drill wells on a substantial portion of our acreage.

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We may not be able to drill on a substantial portion of our acreage for various reasons. We may not generate or be able to raise sufficient capital to do so. Future deterioration in commodities pricing may also make drilling some acreage uneconomic. Our actual drilling activities and future drilling budget will depend on drilling results, oil and natural gas prices, the availability and cost of capital, drilling and production costs, availability of drilling services and equipment, lease expirations, gathering system and pipeline transportation constraints, regulatory approvals and other factors. In addition, any drilling activities we are able to conduct may not be successful or add additional proved reserves to our overall proved reserves, which could have a material adverse effect on our finire business, financial condition and results of operations.

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Certain of our undeveloped leasehold acreage is subject to leases that will expire over the next several years unless production is established on units containing the acreage.

A large portion of our acreage is not currently held by production. Unless production in paying quantities is established on units containing these leases during their terms, these leases will expire. If our leases expire, we will lose our right to develop the related properties. Our drilling plans for these areas are subject to change based upon various factors, many of which are beyond our control, including drilling results, oil and natural gas prices, the availability and cost of capital, drilling and production costs, availability of drilling services and equipment, gathering system and pipeline transportation constraints, and regulatory approvals. Further, some of our acreage is located in sections where we do not hold the majority of the acreage and therefore it is likely that we will not be mmed operator of these sections. On our acreage that we do not operate, we have less control over the timing of drilling and there is therefore additional risk of expirations occurring in those sections.

Prices and markets for oil and natural gas are unpredictable and tend to fluctuate significantly, which could reduce profitability, growth and the value of our business.

Oil and natural gas are commodities whose prices are determined based on world demand, supply and other factors, all of which are beyond our control. World prices for oil and natural gas have fluctuated widely in recent years, and we expect that prices will fluctuate in the future. Price fluctuations will have a significant impact upon our revenue, the return from our reserves and on our financial condition generally. Price fluctuations for oil and natural gas commodities may also impact the investment market for companies engaged in the oil and natural gas industry. Prices may not remain at current levels. Decreases in the prices of oil and matani gas may have a material adverse effect on our financial condition, the liture results of our operations and quantities of reserves recoverable on an economic basis.

Penalties we may incur could impair our business.

Failure to comply with government regulations could subject us to civil and criminal penalties, could require us to forfeit property rights, and may affect the value of our assets. We may also be required to take corrective actions, such as installing additional equipment or taking other actions, each of which could require us to make substantial capital expenditures. We could also be required to indemnify our employees in connection with any expenses or liabilities that they may incur individually in connection with regulatory action against them. As a result, our future business prospects could deteriorate due to regulatory constraints, and our profitability could be impaired by our obligation to provide such indemnification to our employees.

We and our operating partners may have difficulty distributing our production, which could harm our financial condition.

In order to sell the oil and natural gas that we are able to produce, we and the operators of our non-operated wells may have to make arrangements for storage and distribution to the market. We will rely on local infrastructure and the availability of transportation for storage and shipment of our products, but infrastructure development and storage and transportation facilities may be insufficient for our needs at commercially acceptable terms in the localities in which we operate. This situation could be particularly problematic to the extent that our operations are conducted in remote areas that are difficult to access, such as areas that are distant from shipping and/or pipeline facilities. These factors may affect our ability to explore and develop properties and to store and transport our oil and natural gas production and may increase our expenses.

Furthermore, weather conditions or natural disasters, actions by companies doing business in one or more of the areas in which we will operate, or labor disputes may impair the distribution of oil and/or natural gas and in turn diminish our financial condition or ability to maintain our operations.

We may be unable to obtain additional capital that we will require to implement our business plan, which could restrict our ability to grow.

We expect that our cash position, revenues from oil and returnal gas sales, proceeds from our recent preferred stock offering, and availability on our credit facility will be sufficient to find our 2013 drilling program.

Our credit facility limits our borrowings to the lesser of the borrowing base and the total commitments. Our borrowing base was \$27.5 million as of December 31, 2012. Our borrowing base is determined semi-annually, and may also be redetermined at the election of us or the banks between the scheduled redeterminations. Lower oil and natural gas prices may result in a reduction in our borrowing base at the next redetermination. A reduction in our borrowing base could require ut to repay any indebtedness in excess. of the borrowing base. Additionally, our credit facility contains coverants limiting our ability to incur additional indebtedness and requiring us to maintain certain financial ratios.

Future acquisitions and future exploration, development, production and marketing activities, as well as our administrative requirements (such as salaries, insurance expenses and general overhead expenses, as well as legal compliance costs and accounting expenses) will require a substantial amount of capital and cash flow.

We may pursue sources of additional capital through various financing transactions or arrangements, including joint venturing of projects, debt financing, equity financing or other means. We may not be successful in identifying suitable financing transactions in the time period required or at all, and we may not obtain the capital we require by other means. If we do not succeed in raising additional capital, our resources may not be sufficient to fund our planned expansion of operations in the future.

Any additional capital raised through the sale of equity will dilute the ownership percentage of our shareholders. Raising any such capital could also result in a decrease in the fair market value of our equity securities because our assets would be owned by a larger pool of outstanding equity. The terms of securities we issue in future capital transactions may be more favorable to our new investors, and may include preferences, superior voting rights and the issuance of other derivative securities. In addition, we have granted and will continue to grant equity incentive awards under our equity incentive plans, which may have a further dilutive effect.

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Our ability to obtain financing, if and when necessary, may be impaired by such factors as the capital markets (both generally and in the oil and natural gas industry in particular), our limited operating history, the location of our oil and natural gas properties and prices of oil and natural gas on the commodities markets (which will impact the amount of asset-based financing available to us) and the departure of key employees. Further, if oil or natural gas prices on the commodities markets decline, our revenues will likely decrease and such decreased revenues may increase our requirements for capital. If the amount of capital we are able to raise from financing activities, together with our revenues from operations, is not sufficient to satisfy our capital needs (even to the extent that we reduce our operations), we may be required to cease our operations, divest our assets at unattractive prices or obtain financing on unattractive terms.

We may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees, securities law compliance fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, which may adversely impact our financial condition.

Estimates of proved oil and natural gas reserves are uncertain and any material inaccuracies in these reserve estimates will materially affect the quantities and the value of our reserves.

This Annual Report on Form 10-K contains estimates of our proved oil and natural gas reserves. These estimates are based upon various assumptions, including assumptions required by the SEC relating to oil and natural gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds. The process of estimating oil and mutural gas reserves is complex. This process requires significant decisions and assumptions in the evaluation of available geological, geophysical, engineering and economic data for each reservoir. Therefore, these estimates are inherently imprecise. Actual funge production, oil and natural gas prices, revenues, taxes, development expenditures, operating expenses and quantities of recoverable oil and natural gas reserves will vary from those estimated. Any significant variance could materially affect the estimated quantities and the value of our reserves. Our properties may also be susceptible to hydrocarbon drainage from production by other operators on adjacem properties. In addition, we may adjust estimates of proved reserves to reflect production history, results of exploration and development, prevailing oil and natural gas prices and other factors, many of which are beyond our control.

At December 31, 2012, approximately 63% of our estimated reserves were classified as proved undeveloped. Recovery of proved undeveloped reserves requires significant capital expenditures and successful drilling operations. The reserve data assumes that we will make significant capital expenditures to develop our reserves. Although we have prepared estimates of these oil and natural gas reserves and the costs associated with development of these reserves in accordance with SEC regulations, actual capital expenditures will likely vary from estimated capital expenditures, development may not occur as scheduled and actual results may not be as estimated.

Our ability to sell our production and/or receive market prices for our production may be adversely affected by transportation capacity constraints and interruptions.

If the amount of oil or natural gas being produced by us and others exceeds the capacity of the various transportation pipelines and gathering systems currently available in our operating areas, it will be necessary for new transportation pipelines and gathering systems to be built. Or, in the case of oil and condensate, it will be necessary for us to rely more heavily on tracks to transport our production, which is more expensive and less efficient than transportation via pipeline. Currently, we anticipate that additional pipeline capacity will be required in the Bakken and Three Forks formations to transport oll and condensate production, which increased substantially during 2012 and is expected to continue to increase. The construction of new pipelines and guihering systems is capital intensive and construction may be postponed, interrupted or cancelled in response to changing economic conditions and the availability and cost of capital. In addition, capital constraints could limit our ability to build gathering systems to transport our production to transportation pipelines. In such event, costs to transport our production may increase materially or we might have to shat in our wells awaiting a pipeline connection or capacity and/or sell our production at much lower prices than market or than we currently project, which would adversely affect our results of operations. A portion of our production may also be interrupted, or shut in, from time to time for numerous other reasons, including as a result of weather conditions, accidents, loss of pipeline or gathering system access, field labor issues or strikes, or we might voluntarily curtail production in response to market conditions.

Environmental risks may adversely affect our business.

All phases of the oil and natural gas business present environmental risks and hazards and are subject to environmental regulation pursuant to a variety of federal, state and municipal laws and regulations. Environmental legislation provides for, among other things, restrictions and prohibitions on spills, releases or emissions of various substances produced in association with oil and mural gas operations. Legislation also requires that wells and facility sites be operated, maintained, abandoned and reclaimed to the satisfaction of applicable regulatory authorities. Compliance with such legislation can require significant expenditures and a breach may result in the imposition of fines and penalties, some of which may be material. Environmental legislation is evolving in a manner in which we

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expect may result in stricter standards and enforcement, larger fines and liability and potentially increased capital expenditures and operating costs. The discharge of oil, natural gas or other pollutants into the air, soil or water may give rise to liabilities to governments and third parties and may require us to incur costs to remedy such discharge. The application of environmental laws to our business may cause us to curtail our production or increase the costs of our production, development or exploration activities.

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Federal or state hydraulic fracturing legislation could increase our costs or restrict our access to oil and natural gas reserves.

Hydraulic fracturing using fluids other than diesel is currently exempt from regulation under the federal Safe Drinking Water Act, but opponents of hydraulic fracturing have called for further study of the technique's environmental effects and, in some cases, a moratorium on the use of the technique, Several proposals have been submitted to Congress that, if implemented, would subject all hydraulic fracturing to regulation under the Safe Drinking Water Act. Further, the EPA's Office of Research and Development (ORD) is conducting a scientific study to investigate the possible relationships between hydraulic fracturing and drinking water. The results of that study could advance the development of additional regulations. Apart from federal regulatory initiatives, states have been considering or implementing new requirements for hydraulic fracturing, including restricting its use in environmentally sensitive areas. Similarly, some localities have significantly limited or prohibited drilling activities, or are considering doing so.

Although it is not possible at this time to predict the final outcome of the ORD's study or the requirements of any additional federal or state legislation or regulation regarding hydraulic fracturing, any new federal, state, or local restrictions on hydraulic fracturing. that may be imposed in areas where we conduct business, such as the Bakken and Three Forks areas, could significantly increase our operating, capital and compliance costs as well as delay or halt our ability to develop oil and natural gas reserves. See Item 1. Business - Governmental Regulation and Environmental Matters - Hydraulic Fracturing.

Possible regulation related to global warming and climate change could have an adverse effect on our operations and demand for oil and natural gas.

Significant studies and research have been devoted to climate change and global warming, and climate change has developed into a major political issue in the United States and globally. Certain research suggests that greenhouse gas emissions contribute to elimate change and pose a threat to the environment. Recent scientific research and political debate has focused in part on carbon dioxide and mediane incidental to oil and natural gas exploration and production. Many states and the federal government have imposed requirements directed at controlling greenhouse gas emissions, and future legislation and regulation could impose additional restrictions or obligations in connection with our drilling and production activities and favor use of alternative energy sources, which could increase our operating costs or reduce the demand for petroleum products. As such, our business could be materially adversely affected by domestic and international legislation targeted at controlling climate change.

Title to the properties in which we have an interest may be impaired by title defects.

Title to oil and natural gas interests is often not capable of conclusive determination without incurring substantial expense. Title defects may exist in many of our oil and natural gas interests. In addition, we may be unable to obtain adequate insurance for title defects on a commercially reasonable basis or at all. If title defects do exist, it is possible that we may lose all or a portion of our right, title and interests in and to the properties to which the title defects relate. If our property rights are reduced, our ability to conduct our exploration, development and production activities may be impaired.

Federal legislation could have an adverse impact on our ability to use derivative instruments to reduce the effects of commodity prices, interest rates and other risks associated with our business.

Historically, we have entered into a namber of commodity derivative contracts in order to hedge a portion of our oil and natural gas production and, periodically, interest expense. The Dodd-Frank Act, which was passed by Congress and signed into law in July 2010, provides for statutory and regulatory requirements for certain derivative transactions, which are broadly referred to as "swaps" and which include oil and gas hedging transactions and interest rate swaps. Swaps designated by the Commodities Futures Trading Commission (CFTC) and swaps within certain classes of swaps designated by the CFTC will be required to be submitted for clearing on a derivative clearing organization and, if accepted for clearing, cleared on the derivative clearing organization. Transactions in swaps accepted for clearing must be executed on a board of trade designated as a contract market or a swap execution facility if such swaps are made available for trading on such a board of trade or swap execution facility. The Dodd-Frank Act provides an exception from application of the Act's clearing requirement that commercial end-users may elect for swaps they use to hedge or mitigate commercial risks. Although we believe we will be able to elect such exception with respect to most, if not all, of our swaps, if we cannot do so with respect to many of the swaps we enter into, our ability to execute our hedging program efficiently will be adversely affected. In addition, any of our existing swaps, as well as swaps that we enter before such swaps become subject to the clearing requirement, that fall within a class of swaps becoming subject to the clearing requirement will have to be submitted for clearing unless we meet certain reporting requirements.

We anticipate that, under regulations adopted under the Dodd-Frank Act and relevant derivative clearing organization and other rules, if we do not qualify as a commercial end-user we will be required to post cash collateral for those of our derivative transactions constituting swaps (including our interest rate swaps and commodities-related swaps) that we need to clear on a derivative clearing organization. Moreover, the CFTC and the federal regulators of banks and other financial institutions have

proposed regulations imposing margin requirements for non-cleared swaps that, if adopted, could require us to post cash or other types of collateral for our non-cleared swaps, if any, from time to time in certain circumstances. Posting cash collateral or margin with respect to our swaps could cause liquidity issues for us by reducing our ability to use our cash for capital expenditures or other partnership purposes. A requirement to post cash collateral or margin could therefore reduce our ability to execute strategic hedges to reduce commodity price uncertainty and, thus, to protect cash flows. In addition, even if we are not required to post cash collateral or margin for our swaps, the banks and other derivatives dealers who are the contractual counterparties to our swaps will be required to comply with the Dodd-Frank Act's requirements, and the costs of their compliance will likely be passed on to customers, including us, thus increasing our costs of engaging in hedging transactions, decreasing the benefits of those transactions to us and reducing our cash flows. If we reduce our use of derivatives as a result of the new legislation and regulations, our results of operations may become more volatile and our cash flows may be less predictable, which could adversely affect our ability to plan for and fund capital expenditures. Increased volatility may make us less attractive to certain types of investors. Finally, the Dodd-Frank Act was intended, in part, to reduce the volatility of oil and natural gas prices, which some legislators attributed to speculative trading in derivatives and commodity instruments related to oil and natural gas. If the legislation and regulations result in lower commodity prices, our revenues could be adversely affected. Any of these consequences could adversely affect our business, financial condition and results of operations.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results could be harmed. We cannot be certain that our efforts to maintain our internal controls will be successful, that we will be able to maintain adequate controls over our financial processes and reporting in the future or that we will be able to continue to comply with our obligations under Section 404 of the Sarbanes-Oxley Act of 2002. Any failure to maintain effective internal controls, or difficulties encountered in implementing or improving our internal controls, could harm our operating results or cause us to fail to meet certain reporting obligations.

We will rely on technology to conduct our business and our technology could become ineffective or obsolete.

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We rely on technology, including geographic and seismic analysis techniques and economic models, to develop our reserve estimates and to guide our exploration, development and production activities. We will be required to continually enhance and update our technology to maintain our efficacy and to avoid obsolescence. The costs of doing so may be substantial, and may be higher than the costs that we anticipated for technology maintenance and development. If we are unable to maintain the efficacy of our technology, our ability to manage our business and to compete may be impaired. Further, even if we are able to maintain technical effectiveness, our technology may not be the most efficient means of reaching our objectives, in which case we may incur higher operating costs than we would were our technology more efficient.

ANNEXURE B - RIGHTS ATTACHING TO EOX SHARES

DESCRIPTION OF CAPITAL STOCK

The following is a summary description of the rights of our common stock and preferred stock and related provisions of our articles of incorporation and our bylaws. The following description of our capital stock is intended as a summary only and is qualified in its entirety by reference to our articles of incorporation and our bylaws, which are filed as exhibits to the registration statement, of which this prospectus forms a part, and to the applicable provisions of Montana law.

Common Stock

Our articles of incorporation authorizes 200,000,000 shares of common stock, par value \$0.001 per share. As of May 11, 2012, we had 58,448,431 shares of common stock outstanding. Each share of our common stock emittes its holder to one vote on all matters to be voted on by the stockholders. Except for the election of directors, which is determined by a plurality vote, and unless otherwise required by Montana law, all matters to be voted on by stockholders must be approved by a majority of the votes entitled to be cast by the holders of our common stock present in person or represented by proxy, voting as a single class. Except as otherwise provided by law or in our articles of incorporation, and subject to any voting rights granted to holders of any then outstanding preferred stock and the powers of our board of directors to amend our bylaws, amendments to our articles of incorporation and our bylaws must be approved by a majority of the votes entitled to be cast by the holders of our common stock, voting as a single class. Holders of our common stock are entitled to curonlate their votes in the election of directors. Each of our directors will be elected annually by our stockholders voting as a single class. Holders of our common stock are not entitled to preemptive rights, and our common stock is not subject to redemption or conversion. There are no redemption or sinking fund provisions applicable to our common stock. Subject to preferences that may apply to shares of preferred stock outstanding at the time, the holders of outstanding shares of our common stock are entitled to receive dividends out of assets legally available at the time if, as and when declared by our board of directors. Upon the liquidation, dissolution or winding-up of the company, the holders of our common stock are entitled to share in all assets remaining after payment of all our debts and other liabilities and the liquidation preferences of any then outstanding preferred stock. All abares of our common stock currently outstanding are fully paid and non-assessable.

Preferred Stock

Our articles of incorporation authorizes 200,000 shares of preferred stock, par value \$0.001 per share. As of May 11, 2012, we had no shares of preferred stock outstanding. Our board of directors has the authority, without action by our stockholders, to designate and issue our preferred stock in one or more series and to designate the rights, preferences and privileges of each series, which may be greater than the rights of our common stock. It is not possible to state the actual effect of the issuance of any shares of our preferred stock upon the rights of holders of our common stock until our board of directors determines the specific rights of the holders of our preferred stock. However, the effects might include, among other things, restricting dividends on our common stock, diluting the voting power of our common stock, impairing the liquidation rights'of our common stock, or delaying or preventing a change in control of the company without further action by our stockholders.

Anti-Takeover Provisions of our Articles of Incorporation and Bylaws

The provisions of Montana law and our articles of incorporation and bylaws we summarize below may have an anti-takeover effect and may delay, defer or prevent a tender offer or takeover attempt that a stockholder might consider in his or her best interest, including those attempts that might result in a premium over the market price for the common stock.

Written Consent of Stockholders. Our bylaws provide that any action required or permitted to be taken by our stockholders may be taken at a duly called meeting of stockholders or by the written consent of 100% of the outstanding voting power.

Special Meetings of Stockholders. Our bylaws provide that special meetings of the stockholders may be called by our board of directors or at the written demand of 10% of the shares outstanding and entitled to vote.

Advance Notice Procedure for Shareholder Proposals. Our bylaws establish an advance notice procedure for the nomination of candidates for election as directors as well as for stockholder proposals to be considered at annual meetings of stockholders. These procedures may operate to limit the ability of stockholders to bring business before a stockholders' meeting, including with respect to the nomination of directors or considering any transaction that could result in a change of control.

Limitation of Liability of Directors. Our articles of incorporation provides that no director shall be personally liable to the company or its stockholders for monetary damages for breach of fiduciary duty as a director to the fullest extent permitted under Montana law. The effect of these provisions is to eliminate ours and our stockholders' rights, through derivative suits on our behalf. to recover monetary damages against a director for a breach of fiduciary duty as a director.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is Wells Fargo Shareowner Services.

Market Information

Our common stock is listed on the NYSE Amex under the symbol "VOG."

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ANNEXURE C - AUDITED FINANCIAL STATEMENTS OF EOX

EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.) CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31,

	2012	2011
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	\$10,192,379	13,927,267 s
Trade Receivables	12,573,156	3,247,412
Other Receivables	1,133,849
Prepaid Expenses and Other Current Assets	103,173	48,330
Total Current Assets	24,002.557	17,223,009
PROPERTY AND EQUIPMENT
Oil and Natural Gas Properties, Full Cost Method
Proved Oil and Natural Gas Properties	167,618,422	60,425,243
Unproved Oil and Natural Gas Properties	61,454,831	32,180,217
Other Property and Equipment	385,023	176,238
Total Property and Equipment	229,458,276	92,781,698
Less - Accumulated Depreciation, Depletion and Amortization	(80,230,517)	(5,505,288)
Total Property and Equipment, Net-	149,227,759	87,276,410
Prepaid Drilling Costs	100,193	33,163
Fair Value of Commodity Derivatives	25,397
Debt Issuance Costs, Net of Amortization t à	269,681	306,839
Other Non-Current Assets	260,775
Total Assets	\$173,886,362	\$104,839,421
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable	39,169,037 s	10,375,239 s
Fair Value of Commodity Derivatives	206,645
Accrued Expenses	420,521	206,122
Total Current Liabilities	39,796,203	10,581,361
LONG-TERM LIABILITIES
Revolving Credit Facility	23,500,000
Senior Secured Promissory Notes		15,000,000
Asset Retirement Obligations	296,074	116,119
Total Liabilities	63,592,277	25,697,480
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred Stock - Par Value \$.001; 20,000,000 Shares Authorized; None Issued or Outstanding
Common Stock, Par Value \$.001; 500,000,000 Shares Authorized, 24,734,643 and 8,264,062
Shares Issued and Outstanding, respectively	24,735	8,264
Additional Paid-In Capital Accumulated Deficit	180,439,530	87,007,758
	(70, 170, 180) 110.294.085	(7,874,081) 79,141,941
Total Stockholders' Equity
", Total Liabilities and Stockholders' Equity	\$173,886,362	\$104,839,421
The accompanying notes are an integral part of these financial statements.

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EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.) CONSOLIDATED STATEMENTS OF OPERATIONS

		Year Ended December 31,
	2012	2011	2010
REVENUES
Oil and Natural Gas Sales	28,129,985	8,426,129	942,840
Loss on Commodity Derivatives	(215, 439)
Total Revenues	27,914,546	8,426,129	942,840
OPERATING EXPENSES
Production Expenses	2,727,133	726,946	26,686
Production Taxes	2,955,015	717,440	102,743
General and Administrative Expenses	12,903,845	2,686,176	1,778,161
Depletion of Oil and Natural Gas Properties	12,770,718	3.546,466	547,844
Impairment of Oil and Natural Gas Properties	61,900,692		1,377,188
Depreciation and Amortization	53,818	30,831	2,929
Accretion of Discount on Asset Retirement Obligations	14,988	4,882	358
Gain on Acquisition of Business, Net	(5,758,048)
Total Expenses	87,568,161	7,712,741	3,835,909
INCOME (LOSS) FROM OPERATIONS	(59, 653, 615)	713,388	(2,893,069)
OTHER INCOME (EXPENSE)
Merger Costs			735,942
Interest Expense	(2,614,240)	(2,036,032)	(629, 026)
Other Income (Expense)	(28, 244)	(22, 410)	54,708
Total Other Income (Expense), Net	(2,642,484)	(2,058,442)	(1,310,260)
LOSS BEFORE INCOME TAXES	(62, 296, 099)	(1,345,054)	(4, 203, 329)
INCOME TAX PROVISION			65,240
NET LOSS	(62, 296, 099)	(1,345,054)	(4,268,569)
Net Loss Per Common Share - Basic and Diluted	(4.91)	(0.17) s	(0.79)
Weighted Average Shares Outstanding - Basic and Diluted	12,699,544	8,012,158	5,434,084

The accompanying notes are an Integral part of these financial statements.

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(FORMERLY VOYAGER OIL & GAS, INC.) CONSOLIDATED STATEMENTS OF CASH FLOWS

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	2012	2011	2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	S (62,296,099) S	$(1,345,054)$ \$	(4.268, 569)
Adjustments to Reconcile Net Loss to Net Cash Provided By (Used For)
Operating Activities:
Depletion of Oil and Natural Gas Properties	12,770,718	3,546,466	547,844
Impairment of Oil and Natural Gas Properties	61,900,692		1,377,188 2,929
Depreciation and Amortization	53,818	30,831	46,448
Amortization of Premium on Bonds Amortization of Debt Discount		163,356	61,664
Amortization of Debt Issuance Costs	1,929,561	82,191
Loss on Disposal of Property and Equipment			34,305
Accretion of Discount on Asset Retirement Obligations	14,988	4,882	358
Gain on Sale of Available for Sale Securities			(1,520)
Unrealized Loss on Derivative Instruments	181,248
Gain on Acquisition of Business	(7, 213, 835)
Share-Based Compensation Expense	7,318,690	728,546	882,804
Changes in Assets and Liabilities:
Increase in Trade Receivables	(9.325.744)	(2,951,591)	(295, 821)
Increase in Other Receivables	(1, 133, 849)
(Increase) Decrease in Prepaid Expenses and Other Current Assets	(54, 843)	90,123	198,350
Increase in Other Non-Current Assets	(100, 100)
Increase (Decrease) in Accounts Payable	30,123	(319,349)	411,469
- Increase (Decrease) in Accrued Expenses	214,399	(183, 557)	(163, 083)
Net Cash Provided By (Used For) Operating Activities ĸ.	4,289,767	(153.156)	(1,165,634)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash Received from Merger Agreement			17,413,845
Cash Received on Note Receivable			500,000
Purchases of Other Property and Equipment	(172, 785)	(157, 892)	(598)
Prepaid Drilling Costs	(67,030)	460,497	(493, 660)
Proceeds from Sales of Available for Sale Securities		242,070	9,769,881
Investment in Oil and Natural Gas Properties	(66, 212, 818)	(44, 052, 953)	(30,934,671)
Net Cash Used For Investing Activities	(66, 452, 633)	(43, 508, 278)	(3,745,203)
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Issuance of Common Stock - Net of Issuance Costs		46,602,251	779,240
Proceeds from Issuance of Serior Secured Promissory Notes	72,167,012		14,775,000
Advances on Revolving Credit Facility and Term Loun	56,530,730
Payments on Revolving Credit Facility and Term Loan	(33,030,730)
Payments of Senior Secured Promissory Notes	(15,000,000)
Payment of Assumed Liabilities	(20, 303, 903)
Cash Paid for Debt Issuance Costs	(1,935,131)	(389,030)
Proceeds from Exercise of Stock Options and Warrants		16,960	23,854
Net Cash Provided by Financing Activities	58,427,978	46,230,181	15,578,094
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(3,734,888)	2,568,747	(10,667,257)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	13,927,267	11,358,520	691,263
CASH AND CASH EQUIVALENTS - END OF PERIOD	\$10,192,379	13,927,267	\$11,358,520
Supplemental Disclosure of Cash Flow Information
Cash Paid During the Period for Interest	s
	1,154,943	1,800,000	s 380,933
Cash Paid During the Period for Income Taxes	s		65,240
Non-Cash Financing and Investing Activities:
Oil and Natural Gas Properties Included in Account Payable	\$38,973,137	10,252,407 s	95,576 s
Stock-Based Compensation Capitalized to Oil and Natural Gas Properties 5	582,040	418,414	s

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Capitalized Asset Retirement Obligations	164,967	10,164
Purchases through Issuance of Common Stock or Assumption of Liabilities:
Oil and Natural Gas Properties	40,787,238	2,358,900
Other Property and Equipment	36,000
Other Non-Current Assets	75,000
Non-Cash Acquisition of Business Amounts:
Fair Market of Common Stock Issued	13,380,501
Debt Assumed	20,303,903

The accompanying notes are an integral part of these financial statements.

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010

	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit
	Shares		Amount
Balance - December 31, 2009 Sale of 114,624 Common Shares at	2,619,915	s	2,620	s	7,683,956	6,486	$$(2,260,458)$ S	5,432,604
\$7.42 Per Share Issued 25,217 Common Shares	114,624		115		846,885			847,000
related to Capital Raise Private Placement Cost Net of	25,217		25		(25)
Common Shares Issued Issued Pursuant to Exercise of					(67,760)			(67,760)
Warrants Restricted Stock Grant	29,772		30		770			800
Compensation Compensation Related to Stock					57,376			57,376 120,770
Warrant Grants Issued 319,229 Common Shares for Leaseholds Interests			319		120,770 2,358,581			2,358,900
Balance Immediately Before	319,229
Reverse Acquisition with			3,109		11,000,553	6,486	(2,260,458)	8,749,690
Ante4, Inc. Acquisition of Ante4, Inc.	3,108,757 3,041,762		3,041		27,515,436			27,518,477
Balance Immediately After Reverse Acquisition with	6,150,519		6,150		38,515,989	6,486	(2,260,458)	36,268,167
Ante4, Inc. Issuance Pursuant to Exercise of Options	5,715		6		23,048			23,054
Issued Pursuant to Exercise of Warrants	321,542		321		(321)
Restricted Stock Grant Compensation					172,128			172,128
Compensation Related to Stock Warrant Grants					362.311			362.311
Director Fees Related to Stock Option Grants					170,219			170,219
Net Change in Unrealized Gains on Available for Sale Investments						(6, 486)		(6, 486)
Net Loss							(4,268,569)	(4,268,569)
Balance - December 31, 2010 Issuance Pursuant to Exercise of	6,477,776		6.477		39,243,374		(6, 529, 027)	32,720,824
Options Net Proceeds from Equity Offering	572 1,785,714		1,786		16,959 46,600,465			16,960 46,602,251
Restricted Stock Grant Compensation Compensation Related to Stock					226,318			226,318
Warrant and Option Grants Director Fees Related to Stock					649,694			649,694
Option Grants Net Loss					270,948		(1.345, 054)	270,948
								(1,345,054)

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Balance - December 31, 2011	8,264,062	8.264	87,007,758	(7,874,081)	79,141,941
Common Shares Issued as Compensation	910,296	910	3,837,212
Restricted Stock Grants	74,285	74			3,838,122
			(74)
Restricted Stock Forfeited	(53, 572)	(53)	53
Restricted Stock Grant
Compensation			1,178,559		1,178,559
Compensation Related to Stock
Option Grants			1,779,901		1,779,901
Director Fees Related to Stock
Option Grants			1,104,147		1,104,147
Issuance of Common Shares for the Acquisition of Emerald Oil
North America, Inc.	1,662,174	1.662	13,378,839		13,380,501
Net Proceeds from Equity
Offering	13,877,555	13,878	72,153,134		72,167,012
Reverse Split Reconciliation Due
to Fractional Shares	(157)
Net Loss				(62,296,099)	(62, 296, 099)
Balance - December 31, 2012	24,734,643	24,735	\$180,439,530		\$(70,170,180) \$110,294,085

The accompanying notes are an integral part of these financial statements.

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Notes to Consolidated Financial Statements

NOTE 1 ORGANIZATION AND NATURE OF BUSINESS

Description of Operations - Emerald Oil, Inc. (formerly Voyager Oil & Gas, Inc.), a Montana corporation (the "Company"), is an independent oil and maaral gas exploration and production company engaged in the business of acquiring acreage in prospective mittenl resource plays within the continental United States ("U.S."), primarily focused on the Williston Basin located in North Dakota und Montana. The Company also holds acreage in other emerging oil plays in Colorado, Wyoming and Montana. The Company seeks to accumulate acreage that builds net asset value by growing reserves and converting undeveloped assets into producing wells in repeatable and scalable shale oil plays.

The Company has historically participated in well development as a non-operator and is in the process of building operations to plan and design well development as an operator on acreage where a controlling interest is held. The Company had 14 employees as of December 31, 2012 and retains independent contractors to assist in operating and managing its prospects as well as to carry out the principal and necessary functions incidental to the oil and natural gas business. With the acquisition of Emerald Oil North America, Inc., formerly known as Emerald Oil, Inc. ("Emerald Oil North America") on July 26, 2012 (see Note 3 - Acquisition of Business), the Company has added executive management that is experienced in well development and intends to build on these capabilities internally and through partnering with others to leverage best practices. Production from oil wells has increased significantly, and the Company intends to add to this production by operating its own wells, while continuing to participate as a non-operator in wells managed by other operators.

NOTE 2 SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

Reverse Stock Split

The Company's board of directors approved a 1-for-7 reverse stock split pursuant to which all alureholders of record received one share of common stock for each seven shares of common stock owned (subject to minor adjustments as a result of fractional shares). On October 22, 2012, a majority of the Company's shareholders approved the reverse stock split. This reverse stock split docreased the issued and outstanding shares by approximately 140,339,000, the outstanding warrants by approximately 6,700,000 and the outstanding stock options by approximately 4,100,000. GAAP requires that the reverse stock split be applied retrospectively to all periods presented. As a result, all suck, warrant and option transactions described herein have been adjusted to reflect the 1-for-7 reverse stock split.

Cash and Cash Equivalents

The Company considers highly liquid investments with insignificant interest rate risk and original maturities of three months or less to be cash equivalents. Cash equivalents consist primarily of interest-bearing bank accounts and money market funds. The Company's cash positions represent assets held in checking and money market accounts. These assets are generally available to the Company on a daily or weekly basis and are highly liquid in rature. All of the Company's non-interest bearing cash accounts were fully insured at December 31, 2012 due to a temporary federal program in effect from December 31, 2010 through December 31, 2012. Under the program, there is no limit to the amount of insurance for eligible accounts. Beginning 2013, insurance coverage will revert to \$250,000 per depositor at each financial institution, and the Company's non-interest bearing cash balances may then exceed federally insured limits. In addition, the Company is subject to Security Investor Protection Corporation protection on a vast majority of its financial assets in the event one of the brokerage firms that the Company utilizes for its investments fails.

Full Cost Method

The Company follows the full cost method of accounting for oil and natural gas operations whereby all costs related to the exploration and development of oil and natural gas properties are initially capitalized into a single cost center ("fial cost pool"). Such costs include land acquisition costs, a portion of employee salaries related to property development, geological and geophysical expenses, carrying charges on non-producing properties, costs of drilling directly related to acquisition, and exploration activities. For the years ended December 31, 2012, 2011 and 2010, the Company capitalized \$842,418, \$526,630 and \$0, respectively, of internal salaries, which included \$582,040, \$418,414 and \$0, respectively, of stock-based compensation. Internal salaries are

capitalized based on employee time allocated to the acquisition of leaseholds and development of oil and natural gas properties. The Company capitalized interest of \$362,688 for the year ended December 31, 2012. The Company did not capitalize interest for the years ended December 31, 2011 and 2010.

Proceeds from property sales will generally be credited to the full cost pool, with no gain or loss recognized, unless such a rale would significantly alter the relationship between capitalized costs and the proved reserves attributable to these costs. The Company has had no property sales since inception, but has a sale pending in the Sand Wash Basin (see Note 16 - Subsequent Events) and engages in acreage trades in the Williston Basin.

The Company assesses all items classified as unevaluated property on a quarterly basis for possible impairment or reduction in value. The assessment includes consideration of the following factors, among others: intent to drill, remaining lease term, geological and geophysical evaluations, drilling results and activity, the assignment of proved reserves, and the economic viability of development if proved reserves are assigned. During any period in which these factors indicate an impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and are then subject to depletion and amortization. For the years ended December 31, 2012 and 2011, the Company included \$3,625,209 and \$6,983,125, respectively, related to expiring leases within costs subject to the depletion calculation.

Capitalized costs associated with impaired properties and properties having proved reserves, estimated future development costs, and asset retirement costs under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 410-20-25 are depleted and amortized on the unit-of-production method based on the estimated gross proved reserves. The costs of unproved properties are withheld from the depletion base until such time as they are either developed, impaired, or abandoned.

Under the full cost method of accounting, capitalized oil and ratural gas property costs less accumulated depletion, net of deferred. income taxes, may not exceed a ceiling amount equal to the present value, discounted at 10%, of estimated future net revenues from proved oil and gas reserves plus the cost of unproved properties not subject to amortization (without regard to estimates of fair value), or estimated fair value, if lower, of unproved properties that are subject to amortization. Should capitalized costs exceed this ceiling, which is tested on a quarterly basis, an impairment is recognized. The present value of estimated future net revenues was computed by applying prices based on a 12-month arithmetic average of the oil and natural gas prices in effect on the first day of each month-less estimated future expenditures to be incurred in developing and producing the proved reserves (assuming the continuation of existing economic conditions), less any applicable future taxes. Based on calculated reserves at December 31, 2012, 2011 and 2010, the unamortized costs of the Company's oil and natural gas properties exceeded the ceiling test limit by \$51,709,458, \$0 and \$1,377,188, respectively. The Company also recognized that oil and natural gas properties exceeded the ceiling test limit as of June 30, 2012 by \$10,191,234. As a result, the Company was required to record impairment of the net capitalized costs of its oil and ratural gas properties in the amount of \$61,900,692, \$0 and \$1,377,188, for the years ended December 31, 2012, 2011 and 2010 respectively.

Oil and Natural Gas Reserve Ouuntities

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Emerald's estimate of proved reserves is based on the quantities of oil and natural gas that engineering and geological analyses demonstrate, with reasonable certainty, to be recoverable from established reservoirs in the future under current operating and cconomic parameters. Pressler Petroleum Consultants, Inc. prepares a reserve and economic evaluation of all Emerald's properties on a case-by-case basis utilizing information provided to it by Emerald and Information available from sume agencies that collect information reported to it by the operators of Emerald's properties. The reserve estimates are then independently audited by Netherland, Sewell & Associates, Inc. The estimate of Emerald's proved reserves as of December 31, 2012, 2011 and 2010 have been prepared and presented in accordance with SEC rules and accounting standards.

Reserves and their relation to estimated future net cash flows impact Emerald's depletion and impairment calculations. As a result, adjustments to depletion and impairment are made concurrently with changes to reserve estimates. Emerald prepares its reserve estimates, and the projected cash flows derived from these reserve estimates, in accordance with SEC guidelines. The independent engineering firms described above adhere to the same guidelines when preparing and auditing the reserve report, respectively. The accuracy of Emerald's reserve estimates is a function of many factors including the quality and quartity of available data, the interpretation of that data, the accuracy of various mandated economic assumptions, and the judgments of the individuals preparing the estimates.

Emerald's proved reserve estimates are a function of many assumptions, all of which could deviate significantly from actual results. As such, reserve estimates may materially vary from the ultimate quantities of oil and natural gas eventually recovered.

91 of 127

EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

Other Property and Equipment

Property and equipment that are not oil and ratural gas properties are recorded at cost and depreciated using the straight-line method over their estimated useful lives of three to seven years. Expenditures for replacements, renewals, and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation expense was \$53,818, \$30,831 and \$2,929 for the years ended December 31, 2012, 2011 and 2010, respectively.

ASC 360-10-35-21 requires that long-lived assets, other than oil and matural gas properties, be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The determination of impairment is based upon expectations of undiscounted future cash flows, before interest, of the related asset. If the carrying value of the asset exceeds the undiscounted future cash flows, the impairment would be computed as the difference between the carrying value of the asset and the fair value. The Company has not recognized any impairment losses on non-oil and natural gas long lived BANKEL

Asset Retirement Obligations

The Company records the fair value of a liability for an asset retirement obligation in the period in which the well is spud or the asset is acquired and a corresponding increase in the carrying amount of the related long-lived asset. The liability is accreted to its present value each period, and the capitalized cost is depleted using the units of production method. If the liability is settled for an amount other than the recorded amount, a gain or loss is recognized.

Revenue Recognition and Natural Gas Balancing

The Company recognizes oil and natural gas revenues from its interests in producing wells when production is delivered and title has transferred to the purchaser, to the extent the selling price is reasonably determinable. The Company uses the sales method of accounting for balancing of nutural gas production and would recognize a liability if the existing proven reserves were not adequate to cover the current imbalance situation. As of December 31, 2012 and 2011, the Company's natural gas production was in balance, i.e., its cumulative portion of natural gas production taken and sold from wells in which it has an interest equaled the Company's entitled interest in natural gas production from those wells.

Stock-Bused Compensation

The Company has accounted for stock-based compensation under the provisions of ASC 718-10-55. The Company recognizes stock-based compensation expense in the financial statements over the vesting period of equity-classified employee stock-based compensation awards based on the grant date fair value of the awards, net of estimated forfeitures. For options and warrants the Company uses the Black-Scholes option valuation model to calculate the fair value of stock based compensation awards at the date of grant. Option pricing models require the input of highly subjective assumptions, including the expected price volatility. For the stock, options and warrants granted the Company has used a variety of comparable and peer companies to determine the expected volatility input based on the expected term of the options. The Company believes the use or peer company data fairly represents the expected volatility it would experience if it were in the oil and ratural gas industry over the expected term of the options. The Company used the simplified method to determine the expected term of the options due to the lack of historical data. Changes in these assumptions can materially affect the fair value estimate.

On May 27, 2011, the shareholders of the Company approved the 2011 Equity Incentive Plan (the "2011 Plan"), under which 714,286 shares of common stock were reserved. On October 22, 2012, the shareholders of the Company approved an amendment to the 2011 Plan to increase the number of shares available for issuance under the 2011 Plan to 3,500,000 shares. The purpose of the 2011 Plan is to promote the success of the Company and its affiliates by facilitating the employment and retention of competent personnel and by furnishing incentives to those officers, directors and employees upon whose efforts the success of the Company and its affiliates will depend to a large degree. It is the intention of the Company to carry out the 2011 Plan through the granting of incentive stock options, nonqualified stock options, restricted stock awards, restricted stock unit awards, performance awards and stock appreciation rights. As of December 31, 2012, 735,705 stock options and 2,743,717 shares of common stock and restricted stock units had been issued to officers, directors and employees under the 2011 Plan, including 1,847,701 unvested restricted stock units. As of December 31, 2012, there are 20,578 shares available for issuance under the 2011 Plan.

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EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

Income Taxes

The Company accounts for income taxes under ASC 740-10-30. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is "more likely than not" that some component or all of the benefits of deferred tax assets will not be realized.

The tax effects from an uncertain tax position can be recognized in the financial statements only if the position is more likely than not of being sustained if the position were to be challenged by a taxing authority. The Company has examined the tax positions taken in its tax returns and determined that there are no uncertain tax positions. As a result, the Company has recorded no uncertain tax liabilities in its consolidated balance sheet.

Net Income (Loss) Per Common Share

Basic net income (loss) per common share is based on the net income (loss) divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share are computed using the weighted average number of common shares plus dilutive common share equivalents outstanding during the period using the treasury stock method. In the computation of diluted earnings per share, excess tax benefits that would be created upon the assumed vesting of unvested restricted shares or the assumed exercise of stock options (i.e., hypothetical excess tax benefits) are included in the assumed proceeds component of the treasury stock method to the extent that such excess tax benefits are more likely than not to be realized. When a loss from continuing operations exists, all potentially dilutive securities are anti-dilutive and are therefore excluded from the computation of diluted earnings per share. As the Company had losses for the years ended December 31, 2012, 2011 and 2010, the potentially dilutive shares were anti-dilutive and were thus not included in the net loss per share calculation.

As of December 31, 2012, (i) 1,847,701 unvested restricted stock units were issued and outstanding and represent potentially dilutive shares; (ii) 424,986 stock options that were issued and presently exercisable and represent potentially dilutive shares; (iii) 410.716 stock options that were granted but are not presently exercisable and represent potentially dilutive shares; (iv) 223,293 warrants that were issued and presently exercisable, which have an exercise price of \$6.86; and (v) 892,858 warrants that were issued and presently exercisable, which have an exercise price of \$49.70.

$F-10$

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EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

Commodity Derivative Instruments

The Company has entered into commodity derivative instruments utilizing "no premium" collars and price swaps to reduce the effect of price changes on a portion of future oil production. The Company's commodity derivative instruments are measured at fair value and are included in the consolidated balance sheet as derivative assets and liabilities. Unrealized gains and losses are recorded based on the changes in the fair values of the derivative instruments. Both the unrealized and realized gains and losses resulting from the contract settlement of derivatives are recorded in the loss on commodity derivatives line on the consolidated statements of operations.

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95 of 127	ĩ, ×				3/21/2013 4:45 PM

EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

The Company's valuation estimate takes into consideration the counterparties' credit worthiness, the Company's credit worthiness, and the time value of money. The consideration of the factors results in an estimated exit price for each derivative asset or liability under a market place participant's view. Management believes that this approach provides a reasonable, non-biased, verifiable, and consistent methodology for valuing commodity derivative instruments (see Note 14- Derivative Instruments and Price Risk Management).

New Accounting Pronouncements

From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company's consolidated financial statements upon adoption.

Joint Ventures

The consolidated financial statements as of December 31, 2012, 2011 and 2010 include the accounts of the Company and its proportionate share of the assets, liabilities, and results of operations of the joint ventures it is involved in.

Use of Estimates

The preparation of consolidated firancial statements under GAAP in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to proved oil and natural gas reserve volumes, future development costs, estimates relating to certain oil and natural gas revenues and expenses, fair value of derivative instruments, valuation of share-based compensation and the valuation of deferred income taxes. Actual results may differ from those estimates.

Industry Segment and Geographic Information

The Company operates in one industry segment, which is the exploration, development and production of oil and natural gas with all of the Company's operational activities having been conducted in the U.S. The Company's current operational activities and the Company's consolidated revenues are generated from markets exclusively in the U.S., and the Company has no long lived assets located outside the U.S.

Reclassifications

Certain reclassifications have been made to prior periods' reported amounts in order to conform with the current period presentation. These reclassifications did not impact the Company's net loss, stockholders' equity or eash flows.

Change in Reporting Period End

On July 29, 2010, the Company's Board of Directors approved a change in the Company's fiscal year end to a traditional calendar year from that of a last Sunday of quarter end period. The change in reporting period has been reflected in this Annual Report on Form 10-K. The Company's fiscal year end is December 31, and the quarters end on March 31, June 30 and September 30.

Priociples of Consolidation

The accompanying consolidated financial statements include the accounts of Emerald Oil, Inc. and its direct and indirect wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

NOTE 3 ACQUISITION OF BUSINESS

On July 9, 2012, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with Emerald Oil & Gas NL (the "Parent") and Emerald Oil North America, Inc. ("Emerald Oil North America"), a wholly owned subsidiary of the Parent pursuant to which the Company purchased all of the outstanding capital stock of Emerald Oil North America for approximately 19.9%

of the total shares of the Company's common stock outstanding as of the closing date. The Company completed the acquisition of Emerald Oil North America on July 26, 2012 and issued approximately 1.66 million shares to the Parent. The Company assumed Emerald Oil North America's liabilities, including approximately \$20.3 million in debt owed by Emerald Oil North America. The acquisition included approximately 10,600 net acres located in Dunn County, North Dakota and approximately 45,000 net acres in the Sandwash Basin Niobrara shale oil play in northwestern Colorado and southwestern Wyoming.

In connection with the closing of the Emerald Oil North America acquisition, five existing members of the Company's board of directors resigned, and their vacancies were filled with directors selected by the remaining members of the Company's board of directors. Also in connection with the closing of the Emerald acquisition, the Company entered into employment agreements with six officers, J.R. Reger (Executive Chairman-formerly Chief Executive Officer), Mike Krzus (Chief Executive Officer), McAndrew Rudisill (President), Paul Wiesner (Chief Financial Officer), Karl Osterbuhr (Vice President of Exploration and Business Development) and Mitchell R. Thompson (Chief Accounting Officer-formerly Chief Financial Officer).

$F-12$

EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

Emerald Oil North America's \$20.3 million in debt obligations assumed by the Company was comprised of \$17.7 million to Hartz Energy Capital, LLC ("Hartz") and \$2.5 million plus accrued interest to Parent. Both were paid in full on September 28, 2012.

interest on the Hartz credit agreement was in the form of an overriding royalty interest in and to all of the oil, gas and other liquid hydrocarbons produced and saved from certain of the Company's oil and natural gas properties, free of any and all expenses of development, production, transportation, marketing and any other related or similar expenses. The initial credit agreement included a 2.15% overriding royalty interest on Emerald Oil North America's properties in the Williston Basin of North Dakota. In accordance with the amended credit agreement, interest on the credit agreement was expanded to include a 0.9% overriding royalty interest in and to all of the oil, gas and other liquid hydrocarbons produced and saved from the Company's properties in the Green River Basin of Colorado and Wyoming.

The acquisition has been accounted for using the acquisition method. Assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. The allocation of the purchase price is based upon a valuation of certain assets acquired and liabilities assumed. The Company recorded a gain on the bargain purchase of Emerald Oil North America as a result of the decrease in the Company's share price between the announcement date (July 10, 2012) and closing date (July 26, 2012) of the acquisition in accordance with GAAP. A summary of the acquisition is below:

	(In thousands)
Proved Oil and Natural Gas Properties	6.839
Unproved Oil and Natural Gas Properties	33.948
Other Assets	ш
Debt Assumed	(20.303)
Net Assets Acquired	20,595
Equity Issued to Emerald Oil NL	(13.381)
Gain on Acquisition	7.214
Less: Acquisition Costs	(1.456)
Gain on Acquisition, net	5.758

Pro Forma Operating Results

From July 26, 2012 to December 31, 2012, the Company recognized \$194,417 in revenues and \$136,196 of expenses relating to Emerald Oil North America, resulting in net income during the year ended December 31, 2012 of \$58,221.

$F-13$

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EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

The following table reflects the unustited pro forma results of operations as though the acquisition had occurred on January 1, 2011. The pro forma amounts are not necessarily indicative of the results that may be reported in the future:

	Year Ended December 31,
	2012 2011
Revenues Net loss	8,569,107 \$27,968,701 \$(64,707,199) \$ (1,977,350)

Net loss per share - basic and diluted	(0.20) (4.74)
Weighted Average Shares Outstanding - Basic and Diluted	13,639,626 9,674,332

NOTE 4 OIL AND NATURAL GAS PROPERTIES

The value of the Company's oil and natural gas properties consists of all acreage acquisition costs (including eash expenditures and the value of stock consideration), drilling costs and other associated capitalized costs. Acquisitions are accounted for as purchases and, accordingly, the results of operations are included in the accompanying consolidated statements of operations from the closing date of the acquisition. Purchase prices are allocated to acquired assets based on their estimated fair value at the time of the acquisition. In the past, acquisitions have been funded with internal cash flow and the issuance of equity securities.

Acquisitions

For the year ended December 31, 2012, the Company acquired approximately 12,416 net mineral acres in the Williston Basin targeting the Bakken and Three Forks formations for an average cost of approximately \$1,340 per net acre including the acreage acquired as a result of the acquisition of Emerald Oil North America.

The Company also acquired approximately 45,000 net mineral acres in the Sandwash Basin of northwestern Colorado and southwestern Wyoming targeting the Niobrara as a result of the acquisition of Emerald Oil North America (See Note 3 - Acquisition of Business).

On October 5, 2012 the Company acquired 4,453 net acres in McKenzie County, North Dakota for \$3,200 per acre from Slawson, under which the Company agreed to acquire certain oil and natural gas leaseholds, and various other related rights, interests, equipment and other assets. The effective time for the transfer of the leases was September 1, 2012. The purchase included operating permits for additional wells and a recently constructed well pad and tank battery at an additional cost of \$1.18 million, for a total cash purchase price of \$15.4 million.

Sandwash Basin - Niobrara

The Company owns approximately 45,000 net mineral acres in the Sand Wash Basin of the Greater Green River Basin prospective for the Niobrara oil shale and other secondary target formations known to contain oil and natural gas. The assets include certain existing oil and gas wells and a 6-inch diameter natural gas gathering pipeline extending approximately 18.5 miles in length from the Company's natural gas production facilities located in Moffat County, Colorado, to a Questar pipellne connection located near the town of Baggs in Carbon County, Wyoming. These assets were acquired in conjunction with the acquisition of Emerald Oil North America on July 26, 2012 (see Note 3 - Acquisition of Business).

The assets are governed by a participation agreement (the "Participation Agreement") with Entek GRB LLC, a subsidiary of Entek Energy Ltd, a publicly traded Australian exploration and production company. Under the Participation Agreement, the Company and Entek have agreed to jointly develop each party's respective leasehold intercats within a designated area of matual interest, referred to as the Green River Basin AMI. The collective leasehold position consists of 45,000 gross acres in Routt County, Colorado and 67,000 gross acres in Moffat County, Colorado and Carbon County, Wyoming, The collective leasehold interest of the Company and

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EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

On January 7, 2013, the Company craered into a definitive agreement with East Management Services, LP, under which the Company has agreed to sell its undivided 45% working interest in its leasehold position in Moffat County, Colorado and Carbon County, Wyoming (see Note 16 - Subsequent Events).

Big Snowy Joint Venture

In October 2008, the Company entered into the Big Snowy Joint Venture Agreement with an administrator third-party to acquire certain oil and natural gas leases in the Heath shale oil play in Musselshell, Petroleum, Garfield, Rosebud and Fergus Counties in Montana, and another third party to perform as the operator. Under the terms of the agreement, the Company is responsible for 72.5% of lease acquisition costs, and the other parties are individually responsible for 2.5% and 25% of the lease acquisition costs. Each party controls the same respective working interest on all future production and reserves. The administrator third-party joint verture partner is responsible for coordinating the geology, acquiring the leases in its name, preparing and disseminating assignments, accounting for the project costs and administration of the well operator. The joint venture had accumulated oil and natural gas leases totaline 33.562 net mineral acres as of December 31, 2012. The Company is committed to a minimum of \$1,000,000 and a maximum of \$1,993,750 toward this joint venture, with all partners, including the Company, committing a minimum of \$2,750,000. The administrator third-party joint venture partner issues cash calls during the year to replenish the joint venture cash account. The Company's contributions to the joint venture totaled \$724,744 as of December 31, 2012. The unutilized cash balance was \$11,790 as of December 31, 2012.

Nlobrara Development with Slawson Exploration Company, Inc.

As of December 31, 2012, the Company held approximately 1,700 net acres in Weld County, Colorado and Laramic County, Wyoming, with 1,440 net acres currently held by production with Slawson Exploration Company, Inc. ("Slawson"). The Company corrersty has no plans for drilling any additional development wells under this development program during 2012.

Major Joint Venture

In May 2008, the Company entered into the Major Joint Venture Agreement with a third-party partner to acquire certain oil and matural gas leases in the Tiger Ridge Gas Field in Blaine, Hill, and Choteau Counties of Montana. Under the terms of the joint venture agreement, the Company is responsible for all lease acquisition costs. The third-party joint venture partner is responsible for coordinating the geology, acquiring the leases in its name, preparing and disseminating assignments, accounting for the project costs and administration of the well operator.

Tiger Ridge Joint Venture

In November 2009, the Company entered lato the Tiger Ridge Joint Venure Agreement with a third-party, Hancock Enterprises, and a well operator, MCR, LLC, to develop and exploit a drilling program in two certain blocks of acreage in the Major Joint Venture, which is an area of mutual interest. The Company controls a 70% working interest, while a third-party investor and the well operator control a 10% working interest and 20% working interest, respectively. The joint venture agreement requires that all parties contribute in eash their proportional share to cover all costs incurred in developing these blocks of acreage for drilling. The Company participated in the drilling of two wells with Devon Energy Corporation, both of which were drilled and shat-in in 2010. The Company conducted 3-D seismic testing throughout 2010 and drilled and completed six exploratory wells in the fourth quarter of 2011 with our joint venture partners. These wells are currently under evaluation for economical production at current natural gas prices.

NOTE 5 RELATED PARTY TRANSACTIONS

On September 22, 2010, Steven Lipscomb and Michael Reger subscribed for \$500,000 and \$1,000,000 of senior secured promissory notes, respectively. The issuance of the senior secured promissory notes is described in Note 8 to the consolidated financial statements. Mr. Lipscomb is a former director of the Company. Mr. Reger is a brother of J.R. Reger, who is Executive Chairman of the Company and formerly the Chief Executive Officer. The Company's Audit Committee, which consisted solely of Independent directors, reviewed and approved this transaction. The senior secured promissory notes were paid in fidl on February 10, 2012.

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On November 2, 2011, the Company purchased certain leases consisting of approximately 256 net acres in Dunn County, North Dakota for a total purchase price of \$768,000. The leases were purchased from Ante5, Inc. ("Seller"), a related party. The Seller and its assets were spun off from the Company and became a separate public reporting U.S. company on June 24, 2010. The Chairman of the Board of the Seller is Bradley Berman, who is the son of a director of the Company and also the beneficial owner of less than five percent of the Company's outstanding common stock as of December 31, 2012. The Company's Audit Committee reviewed and approved this transaction prior to its completion. In approving this transaction, the Audit Committee, which consisted solely of independent directors, took into account, among other factors, that due diligence performed by the Company evidenced that the leases were purchased by the Company at the Seller's original cost per acre and on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances.

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EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

NOTE 6 PREFERRED AND COMMON STOCK

The Company has authorized 20,000,000 shares of preferred stock. No shares of preferred stock were issued as of December 31, 2012 and 2011.

In January 2010, the Company completed a private placement offering of 114,624 shares of common stock to accredited investors at a subscription price of \$7.42 per share for total gross proceeds of \$847,000. As part of this private placement, the Company entered into an introduction letter agreement with Great North Capital Consultants, Inc. ("Great North"). As compensation for the work performed, Great North received 25,217 shares of restricted common stock of the Company and \$67,760 in cash. The fair value of the restricted stock was \$186,340 or \$7.42 per share, based upon the market value of one share of common stock on the date the transaction closed. These costs were netted against the proceeds of the offering through additional paid-in capital.

On March 10, 2010, the Company purchased leasehold interests from South Fork Exploration, LLC (SFE) for \$1,374,375 and 319,229 shares of restricted common stock with a fair value of \$2,358,900. SFE's president was J.R. Reger, Executive Chairman of the Company.

On February 8, 2011, the Company completed a private placement of 1,785,714 units, which consisted of one share of common stock and a warrant to purchase one-half of a share of common stock, at a subscription price of \$28.00 per unit for total gross proceeds of \$50 million. The exercise price of the warrants is \$49.70 per whole share of common stock for a period of five years from the date of closing. The total number of shares that are issuable upon exercise of warrants is 892,857. The Company incurred costs of \$3,397,749 related to this transaction, which costs were netted against the proceeds of the transaction through additional paid-in capital.

On September 28, 2012, the Company completed a public offering of 13,392,857 shares of common stock at a price of \$5.60 per share for total gross proceeds of \$75 million. The Company incurred costs of approximately \$5.3 million related to this transaction, which costs were netted against the proceeds of the transaction through additional paid-in capital. The underwriters elected to exercise the over-allotment option to sell an additional 484,698 shares of common stock at \$5.60 per share. The grous proceeds from the over-allotment exercise were \$2.7 million, and the net proceeds are approximately \$2.5 million after deducting underwriting discounts and commissions. The over-allotment exercise closed on October 26, 2012.

Stock Awards and Stock Unit Awards

In March 2012, the Company issued an aggregate of 14,286 shares of common stock to executives of the Company as compensation for their services. The shares were fully vested on the date of the grant. The fair value of the stock issued was approximately \$294,000 or \$20.58 per share, the market value of a share of common stock on the date the stock was issued. The Company expensed \$160,718 in share-based compensation related to these grants in the year ended December 31, 2012. The remainder of the fair value of these grants was capitalized into the full cost pool.

$F - 16$

103 of 127

EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

In March 2012, the Company issued an aggregate 85,714 shares of restricted common stock as compensation to its officers, of which 32,142 restricted shares had vested prior to the acquisition of Emerald Oil North America. The officers forfeited the remaining 53,572 shares of restricted common stock as part of the acquisition of Emerald Oil North America.

In May 2012, the Company Issued 2,858 shares of restricted common stock as compensation to an employee, which shares vest equally over two years on May 11, 2013 and May 11, 2014. As of December 31, 2012, there was approximately \$29,000 of unrecognized compensation expense related to unvested restricted stock. The Company will recognize compensation expense over the remaining vesting period of the restricted stock grant. The Company has assumed a 0% forfeiture rate for the restricted stock.

In July 2012, the Company issued an aggregate of 35,714 shares of common stock to executives of the Company as compensation for their services. The shares were fully vested on the date of the grant. The fair value of the stock issued was approximately \$280,000 or \$7.84 per share, the market value of a share of common stock on the date the stock was issued. The Company expensed \$265,767 in share-based compensation related to these grants in the year ended December 31, 2012. The remainder of the finir value of these grants was capitalized into the full cost pool.

In July 2012, the Company Issued 107,142 restricted stock units as compensation to its officers and certain employees. Unvested restricted stock units vest 35,714 on each of July 26, 2013, 2014 and 2015. As of December 31, 2012, there was approximately \$723,000 of urrecognized compensation expense related to unvested restricted stock units. The Company will recognize compensation expense over the remaining vesting period of the restricted stock units. The Company has assumed a 0% forfeiture rate for the restricted stock units.

In November 2012, the Company issued an aggregate of 860,295 shares of common stock to executives of the Company as compensation for their services. The shares were fidly vested on the date of the grant. The fair value of the stock issued was approximately \$3,504,125 or \$4.07 per share, the market value of a share of common stock on the date the stock was issued. The Company expensed \$3,504,125 in share-based compensation related to these grants in the year ended December 31, 2012.

In November 2012, the Company issued 1,720,585 restricted stock units as compensation to its officers, directors and certain employees. Unvested restricted stock units vest 860,292 in each November 2013 and 2014. As of December 31, 2012, there was approximately \$6,570,215 of unrecognized compensation expense related to the unvested restricted stock units. The Company will recognize compensation expense over the remaining vesting period of the restricted stock units. The Company has assumed a 0% forfeiture rate for the restricted stock units.

On December 17, 2012, the Company issued 51,351 restricted stock units as compensation to an employee. Unvested restricted stock units vest 17,117 on each December 17, 2013, 2014 and 2015. The restricted stock units vesting on December 17, 2014 and 2015 are contingent on the shareholders of the Company approving an amendment to the 2011 Plan for additional shares to be reserved under the Plan. As of December 31, 2012, there was approximately \$76,706 of unrecognized compensation expense related to the unvested restricted stock units. The Company will recognize compensation expense over the remulning vesting period of the restricted stock units. The Company has assumed a 0% forfeiture rate for the restricted stock units.

The Company has estimated that \$1,196,577 in federal and state withholding taxes is due on restricted stock granted to officers which vested during 2012. Of this amount, the Company estimates that it will be responsible for \$62,728, which has been included in general and administrative expenses for the year ended December 31, 2012 with the remaining amount of \$1,133,849 recorded as a receivable from officers as of December 31, 2012. The Company's officers remitted payment on the receivable to the Company in February and March 2013.

The Company incurred compensation expense associated with restricted stock and restricted stock units granted of \$4,684,009 and \$126,962 for the years ended December 31, 2012 and 2011, respectively. There were 1,847,701 unvested restricted stock units and \$7,398,893 associated remaining aurecognized compensation expense as of December 31, 2012 which is expected to be recognized over the weighted-average period of 1.4 years. The Company capitalized compensation expense associated with the restricted stock of \$332,673 and \$99,358 to oil and natural gas properties for the years ended December 31, 2012 and 2011, respectively.

EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

NOTE 7 STOCK OPTIONS AND WARRANTS

Stock Options

The total fair value of all stock options granted during the years ended December 31, 2012, 2011 and 2010 were calculated using the Black-Scholes valuation model based on factors present at the time the options were granted.

On April 21, 2010, the Company granted its outside directors stock options to purchase a total of 100,000 shares of common stock exercisable at \$19.32 per share. The Company had assumed a 10% forfeiture rate on these options. As of December 31, 2012, 35,714 of these options have been forfeited and 7,146 of these options expired. On July 26, 2012 upon closing the acquisition of Emerald Oil North America, the remaining 57,140 options granted to the former non-employee directors of the Company became fully vested. The vesting of these options is considered a modification under GAAP. The fair value of the options calculated on the modification date was less than the remaining unamortized expense to be reported on the options. The Company expensed the remaining grant date fair value in the year ended December 31, 2012.

On November 12, 2010, the Company granted an outside director stock options to purchase a total of 21,428 shares of common stock exercisable at \$25.90 per share. The Company had assumed a 10% forfeiture rate on these options. On July 26, 2012 upon closing the acquisition of Emerald Oil North America, these options became fully vested. The vesting of these options is considered a modification under GAAP. The fair value of the options calculated on the modification date was less than the remaining unamortized expense to be reported on the options. The Company expensed the remaining grant date fair value in the year ended December 31, 2012.

In May 2011, the Company granted stock options to two employees to purchase a total of 14,286 and 7,143 shares of common stock exercisable at \$21.14 and \$24.85 per share, respectively. The Company has assumed a 10% forfeiture rate on these options. The options vested over one year with all of the options vesting on the anniversary date of the grant.

On May 27, 2011, the Company granted stock options to non-employee directors to purchase a total of 17,855 shares of common stock exercisable at \$21.00 per share. The Company bad assumed a 10% forfeiture rate on these options. On July 26, 2012 upon closing the acquisition of Emerald Oil North America, these options became fully vested. The vesting of these options is considered a modification under GAAP. The fair value of the options calculated on the modification date was less than the remaining unamortized expense to be reported on the options. The Company expensed the remaining grant date fair value in the year ended December 31, 2012.

On January 6, 2012, the Company granted stock options to an employee to purchase a total of 3,571 shares of common stock exercisable at \$18.55 per share. The Company has assumed a 10% forfeiture rate on these options. The options vest on the one year anniversary date of the grant.

On March 30, 2012, the Company granted stock options to an employee to purchase a total of 50,000 shares of common stock exercisable at \$17.01 per share. The Company has assumed a 10% forfeiture rate on these options. The options vest on the one year andversary date of the grant.

On May 23, 2012, the Company granted stock options to an employee to purchase a total of 35,714 shares of common stock exercisable at \$12.39 per share. The Company has assumed a 10% forfeiture rate on these options. The options vest over 30 months with 14,286 options vesting on May 23, 2013 and 2014 and 7,142 options vesting on November 23, 2014.

On May 24, 2012, the Company granted stock options to non-employee directors to purchase a total of 17,857 shares of common stock exercisable at \$13.30 per share. The Company had assumed a 10% forfeiture rate on these options. On July 26, 2012 upon closing the acquisition of Emerald Oil North America, these options became fully vested. The vesting of these options is considered a modification under GAAP. The fair value of the options calculated on the modification date was less than the remaining unamortized expense to be reported on the options. The Company expensed the remaining grant date fair value in the year ended December 31, 2012.

On July 26, 2012, the Company granted stock options to officers and certain employees to purchase a total of 428,572 shares of common stock exercisable at \$7.84 per share. The Company has assumed a forfeiture rate of 0% to 15% on these options.

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Twenty-five percent, or options to purchase 107,143 shares of common stock, vested immediately on the grant date, and the remaining options vest equally over 36 months with 107,143 options vesting on July 26, 2013 and 2014 and 2015.

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On November 15, 2012 the Company granted stock options to certain employees to purchase a total of 150,000 shares of common stock exercisable at \$4.43 per share. The options vested immediately on the grant date.

The impact on the Company's statement of operations of stock-based compensation expense related to options granted for the years ended December 31, 2012, 2011, and 2010 was \$2,634,681, \$334,520 and \$170,219, respectively, net of \$0 tax. The Company capitalized \$249,367 and \$109,688 in compensation to oil and natural gas properties related to outstanding options for the years ended December 31, 2012 and 2011, respectively. No compensation related to outstanding options for the year ended December 31, 2010 was capitalized.

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EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

A summary of options for the years ended December 31, 2012, 2011, and 2010 is as follows:

	Number of Options	Weighted Average Exercise Price	Remaining Contractual Term (in Years)	Intrinsic Value
Outstanding at January 1, 2010
Granted	121,428	20.51
Pre-Merger ante4, Inc. Options	38,429	17.50
Exercised	(5.714)	4.06
Forfeited	(14, 286)	19.32
Outstanding at December 31, 2010	139,857	20.51	8.9	2,420,660
Granted	39,284	22.40
Exercised	(571)	29.68
Forfeited or Expired	(28, 570)	19.32
Outstanding at December 31, 2011	150,000	20.44	7.2
Granted	685,713	8.11
Exercised
Forfeited or Expired
Outstanding at December 31, 2012	835,713	10.43	7.7
Stock Options Exercisable at December 31, 2010	32,714	20.02	7.0	581,660
Stock Options Exercisable at December 31, 2011	51,786	18.90	6.9	302,750
Stock Options Exercisable at December 31, 2012	424,997	11.39	5.9	121,500

For the year ended December 31, 2012, 2011 and 2010, other information pertaining to stock options was as follows:

	2012	2011	2010
Weighted-average per share grant-date fair value of stock options granted	4.62 S	14.35 S	12.95
Total intrinsic value of options exercised		3,520	96,946
Total grant-date fair value of stock options vested during the year	2.159.307	349,875

A summary of the status of the Company's nonvested options as of December 31, 2012 and changes during the year then ended is as follows:

	Number of Options	Weighted-Average Grant-Date Fair Value
Nonvested at December 31, 2011	98,214	13.09
Granted	685,713	4.78
Vested	(373, 211)	6.14
Forfeited
Nonvested at December 31, 2012	410,716	5.87

$F-19$

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EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

The following assumptions were used for the Black-Scholes model to value the options granted during the years ended December 31, 2012, 2011 and 2010.

	2012	2011	2010
Risk free rates	0.17% to 1.20%	0.91% to 0.96%	1.35% to 2.52%
Dividend Yield	096	0%	$0\%$
Expected volatility	69,70% to 78.99%	85.90% to 86.17%	69.19% to 70.93%
Weighted average expected life	4 years	3 years	6 years

All stock options related to the pre-merger entity ante4, Inc. were expensed prior to the merger date, April 16, 2010. ante4, Inc. completed a spin-off of certain assets and liabilities to ante5, Inc. concurrently with the merger. As part of this spin-off, the holders of stock options for ante4, Inc. received an equal number of stock options in ante5, Inc. at an exercise price determined by methodology in accordance with the spin-off distribution agreement. As a result, the exercise prices of the stock options held in Emerald were adjusted to reflect the spin-off. The above table takes into consideration the changes in weighted average exercise price based on a modification as described in ASC 718-20-35-3. The total exercise price adjustment for the options outstanding at December 31, 2010 was \$44,470 and the adjustment on shares exercised during 2010 was \$1,464.

There was \$1,385,207 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted as of December 31, 2012. At December 31, 2012, the remaining cost is expected to be recognized over a weighted-average period of 2.3 years. These estimates are subject to change based on a variety of future events which include, but are not limited to, changes in estimated forfeiture rates, cancellations and the issuance of new options.

Warrants

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The impact on the Company's statement of operations of stock-based compensation expense related to warrants granted for the years ended December 31, 2012, 2011, and 2010 was \$0, \$267,065 and \$483,082, respectively, net of \$0 tax. The Company capitalized \$209,370 in compensation related to outstanding warrants to oil and natural gas properties for the year ended December 31, 2011,

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EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

A summary of warrants granted to employees, directors and consultants for the years ended December 31, 2012, 2011 and 2010 is as follows:

	Number of Warrants	Weighted Average Exercise Price	Remaining Contractual Term (in Years)	Intrinsic Value
Outstanding at December 31, 2009	699.651	6.58 s	9.7	203,200
Granted
Exercised	476,358	6.44
Outstanding at December 31, 2010	223,293	6.86	9.5	6,908,681
Granted
Exercised
Outstanding at December 31, 2011	223,293	6.86	8.0	2,458,251
Granted
Exercised
Outstanding at December 31, 2012	223,293	6.86	7.0

On February 8, 2011, in conjunction with the sale of 1,785,714 shares of common stock (see Note 6), the Company issued investors warrants to purchase a total of 892,858 shares of common stock exercisable at \$49.70 per share.

For the years ended December 31, 2012, 2011 and 2010, other information pertaining to warrants was as follows:

	2011	2010
Weighted-average grant-date fair value of warrants granted	2.02
Total intrinsic value of warrants exercised		\$8,096,977
Total grant-date fair value of warrants vested during the year	$-$ \$12,625,000 \$

The following assumptions were used for the Black-Scholes model to value the warrants granted during the years ended December 31, 2012, 2011 and 2010.

	2011	2010
Risk free rates	2.02
Dividend yield	0%
Expected volatility	75.52%	$\overline{\phantom{a}}$
Weighted average expected life	5 years

The table below reflects the status of warrants outstanding at December 31, 2012:

	Warrants	Exercise Price	Expiration Date
December 1, 2009	37,216 S	6.86	December 1, 2019
December 31, 2009	186,077 S	6.86	December 31, 2019
February 8, 2011	892.858 S	49.70	February 8, 2016
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EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

NOTE 8 SENIOR SECURED PROMISSORY NOTES

In September 2010, the Company issued senior secured promissory notes in the principal amount of \$15 million (the "Notes") in order to finance future drilling and development activities. Proceeds of the Notes were used primarily to fund developmental drilling on the Company's significant acreage positions targeting the Williston Busin - Bakken/Three Forks area and the Niobrara formation located in the DJ Basin through the joint venture with Slawson.

The Notes were paid in full on February 10, 2012 in conjunction with the Company entering into a credit facility ("the Macquarie Facility") with Macquarie Bank Limited ("MBL") (see Note 9 - Revolving Credit Facility). The remaining unanortized debt issuance costs of \$217,809 were written off to interest expense in the year ended December 31, 2012.

NOTE 9 REVOLVING CREDIT FACILITY

On February 10, 2012, the Company entered into a credit facility (the "Macquarie Facility") with Macquarie Bank Limited ("MBI."). The Macquarie Facility provided up to a maximum of \$150 million in principal amount of borrowings to be used as working capital for exploration and production operations. Initially, \$15 million of financing was available under the Macquarie Facility based on reserves (Tranche A), with an additional \$50 million available under a development tranche (Tranche B).

The borrowing base of funds that were available to the Company under Tranche A was re-determined semi-annually based upon the net present value, discounted at 10% per annum, of the future net revenues expected to accrue from the Company's interests in proved reserves estimated to be produced from its crude oil and natural gas properties. The Macquarie Facility had a termination date of February 10, 2015. Tranche B was uncommitted, however, MBL could, in its sole discretion and subject to an approved revised development plan and the satisfaction of certain conditions, commit additional funds under Tranche B. Outstanding borrowings, if any, under Tranche B were due in six equal monthly installments beginning on August 10, 2015.

The Company had the option to designate the reference rate of interest for each specific borrowing under the Macquarie Facility as amounts were advanced. Under Tranche A, borrowings that were designated to be based upon the London Interbank Offered Rate ("LIBOR") would bear interest at a rate equal to LIBOR plus a spread ranging from 2.75% to 3.25%, depending on the percentage of borrowing base that was advanced. Any borrowings not designated LIBOR-based would bear interest at a rate equal to the current prime rate published by the Wall Street Journal plus a spread ranging from 1.75% to 2.25%, depending on the percentage of borrowing base that is currently advanced. The Company had the option to designate either pricing mechanism. The Company's Interest rate on Tranche A was 3,482% when the Macquarie Facility was paid off. Tranche B borrowing would bear interest at a rate equal to LIBOR plus 7.5%. The Company's interest rate on Tranche B was 7.732% when the Macquarie Facility was paid off. Interest payments were due under the Facility in arrears; in the case of a LIBOR-based loan, on the last day of the specified interest period and in the case of all other loans on the last day of each March, June, September and December. All outstanding principal was due and payable upon termination of the Macquarie Facility.

On July 26, 2012, the Company entered into an amended and restated credit agreement with MBL to expand the existing availability and outstanding balance under its existing Macquarie Facility and drew \$15 million of additional debt on a new third tranche at an initial rate of 9% above the applicable LIBOR and had the potential to draw a maximum of \$20 million. The \$15 million drawn was med for existing development activities and was paid in full with proceeds from the equity offering completed on September 28. 2012

Upon an event of default, the applicable interest rate under the Macquarie Facility would have increased, and the lenders could have accelerated payments under the Macquarie Facility or call all obligations due under certain circumstances. The Macquarie Facility referenced various events constituting a default, including, but not limited to, failure to pay interest on any loan under the Macquarie Facility, any material violation of any representation or warranty under the Macquarie Facility, failure to observe or perform certain coverants, conditions or agreements under the Macquarie Facility, a change in control of the Company, definult under any other material indebtedness of the Company, bankruptcy and similar proceedings and failure to pay disbursements from lines of credit issued under the Macquarie Facility.

The Macquarie Facility required the Company to enter into hedging agreements with MBL for each month of the 36-month period following the date on which each such hedge agreement is executed, the notional volumes for which, when aggregated with other commodity derivative agreements and additional fixed-price physical off-take contracts then in effect are not less than 50%, nor

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greater than 90%, of the reasonably anticipated projected production from our proved developed producing reserves. The Facility also required the Company to maintain certain financial ratios, including current ratio (at least 1.00 to 1.00), debt coverage ratio (no more than 3.50 to 1.00), interest coverage ratio (at least 2.50 to 1.00) and a ceiling on general and administrative expenses (no more than \$500,000 per fiscal quarter, excluding certain non-cash, audit and engineering-related expenses).

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EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

All of the Company's obligations under the Macquarie Facility and the derivative agreements with MBL were secured by a first priority security interest in any and all of the Company's assets.

On November 20, 2012, the Company entered into a credit agreement (the "Credit Agreement") with Wells Fargo Bank, N.A. ("Wells Fargo"), as administrative agent, and the lenders party thereto. The Credit Agreement is a tenior secured reserve-based revolving credit facility with a maximum commitment of \$400 million and an initial borrowing base of \$27.5 million (the "Wells Fargo Facility"). The Macquarie Facility was paid in full on November 20, 2012. The remaining unamortized debt issuance costs of \$389,333 related to the Macquarie Facility were written off to interest expense in the year ended December 31, 2012.

Amounts borrowed under the Wells Fargo Facility will mature on November 20, 2017, and upon such date, any amounts outstanding under the Facility are due and payable. Redeterminations of the borrowing base will be on a semi-annual basis, with an option to elect an additional redetermination every six months between the semi-annual redeterminations.

The annual interest cost, which is dependent upon the percentage of the borrowing base utilized, is, at the Company's option, based on either the Alternate Base Rate (as defined in the Credit Agreement) plus 0.75% to 1.75% or the London Interbank Offer Rate (LIBOR) plus 1.75% to 2.75%; provided, in no event may the Interest exceed the maximum interest rate allowed by any current or fiture law. As of December 31, 2012, the annual interest rate on the Wells Fargo Facility was 2.81%, which is based on LIBOR plus 2.25%. Interest on ABR Loans is due and payable on a quarterly basis, and interest on Eurodollar Loans is due and payable, at the Company's option, at one-, two-, three-, six- (or in some cases nine- or twelve-) month intervals. The Company will also pay a commitment fee ranging from 0.375% to 0.5%, depending on the percentage of the borrowing base utilized.

A portion of the Wells Fargo Facility not in excess of \$5 million will be available for the issuance of letters of credit by Wells. Fargo. The Company will pay a rate per annum ranging from 1.75% to 2.75% on the face amount of each letter of credit issued and will pay a fronting fee equal to the greater of \$500 and 0.125% of the face amount of each letter of credit issued. The Company didnot obtain any letters of credit under the Wells Fargo Facility in 2012.

Each of the Company's subsidiaries is a guarantor under the Wells Fargo Facility. The Wells Fargo Facility is secured by first priority, perfected liens and security interests on substantially all assets of the Company and the guarantors, including a pledge of their ownership in their respective subsidiaries.

The Credit Agreement contains customary covenants that include among other things. limitations on the ability of the Company to incur or guarantee additional indebtedness; create liens; pay dividends on or repurchase stock; make certain types of investments; enter into transactions with affiliates; and sell assets or merge with other companies. The Credit Agreement also requires compliance with certain financial coverants, including, (a) a ratio of current assets to current liabilities of at least 1.00 to 1.00, (b) a maximum ratio of debt to EBITDA for the preceding four fiscal quarters of no more than 3.50 to 1.00, and (c) a fixed charge coverage ratio for any four fiscal quarters of at least 3.00 to 1.00. The Company was not in compliance with the current ratio coverant as of December 31, 2012, and a waiver was obtained from Wells Fargo.

The Company had \$4.0 million available under the Wells Fargo Facility as of December 31, 2012. The principal balance amount on the Credit Agreement was \$23.5 million at December 31, 2012

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EMERALD OIL, INC. FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

NOTE 10 ASSET RETIREMENT OBLIGATION

The Company has asset retirement obligations associated with the fiture plugging and abandonment of its proved oil and natural gas properties and related facilities. Under the provisions of ASC 410-20-25, the fair value of a liability for an asset retirement obligation is recorded in the period in which it is incurred and a corresponding increase in the carrying amount of the related long lived asset. The liability is accreted to its present value each period, and the capitalized cost is depleted using the units of production method. If the liability is settled for an amount other than the recorded amount, a gain or loss is recognized. The fair value of additions to the asset retirement obligations is estimated using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation include estimates of: (i) plug and abandon costs per well based on existing regulatory requirements; (ii) remaining life per well; (iii) future inflation factors (2.5% for each of the years in the three-year period ended December 31, 2012); and (iv) a credit-adjusted risk-free interest rate (average of 7.0% for each of the years in the three-year period ended December 31, 2012). These inputs require significant judgments and estimates by the Company's management at the time of the valuation and are the most sensitive and subject to change. The Company has no assets that are legally restricted for purposes of settline asset retirement obligations.

The following table summarizes the Company's asset retirement obligation transactions recorded in accordance with the provisions of ASC 410-20-25 for the years ended December 31, 2012 and 2011:

	2012	2011
Beginning Asset Retirement Obligation	116.119S	10.522
Liabilities Incurred or Acquired	164,967	100,715
Accretion of Discount on Asset Retirement Obligations	14,988	4,882
Ending Asset Retirement Obligation	296,074	116,119

NOTE II INCOME TAXES

The Company utilizes the asset and liability approach to measuring deferred tax assets and liabilities based on temporary differences existing at each balance sheet date using currently emicted tax rates in accordance with ASC 740-10-30. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

The income tax expense (benefit) for the year ended December 31, 2012, 2011, and 2010 consists of the following:

		2012	2011	2010
Current Income Taxes Deferred Income Taxes				65.240
Federal
State
Total Expense

P-24

EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

The following is a reconciliation of the reported amount of income tax expense (benefit) for the years ended December 31, 2012, 2011 and 2010 to the amount of income tax expenses that would result from applying the statutory rate to pretax income.

Reconciliation of reported amount of income tax expense:

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	2012	2011	2010
Loss Before Taxes	\$(62,296,099)	\$(1,354,054)	\$(4,203,329)
Federal Statutory Rate	35%	35%	34%
Benefit Computed at Federal Statutory Rates	(21.803.635)	(473,919)	(1, 429, 132)
State Benefit, Net of Federal Benefit	(1.969.364)	(68, 416)	(157,760)
Effects of:
Nondeductible experies	10,941
Other	(119, 872)	48.919	4,132
Nondeductible Merger Costs Paid			283,000
Merger with ante4, Inc.			(195,000)
Change in Valuation Allowance	23,881,930	493,416	1,560,000
Reported Provision			65,240

The components of the Company's deferred tax asset were as follows:

Year Ended December 31,
2011


455,000

28,550
483,550

14,022,924


(11,698,388)

2,324,536
2,808,086
(2,808,086)

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EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

At December 31, 2012, the Company has U.S. Federal net operating loss (NOL) carryovers of \$58,142,000, which expire at various dates from 2029 through 2032. In addition, the Company has state NOL carryovers of approximately \$50,712,000. During 2012, the Company had a IRC Section 382 change of ownership which may restrict its ability to utilize its NOL carryovers. Valuation allowances of \$28,025,000 and \$2,808,000 have been established to offset the Company's net deferred tax assets as of December 31. 2012 and December 31, 2011, respectively, as the realization of these deferred tax assets is not more likely than not.

Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in the Company's tax returns that do not meet these recognition and measurement standards. The Company has no liabilities for unrecognized tax benefits.

The Company's policy is to recognize potential interest and penalties accrued related to unrecognized tax benefits within income tax expenses. For the years ended December 31, 2012, 2011 and 2010, the Company did not recognize any interest or penalties in its statement of operations, nor did it have any interest or penalties accrued in its balance sheet at December 31, 2012 and 2011 relating to unrecognized benefits.

The tax years 2009 through 2012 remain open to examination for U.S. federal income tax purposes. The Company files tax returns with various state taxing authorities and these returns remain open to examination for the tax years 2008 through 2012.

NOTE 12 FAIR VALUE

ASC 820-10-55 defines fair value, establishes a framework for measuring fair value under GAAP and enhances disclosures about fair value measurements. Fair value is defined under ASC 820-10-55 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

Level 1 - Unadjusted quoted prices in active markets that are accessible at measurement date for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities and less observable from objective sources.

The following schedule summarizes the valuation of financial instruments measured at fair value on a recurring basis in the consolidated balance sheet as of December 31, 2012;

	Fair Value Measurements at December 31, 2012 Using
	Ouated Prices In Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Commodity Derivatives - Current Liability (oil swaps and collars) Commodity Derivatives - Long Term Asset (oil swaps and		$(206, 645)$ \$
collars)		25,397
Total 1		(181, 248)

There were no financial instruments measured at fair value on a recurring basis as of December 31, 2011.

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EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

Level 2 assets consist of conunodity derivative assets and liabilities (See Note 14 - Derivative Instruments and Price Risk Management). The fair value of the commodity derivative assets and liabilities are estimated by the Company by utilizing an option pricing model which takes into account notional quantities, market volatility, market prices, contract parameters and discount rates based on published LIBOR rates. The Company validates the data provided by third parties by understanding the pricing models used, obtaining market values from other pricing sources, analyzing pricing data in certain situations and confirming that those securities trade in active markets. Assumed credit risk adjustments, based on published credit ratings, public bond yield spreads and credit default swap spreads, are applied to the Company's commodity derivatives. Significant changes in the quoted forward prices for commodities and changes in market volatility generally leads to corresponding changes in the fair value measurement of our oil derivative contracts. The fair value of all derivative contracts is reflected on the consolidated balance sheet.

NOTE 13 FINANCIAL INSTRUMENTS

The Company's non-derivative financial instruments include cash and cash equivalents, accounts receivable, accounts payable and the revolving credit facility. The carrying amount of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of their immediate or short-term maturities. The book value of the revolving credit facility approximates fair value because of its floating rate structure. The Company has classified the credit facility as a Level 2 item with the fair value hierarchy.

NOTE 14 DERIVATIVE INSTRUMENTS AND PRICE RISK MANAGEMENT

The Company utilizes commodity swap contracts and costless collars (purchased put options and written call options) to (i) reduce the effects of volatility in price changes on the oil commodities it produces and sells, (ii) reduce commodity price risk and (iii) provide a base level of cash flow in order to assure it can execute at least a portion of its capital spending.

All derivative positions are carried at their fair value on the consolidated balance sheet and are marked-to-market at the end of each period. Both the unrealized and realized gains and losses resulting from the contract settlement of derivatives are recorded in the loss on commodity derivatives line on the consolidated statement of operations.

The Company has a master netting agreement on each of the individual oil contracts and therefore the current asset and liability are netted on the consolidated balance sheet and the non-current asset and liability are netted on the consolidated balance sheet.

The Company realized a loss on settled derivatives of \$34,191 and an unrealized loss on mark-to-market of derivatives instruments of \$181,248 for the year ended December 31, 2012. The Company did not enter into derivative instruments prior to 2012.

The following table reflects open commodity swap contracts as of December 31, 2012, the associated volumes and the corresponding weighted average NYMEX reference price.

Settlement Period	Oil (Barrels)	Fixed Price	Weighted Avg NYMEX Reference Price
Oll Swaps
January 1, 2013 - December 31, 2013	73,370 \$	88.00 \$	92.70
January 1, 2014 - December 31, 2014	48,742 \$	2 00.88	92.70
January 1, 2015 - February 28, 2015	6,404 S	88.00 \$	92.70
Total	128,516

Costless collars are used to establish floor and ceiling prices on anticipated oil production. There were no premiums paid or received by the Company related to the costless collar agreements. The following table reflects open costless collar agreements as of December 31, 2012.

Term	Price	Basis
Costless Collars
January 1, 2013 - December 31, 2013	73,389 \$90,00-\$103.50	NYMEX
January 1, 2014 - December 31, 2014	54,525 \$90,00 \$103.50	NYMEX

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January 1, 2015 - February 28, 2015 Total		5		$7,472$ \$ 90.00-\$103.50 135,386	$\ensuremath{\text{NYMEX}}$	25
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EMERALD OIL, INC. FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

At December 31, 2012, the Company had derivative financial instruments recorded on the consolidated balance sheet as set forth below:

Type of Contract	Balance Sheet Location
Derivative Assets: Costless Collars Costless Collars Swap Contracts	Non-current assets Non-current liabilities Non-current liabilities		630,441 (382, 872) (222, 172)
Total Derivative Assets			25,397
Derivative Liabilities:
Costless Collars	Current liabilities	S	(194, 810)
Costless Collars	Current assets		365,679
Swap Contracts	Current liabilities		(377, 514)
Total Derivative Liabilities			(206, 645)
Net Derivative Position			(181.248)

The use of derivative transactions involves the risk that the counterparties will be unable to meet the financial terms of such transactions. The Company has netting arrangements with Wells Fargo Bank, N.A. that provide for offsetting payables against receivables from separate derivative instruments.

On January 4, 2013, the Company executed a NYMEX West Texas Intermediate oil derivative swap contract that unwound the swap and collar contracts and combined the swap and collar contracts into a single swap contract (see Note 16 - Subsequent Events).

NOTE IS COMMITMENTS AND CONTINGENCIES

We are subject to litigation claims and governmental and regulatory proceedings arising in the ordinary course of business. We believe that all such litigation matters are not likely to have a material adverse effect on the Company's financial position, cash flows or results of operations

NOTE 16 SUBSEQUENT EVENTS

Sand Wash Basin Sale

On January 7, 2013, the Company entered into a definitive agreement with East Management Services, LP ("East"), under which the Company has agreed to sell its undivided 45% working interest in and to certain oil and natural gas leaseholds in the Sand Wash Basin, comprising approximately 30,902 net acres of the Company's 45,800 net acres located in Routt and Moffatt Counties, Colorado and Carbon County, Wyoming. The effective time for the transfer of the leases will be the date of closing. The closing of the transaction is expected to occur during the first quarter of 2013, subject to the satisfaction of customary closing conditions and the condition that East and Entek GRB, LLC enter into and timely perform an agreement by which East acquires Entek's interest in the certain oil and gas leaseholds.

The aggregate estimated sales price is approximately \$10.0 million, subject to adjustment for certain title defects and title benefits and for leases with a primary term expiring on or before June 30, 2013 that cannot be renewed or extended. The Company is currently determining the appropriate sales allocation for this transaction. The agreement may be terminated (i) by mutual agreement of the parties; (ii) by East if certain representations by the Company regarding overriding royalty interests or working interests are not true; (iii) by East if during the 45-day period following execution of the Agreement, title defects exceed 5% of the net acres of the certain oil and gas leaseholds; (iv) by East if there are any environmental claims against the Company that might result in a material adverse effect on the certain oil and natural gas leaseholds, or (v) by either party if East is unable to acquire Entek's interest in the certain oil and natural gas leaseholds.

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EMERALD OIL, INC. FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

Acreage Acquisitions

On January 9, 2013, the Company entered into a purchase and sale agreement with a third party pursuant to which the Company. acquired leases of oil and natural gas properties in McKenzie County, North Dakota. Pursuant to the purchase and sale agreement and as consideration for the approximate \$4.7 million purchase price of the acquired leases, the Company issued 851,315 shares of its common stock at a per share value of \$5.50 per share, based on the five-day trading volume-weighted average price of the Company's common stock prior to closing. The Company issued the shares of common stock in reliance upon an exemption from the registration requirements under the Securities Act of 1933, as amended, provided by Section 4(2) thereof. The Company is currently determining the appropriate purchase price allocation for this transaction. Under the terms of each purchase and sale agreement, the Company agreed to register the shares issued to each respective seller for resale from time to time.

On February 4, 2013, the Company entered into a purchase and sale agreement with a third party pursuant to which the Company acquired leanes of oil and natural gas properties in McKenzie County, North Dakota. Pursuant to the purchase and sale agreement and as consideration for the approximate \$1.9 million purchase price of the acquired leases, the Company issued 313,700 shares of its common stock at a per share value of \$6.058 per share, based on the five-day trading volume-weighted average price of the Company's common stock prior to closing. The Company issued the shares of common stock in reliance upon an exemption from the registration requirements under the Securities Act of 1933, as amended, provided by Section 4(2) thereof. The Company is currently determining the appropriate purchase price allocation for this transaction. Under the terms of each purchase and sale agreement, the Company ugreed to register the shares issued to each respective seller for resale from time to time.

White Deer Energy Securities Purchase Agreement

On February 1, 2013, the Company entered into a securities purchase agreement with WDE Emerald Holdings LLC, a Delaware limited liability company, and White Deer Energy FI L.P., a Cayman Islands exempted limited partnership, pursuant to which, in exchange for a cash investment of \$50 million, the Company issued to the Investors the following (collectively, the "Investment"):

500,000 shares of a new Series A Perpetual Preferred Stock, \$0.001 par value per share (the "Series A Preferred Stock");
5.114,633 shares of a new Series B Voting Preferred Stock, \$0.001 par value per share (the "Series B Preferred Stock"); and
warrants to purchase an initial aggregate amount of 5,114,633 shares of the Company's common stock, \$0.001 par value per share (the "Common Stock"), at an initial exercise price of \$5.77 per share.

The Series A Preferred Stock, the Series B Preferred Stock and the warrants are referred to herein as the "Securities." The warrants will entitle the holders thereof to acquire a number of shares of Common Stock equal to approximately 19.75% of the shares of Common Stock outstanding as of February 19, 2013, or approximately 16.49% of the Company's outstanding Common Stock on a diluted basis taking into account the exercise of the warrants. The Company is currently evaluating the accounting for the issuance of the preferred stock and related warrants to determine whether equity and/or liability treatment is required.

Prior to April 1, 2015, the Company may pay dividends on the outstanding shares of Series A Preferred Stock either in cash or by issuance of additional shares of Series A Preferred Stock valued at the volume-weighted average trading price of the Common Stock for the ten consecutive trading days preceding the dividend payment date and an additional warrant to purchase shares of Common Stock at an exercise price equal to such volume-weighted average price; provided that such dividends must be paid in cash unless and until the Company's shareholders vote to approve the issuance of any warrants and any shares of Common Stock issuable upon exercise of such warrants.

Derivative Instruments

Sk. 72

10.

On January 4, 2013, the Company executed the following NYMEX West Texas Intermediate oil derivative swap contract that terwound the awap and collar contracts disclosed in Note 14 - Derivative Instruments and Price Risk Management above and combined the swap and collar contracts into a single swap contract as indicated below:

Weighted Avg

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				http://www.sec.gov/Archives/edgar/data/1283843/000114420413015586
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ų		Settlement Period		Oil (Barrels) Fixed Price			NYMEX Reference Price
	Oil Swaps	January 1, 2013 - December 31, 2013
		January 1, 2014 - December 31, 2014		146,759 103,267	\$ \$	91.00 S 91.00 S	93.12 93.12
	Total	January 1, 2015 - February 28, 2015		13,876 263,902	s	91.00 S	93.12
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EMERALD OIL, INC. (FORMERLY VOYAGER OIL & GAS, INC.)

Notes to Consolidated Financial Statements

NOTE 17 QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

Quarterly data for the years ended December 31, 2012 and 2011 are as follows:

March 31, June 30. September 30, 2012 Revenue 4,185,898 9,014,972 5,476,134 s s s s Expenses 3,926,478 15,806,435 2,065,334 Income (Loss) from Operations 259,420 (6,791,463) 3,410,800	December 31, 9,237,542 65,769,914




	(56, 532, 372)
Other Income (Expense), Net (515,790) (169, 445) (1, 415, 958)	(541, 291)
Net Income (Loss) (256,370) \$(6,960,908) 1,994,842	\$ (57,073,663)
Net Loss Per Common Share - Basic and diluted (0.00) $(0.12)$ \$ 0.20 s	(2.36)
Ouarter Ended

March 31, June 30. December 31, September 30,
2011
Revenue 1,666,535 s 832.621 2,872,674 s s s	3,054,299
Expenses 1,233,288 1,592,166 2,310,151	2,577,136
Income (Loss) from Operations (400.667) 74,369 562,523	477,163
Other Income (Expense), Net (489,107) (539, 426) (506, 649)	(523, 260)
Net Income (Loss) (889, 774) (465, 057) 55,874 s	(46,097)

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SUPPLEMENTAL OIL AND NATURAL GAS INFORMATION

(UNAUDITED)

Oil and Natural Gas Exploration and Production Activities

Oil and natural gas sales reflect the market prices of net production sold or transferred with appropriate adjustments for royalties, net profits interest, and other contractual provisions. Production expenses include litting costs incurred to operate and maintain productive wells and related equipment including such costs as operating labor, repairs and maintenance, materials, supplies and fuel consumed. Production taxes include production and severance taxes. Depletion of oil and ratural gas properties relates to capitalized costs incurred in acquisition, exploration, and development activities. Results of operations do not include interest expense and general corporate amounts. The results of operations for the Company's oil and natural gas production activities are provided in the Company's related statements of operations.

Costs Incurred and Capitalized Costs

The costs incurred in oil and natural gas acquisition, exploration and development activities follow:

		Year Ended December 31.
	2012	2011	2010
Costs Incurred for the Year: Proved Property Acquisition	7,799,945
Unproved Property Acquisition	54,917,350	18,351,743	22,886,390
Exploration Costs	1,939,440	251,566	1.358.867
Development	71.811.058	36,125,604	9,154,054
Total	\$136,467,793		\$54,728,913 \$33,399,311

Excluded costs for unproved properties are accumulated by year. Costs are reflected in the full cost pool as the drilling costs are incurred or as costs are evaluated and deemed impaired. The Company anticipates these excluded costs will be included in the depletion computation over the next five years. The Company is unable to predict the future impact on depletion rates. The following is a summary of capitalized costs excluded from depletion at December 31, 2012 by year incurred.

			Year Ended December 31.
	Total	2012	2011	2010	Prior Years
Property Acquisition	\$55,127,107	34,486,397	9,712,705	8,402,218	2,525,787
Exploration	3,549,873	1,939,440	251,565	1,358,868
Drilling	2,777,851	1,973,696	642,225	161,930
Total	61,454,831	38,399,533	10,606,495	9,923,016	2,525,787

Oil and Natural Gas Reserves and Related Financial Data

Information with respect to the Company's oil and natural gas producing activities is presented in the following tables. Reserve quantities, as well as certain information regarding future production and discounted cash flows, were determined by Pressler Petroleum Consultants, Inc. and audited by Netherland Sewell & Associates, Inc.

Oll and Natural Gas Reserve Data

The following tables present the Company's estimates of its proved oil and natural gas reserves. The Company emphasizes that reserves are approximations and are expected to change as additional information becomes available. Reservoir engineering is a aubjective process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact way, and the accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment.

125 of 127

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	Natural Gas (MCF)	OII (BLS)
Proved Developed and Undeveloped Reserves at December 31, 2009. Revisions of Previous Estimates Production	187,130 (3,489)	354,757 (13, 198)
Proved Developed and Undeveloped Reserves at December 31, 2010	183,641	341,559
Revisions of Previous Estimates Extensions, Discoveries and Other Additions Production	21,651 1,548,713 (14,962)	104,077 2,876,902 (95, 517)
Proved Developed and Undeveloped Reserves at December 31, 2011	1,739,043	3,227,021
Revisions of Previous Estimates Extensions, Discoveries and Other Additions	(1, 225, 387) 841,310	(2,738,676) 1,808,282
Acquisition of Reserves Production	1,680,618 (127.091)	2,892,866 (320, 147)
Proved Developed and Undeveloped Reserves at December 31, 2012	2,908,493	4,869,346
Proved Developed Reserves: Proved Developed Reserves at December 31, 2009
Proved Developed Reserves at December 31, 2010	35,573	94,783
Proved Developed Reserves at December 31, 2011	410,092	1,066,504
Proved Developed Reserves at December 31, 2012.	1,014,158	1,788,230
Proved Undeveloped Reserves: Proved Undeveloped Reserves at December 31, 2009
Proved Undeveloped Reserves at December 31, 2010	148,067	246,776
Proved Undeveloped Reserves at December 31, 2011	1,328,953	2,160,518
Proved Undeveloped Reserves at December 31, 2012	1,894,335	3,081,116

Proved reserves are estimated quantities of oil and natural gas, which geological and engineering data indicate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved developed reserves are proved reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. Proved undeveloped reserves are included for reserves for which there is a high degree of confidence in their recoverability and they are scheduled to be drilled within the next five years.

Standardized Measure of Discounted Future Net Cash Inflows and Changes Therein

The following table presents a standardized measure of discounted future net cash flows relating to proved oil and mural gas reserves and the changes in standardized measure of discounted future net cash flows relating to proved oil and natural gas were prepared in accordance with the provisions of ASC 932-235-555, Future cash inflows were computed by applying average prices of oil and natural gas for the last 12 months as of December 31, 2012 to estimated future production. Future production and development costs were computed by estimating the expenditures to be incurred in developing and producing the proved oil and mitural gas reserves at the end of the year, based on year-end costs and assuming continuation of existing economic conditions. Future income tax expenses were calculated by applying appropriate year-end tax rates to future pretax cash flows relating to proved oil and natural gas reserves, less the tax basis of properties involved and tax credits and loss carryforwards relating to oil and natural gas producing activities. Future net cash flows are discounted at the rate of 10% annually to derive the standardized measure of discounted future cash flows. Actual future cash inflows may vary considerably, and the standardized measure does not necessarily represent the fair value of the Company's oil and natural gas reserves.

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		Year Ended December 31,
	2012	2011	2010
Future Cash Inflows	\$432,483,781	\$297.627.312	24.430.880
Future Production Costs	(135.774.945)	(78, 513, 840)	(6, 183, 310)
Future Development Costs	(93, 833, 711)	(65,608,984)	(8,643,951)
Future Income Taxes	(12, 157, 129)
Future Net Cash Inflows	190,717,996	153,504,488	9,603,619
10% Annual Discount for Estimated Timing of Cash Flows	(105, 433, 212)	(93,879,486)	(4,828.213)
Standardized Measure of Discounted Future Net Cash Flows	85,284,784	59,625,002	4,775,406

The twelve month average prices for the year ended December 31, 2012 was adjusted to reflect applicable tramportation and quality differentials on a well-by-well basis to arrive at realized sales prices used to estimate th the Company's reserve estimates were as follows:

	Natural Gas MCF		Оil BM
December 31, 2012		5.13S	85,75
December 31, 2011	6.34		88.81
December 31, 2010	4.05		69.35

Changes in the future net cash inflows discounted at 10% per annum follow:

		Year Ended December 31,
	2012	2011	2010
Beginning of Period	59,625,002	4,775,406
Sales of Oil and Natural Gas Produced, Net of Production Costs	(22.447.837)	(6.981.743)	(813, 411)
Extensions and Discoveries	38,895,353	45,912,799	5,588,817
Previously Estimated Development Cost Incurred During the Period	11,482,616	7,959,195
Net Change of Prices and Production Costs	(3.003.652)	6,349,467
Change in Future Development Costs	(13.726.678)	(197.986)
Revisions of Quantity and Timing Estimates	(30.431.352)	1,079,350
Accretion of Discount	5,962,520	477.541
Change in Income Taxes	(2.534.578)
Purchase of Reserves in Place	31,348,048
Changes in timing and other	10,115,342	250,973
	85,284,784	59,625,002	775,406

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ANNEXURE D - OVERVIEW OF EOX'S BUSINESS

EMERALD OIL, INC.

ANNUAL REPORT ON FORM 10-K

FOR FISCAL YEAR ENDED DECEMBER 31, 2012

PART I

Item L. Business

Overview

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Emerald Oil, Inc., a Montana corporation ("Emerald," the "Company," "we," "us," or "our"), is a Denver-based independent exploration and production company focused on the development of operated wells in the Williston Basin in North Dakota and Montana.

On July 26, 2012, we completed the acquisition of Emerald Oil North America, Inc., formerly Emerald Oil, Inc., from Emerald Oil & Gas NL for approximately 1.66 million of our shares of common stock, which represented approximately 19.9% of our outstanding common stock as of the closing date. As part of the acquisition, we agreed to retain Emerald Oil North America's liabilities, including approximately \$20.3 million in debt. Included in the acquisition were approximately 10,600 net acres located in Dunn County, North Dakota and approximately 45,000 net acres in the Sand Wash Basin Niobrara shale oil play in northwestern Colorado and southwestern Wyoming. In connection with the closing of the acquisition, five existing members of our board of directors resigned, and their vacancies were filled with directors selected by the remaining members of our board of directors. Also in connection with the closing of the acquisition, we entered into employment agreements with six officers, J.R. Reger (Executive Chairman-formerly our Chief Executive Officer), Mike Krzus (Chief Executive Officer), McAndrew Rudisill (President), Paul Wiesner (Chief Financial Officer), Karl Osterbuhr (Vice President of Exploration and Business Development) and Mitchell R. Thompson (Chief Accounting Officer-formerly our Chief Financial Officer).

Following the closing of the acquisition, we took the following actions:

changed our name from Voyager Oil Gas, Inc. to Emerald Oil, Inc.;
changed the ticker symbol for our common stock traded on the NYSE MKT from "VOG" to "EOX";
amended our 2011 Equity Incentive Plan to increase the number of shares of our common stock authorized for issuance under the plan to 3.5 million shares;
effected a 1-for-7 reverse stock split of our common stock (all amounts herein have been retroactively adjusted to take into account the effect of the reverse stock split); and
increased the aggregate number of authorized shares of common stock available for issuance to 500,000.000 shares.

Since the acquisition of Emerald Oil North America, we began establishing an operated drilling program in McKenzie County, North Dakota. We believe the addition of operating capabilities provides increased control over the planning and designing of well development and increases our long-term growth prospects and attractiveness to partner with others. We monitor and plan to continue to monitor offset operator drilling activity in the Williston Basin, and as development activity increases and well designs improve to enhance production and well economics, we plan to replicate the well designs and drilling and completion techniques that we believe represent best practices in the area.

As of December 31, 2012, we had approximately 46,000 net acres in the Williston Basin. Pro forma for closed and pending acquisitions in 2013, we currently hold approximately 51,000 net acres. We have identified approximately 279 net potential drilling locations on this acreage prospective for oil in the Bakken and Three Forks formations. The majority of our capital expenditures in 2013 are expected to be directed toward drilling operated Bakken and Three Forks wells. We plan to leverage our management team's collective technical, land, financial, and industry operating experience to execute our operated well development program in the Williston Basin that we believe provides significant risk-adjusted returns on capital while enhancing the strategic value of our company.

In addition to our Williston Basin position, we hold positions in the following Rocky Mountain oil and natural gas plays. We have

approximately 14,600 net acres in the Sand Wash Basin in northwest Colorado (pending an expected sale of 31,000 net acres in the Sand Wash Basin in southwest Wyoming) prospective for oil in the Niobrara formation. We have approximately 33,500 net acres in central Montana prospective for oil in the Heath formation. We have approximately 72,800 net acres in the Tiger Ridge Field located in Blaine, Hill, and Chouteau Counties, Montana, prospective for natural gas, and another approximate 1,700 net acres in the Denver-Julesburg (or DJ) Basin in Weld County, Colorado, prospective for oil in the Niobrara formation. As of December 31, 2012 our oil and natural gas production was derived from participation in wells as a non-operating partner basis proportionate to our working interest, allowing us to participate with established operators.

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We have been trading and expect to continue to trade or swap our non-operated acreage to increase our operated acreage and working interests in areas where we have existing acreage. Most trades are for comparable acreage and mutually beneficial for both us and the other party, as we consolidate and increase our working interests. We also intend to acquire more operated acreage through a variety of means, including cash purchases and the issuance of common stock as purchase price consideration.

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Recent Developments

White Deer Energy Securities Purchase Agreement

On February 19, 2013, we completed a private offering with affiliates of White Deer Energy L.P. ("White Deer Energy"), pursuant to which, in exchange for a cash investment of \$50 million, we issued the following to White Deer Energy:

500,000 shares of a new Series A Perpetual Preferred Stock, \$0.001 par value per share (the "Series A Preferred Stock");
5,114,633 shares of a new Series B Voting Preferred Stock, \$0,001 par value per share (the "Series B Preferred Stock"); and
warrants to purchase an initial aggregate 5,114,633 shares of our common stock, \$0.001 par value per share, at an initial exercise price of \$5.77 per share.

The Series A Preferred Stock has a cumulative dividend rate of 10% per annum, payable quarterly on each March 31, June 30, September 30 and December 31, commencing on March 31, 2013. If we voluntarily or involuntarily liquidate, dissolve or wind up our affairs, the Series A Preferred Stock will be entitled to receive out of our available assets, after satisfaction of liabilities to creditors, if any, and before any distribution of assets is made on our common stock or any other shares of our junior stock, a liquidating distribution in the amount, with respect to each share of Series A Preferred Stock, equal to the sum of (a)(1) on or prior February 19, 2015, \$112.50, (2) from February 20, 2015 through February 19, 2016, \$110.00, (3) from February 20, 2016 through February 19, 2017, \$105.00 and (4) thereafter, \$100.00 and (b) the accrued and unpaid dividends thereon (the "Liquidation Preference"). Prior to April 1, 2015, we may pay dividends on the Series A Preferred Stock either (x) in cash or (y) by issuance of (A) additional shares of Series A Preferred Stock valued at the same value as the initial per share purchase price of the Series A Preferred Stock and (B) an additional warrien to purchase shares of common stock; provided that such dividends must be paid in cash unless and until we obtain shareholder approval to authorize the issuance of any additional warrants and any shares of common stock issuable upon exercise of such additional warrants. We have the option to redeem shares of Series A Preferred Stock in whole or in part at any time at the appregate Liquidation Preference, subject to a minimum redemption amount equal to the lesser of 50,000 shares or the number of shares then outstanding. Upon a change of control, the holders of the Series A Preferred Stock have the right to require us to purchase the Series A Preferred Stock at the Liquidation Preference. The Series A Preferred Stock does not vote generally with our common stock, but has specified approval rights with respect to, among other things, changes to our organizational documents that affect the Series A Preferred Stock, payment of dividends on our common stock or other junior stock, redemptions or repurchases of common stock or other capital stock and incurrence of certain indebtedness. Upon the occurrence of certain events of default under our credit facility with Wells Fargo Bank, N.A., the holders of the Series A Proferred Stock have additional specified approval rights with respect to, among other things, the incurrence or guarantee by us of any indebtedness, any change in compensation or benefits of or employment or severance agreements with our officers and any agreement or arrangement pursuant to which we or our subsidiaries would pay or incur liability in excess of \$1,000,000 over the term of such agreement or arrangement.

The Series B Preferred Stock is entitled to vote, until January 1, 2020, in the election of directors and on all other nutters submitted to a vote of the holders of common stock as a single class. Each share of Series B Preferred Stock has one vote. The Series B Preferred Stock has no dividend rights and a liquidation preference of \$0.001 per share. On and from time to time after January 1, 2020 we nuy redeem, in whole or in part, the then-outstanding shares of Serien B Preferred Stock, at a redemption price per share equal to \$0.001.

The warrants entitle the holders thereof to acquire a number of shares of common stock equal to approximately 19.75% of our shares of common stock outstanding as of February 19, 2013, or approximately 16,49% of our outstanding Common Stock on a diluted basis taking into account the exercise of the warrants.

Amendment to Our Credit Facility

In connection with the White Deer Energy investment, we amended our credit facility with Wells Fargo Bank, N.A. to allow for the payment of dividends on the preferred stock we issued to White Deer Energy and include additional definitions related to the issuance of the Series A and Series B Preferred Stock.

Acreage Acquisitions

On January 9, 2013, we entered into a purchase and sale agreement with a third party pursuant to which we acquired leases of oll and natural gas properties in McKenzie County, North Dakota. As consideration for the approximate \$4.7 million purchase price of the acquired leases, we issued 851,315 shares of our common stock at a per share value of \$5.50 per share, based on the five-day trading volume-weighted average price of our common stock prior to the closing of the acquisition.

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On February 4, 2013, we entered into a purchase and sale agreement with a third party pursuant to which we acquired leases of oil and natural sas properties in McKenzic County, North Dakota. Pursuant to the purchase and sale agreement and as consideration for the approximate \$1.9 million purchase price of the acquired leases, we issued 313,700 shares of our common stock at a per share value of \$6,058 per share, based on the five-day trading volume-weighted average price of our common stock prior to closing.

For both acquisitions, we issued the shares of common stock in rellance upon the exemption from the registration requirements under the Securities Act of 1933, as amended, provided by Section 4(2) thereof. Under the terms of each purchase and sale agreement, we granted registration rights to the seller.

Sand Wesh Basin Sale

On January 7, 2013, we entered into a definitive agreement with East Management Services, LP ("East"), under which we have agreed to sell our undivided 45% working interest in and to certain oil and natural gas leaseholds in the Sand Wash Basin, comprising approximately 31,000 net acres of our 46,000 net acres located in Routi and Moffatt Counties, Colorado and Carbon County, Wyoming. The effective time for the transfer of the leases will be the date of closing, which is expected to occur during the first quarter of 2013, subject to the satisfaction of customary closing conditions and the condition that East and Entek GRB, LLC timely perform an agreement by which East will acquire Entek's interest in the same oil and natural gas leaseholds,

The aggregate sale price is approximately \$10.0 million, subject to adjustment for certain title defects and title benefits and for leases with a primary term expiring on or before June 30, 2013 that cannot be renewed or extended. The agreement may be terminated (i) by mutual agreement of the parties; (ii) by East if certain representations made by us regarding overriding royalty interests or working interests are not true; (iii) by East if during the 45-day period following execution of the agreement, title defects exceed 5% of the net acres of the certain oil and ratural gas leaseholds; (iv) by East if there are any environmental claims that might result in a material adverse effect on the oil and natural gas leasebolds, or (v) by either party if East is unable to acquire Entek's interest in the oil and natural gas leaseholds.

Production Methods

We began our operated drilling program in McKenzie County, North Dakota in November 2012. We have successfully drilled three operated wells and are in the process of drilling our fourth operated well with our continuous one-rig drilling program. The first three operated wells are scheduled to begin fracture stimulation by the end of first quarter of 2013. Going forward, we expect that revenue from oil and intural gas produced from our operated leasehold positions will increase as a percentage of our overall revenue.

Currently, all of our oil and natural gas production comes from production in which we participate on a heads-up basis alongside third-party interests in wells drilled and completed in spacing units that include our acreage. We typically depend on our drilling partners to propose, permit and initiate the drifting of wells. Prior to commencing drilling, our partners are required to provide all owners of oil, materal gas and mineral interests within the designated spacing unit the opportunity to participate in the drilling costs. and revenues of the well to the extent of their pro-rata share of such interest within the spacing unit. In 2011, we participated in the drilling of all proposed wells that included any of our acreage. Beginning in 2012 and on a going forward basis, we assess each drilling opportunity on a case-by-case basis and participate in wells that we expect to meet our return thresholds based upon our estimates of ultimate recoverable oil and natural gas, expertise of the operator and completed well cost from each project, as well as other factors.

We manage our operated commodities marketing and hedging activities internally. We expect to coordinate the transportation of our oil production from our operated wells to the appropriate off-take facilities by means of truck transport at the well head, rail car transport and pipeline off-take. For our non-operated properties, our operating partners generally market and sell the oil and natural ass produced from wells in which we have an interest. Our operating partners coordinate the transportation of our oil production to the appropriate pipelines pursuant to arrangements that such partners negotiate and maintain with various parties purchasing the production. We understand that our partners generally sell our production to a variety of purchasers at prevailing market prices under separately negotiated short-term contracts. The price at which production is sold generally is tied to the spot market for oil. Williston Basin Light Sweet Crude from the Bakken and Three Forks source rock is generally 41-42 degrees API oil and is readily accepted into the pipeline infrastructure. Our average differential during 2012 was approximately \$8,42 per Bbl below New York Mercantile Exchange ("NYMEX") pricing. This differential represents the imbedded transportation costs in moving oil from the wellhead to the refinery.

2013 Capital Budget

For the 12-month period ending December 31, 2013, we plan to spend approximately \$86 million on well development in the

Williston Basin. Specifically, we plan to spend approximately \$78.5 million (\$82.5 million less \$4.0 million spent during the three months ended December 31, 2012) to drill 7.5 net operated wells at an average estimated co informately \$7.4 million to participate in 0.8 net non-operated wells at an average estimated cost of \$11.0 million per well and approximately \$7.4 million to participate in 0.8 net non-operated wells at an average estimat

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Competition

The oil and natural gas industry is interestly competitive, particularly with respect to the acquisition of prospective oil and natural gas properties and oil and natural gas reserves. Our ability to effectively compete is dependent on our geological, geophysical and engineering expertise, and our financial resources. We compete against a substantial number of major and independent oil and natural gas companies that have larger technical staffs and greater financial and operational resources than we do. Many of these companies not only engage in the acquisition, exploration, development and production of oil and natural gas reserves, but also have refining operations, market refined products and generate electricity. We also compete with other oil and natural gas companies to secure drilling rigs and other equipment necessary for drilling and completion of wells. Generally, as oil and natural gas prices decline, access to additional drilling equipment and completion services becomes more available. Conversely, as commodity prices increase, drilling equipment, may be in short supply from time to time. See Item 1A. Risk Factors - Competition in obtaining rights to explore and develop oil and natural gas reserves and to market our production may impair our business.

Marketing and Customers

The market for oil and natural gas we produce depends on factors beyond our control, including the extent of domestic production and imports of oil and natural gas, the proximity and capacity of natural gas pipelines and other transportation facilities, demand for oil and natural gas, the marketing of competitive fuels and the effects of state and federal regulation. The oil and natural gas industry also competes with other industries in supplying the coergy and fuel requirements of industrial, commercial and individual consumers.

Our oil production will generally be sold at prices tied to spot oil markets. Our ratural gas production is expected to be sold under long-term contracts and priced based on a set differential to daily spot market prices. We rely on our internal marketing group to sell all of our operated production and we rely on our working interest partners to sell all of our non-operated production. Our non-operated working interest partners include a variety of exploration and production companies, from large publicly traded companies to small, privately owned companies. See Item 1A. Risk Factors - We own a significant amount of operated and
non-operated acreage. Our development of successful operations on our operated acreage depends on the t our team and is inherently affected by the geology of each prospect. Our non-operated acreage relies extensively on third-parties who, if not successful, could have a material adverse effect an our results of operation.

Principal Agreements Affecting Our Ordinary Business

We do not own any physical real estate, but, instead, our acreage is comprised of leasehold interests subject to the terms and provisions of lease agreements that provide us the right to drill and maintain wells in specific geographic areas. All lease arrangements that comprise our acreage positions are established using standard terms used in the oil and natural gas industry for many years.

In general, our lease agreements stipulate three- to five-year primary terms. Bonases and royalty rates are negotiated on a case-by-case basis corelistent with industry standard pricing. Once a well is drilled and production established, the unit is considered held by production, meaning the lease continues as long as hydrocarbons are being produced. Other locations within the drilling unit created for a well may also be drilled at any time as long as the lease is held by production. Given our plans to develop our operated acreage and the current pace of drilling in the Williston Basin, we do not believe lease expirations will materially affect our acreage positions.

Governmental Regulation and Environmental Matters

Our operations are subject to various rules, regulations and limitations impacting the oil and natural gas exploration and production industry as a whole.

Regulation of Oil and Natural Gas Production

Our oil and natural gas exploration, production and related operations, when developed, are subject to extensive rules and regulations promulgated by federal, state, tribal and local authorities and agencies. For example, North Dakota, Montana and Colorado require permits for drilling operations, drilling bonds and reports concerning operations and impose other requirements relating to the exploration and production of oil and natural gas. Such states may also have statutes or regulations addressing conservation matters, including provisions for the unitization or pooling of oil and natural gas properties, the establishment of maximum rates of production from wells, and the regulation of spacing, plugging and abandomment of such wells. Failure to comply with any such rules and regulations can result in substantial penalties. The regulatory burden on the oil and natural gas industry will most likely increase our cost of doing business and may affect our profitability. Although we believe we are currently in substantial compliance with all applicable laws and regulations, because such rules and regulations are frequently amended or reinterpreted, we

are unable to predict the future cost or impact of complying with such laws. Significant expenditures may be required to comply with
governmental laws and regulations and may have a material adverse effect on our financial

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Environmental Matters

Our operations and properties are subject to extensive and changing federal, state and local laws and regulations relating to environmental protection, including the generation, storage, handling, emission, transportation and discharge of materials into the environment, and relating to safety and health. The recent trend in environmental legislation and regulation generally is toward stricter standards, and this trend will likely continue. These laws and regulations may:

· require the acquisition of a permit or other authorization before construction or drilling commences and for certain other activities:
limit or prohibit construction, drilling and other activities on certain lands lying within wilderness and other protected areas; and
impose substantial liabilities for pollution resulting from our operations.

The permits required for our operations may be subject to revocation, modification and renewal by issuing authorities. Governmental authorities have the power to enforce their regulations, and violations are subject to fines, injunctions, or both. In management's opinion, we are in substantial compliance with current applicable environmental laws and regulations, and have no material commitments for capital expenditures to comply with existing environmental requirements. Nevertheless, changes in existing environmental havs and regulations or in interpretations thereof could have a significant impact on us, as well as the oil and natural gas industry in general.

The following is a summary of some of the existing laws, rules and regulations to which our operations are subject.

The Comprehensive Environmental, Response, Compensation, and Liability Act (CERCLA) and comparable state statutes impose strict, joint and several liability on owners and operators of sites and on persons who disposed of or arranged for the disposal of "hazardous substances" found at such sites. It is not uncommon for the neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment. The Federal Resource Conservation and Recovery Act (RCRA) and comparable state statutes govern the disposal of "solid waste" and "hazardous waste" and authorize the imposition of substantial fines and penalties for noncompliance, Although CERCLA currently excludes petroleum from its definition of "hazardous substance," state laws affecting our operations may impose clean-up liability relating to petroleum and petroleum related products. In addition, although RCRA classifies certain oil field wastes as "non-hazardous," such exploration and production wastes could be reclassified as hazardous wastes thereby making such wastes subject to more stringent handling and disposal requirements.

The federal Sufe Drinking Water Act (SDWA) and the Underground Injection Control (UIC) program promulgated under the SDWA and state programs regulate the drilling and operation of salt water disposal wells. The Environmental Protection Agency (EPA) directly administers the UIC program in some states and in others it is delegated to the state for administering. Permits must be obtained before drilling salt water disposal wells, and casing integrity monitoring must be conducted periodically to ensure the casing. is not leaking salt water to groundwater. Communination of groundwater by oil and natural gas drilling, production, and related operations may result in fines, penalties, and remediation costs, among other sanctions and liabilities under the SDWA and state laws. In addition, third party claims may be filed by landowners and other parties claiming damages for alternative water supplies, property damages, and hodily injury

Our operations are also subject to the federal Clean Water Act and analogous state laws. The Clean Water Act and similar state acts regulate other discharges of wastewater, oil, and other pollutants to surface water bodies, such as lakes, rivers, wetlands, and streams. Failure to obtain permits for such discharges could result in civil and criminal penalties, orders to cease such discharges, and costs to remediate and pay natural resources damages. Under the Clean Water Act, the EPA has adopted regulations concerning discharges of storm water runoff. This program requires covered facilities to obtain individual permits, or seek coverage under a general permit. Some of our properties may require permits for discharges of storm water runoff and, as part of our overall evaluation of our current operations, we will apply for storm water discharge permit coverage and updating storm water discharge management. practices at some of our facilities. We believe that we will be able to obtain, or be included under, these permits, where necessary, and make minor modifications to existing facilities and operations that would not have a material effect on us. These laws also require the preparation and implementation of Spill Prevention, Control, and Countermeasure Plans in connection with on-site storage of significant quantities of oil.

The federal Clean Air Act and comparable state laws regulate emissions of various air pollusants through air emissions permitting. programs and the imposition of other requirements. In addition, the EPA has developed and continues to develop stringent regulations governing emissions of toxic air pollutants at specified sources. Federal and state regulatory agencies can impose administrative,

civil and criminal penalties for non-compliance with air permits or other requirements of the federal Clean Air Act and associated state laws and regulations. Our operations, or the operations of service companies engaged by us, may be, in certain circumstances and locations, subject to permits and restrictions under these statutes for emissions of air pollutants.

The Endangered Species Act (ESA) seeks to ensure that activities do not jeopardize endangered or threatened animal, fish and plant species, nor destroy or modify the critical habitat of such species. Under ESA, exploration and production operations, as well as actions by federal agencies, may not significantly impair or jeopardize the species or its habitat. ESA provides for criminal penalties for willful violations of ESA. Other statutes that provide protection to animal and plant species and that may apply to our operations include, but are not necessarily limited to, the Fish and Wildlife Coordinati Management Act, the Migratory Bird Treaty Act and the National Historic Preservation Act. Although we believe that our operations are in substantial compliance with such statutes, any change in these statutes or any reclassification of a species as endangered could subject us to significant expenses to modify our operations or could force us to discontinue certain operations altogether.

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Ilydraulic Fracturing Concerns

The practice of hydraulic fracturing has recently become the subject of significant focus among some environmentalists, regulators and the general public. Concerns over potential hazards associated with the use of hydraulic fracturing and its impact on the environment have been raised at all levels, including federal, state and local. There have been reports associating hydraulic fracturing with groundwater contamination, improper waste disposal, poor air quality and earthquakes. Hydraulic fracturing requires the use and disposal of significant quantities of water, and public concern has been growing over its possible effects on drinking water supplies. as well as the adequacy of supply. Hydraulic fracturing techniques have been used by the industry for many years, and, currently, more than 90% of all oil and natural ans wells drilled in the U.S. employ hydraulic fracturing. We and our operating partners strive to adopt best practices and industry standards and comply with all regulatory requirements regarding well construction and operation. We have, and believe our operating partners have, established processes to help ensure that hydraulic fracturing does not pose a meaningful risk to water supplies,

Potential Rulemaking

Although hydraulic fracturing is regulated primarily at the state level, governments and agencies at all levels from federal to municipal are conducting studies and considering regulations. For example, in 2011, the U.S. Secretary of Evergy formed the Shale Cas Production Subcommittee, a subcommittee of the Secretary of Energy Advisory Board. The Subcommittee was charged with making recommendations to improve the safety and environmental performance of hydraulic fracturing. On August 18, 2011, the Subcommittee issued its Ninety Day Report (the "Report"), which focused exclusively on the production of matural gas (and some liquid hydrocarbons) from shale formations with hydraulic fracturing stimulation in either vertical or horizontal wells. The Subcommittee identified four primary areas of concern including possible water pollution, air pollution, disruption of the community during production, and potential for adverse impact on communities and ecosystems. The Subcommittee also set forth a list of recommendations addressing, among other areas, communications, air quality, protection of water supply and quality, disclosure of fracturing fluid composition, reduction of diesel fuel use, continuous development of best practices, and federal sponsorship of research and development with respect to unconventional gas. The Subcommittee issued its Final Report in November 2011, which recommended implementation of the Subcommittee's recommendations by federal and state agencies. We will continue to monitor the Impact the Subcommittee's recommendations, and any resulting rule-making activities evolving at federal and state levels, could have on our exploration and development activities.

During 2012, the Bureau of Land Management (BLM) proposed regulations governing hydraulic fracturing on federal lands. The regulations would require: (1) public disclosure of chemicals used in hydraulic fracturing operations: (2) assurances on well-bore integrity to verify that fluids used in wells during fracturing operations are not escaping; and (3) confirmation of a water management ptan in place for handling fracturing fluids that flow back to the surface. On January 21, 2013, the BLM announced that it was withdrawing its proposed regulations and would reissue a new set of proposed regulations regarding hydraulic fracturing later in 2013.

During 2012, the EPA proposed new guidelines under the Safe Drinking Water Act regarding the issuance of permits for the use of diesel fuel as a component in hydraulic fracturing activities. The draft guidance outlines for EPA permit writers, where the EPA is the permitting authority, requirements for diesel facis used for hydraulic fracturing wells, technical recommendations for permitting those wells, and a description of diesel firsts for EPA underground injection control permitting.

The EPA is currently studying the potential impacts of hydraulic fracturing on drinking water resources. Results are expected to be released in a draft for public and peer review in 2014. In addition, the EPA's recently-issued proposed rules subjecting oil and natural gas operations to regulation under the New Source Performance Stundards will be applicable to newly drilled and fractured wells as well as existing wells that are refractured.

We continue to monitor new and proposed legislation and regulations to assess the potential impact on our business. Any additional federal, state or local restrictions on hydraulic fracturing that may be imposed in areas in which we conduct business could result in substantial incremental operating, capital and compliance costs as well as delay our ability to develop oil and natural gas reserves. For additional discussion, see Item 1A. Risk Factors - Federal or state hydraulic fracturing legislation could increase our costs or restrict our access to oil and natural gas reserves.

Climate Change

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directed at controlling greenhouse gas emissions, and future legislation and regulation could impose additional restrictions or requirements in connection with our drilling and production activities and favor use of alternative energy sources, which could increase operating costs and demand for oil products. As such, our business could be materially adversely affected by domestic and international legislation targeted at controlling climate change.

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Employees

We currently have 15 full time employees. Our Chief Executive Officer, Michael Krzus, and our Chief Financial Officer, Paul Wiesner, are responsible for all material employee related policy-making decisions. None of our employees are subject to a collective bargaining agreement. If drilling and production activities continue to increase, we may hire additional technical or administrative personnel as appropriate. We are using and will continue to use the services of independent consultants and contractors to perform various professional services, particularly in the area of reservoir engineering, well drilling and well completion operations.

Office Locations

Our executive offices are located at 1600 Broadway Avenue, Suite 1360, Denver, Colorado 80202, Our land operations office is located at 2718 Montana Avenue, Suite 220, Billings, Montana 59101. We believe our current office spaces will be sufficient to meet our needs for the foreseeable future.

Fluancial Information about Segments and Geographic Areas

Our leaseholds consist of four separate and distinct natural resource plays in the Rocky Mountain Region of the United States. We have segregated each area for the developed and undeveloped acreage and productive and exploratory wells below in frem 2. Properties. All of our oil and uatural gas properties and related operations are located oushore in the United States, and management has determined that we have one reportable segment.

Available Information - Reports to Security Holders

Our website address is www.emeraldoil.com. Available on this website under "Investor Relations," free of charge, are our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, Section 16 reports for officers and directors, and amendments to those reports as soon as reasonably practicable after we electronically file those materials with, or furnish those materials to, the SEC. These filings are also available to the public at the SEC's Public Reference Room at 100 F Street, NE, Room 1580, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Electronic filings with the SEC are also available on the SEC website at www.sec.gov.

We have also posted to our website our Audit Committee Charter, Compensation Committee Charter, Governance/Nominating Committee Charter and our Code of Business Conduct and Ethics, in addition to all pertinent contact information.

EMERALD OIL AND GAS NL ACN 009 795 046 PROXY FORM

The Secretary Emerald Oil and Gas NL PO Box 535 Applecross WA 6953 Fax Number: +61 8 9315 2233 I/We of being a shareholder/(s) of Emerald Oil and Gas NL hereby appoint ______________________________ of or failing him/her _______________________________________________________________ of

or failing him/her the Chairman as my/our proxy to vote for me/us and on my/our behalf at the General Meeting of the Company to be held at 52 Ord Street, West Perth, Western Australia at 2.15pm (WST) on Friday, 24 May 2013, and at any adjournment thereof in respect of [ ]% of my/our shares or, failing any number being specified, ALL of my/our shares in the Company. If two proxies are appointed, the proportion of voting rights this proxy is authorised to exercise is [ ]%. (An additional proxy form will be supplied by the Company on request.)

If you wish to indicate how your proxy is to vote, please tick the appropriate places below. If no indication is given on a Resolution, the proxy may abstain or vote at his or her discretion.

I/we direct my/our proxy to vote as indicated below:

		FOR	AGAINST	ABSTAIN
Resolution 1	Reduction of capital and distribution in specie	□	□	□
Resolution 2	Approval for provision of a financial benefit to related parties	□	□	□

Proxies given by a natural person must be signed by each appointing shareholder or the shareholder's attorney duly authorised in writing. Proxies given by companies must be executed in accordance with section 127 of the Corporations Act or signed by the appointor's attorney duly authorised in writing. The Chairman intends to vote all undirected proxies AGAINST each Resolution.

If the Chair of the Meeting is your nominated proxy, or may be appointed by default, and you do not wish to direct your proxy how to vote in respect of a Resolution, please place a mark in the box.

By marking this box, you acknowledge that the Chair of the Meeting may exercise your proxy even if he has an interest in the outcome of the Resolution and votes cast by him, other than as proxy holder, will be disregarded because of that interest. If you do not mark this box, and you have not directed your proxy how to vote, the Chair of the Meeting will not cast your votes on the Resolution and your votes will not be counted in computing the required majority if a poll is called on the Resolution. The Chair of the Meeting intends to vote all undirected proxies AGAINST all Resolutions.

As witness my/our hand/s this day of 20

If a natural person:

SIGNED by:

Signature Signature (if joint holder)

If a company: Executed in accordance with section 127 of the Corporations Act

Signature of Director Signature of Director / Secretary

AI assistant

EMERALD RESOURCES NL — Proxy Solicitation & Information Statement 2013

64849_rns_2013-04-25_e16ea49f-b6d2-4569-9f98-5610c43a082b.pdf

EMERALD OIL AND GAS NL ACN 009 795 046

NOTICE OF GENERAL MEETING

AND

EXPLANATORY MEMORANDUM

EMERALD OIL & GAS NL ACN 009 795 046

NOTICE OF GENERAL MEETING

AGENDA

RESOLUTION 1 – REDUCTION OF CAPITAL AND DISTRIBUTION IN SPECIE

RESOLUTION 2 – APPROVAL FOR PROVISION OF A FINANCIAL BENEFIT TO RELATED PARTIES

DATED THIS 10th DAY OF APRIL 2013

BY ORDER OF THE BOARD

GRAEME SMITH COMPANY SECRETARY

Notes:

Definitions

Note

Proxies

Bodies Corporate

EMERALD OIL & GAS NL ACN 009 795 046

EXPLANATORY MEMORANDUM

1. RESOLUTION 1 - REDUCTION OF CAPITAL AND DISTRIBUTION IN SPECIE

1.1 Background

The Directors' recommendations on how to vote on Resolutions 1 and 2 are included in Section 3.

1.2 Legal Requirements – Capital Reduction

Corporations Act

Listing Rule 7.20

1.3 Effect of Reduction of Capital on the Company

Emerald Oil & Gas NL

Pro-Forma Statement of Financial Position

1.4 Directors' Interests

1.5 Advantages and Disadvantages of the Proposal

Advantages

Disadvantages

1.6 Effect of Capital Reduction and In Specie Distribution

(a) Effect on Shares

Listing Rule 7.22

1.7 Tax Implications

Australian taxation implications for Australian resident Shareholders if Class Ruling application is successful

Australian taxation implications for non-resident Shareholders

Australian taxation implications for the Company

1.8 Risk Factors Associated with EOX

1.9 Rights and Liabilities Attaching to EOX Shares

1.10 Financial Position of EOX

1.11 Overview of EOX's Business

2. RESOLUTION 2 - Chapter 2E of the Corporations Act

The related parties to whom the Resolutions would permit the financial benefit to be given.

Trading history

The nature of the financial benefit

Directors' recommendation and basis of recommendation

Directors' interest in the outcome

Relevant Director's remuneration package

Related party's existing interest

Valuation of financial benefit

3. Directors' Recommendation

4. DEFINITIONS

ANNEXURE A - RISK FACTORS ASSOCIATED WITH EOX

Item 1A. Risk Factors

We have a limited operating history, and may not be successful in sustaining profitable business operations.

Our lack of diversification will increase the risk of an investment in us and our financial condition and results of operations may deteriorate if we fall to diversify.

We have a history of losses which may continue and negatively impact our ability to achieve our business objectives.

Strategic relationships upon which we may rely are subject to change, which may diminish our ability to conduct our operations.

Competition in obtaining rights to explore and develop oil and natural gas reserves and to market our production may impair our business.

We may not be able to effectively manage our growth, which may harm our profitability.

Our business may suffer if we do not attract and retain talented personnel.

Lower oil and natural gas prices, decreases in value of undeveloped acreage, lease expirations and material changes to our plans of development may cause us to record celling test write-downs.

Our hedging activities could result in financial losses or could reduce our net income or increase our net loss, which may adversely affect our business.

Exploration for oil and natural gas is risky and may not be commercially successful, and the advanced technologies we and our operating partners use cannot eliminate exploration risk, which could impair our ability to generate revenues from our operations.

We may not be able to develop oil and natural gas reserves on an economically viable basis, and our reserves and production may decline as a result.

We may not be able to drill wells on a substantial portion of our acreage.

Certain of our undeveloped leasehold acreage is subject to leases that will expire over the next several years unless production is established on units containing the acreage.

Prices and markets for oil and natural gas are unpredictable and tend to fluctuate significantly, which could reduce profitability, growth and the value of our business.

Penalties we may incur could impair our business.

We and our operating partners may have difficulty distributing our production, which could harm our financial condition.

We may be unable to obtain additional capital that we will require to implement our business plan, which could restrict our ability to grow.

Estimates of proved oil and natural gas reserves are uncertain and any material inaccuracies in these reserve estimates will materially affect the quantities and the value of our reserves.

Our ability to sell our production and/or receive market prices for our production may be adversely affected by transportation capacity constraints and interruptions.

Environmental risks may adversely affect our business.

Federal or state hydraulic fracturing legislation could increase our costs or restrict our access to oil and natural gas reserves.

EMERALD RESOURCES NL Proxy Solicitation & Information Statement 2013

EMERALD OIL, INC.
(FORMERLY VOYAGER OIL & GAS, INC.) CONSOLIDATED STATEMENTS OF CASH FLOWS