HOUSTON, Aug. 4 /PRNewswire-FirstCall/ -- Endeavour International
Corporation (NYSE Amex: END) (LSE:ENDV) today reported
discretionary cash flow for the second quarter of 2009 of $19.0
million and net income, as adjusted, of $38.5 million. Production
for the period averaged 5,360 barrels of oil equivalent per day.
"This was a quarter of strategic significance for Endeavour with
the completion of the sale of our Norwegian operations, a
significant reduction in debt, and the expansion of our portfolios
both in the United Kingdom and United States," said William L.
Transier, chairman, chief executive officer and president.
"Together with continued good operating performance and better than
anticipated results from appraisal drilling at the Rochelle and
Cygnus discoveries, we are now moving forward with three North Sea
developments that will significantly increase our UK production and
provide the financial foundation to pursue other growth
opportunities." On a GAAP basis, net income to common stockholders
was $7.1 million for the second quarter of 2009 as compared to a
loss of $66.7 million in the same quarter in 2008. Included in 2009
second quarter after-tax results are $47.1 million in gain on sale
of the Norwegian operations, non-cash charges of $31.4 million
primarily relating to unrealized losses on derivatives and the
impact of deferred taxes on the change in currency exchange rates.
Endeavour recorded unrealized losses on commodity derivatives
during the second quarter of $27 million as compared to $122
million for the same period in 2008 largely due to increases in
commodity prices during these periods. The results reflect the
hedging program for future oil and gas production that applies
mark-to-market accounting principles to pull forward into current
periods the non-cash gains and losses from commodity price
fluctuations relating to all upcoming deliveries. Highlights for
the second quarter are as follows: The closing on the sale of
Norwegian operations for $150 million - In mid-May, Endeavour
completed the sale of its Norwegian operations to VNG-Verbundnetz
Gas AG. The sale is a significant strategic step as it increases
the company's financial flexibility and strength to capitalize on
recent drilling success in the United Kingdom and to actively
pursue growth strategies. It also demonstrates the implied value
underlying Endeavour's remaining asset portfolio. Significant debt
reduction - Endeavour repaid approximately $54 million in bank debt
during the second quarter resulting in a total debt reduction of
$65 million thus far in 2009. Proceeds from the Norway sale are
expected to be used to supplement cash flow from operations and to
fund field developments in the United Kingdom as well as growth
opportunities in the North Sea and United States. Continuous
development of a more balanced and extensive exploration portfolio
- Endeavour continues to focus on maintaining a drilling inventory
that is well-balanced between risk, potential and timing of impact.
Portfolio and risk management initiatives implemented in late 2007
have resulted in 13 successful exploration and appraisal wells out
of 15 wells drilled. The company plans to drill an estimated 10
wells per year during 2009 and 2010 in the United Kingdom sector of
the North Sea and onshore United States. Increased exploration
activity in the United Kingdom - Endeavour completed testing of two
significant wells in the North Sea and entered into agreements to
participate in three new prospects. Activities include: -- The
testing of an appraisal well at the Central North Sea Rochelle
discovery that added significant reserves and tested the upper 20
feet of an 87-foot hydrocarbon column at a rate of 41 million cubic
feet of gas per day and 2,300 barrels of condensate per day. -- The
completion of a third successful Southern North Sea appraisal well
at Cygnus that tested gas at a rate of 32 million cubic feet of gas
per day. -- Entry into farm-in agreements to participate in the
following Central North Sea exploratory wells: -- Maureen - Planned
for drilling during the third quarter to target an untested fault
block of a previously producing oil field abandoned in 1999 due to
low prices. Endeavour holds a 38.5 percent interest. -- Deacon -
Scheduled to be drilled in late 2009 as a high-potential,
medium-risk prospect with Endeavour holding a 10 percent interest.
-- Centurion - Slated for drilling in late 2010 as an appraisal of
a previous discovery. Endeavour holds a 33.3 percent interest.
Onshore exploration program in the United States accelerates -
Endeavour plans to drill approximately 10 wells over the next two
years in its three exploratory focus areas in South Texas, South
Louisiana and Southeast New Mexico. Activities include: -- Drilling
four wells in the emerging Wolfcamp horizontal drilling oil play in
Southeast New Mexico at a 56.3 percent interest. The first well,
Lucky Penny, is ready for testing and a second, Moore Bailout, will
spud within days. Two additional exploratory wells are scheduled
for drilling later in the year. Approximately 10,000 gross acres in
the play have been leased to date in seven prospect areas.
Additional wells would be drilled with success of the initial
program. -- Drilling of the high-risk, high-potential Pidan
prospect in the first half of 2010 targeting a gas play with
significant gas potential. Endeavour holds a 10 percent interest.
-- Testing of the Middle Wilcox formation in the Armour Runnels #1
exploration field in the Alligator Bayou prospect based on positive
log analysis. Endeavour holds a 10 percent interest in the very
large prospect. Continued development of new fields in the United
Kingdom sector of the North Sea - Endeavour continues to
aggressively pursue the development of three previous discoveries
following successful appraisal programs that heightened the
potential of the fields. -- Rochelle - Work is progressing for the
exploitation of the Rochelle field in Block 15/27 with a field
development program expected to be filed with the Department of
Energy and Climate Change (DECC) by the end of the year. Production
from Rochelle is expected to begin in late 2010. Endeavour holds a
55.6 percent interest in the well and is operator for the block. --
Cygnus - A revised field development plan for the Cygnus project
was submitted earlier in the year to the DECC that calls for a
phased development scenario with initial production from the first
phase to begin by mid-2011. The company estimates potential
reserves in the greater Cygnus area of one trillion cubic feet of
gas, including 500 billion cubic feet proven to date in the eastern
half of the structure. Endeavour holds a 12.5 percent interest in
the Cygnus area spread over two United Kingdom blocks, 44/11a and
12a. -- Columbus - Endeavour and its partners continue to pursue
commercial agreements as part of the field development plan for the
Columbus field in Block 21/16f with anticipated production by
mid-2011. Reserves on the block are approximately 100 billion cubic
feet of natural gas. Endeavour holds a 25 percent interest in the
development. Guidance for Year 2009 The table below sets forth
estimates for operating statistics for the full year ending
December 31, 2009 following the sale of the Norwegian subsidiary.
Estimated Average Production (A) Daily Production (boepd) 4,000 to
5,000 Differentials (B) Oil ($/bbl) $(5.50) to $(6.50) Gas ($/mcf)
$(0.10) to $(0.20) Gas Percentage of Total 50% to 55% Lease
Operating Expense (per barrel) $9.50 to $12.00 (A) Actual results
may differ materially from these estimates. (B) For purposes of the
estimates, assumptions of price differentials are based on
location, quality and other factors, excluding the effects of
derivative financial instruments. Gas price differentials are
stated as premiums (discounts) from National Balancing Point
pricing, and oil price differentials are stated as premiums
(discounts) from Dated Brent pricing. Earnings Conference Call
Today, Tuesday, August 4, 2009 at 9:00 a.m., Central Daylight Time,
3:00 p.m. British Summer Time Endeavour will host an analyst
conference call and web cast today, Tuesday, August 4, 2009, to
discuss its 2009 second quarter financial and operating results at
9 a.m. Central Daylight Time, 3 p.m. British Summer Time. To
participate and ask questions during the conference call, dial the
local country telephone number and the confirmation code 2438753.
The toll-free numbers are 888-599-8658 in the United States and 0
800 051 7166 in the United Kingdom. Other international callers
should dial 913-312-1269 (tolls apply). To listen only to the live
audio web cast, access Endeavour's home page at
http://www.endeavourcorp.com/. A replay will be available beginning
at 12:00 p.m. Central Daylight Time on August 4 through 12:00 p.m.
August 11 by dialing toll free 888-203-1112 (U.S.) or 719-457-0820
(international), confirmation code 2438753. Endeavour International
Corporation is an oil and gas exploration and production company
focused the development, exploration and acquisition of energy
reserves in the North Sea and the United States. For more
information, visit http://www.endeavourcorp.com/. Additional
information for investors: Certain statements in this press release
are forward-looking and are based upon Endeavour's current belief
as to the outcome and timing of future events. All statements,
other than statements of historical facts that address an activity
that Endeavour plans, expects, believes, projects, estimates, or
anticipates will, should or may occur in the future, including
future production of oil and gas, future capital expenditures and
drilling of wells and future financial or operating results are
forward-looking statements. Important factors that could cause
actual results to differ materially from those in the
forward-looking statements herein include the timing and extent of
changes in commodity prices for oil and gas, operating risks and
other risk factors as described in Endeavour's Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q as filed with the
Securities and Exchange Commission (SEC). Should one or more of
these risks or uncertainties occur, or should underlying
assumptions prove incorrect, Endeavour's actual results and plans
could differ materially from those expressed in the forward-looking
statements. The SEC permits oil and gas companies, in their filings
with the SEC, to disclose only proved reserves that a company has
demonstrated by actual production or conclusive formation tests to
be economically and legally producible under existing economic and
operating conditions. Endeavour is also subject to the requirements
of the London Stock Exchange and considers the disclosures in this
release to be appropriate and/or required under the guidelines of
that exchange. We may use certain terms, such as probable, possible
and potential reserves or resources, that the SEC's guidelines
strictly prohibit us from including in our filings with the SEC.
These estimates are by their nature more speculative than estimates
of proved reserves and accordingly are subject to substantially
greater risk of being actually realized by Endeavour. Potential
resources may not constitute reserves within the meaning of the
Society of Petroleum Engineer's Petroleum Resource Management
System and does not include any proved reserves. Actual quantities
that may be ultimately recovered from Endeavour's interests may
differ substantially. Factors affecting ultimate recovery include
oil and gas pricing, the scope of our ongoing drilling program,
which will be directly affected by the availability of capital,
drilling and production costs, availability of drilling services
and equipment, drilling results, transportation constraints,
regulatory approvals and other factors; and actual drilling
results, including geological and mechanical factors affecting
recovery rates. Investors are urged to consider closely the
disclosure in our Form 10-K and each of our Form 10-Qs, available
free of charge on our internet site
(http://www.endeavourcorp.com/). You can also obtain these forms
from the SEC on the SEC's internet site (http://www.sec.gov/) or by
calling 1-800-SEC-0330. Endeavour International Corporation
Condensed Consolidated Balance Sheets (Unaudited) (Amounts in
thousands) June 30, 2009 December 31, 2008 -------------
------------ Assets Current Assets: Cash and cash equivalents
$101,602 $31,421 Restricted cash 2,147 20,739 Accounts receivable
19,214 22,325 Prepaid expenses and other current assets 22,634
42,194 Current assets of discontinued operations - 16,726
------------------------------ ------- ------ Total Current Assets
145,597 133,405 Property and Equipment, Net 227,341 232,346
Goodwill 213,949 213,949 Other Assets 6,274 9,165 Long Term Assets
of Discontinued Operations - 148,605
-------------------------------- ------- ------- Total Assets
$593,161 $737,470 ------------ -------- -------- Liabilities and
Stockholders' Equity Current Liabilities: Accounts payable $20,508
$38,630 Current maturities of debt - 13,000 Accrued expenses and
other 33,301 36,642 Current liabilities of discontinued operations
- 22,231 ------------------------ ------- ------ Total Current
Liabilities 53,809 110,503 Long-Term Debt 167,510 214,855 Deferred
Taxes 66,869 67,299 Other Liabilities 71,884 55,791 Long-term
Liabilities of Discontinued Operations - 46,051
------------------------ ------- ------ Total Liabilities 360,072
494,499 Commitments and Contingencies Series C Convertible
Preferred Stock 125,000 125,000 Stockholders' Equity 108,089
117,971 -------------------- ------- ------- Total Liabilities and
Stockholders' Equity $593,161 $737,470 ---------------------
-------- -------- Endeavour International Corporation Condensed
Consolidated Statement of Operations (Unaudited) (Amounts in
thousands, except per share data) For the Three Months For the Six
Months Ended June 30, Ended June 30, -------------- --------------
2009 2008 2009 2008 ---- ---- ---- ---- Revenues $18,082 $55,343
$34,420 $101,151 Cost of Operations: Operating expenses 4,397 9,180
10,580 16,527 Depreciation, depletion and amortization 7,858 19,503
19,182 38,391 Impairment of oil and gas properties 1,244 - 30,645 -
General and administrative 4,115 3,845 7,950 7,553 ---------------
----- ----- ----- ----- Total Expenses 17,614 32,528 68,357 62,471
-------------- ------ ------ ------ ------ Income (Loss) From
Operations 468 22,815 (33,937) 38,680 ------------------ --- ------
------- ------ Other Income (Expense): Derivatives: Realized gains
(losses) 9,114 (14,494) 21,050 (17,644) Unrealized losses (32,722)
(130,686) (34,095) (160,328) Interest expense (4,224) (5,478)
(8,135) (13,794) Interest income and other (7,992) (122) (8,333)
(31) ------------------- ------ ---- ------ --- Total Other Expense
(35,824) (150,780) (29,513) (191,797) ------------------- -------
-------- ------- -------- Loss Before Income Taxes (35,356)
(127,965) (63,450) (153,117) Income Tax Expense (Benefit) 916
(58,304) (10,036) (66,931) ------------------ --- ------- -------
------- Loss from Continuing Operations (36,272) (69,661) (53,414)
(86,186) Discontinued Operations, net of tax: Income (loss) from
operations (1,052) 5,637 (774) 5,370 Gain on sale 47,144 - 47,144 -
------------ ------ ----- ------ ----- Income from Discontinued
Operations 46,092 5,637 46,370 5,370 ------------- ------ -----
------ ----- Net Income (Loss) 9,820 (64,024) (7,044) (80,816)
Preferred Stock Dividends 2,696 2,709 5,365 5,404 ---------------
----- ----- ----- ----- Net Income (Loss) to Common Stockholders
$7,124 $(66,733) $(12,409) $(86,220) -------------------- ------
-------- -------- -------- Basic and Diluted Income (Loss) per
Common Share: Continuing operations $(0.31) $(0.56) $(0.46) $(0.72)
Discontinued operations 0.36 0.04 0.36 0.04 ------------ ---- ----
---- ---- Basic and Diluted Income (Loss) per Common Share $0.05
$(0.52) $(0.10) $(0.68) ------------------ ----- ------ ------
------ Weighted Average Number of Common Shares Outstanding: Basic
and Diluted 129,741 127,626 129,521 127,581 -----------------
------- ------- ------- ------- Endeavour International Corporation
Condensed Consolidated Statement of Cash Flows (Unaudited) (Amounts
in thousands) For the Six Months Ended June 30,
-------------------------- 2009 2008 ---- ---- Cash Flows From
Operating Activities: Net loss $(7,044) $(80,816) Adjustments to
reconcile net loss to net cash provided by operating activities:
Depreciation, depletion and amortization 23,863 45,123 Impairment
of oil and gas properties 30,645 - Deferred tax benefit (3,596)
(58,277) Unrealized loss on derivatives 34,095 160,328 Gain on sale
of Norwegian operations (47,144) - Other 11,536 8,568 Changes in
assets and liabilities (156) (2,972)
--------------------------------- ---- ------ Net Cash Provided by
Operating Activities 42,199 71,954 Cash Flows From Investing
Activities: Capital expenditures (67,337) (32,168) Proceeds from
sales, net of cash 139,797 - Decrease in restricted cash 18,592 -
--------------------------- ------ ------ Net Cash Provided by
(Used in) Investing Activities 91,052 (32,168) Cash Flows From
Financing Activities: Repayments of borrowings (64,458) (105,000)
Borrowings under debt agreements - 88,000 Dividends paid (5,313)
(5,313) Financing costs paid - (4,282) Other financing (34) (252)
--------------- --- ---- Net Cash Used in Financing Activities
(69,805) (26,847) Net Increase in Cash and Cash Equivalents 63,446
12,939 Cash and Cash Equivalents, Beginning of Period 38,156 16,440
--------------------------------------- ------ ------ Cash and Cash
Equivalents, End of Period $101,602 $29,379
---------------------------------------- -------- ------- Cash and
Cash Equivalents, End of Period: Continuing operations $101,602
$16,552 Discontinued operations - 12,827 -----------------------
------- ------ Total $101,602 $29,379 ----- -------- -------
Endeavour International Corporation Operating Statistics
(Unaudited) Three Months Ended June 30, Six Months Ended June 30,
-------------------- --------------------- 2009 2008 2009 2008 ----
---- ---- ---- Sales volume (1): Oil and condensate sales (Mbbl):
United Kingdom 234 332 412 598 United States - - 1 - -------------
--- --- --- --- Continuing operations 234 332 413 598 Discontinued
operations - Norway 87 246 310 342 ------------- -- --- --- ---
Total 321 578 723 940 ----- --- --- --- --- Gas sales (MMcf):
United Kingdom 1,071 1,644 2,148 3,679 United States 60 - 111 -
------------- --- --- --- ---- Continuing operations 1,131 1,644
2,259 3,679 Discontinued operations - Norway 153 467 686 1,065
------------- --- --- --- ----- Total 1,284 2,111 2,945 4,744 -----
----- ----- ----- ----- Total sales (MBOE): United Kingdom 413 606
770 1,211 United States 10 - 20 - ------------- --- --- --- ---
Continuing operations 423 606 790 1,211 Discontinued operations -
Norway 112 324 424 520 ------------- --- --- --- --- Total 535 930
1,214 1,731 ----- --- --- ----- ----- BOE per day 5,877 10,222
6,710 9,509 ----------- ----- ------ ----- ----- Physical
production volume (BOE per day): United Kingdom 3,995 6,123 4,132
6,678 United States 41 - 65 - ------------- --- --- --- ---
Continuing Operations 4,036 6,123 4,197 6,678 Discontinued
operations - Norway 1,324 2,791 2,332 2,843 ------------- -----
----- ----- ----- Total 5,360 8,914 6,529 9,521 ----- ----- -----
----- ----- Realized Prices (2): Oil and condensate price ($ per
Bbl): Before commodity derivatives $50.83 $105.45 $45.74 $99.44
Effect of commodity derivatives 18.88 (20.57) 22.00 (19.42)
------------ ----- ------ ----- ------ Realized prices including
commodity derivatives $69.71 $84.88 $67.74 $80.02 ---------------
------ ------ ------ ------ Gas price ($ per Mcf): Before commodity
derivatives $4.64 $12.01 $6.41 $11.41 Effect of commodity
derivatives 2.38 (1.23) 1.74 0.13 ------------ ---- ----- ---- ----
Realized prices including commodity derivatives $7.02 $10.78 $8.15
$11.54 --------------- ----- ------ ----- ------ Equivalent oil
price ($ per BOE): Before commodity derivatives $41.62 $92.82
$42.79 $85.29 Effect of commodity derivatives 17.04 (15.58) 17.34
(10.20) ------------ ----- ------ ----- ------ Realized prices
including commodity derivatives $58.66 $77.24 $60.13 $75.09
--------------- ------ ------ ------ ------ 1. We record oil
revenues on the sales method, i.e. when delivery has occurred.
Actual production may differ based on the timing of tanker
liftings. We use the entitlements method to account for sales of
gas production. 2. The average sales prices reflect both our
continuing and discontinued operations and include realized gains
and losses for derivative contracts we utilize to manage price risk
related to our future cash flows. Endeavour International
Corporation Reconciliation of GAAP to Non-GAAP Measures (Unaudited)
(Amounts in thousands) As required under Regulation G of the
Securities Exchange Act of 1934, provided below are reconciliations
of net income (loss) to the following non-GAAP financial measures:
net income, as adjusted, Adjusted EBITDA and discretionary cash
flow. We use these non-GAAP measures as key metrics for our
management and to demonstrate our ability to internally fund
capital expenditures and service debt. The non-GAAP measures are
useful in comparisons of oil and gas exploration and production
companies as they exclude non-operating fluctuations in assets and
liabilities. For the Three Months For the Six Months Ended June 30,
Ended June 30, -------------- -------------- 2009 2008 2009 2008
---- ---- ---- ---- Net income (loss) $9,820 $(64,024) $(7,044)
$(80,816) Depreciation, depletion and amortization 7,804 23,720
23,863 45,123 Impairment of oil and gas properties 1,244 - 30,645 -
Deferred tax expense (benefit) 4,827 (55,133) (3,596) (58,277) Gain
on asset sales (47,144) - (47,144) - Unrealized loss on derivative
instruments 32,722 130,686 34,095 160,328 Other 9,690 3,366 11,535
8,568 ----- ----- ----- ------ ----- Discretionary cash flow (1)
$18,963 $38,615 $42,354 $74,926 ---------------------- -------
------- ------- ------- Net income (loss) to common shareholders
$7,124 $(66,733) $(12,409) $(86,220) Impairment of oil and gas
properties (net of tax) (2) 1,244 - 15,945 - Unrealized losses on
derivatives (net of tax)(3) 19,176 69,748 20,747 84,234 Currency
impact of deferred taxes 10,955 81 10,250 2,722 ------------------
------ --- ------ ----- Net income, as adjusted $38,499 $3,096
$34,533 $736 ----------------------- ------- ------ ------- ----
Net income (loss) to common shareholders $7,124 $(66,733) $(12,409)
$(86,220) Unrealized losses on derivatives 32,722 130,686 34,095
160,328 Net interest expense 4,186 5,183 8,071 13,139 Depreciation,
depletion and amortization 7,858 19,503 19,182 38,391 Impairment of
oil and gas properties 1,244 - 30,645 - Income tax expense
(benefit) 916 (58,304) (10,036) (66,931) (Income) loss from
discontinued operations (46,092) (5,637) (46,370) (5,370) Preferred
stock dividends 2,696 2,709 5,365 5,405 --------------- ----- -----
----- ----- Adjusted EBITDA $10,654 $27,407 $28,543 $58,742
--------------- ------- ------- ------- ------- 1. Discretionary
cash flow is equal to cash flow from operating activities before
the changes in operating assets and liabilities. 2. Net of tax
benefits of $14,701 for the six months ended June 30, 2009. 3. Net
of tax benefits of $13,546, $60,938, $13,348 and $76,094,
respectively. DATASOURCE: Endeavour International Corporation
CONTACT: Investor Relations, Mike Kirksey, +44 (0) 207 451 2364, or
+1-713-307-8788; or UK Brokers, Jeffrey Auld of Canaccord Adams, +
44 (0) 207 050 6500; or UK Media, Philip Dennis, +44 (0) 207 743
6363, or Henry Lerwill, +44 (0) 203 178 6242, both of Pelham Public
Relations, all for Endeavour International Corporation Web Site:
http://www.endeavourcorp.com/
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