Attached files

file filename
EX-99.2 - EX-99.2 - ENDEAVOUR INTERNATIONAL CORPd623922dex992.htm
8-K - FORM 8-K - ENDEAVOUR INTERNATIONAL CORPd623922d8k.htm

Exhibit 99.1

 

LOGO

For immediate release

Endeavour Announces 2013 Third Quarter

Financial and Operational Results

Houston, November 6, 2013 – Endeavour International Corporation (NYSE: END) (LSE: ENDV) today reported third quarter 2013 net loss, as adjusted of $34.7 million compared to a net loss, as adjusted of $13.6 million for the same period in 2012. On a GAAP basis, net loss for the third quarter of 2013 was $40.3 million as compared to net loss of $34.2 million for the same quarter in 2012.

Third quarter 2013 sales and production numbers were impacted by the annual summer maintenance period in the U.K. North Sea and the timing of liftings at the Alba field during the period. Sales volumes for the third quarter of 2013 were 4,725 barrels of oil equivalent per day (“boepd”), compared to 11,006 boepd for the same quarter in the prior year. Physical production for the third quarter of 2013 averaged 7,980 boepd compared to 10,724 boepd for the same quarter of 2012.

Recent Business Highlights:

 

    First production achieved at Rochelle

 

    Bacchus B1 well commenced production in July

 

    Completion of the summer maintenance at the Alba field

 

    Joint venture in the Pennsylvania Marcellus

 

    Conclusion of the Strategic Review

“First production at Rochelle is a major achievement for our Company. Rochelle was part of a package of assets Endeavour purchased in 2006. The field’s evolution from stranded discovery to producing asset is a testament to the perseverance and technical talent of all whom have been involved in the project,” said William L. Transier, chairman, chief executive officer and president. “Now with three significant assets and all of our U.K. development projects on-line, we will focus on exploiting the underlying value of our assets and turn our attention in the near-term to reducing debt and being cost efficient.”

Operational Update

North Sea

Rochelle commenced production on October 23, 2013. Following first production, Rochelle is in a 30-day proving period and the W1 well is being ramped up to its full potential. Current production is 44


MMscf/d with 2,500 barrels of oil a day (“bopd”) of associated condensate, which is in line with operational expectations for the new infrastructure on the Scott Platform. At East Rochelle, the E2 well has been drilled to total depth, completed and a production test is due to commence in the next few days. The E2 well is expected on-line in the fourth quarter. When fully operational, the production from the Rochelle field is expected to exceed the available production capacity at Scott. Endeavour has a 44% working interest in the Rochelle development.

At the Bacchus field, the third planned production well (B1) was completed in July. The well logged 2,057 feet net oil pay along a horizontal completion segment in high quality Jurassic-aged Fulmar sandstone in the field’s western fault block. The third well was completed ahead of schedule and below estimated costs. Current production at the field is 13,000 bopd gross, in line with the expected field performance. Endeavour has a 30% working interest in the field.

At Alba, the planned 28-day summer maintenance program was completed on time and the field restarted in the middle of September. The previous water handling, turbine and emulsion concerns have been addressed and the field is currently ramping back up to full production levels. Production has achieved rates of over 25,000 bopd and the operator is working to maintain consistent production rates with on-going operational activities. Two infield wells, drilled earlier in the year, were brought back on-line and another platform well is scheduled to be on production in early 2014. Endeavour has a 25.68% working interest in the Alba field.

As of the fourth quarter of 2013, all the Company’s major U.K. oil and gas assets are on production.

North America

In Rio Blanco County, Colorado, the Company successfully drilled, cored and logged its Wiley Federal Unit well. The data indicates liquids-rich gas potential in both the Niobrara and Frontier formations. The well is being evaluated for a future horizontal re-entry sometime next year. In a separate operation in Mesa County, Colorado, Endeavour obtained Niobrara cores in a third party well where the Company has drill-to-earn options, that may be exercised by horizontal drilling in 2014. In total, the Company has leasehold and drilling options over approximately 40,000 gross acres in this liquids-rich Cretaceous play.

During October in the Pennsylvania Marcellus area, the Company entered into a purchase and sale agreement covering 50% of its upstream and midstream assets. The transaction is expected to deliver the capital necessary for near term joint development of these assets. Final closing of the agreement is anticipated to occur in the fourth quarter of 2013.

Strategic Review

In October, the Board of Directors concluded the strategic review process that started in February 2013. During the course of the strategic review, the Board considered the sale of all or parts of the Company and possible joint venture arrangements. As the year progressed, Endeavour achieved several objectives that improved the long-term value of the business, including the completion of Bacchus, start-up of production at Rochelle and continued process improvements at the Alba field. As a result, the Board decided it was in the best interest of shareholders to retain and exploit the asset base.

In conjunction with the conclusion of the strategic review, Endeavour decided to close its London office and consolidate its technical teams in Aberdeen, Scotland. Derek A. Neilson has been promoted to Managing Director of U.K. Operations to head the consolidated team. Mr. Neilson has been with Endeavour for over six years and has 28 years of experience in the oil and gas industry. Once the consolidation and organizational changes are fully implemented, the Company expects to achieve annual cash savings of approximately $15 million to $20 million.


Finance

In August, the Company completed the sale of an additional $25 million expansion to the Monetary Production Payment (MPP), bringing the total to $150 million outstanding. The MPP has a two-year term and will be satisfied out of the production from the Alba and Bacchus fields. Repayment of the MPP began in July 2013 under its terms.

In September, Endeavour entered into a second Forward Sale agreement receiving a payment of $22.5 million. This effectively hedged a portion of production by locking in pricing for in excess of 200,000 barrels of oil, over a six month delivery period. This has had a positive effect on the Company’s realized oil prices year-to-date. The first Forward Sale commitment was fulfilled in June 2013.

Fourth Quarter Production Guidance

With Rochelle and Alba ramping up over the course of the fourth quarter, average daily production volumes are expected to be in the range of 12,000 – 13,000 boepd for the period. Sales volumes recorded as revenue will be affected by the number of actual liftings from the Alba field. Currently, one lifting is expected during the fourth quarter.

Earnings Conference Call, Wednesday, November 6, 2013 at 9:00 a.m., Central Time, 3:00 p.m. British Time

Endeavour International will host a conference call and web cast to discuss its 2013 third quarter financial and operating results on Wednesday, November 6, 2013 at 9:00 a.m. Central Time, 3:00 p.m. British Time. A supporting slide deck for the conference call is available on the home page of Endeavour’s website at www.endeavourcorp.com and under the Investor Relations section in conjunction with the details for the conference call. To participate and ask questions during the conference call, dial the local country telephone number and the confirmation code 4806271. The toll-free numbers are 888-812-8595 in the United States and 0-808-101-1152 in the United Kingdom. Other international callers should dial 913-312-0672 (tolls apply). To listen only to the live audio web cast access Endeavour’s home page at www.endeavourcorp.com. A replay will be available beginning at 12:00 p.m. Central Time on November 6, 2013 through 12:00 p.m. on November 12, 2013 by dialing toll free 888-203-1112 (U.S.) or 719-457-0820 (international), confirmation code 4806271.


Endeavour International Corporation is an oil and gas exploration and production company focused on the acquisition, exploration and development of energy reserves in the North Sea and the United States. For more information, visit www.endeavourcorp.com.

Additional information for investors:

Certain statements in this news release should be regarded as “forward-looking” statements within the meaning of the securities laws. These statements speak only as of the date made. Such statements are subject to assumptions, risk and uncertainty. Actual results or events may vary materially.

The Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose not only proved reserves, but also probable reserves and possible reserves that meet the SEC’s definitions for such terms, and price and cost sensitivities for such reserves, and prohibits disclosure of resources that do not constitute such reserves. We use may use certain terms in our news releases, such as “reserve potential,” that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. These estimates are by their nature more speculative than estimates of proved, probable and possible reserves and accordingly are subject to substantially greater risk of being actually realized. In addition, we do not represent that the probable or possible reserves described herein meet the recoverability thresholds established by the SEC in its new definitions. Investors are urged to also consider closely the disclosure in our filings with the SEC, available from our website at www.endeavourcorp.com. 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.

For further information:

Endeavour – Investor Relations

Darcey Matthews             713.307.8711

Pelham Public Relations – UK Media

 

Philip Dennis    +44 (0)207 861 3919
Henry Lerwill    +44 (0)207 861 3169


Endeavour International Corporation

Condensed Consolidated Balance Sheets

(Unaudited)

(Amounts in thousands)

 

     September 30,
2013
     December 31,
2012
 
Assets      

Current Assets:

     

Cash and cash equivalents

   $ 60,357      $ 59,185  

Accounts receivable

     24,496        46,181  

Prepaid expenses and other current assets

     48,696        20,995  
  

 

 

    

 

 

 

Total Current Assets

     133,549        126,361  

Property and Equipment, Net

     1,078,906        1,003,441  

Goodwill

     259,238        262,764  

Other Assets

     36,396        49,906  
  

 

 

    

 

 

 

Total Assets

   $ 1,508,089      $ 1,442,472  
  

 

 

    

 

 

 
Liabilities and Stockholders’ Equity      

Current Liabilities:

     

Accounts payable

   $ 44,802      $ 60,153  

Current maturities of debt

     115,163        15,713  

Deferred revenue

     40,691        —     

Monetary production payment, current

     19,167        —     

Accrued expenses and other

     54,422        90,100  
  

 

 

    

 

 

 

Total Current Liabilities

     274,245        165,966  

Long-Term Debt

     752,769        843,793  

Deferred Taxes

     127,658        141,887  

Other Liabilities

     263,465        147,692  
  

 

 

    

 

 

 

Total Liabilities

     1,418,137        1,299,338  

Commitments and Contingencies

     

Series C Convertible Preferred Stock

     43,703        43,703  

Stockholders’ Equity

     46,249        99,431  
  

 

 

    

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 1,508,089      $ 1,442,472  
  

 

 

    

 

 

 


Endeavour International Corporation

Condensed Consolidated Statement of Operations

(Unaudited)

(Amounts in thousands, except per share data)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2013     2012     2013     2012  

Revenues

   $ 36,901      $ 83,275      $ 220,738      $ 121,444   

Cost of Operations:

        

Operating expenses

     16,358        23,973        71,951        34,613   

Depreciation, depletion and amortization

     18,596        23,759        93,466        42,292   

Impairment of oil and gas properties

     6,032        11,416        9,566        47,116   

General and administrative

     3,913        5,026        14,276        15,379   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Expenses

     44,899        64,174        189,259        139,400   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (Loss) From Operations

     (7,998     19,101        31,479        (17,956
  

 

 

   

 

 

   

 

 

   

 

 

 

Other Income (Expense):

        

Unrealized gains (losses) on derivatives

     855        (1,204     1,158        (2,178

Interest expense

     (26,461     (18,053     (72,346     (63,016

Loss on early extinguishment of debt

     —          —          —          (21,661

Letter of credit fees

     (7,274     (9,378     (25,782     (12,442

Unrealized foreign currency gains (losses)

     (10,793     (1,448     38        (4,186

Other expense

     (2,544     (1,215     (4,505     (1,758
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Other Expense

     (46,217     (31,298     (101,437     (105,241
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss Before Income Taxes

     (54,215     (12,197     (69,958     (123,197

Income Tax Expense (Benefit)

     (14,330     21,505        (2,141     (3,424
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Loss

     (39,885     (33,702     (67,817     (119,773

Preferred Stock Dividends

     456        456        1,367        1,367   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Loss to Common Stockholders

   $ (40,341   $ (34,158   $ (69,184   $ (121,140
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Loss per Common Share:

        

Basic and Diluted

   $ (0.86   $ (0.73   $ (1.47   $ (2.94
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted Average Number of Common Shares Outstanding:

        

Basic and Diluted

     47,092        46,555        47,082        41,163   
  

 

 

   

 

 

   

 

 

   

 

 

 


Endeavour International Corporation

Condensed Consolidated Statement of Cash Flows

(Unaudited)

(Amounts in thousands)

 

     Nine Months Ended
September 30,
 
     2013     2012  

Cash Flows from Operating Activities:

    

Net loss

   $ (67,817   $ (119,773

Adjustments to reconcile net loss to net cash provided by operating activities:

    

Depreciation, depletion and amortization

     93,466        42,292   

Impairment of oil and gas properties

     9,566        47,116   

Deferred tax benefit

     (17,262     (15,849

Unrealized (gains) losses on derivatives

     (1,158     2,178   

Amortization of non-cash compensation

     2,352        3,605   

Amortization of loan costs and discount

     15,330        10,536   

Non-cash interest expense

     5,246        7,077   

Loss on early extinguishment of debt

     —          21,661   

Other

     10,192        9,692   

Changes in operating assets and liabilities

     4,872        (7,191
  

 

 

   

 

 

 

Net Cash Provided by Operating Activities

     54,787        1,344   

Cash Flows From Investing Activities:

    

Capital expenditures

     (176,171     (175,597

Acquisitions, net of cash acquired

     (2,602     (228,437

Increase in restricted cash

     —          (178
  

 

 

   

 

 

 

Net Cash Used in Investing Activities

     (178,773     (404,212

Cash Flows From Financing Activities:

    

Repayments of borrowings

     —          (247,065

Borrowings under debt agreements, net of debt discount

     —          595,000   

Proceeds from issuance of common stock

     —          60,805   

Proceeds from issuance of monetary production payment

     150,000        —     

Repayments of monetary production payment

     (4,167     —     

Dividends paid

     (1,249     (833

Payments for early extinguishment of debt

     —          (7,248

Financing costs paid

     (19,427     (28,109

Other financing

     1        4   
  

 

 

   

 

 

 

Net Cash Provided by Financing Activities

     125,158        372,554   

Net Increase (Decrease) in Cash and Cash Equivalents

     1,172        (30,314

Cash and Cash Equivalents, Beginning of Period

     59,185        106,036   
  

 

 

   

 

 

 

Cash and Cash Equivalents, End of Period

   $ 60,357      $ 75,722   
  

 

 

   

 

 

 


Endeavour International Corporation

Operating Statistics

(Unaudited)

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2013      2012      2013      2012  

Sales volume: (1)

           

Oil and condensate sales (Mbbls):

           

United Kingdom

     327         812         2,039         1,099   

United States

     —           1         1         2   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     327         813         2,040         1,101   
  

 

 

    

 

 

    

 

 

    

 

 

 

Gas sales (MMcf):

           

United Kingdom

     9         19         35         69   

United States (2)

     638         1,182         2,127         4,234   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     647         1,201         2,162         4,303   
  

 

 

    

 

 

    

 

 

    

 

 

 

Oil equivalent sales (MBOE):

           

United Kingdom

     328         815         2,045         1,110   

United States (2)

     107         198         356         708   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     435         1,013         2,401         1,818   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total BOE per day

     4,725         11,006         8,794         6,635   
  

 

 

    

 

 

    

 

 

    

 

 

 

Physical production volume (BOE per day): (1)

           

United Kingdom

     6,824         8,573         7,586         4,474   

United States

     1,156         2,151         1,354         2,585   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     7,980         10,724         8,940         7,059   
  

 

 

    

 

 

    

 

 

    

 

 

 

Realized Price, before and after derivatives :

           

United Kingdom:

           

Oil and condensate price ($ per Bbl)

   $ 106.82       $ 99.32       $ 104.77       $ 101.78   
  

 

 

    

 

 

    

 

 

    

 

 

 

Gas price ($ per Mcf)

   $ 7.92       $ 6.80       $ 8.03       $ 7.18   
  

 

 

    

 

 

    

 

 

    

 

 

 

Equivalent oil price ($ per BOE)

   $ 106.55       $ 99.09       $ 104.60       $ 101.16   
  

 

 

    

 

 

    

 

 

    

 

 

 

United States:

           

Oil and condensate price ($ per Bbl)

     106.78       $ 92.93         94.84         96.19   
  

 

 

    

 

 

    

 

 

    

 

 

 

Gas price ($ per Mcf)

   $ 2.99       $ 2.09       $ 3.15       $ 2.11   
  

 

 

    

 

 

    

 

 

    

 

 

 

Equivalent oil price ($ per BOE)

   $ 18.29       $ 12.88       $ 19.13       $ 12.95   
  

 

 

    

 

 

    

 

 

    

 

 

 

Realized Price, before and after derivatives:

           

Oil and condensate price ($ per Bbl)

   $ 106.82       $ 99.31       $ 104.76       $ 101.76   
  

 

 

    

 

 

    

 

 

    

 

 

 

Gas price ($ per Mcf)

   $ 3.06       $ 2.16       $ 3.23       $ 2.19   
  

 

 

    

 

 

    

 

 

    

 

 

 

Equivalent oil price ($ per BOE)

   $ 84.89       $ 82.24       $ 91.95       $ 66.80   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)  We record oil revenues when deliveries have occurred and legal ownership of the oil transfers to the customer. Physical production may differ from sales volumes based on the timing of tanker liftings for our international sales.


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 and Adjusted EBITDA. 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.

 

(Amounts in thousands)

   Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2013     2012     2013     2012  

Net loss

   $ (39,885   $ (33,702   $ (67,817   $ (119,773

Impairment of oil and gas properties (net of tax) (1)

     6,032        11,416        9,566        47,116   

Unrealized gains (losses) on derivatives (net of tax) (2)

     (855     265        (1,158     58   

Loss on early extinguishment of debt (net of tax) (3)

     —          —          —          17,762   

Deferred tax expense related to U.K. tax rate change

       8,393          8,393   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Loss as Adjusted

   $ (34,708   $ (13,628   $ (59,409   $ (46,444
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (39,885   $ (33,702   $ (67,817   $ (119,773

Unrealized loss on derivatives

     (855     1,204        (1,158     2,178   

Net interest expense

     26,441        18,005        72,290        62,789   

Letter of credit fees

     7,274        9,378        25,782        12,442   

Loss on early extinguishment of debt

     —          —          —          21,661   

Depreciation, depletion and amortization

     18,596        23,759        93,466        42,292   

Impairment of oil and gas properties

     6,032        11,416        9,566        47,116   

Income tax expense (benefit)

     (14,330     21,505        (2,141     (3,424
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 3,273      $ 51,565      $ 129,988      $ 65,281   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)  Since the impairments related to U.S. oil and gas properties, we recognized no tax benefits as there was no assurance that we could generate any U.S. taxable earnings.
(2)  Net of tax benefit of none, $939, none and $2,120 for the three months ended September 30, 2013 and 2012, nine months ended September 30, 2013 and 2012, respectively.
(3)  Net of tax benefit of $3,899 for the nine months ended September 30, 2012.