HOUSTON, July 18, 2011 /PRNewswire/ -- Endeavour
International Corporation (NYSE: END) (LSE: ENDV) announced today
that it has entered into purchase and sale agreements with SM
Energy Company (NYSE:SM) and certain other minority owners to
acquire the leasehold and producing interests held by SM Energy and
its partners in the Marcellus shale in north central Pennsylvania, as well as a pipeline and
related facilities for aggregate consideration of $110 million. The transaction provides Endeavour
with significant production and reserve potential on acreage that
is adjacent to the Company's existing Marcellus acreage and is
readily available for development in one of the most economically
attractive shale gas plays in the United
States.
The assets include the following:
- Approximately 50,000 net acres of leasehold with 100 percent
operated working interests in McKean and Potter counties;
- Current production from three existing wells of approximately
three to four million cubic feet of natural gas per day, including
the Potato Creek #3H well that initially flowed 11 million cubic
feet of gas per day and is expected to recover in excess of 4
billion cubic feet of gas;
- 100 percent ownership of Potato Creek LLC, which owns a
midstream gathering system and related facilities in southern
McKean County, including a 10-mile
16" trunkline connected and flowing to Tennessee Gas Pipeline's 24"
mainline; and
- Proprietary and fully processed 3-D seismic survey covering the
entire Potato Creek lease block.
Following the completion of the transaction, Endeavour's
leasehold interests in the Marcellus Shale will total approximately
93,000 gross (68,000 net) acres. A new 7-year lease will be issued
at closing on the key 21,000 net acre Potato Creek block that
requires only five wells to be drilled in the first three years.
Minimal capital is required over the next three years to hold
all acreage in McKean County,
including the key Potato Creek leasehold. The transaction is
expected to close within 60 days and is expected to be financed
with proceeds from the issuance of convertible debt securities.
"This acquisition represents a significant step forward in the
growth of our domestic onshore business in a play that offers some
of the highest returns in the United
States today," said William L.
Transier, chairman, chief executive officer and president.
"The acreage is located on trend with several major industry
developments and complements our existing acreage position in
Cameron County immediately to the
south. Our development model indicates recoverable natural gas
potential from 1.0 to 1.3 trillion cubic feet with more than 300
identified drilling locations on our McKean and Cameron
County leasehold. As operator of these assets,
including the gathering infrastructure, we have the opportunity to
accelerate our development plans in an effort to realize the value
of our investment while expanding our position in this three county
area."
Operational and Financial Update
Bacchus Update
The Rowan Gorilla VII rig has arrived at the Bacchus field and
has commenced drilling operations for the three planned development
wells. The Bacchus development is located in the Central UK
North Sea and Endeavour has a 30% working interest in the field.
Senior Term Loan
In support of the Company's growth plans, Cyan Partners and
certain lenders under the Senior Term Loan have amended the terms
of the Company's Senior Term Loan and agreed to expand the facility
by $75 million. Endeavour intends to
use this additional capital to accelerate its development
activities throughout the Company, particularly its Greater
Rochelle development and its expanded position in Pennsylvania following the Marcellus
acquisition.
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:
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements include statements that express a
belief, expectation, or intention, as well as those that are not
statements of historical fact, and may include projections and
estimates concerning the timing and success of specific projects
and our future production, revenues, income and capital spending.
Our forward-looking statements are generally accompanied by words
such as "estimate," "project," "predict," "believe," "expect,"
"anticipate," "potential," "plan," "goal" or other words that
convey the uncertainty of future events or outcomes. We caution you
not to rely on them unduly. We have based these forward-looking
statements on our current expectations and assumptions about future
events. While our management considers these expectations and
assumptions to be reasonable, they are inherently subject to
significant business, economic, competitive, regulatory and other
risks, contingencies and uncertainties, most of which are difficult
to predict and many of which are beyond our control. These risks,
contingencies and uncertainties, which may not be exhaustive,
relate to, among other matters, the following: discovery,
estimation, development and replacement of oil and gas reserves;
decreases in proved reserves due to technical or economic factors;
drilling of wells and other planned exploitation activities; timing
and amount of future production of oil and gas; the volatility of
oil and gas prices; availability and terms of capital; operating
costs such as lease operating expenses, administrative costs and
other expenses; our future operating or financial results; amount,
nature and timing of capital expenditures, including future
development costs; cash flow and anticipated liquidity;
availability of drilling and production equipment; uncertainties
related to drilling and production operations in a new region; cost
and access to natural gas gathering, treatment and pipeline
facilities; business strategy and the availability of acquisition
opportunities; and factors not known to us at this time. Any of
these factors, or any combination of these factors, could
materially affect our future financial condition or results of
operations and the ultimate accuracy of a forward-looking
statement. The forward-looking statements are not guarantees of our
future performance, and our actual results and future developments
may differ materially from those projected in the forward-looking
statements. In addition, any or all of our forward-looking
statements included in this release may turn out to be incorrect.
They can be affected by inaccurate assumptions we might make or by
known or unknown risks and uncertainties, including those included
in our Annual Report on Form 10-K for the year ended December 31, 2010.
Reserve engineering is a process of estimating underground
accumulations of oil and natural gas that cannot be measured in an
exact way. The accuracy of any reserve estimate depends on the
quality of available data, the interpretation of such data and
price and cost assumptions made by our reserve engineers. In
addition, the results of drilling, testing and production
activities may justify revisions of estimates that were made
previously. If significant, such revisions would change the
schedule of any further production and development drilling.
Accordingly, reserve estimates may differ from the quantities of
oil and natural gas that are ultimately recovered. We use may
use certain terms in our news releases, such as "resource
potential," that the SEC's guidelines strictly prohibit us from
including in filings with the SEC. 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.
SOURCE Endeavour International Corporation