HOUSTON, May 2, 2012 /PRNewswire/ -- Endeavour
International Corporation (NYSE: END) (LSE: ENDV) today reported
first quarter 2012 net loss, as adjusted of $15.4 million compared to $12.9 million for the same quarter of 2011.
On a GAAP basis, net loss for the first quarter of 2012 was
$35.3 million as compared to net loss
of $7.5 million for the same quarter
in 2011. Volumes for the first quarter 2012 averaged approximately
4,200 barrels of oil equivalent per day ("boepd").
Business highlights include:
- North Sea:
- At Bacchus, production at the first well commenced with an
initial flow rate of approximately 6,000 gross barrels of oil per
day ("bopd")
- The semisubmersible rig, the Diamond Ocean Nomad, is scheduled
to arrive in May to begin drilling the first of two planned
Rochelle development wells
- North Sea Acquisition:
- Discussions continue between ConocoPhillips and the Alba
partners, along with Endeavour, concerning the closing requirements
for the Alba Field transaction. Endeavour believes progress is
being made and is hopeful a resolution will be forthcoming
soon
- U.S. Onshore:
- One gross Haynesville well was brought on production during the
quarter
- U.S. net production averaged 18.5 million cubic feet of gas
equivalent per day (MMCFe/D) for the first quarter
- Finance:
- Completed the sale of $500
million of Senior Notes due 2018 to fund the North Sea
acquisition and retire the Senior Term Loan
- On April 12, 2012, the Company
entered into a new $100 million
revolving credit agreement and borrowed $40
million under the facility to supplement operating funds
primarily in replacement of the $32
million escrowed in March to secure a previously existing
letter of credit
"We are focused on three priorities this year," said
William L. Transier, chairman, chief
executive officer and president. "Those priorities are the
completion of the development projects at Bacchus and Rochelle, as
well as the finalization of the North Sea acquisition. We have
already completed the high-yield debt offering to fund the
acquisition and repay our first lien debt. In the near-term,
there is nothing more important than completing these priorities
that we, as a management team, can do to impact shareholder
value."
Operational Update
United Kingdom
At the Bacchus field in Block 22/06a in the Central North Sea,
drilling at the first of three planned development wells is
complete. The first well is on production with initial flow rates,
for the first five days, of approximately 6,000 gross bopd.
Drilling of the second well began on April 20, 2012 and is expected to be on
production early in the third quarter. The top-hole sections
of all three wells were drilled to approximately 1,000 feet in
2011.
At Rochelle the contracted drilling rig, the Diamond Ocean
Nomad, is scheduled to arrive in May to drill the first of two
planned development wells. Modifications to the Scott Platform, the
off-take solution for the Rochelle development, are continuing as
planned. The pipeline fabrication is completed and installation on
the seabed floor is scheduled to commence in the third quarter. The
Rochelle development continues on schedule for first production in
the fourth quarter of 2012. Endeavour is operator and holds a
44% ownership interest in the Rochelle development which is
comprised of Blocks 15/26b, 15/26c and 15/27.
North Sea Acquisition
The Company is working to close the North Sea acquisition.
Completion of the Alba field transfer has been delayed due to the
efforts of certain of the co-venturers who seek an agreement on the
handling of future decommissioning costs, which was neither under
discussion by the co-venturers at the execution of the purchase and
sale agreement, nor is it required as a condition of closing.
As a current owner in Alba field, Endeavour believes it is the best
interest of all parties to deal with future decommissioning plans
and associated costs prudently in time, but proceed to closing the
Alba transaction immediately. ConocoPhillips and Endeavour
have proposed a solution to the Alba co-venturers who are
considering the proposal. At this time, the resolution of
this process is not clear. We believe the failure to close under
these circumstances would be detrimental to the U.K. North Sea oil
and gas business generally, the Alba co-venturers and the
Company.
If the Alba co-venturers do not reach a consensus and the
transaction does not close or other alternatives arranged, the
Company would be required to redeem the 2018 Notes, including
penalties and interest, which is more than the net proceeds from
the offering now in escrow. In addition, the Company would be
required to repay the $40 million of
outstanding borrowings under its new revolving credit
facility. There can be no assurance that the Company will
have the necessary cash or will be able to obtain the necessary
financing to fund these repayments.
United States Onshore
During the first quarter, the Company brought one Haynesville
well on production and drilled a second well. The completion of the
second well was deferred and there is currently no drilling
activity going on in the U.S. Net daily production averaged 18.5
MMCFe/D for the first quarter.
In the Heath Shale tight oil play, the Company and its partners
are finishing the core and log data analysis from four vertical
pilot wells. Endeavour will target horizontal re-entry zones
in the pilot wells to be tested later this year.
Finance
On February 23, 2012, Endeavour
closed the private placement of $500
million aggregate principal amount of the 2018 Notes, priced
at 96% of par. The Company intends to use the net proceeds
from the 2018 Notes to fund the North Sea acquisition, to repay all
amounts outstanding under the Senior Term Loan due 2013 and for
general corporate purposes. Prior to the closing of the
acquisition in the North Sea, the net proceeds of the offering are
held in an escrow account and reflected as restricted cash on the
balance sheet.
On April 12, 2012, the Company
entered into a $100 million revolving
credit agreement and borrowed $40
million under the facility to supplement operating funds
primarily in replacement of the $32
million of funds required by a bank to be escrowed to cash
collateralize an existing letter of credit. The Company is actively
engaged in replacing this letter of credit with another bank.
The remainder of the revolving credit facility is available on the
closing of the Alba field acquisition.
Earnings Conference Call, Wednesday,
May 2, 2012 at 9:00 a.m., Central
Daylight Time, 3:00 p.m.
British Summer Time
Endeavour International will host a conference call and web cast
to discuss its 2012 first quarter financial and operating results
on Wednesday, May 2, 2012 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
4222627. The toll-free numbers are
888-228-5293 in the United
States and 0-808-101-1402 in the United Kingdom. Other international callers
should dial 913-312-1301(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 Daylight
Time on May 2, 2012 through
12:00 p.m. on May 9, 2012 by dialing toll free
888-203-1112 (U.S.) or 719-457-0820
(international), confirmation code
4222627.
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.
Endeavour International
Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December
31,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Assets
|
Current
Assets:
|
|
|
|
|
|
|
Cash and
cash equivalents
|
$
|
18,186
|
|
$
|
106,036
|
|
Restricted cash
|
|
493,434
|
|
|
-
|
|
Accounts
receivable
|
|
13,594
|
|
|
8,649
|
|
Prepaid
expenses and other current assets
|
|
25,335
|
|
|
18,840
|
|
Total
Current Assets
|
|
550,549
|
|
|
133,525
|
|
|
|
|
|
|
|
|
Property and Equipment,
Net
|
|
593,973
|
|
|
549,196
|
|
Goodwill
|
|
211,886
|
|
|
211,886
|
|
Other
Assets
|
|
48,347
|
|
|
30,384
|
|
|
|
|
|
|
|
|
Total
Assets
|
$
|
1,404,755
|
|
$
|
924,991
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
Current
Liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
$
|
102,970
|
|
$
|
62,275
|
|
Current
maturities of debt
|
|
14,850
|
|
|
12,350
|
|
Accrued
expenses and other
|
|
14,147
|
|
|
20,549
|
|
Total
Current Liabilities
|
|
131,967
|
|
|
95,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term
Debt
|
|
|
|
|
|
|
2018
Notes, net of debt discount
|
|
480,000
|
|
|
-
|
|
Other long-term
debt
|
|
456,090
|
|
|
455,028
|
|
Total
long-term debt
|
|
936,090
|
|
|
455,028
|
|
Deferred
Taxes
|
|
106,745
|
|
|
115,759
|
|
Other
Liabilities
|
|
66,235
|
|
|
61,248
|
|
Total
Liabilities
|
|
1,241,037
|
|
|
727,209
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series C Convertible
Preferred Stock
|
|
43,703
|
|
|
43,703
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
120,015
|
|
|
154,079
|
|
|
|
|
|
|
|
|
Total Liabilities and
Stockholders' Equity
|
$
|
1,404,755
|
|
$
|
924,991
|
|
|
|
Endeavour International Corporation
Condensed Consolidated Statement of Operations
(Unaudited)
(Amounts in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
|
|
March
31,
|
|
|
|
2012
|
|
2011
|
Revenues
|
$
|
15,166
|
|
$
|
14,104
|
|
|
|
|
|
|
|
|
Cost of
Operations:
|
|
|
|
|
|
|
Operating
expenses
|
|
4,898
|
|
|
5,041
|
|
Depreciation, depletion and amortization
|
|
7,906
|
|
|
6,323
|
|
Impairment
of oil and gas properties
|
|
15,740
|
|
|
-
|
|
General
and administrative
|
|
5,323
|
|
|
4,713
|
|
Total
Expenses
|
|
33,867
|
|
|
16,077
|
|
|
|
|
|
|
|
|
Loss From
Operations
|
|
(18,701)
|
|
|
(1,973)
|
|
|
|
|
|
|
|
|
Other
Income (Expense):
|
|
|
|
|
|
|
Derivatives:
|
|
|
|
|
|
|
|
Unrealized
gains (losses)
|
|
(4,779)
|
|
|
4,464
|
|
Interest
expense
|
|
|
|
|
|
|
|
Interest
expense related to the 2018 Notes
|
|
(6,653)
|
|
|
-
|
|
|
Other
interest expense
|
|
(13,054)
|
|
|
(12,523)
|
|
|
Total
interest expense
|
|
(19,707)
|
|
|
(12,523)
|
|
Interest
income and other
|
|
(2,668)
|
|
|
(139)
|
Total
Other Expense
|
|
(27,154)
|
|
|
(8,198)
|
|
|
|
|
|
|
|
|
Loss
Before Income Taxes
|
|
(45,855)
|
|
|
(10,171)
|
|
|
|
|
|
|
|
|
Income Tax
Benefit
|
|
(10,593)
|
|
|
(2,714)
|
Net
Loss
|
|
(35,262)
|
|
|
(7,457)
|
Preferred
Stock Dividends
|
|
456
|
|
|
545
|
|
|
|
|
|
|
|
|
Net Loss
to Common Stockholders
|
$
|
(35,718)
|
|
$
|
(8,002)
|
|
|
|
|
|
|
|
|
Net Loss
per Common Share:
|
|
Basic and
Diluted
|
$
|
(0.94)
|
|
$
|
(0.30)
|
|
|
|
|
|
|
|
|
Weighted
Average Number of Common Shares Outstanding:
|
|
Basic and
Diluted
|
|
37,854
|
|
|
26,750
|
|
|
Endeavour International Corporation
Condensed Consolidated Statement of Cash Flows
(Unaudited)
(Amounts in thousands)
|
|
|
|
|
|
|
|
|
|
Three
Months Ended March 31,
|
|
|
|
|
2012
|
|
2011
|
Cash Flows
from Operating Activities:
|
|
|
|
|
|
|
Net
loss
|
$
|
(35,262)
|
|
$
|
(7,457)
|
|
Adjustments to reconcile net loss to net
cash
|
|
|
|
|
|
|
|
used in
operating activities:
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
7,906
|
|
|
6,323
|
|
|
Impairment
of oil and gas properties
|
|
15,740
|
|
|
-
|
|
|
Deferred
tax benefit
|
|
(9,014)
|
|
|
(2,182)
|
|
|
Unrealized
(gains) losses on derivatives
|
|
4,779
|
|
|
(4,464)
|
|
|
Amortization of non-cash compensation
|
|
1,559
|
|
|
875
|
|
|
Amortization of loan costs and discount
|
|
3,669
|
|
|
3,916
|
|
|
Non-cash
interest expense
|
|
3,528
|
|
|
3,031
|
|
|
Other
|
|
1,894
|
|
|
2,602
|
|
|
Changes in
operating assets and liabilities
|
|
(15,950)
|
|
|
(18,066)
|
Net Cash
Used in Operating Activities
|
|
(21,153)
|
|
|
(15,422)
|
|
|
|
|
|
|
|
|
Cash Flows
From Investing Activities:
|
|
|
|
|
|
|
Capital
expenditures
|
|
(23,242)
|
|
|
(20,148)
|
|
Acquisitions
|
|
(8,017)
|
|
|
(20,964)
|
|
Increase
in restricted cash
|
|
(493,434)
|
|
|
(1,295)
|
Net Cash
Used in Investing Activities
|
|
(524,693)
|
|
|
(42,407)
|
|
|
|
|
|
|
|
|
|
Cash Flows
From Financing Activities:
|
|
|
|
|
|
|
Repayments
of borrowings
|
|
(588)
|
|
|
(5,400)
|
|
Borrowings
under debt agreements, net of debt discount
|
|
480,000
|
|
|
-
|
|
Financing
costs related to the 2018 Notes
|
|
(21,005)
|
|
|
-
|
|
Other
financing costs paid
|
|
-
|
|
|
(583)
|
|
Proceeds
from issuance of common stock
|
|
-
|
|
|
116,822
|
|
Dividends
paid
|
|
(416)
|
|
|
(506)
|
|
Other
financing
|
|
5
|
|
|
375
|
Net Cash
Provided by Financing Activities
|
|
457,996
|
|
|
110,708
|
|
|
|
|
|
|
|
|
|
Net
Increase (Decrease) in Cash and Cash Equivalents
|
|
(87,850)
|
|
|
52,879
|
Cash and
Cash Equivalents, Beginning of Period
|
|
106,036
|
|
|
99,267
|
|
|
|
|
|
|
|
|
|
Cash and
Cash Equivalents, End of Period
|
$
|
18,186
|
|
$
|
152,146
|
|
|
Endeavour International Corporation
Operating Statistics
(Unaudited)
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
|
|
|
March
31,
|
|
|
|
|
2012
|
2011
|
Sales
volume (1)
|
|
|
|
|
|
Oil and
condensate sales (Mbbls):
|
|
|
|
|
|
|
United
Kingdom
|
|
96
|
|
100
|
|
|
United
States
|
|
1
|
|
2
|
|
|
Total
|
|
97
|
|
102
|
|
|
|
|
|
|
|
|
Gas
sales (MMcf):
|
|
|
|
|
|
|
United
Kingdom
|
|
21
|
|
44
|
|
|
United
States
|
|
1,677
|
|
965
|
|
|
Total
|
|
1,698
|
|
1,009
|
|
|
|
|
|
|
|
|
Oil
equivalent sales (MBOE)
|
|
|
|
|
|
|
United
Kingdom
|
|
100
|
|
108
|
|
|
United
States
|
|
280
|
|
162
|
|
|
Total
|
|
380
|
|
270
|
|
|
|
|
|
|
|
Total
BOE per day
|
|
4,174
|
|
3,001
|
|
|
|
|
|
|
|
Physical production volume (BOE per day)
(1)
|
|
|
United
Kingdom
|
|
893
|
|
1,307
|
|
|
United
States
|
|
3,081
|
|
1,885
|
|
|
Total
|
|
3,974
|
|
3,192
|
|
|
|
|
|
|
Realized Price, before and after
derivatives
|
|
|
|
|
|
Oil and
condensate price ($ per Bbl)
|
$
|
116.99
|
$
|
98.79
|
|
Gas price
($ per Mcf)
|
$
|
2.25
|
$
|
4.00
|
|
Equivalent
oil price ($ per BOE)
|
$
|
39.92
|
$
|
52.22
|
|
|
|
|
|
|
(1)
|
We record
oil revenues using the sales method, i.e. when delivery has
occurred. Physical production may differ based on
the timing of tanker liftings for international sales. We use the
entitlements method to account for sales of gas
production.
|
|
|
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.
|
|
|
|
Three
Months Ended
|
|
|
|
March
31,
|
|
|
|
2012
|
2011
|
Net
loss
|
$
|
(35,262)
|
$
|
(7,457)
|
Impairment
of oil and gas properties (net of tax) (1)
|
|
15,740
|
|
-
|
Unrealized
(gain) loss on derivatives (net of tax) (2)
|
|
4,148
|
|
(5,469)
|
|
|
|
|
|
Net
Loss as Adjusted
|
$
|
(15,374)
|
$
|
(12,926)
|
|
|
|
|
|
Net
loss
|
$
|
(35,262)
|
$
|
(7,457)
|
Unrealized
(gain) loss on derivatives
|
|
4,779
|
|
(4,464)
|
Net
interest expense
|
|
19,651
|
|
12,418
|
Depreciation, depletion and amortization
|
|
7,906
|
|
6,323
|
Impairment
of oil and gas properties
|
|
15,740
|
|
-
|
Income tax
(benefit)
|
|
(10,593)
|
|
(2,714)
|
|
|
|
|
|
Adjusted EBITDA
|
$
|
2,221
|
$
|
4,106
|
|
|
|
|
|
(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 $631 and $1,006, respectively.
|
SOURCE Endeavour International Corporation