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
+1-888-228-5293 in the United States and
+0-808-101-1402 in the United Kingdom. Other international callers
should dial +1-913-312-1301(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
+1-888-203-1112 (U.S.) or
+1-719-457-0820 (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.
|
|
|
|
|
|