HOUSTON, Nov. 1, 2012 /PRNewswire/ -- Endeavour
International Corporation (NYSE: END) (LSE: ENDV) today reported
third quarter 2012 Adjusted EBITDA of $51.6
million compared to $2.4
million for the same quarter of 2011. On a GAAP basis, for
the third quarter of 2012 net loss was $33.7
million as compared to net loss of $63.3 million for the same quarter in
2011.
Production for the quarter ending September 30, 2012 was up 370% from the
comparable quarter in 2011, with U.K. crude oil accounting for 100%
of the increase. For the first nine months of 2012 compared to the
same period in 2011, sales volumes increased 215% from U.K. crude
production. For the third quarter 2012, entitlement production
averaged approximately 10,700 barrels of oil equivalent per day
("boepd") compared to actual sales volumes for the period of
approximately 11,000 boepd.
Business highlights include:
- North Sea:
- At Rochelle, the installation
of subsea pipelines and umbilicals has been completed ahead of
schedule
- The first of the two planned production wells was drilled to a
final casing point
- Awarded seven licenses covering ten exploration blocks in the
U.K.'s 27th Licensing Round around existing core
areas
- U.S. Onshore:
- Closed an exchange with co-owner J-W Operating to obtain
operator status, control of upstream and midstream assets and an
additional 15,500 net acres in the Pennsylvania Marcellus
- U.S. net production averaged 12.9 million cubic feet of gas
equivalent per day (MMCFe/D) for the third quarter
- Finance:
- Completed an offering of an additional $54 million of 12% Senior Notes due 2018 for net
proceeds of $58 million
- Fully redeemed the $25.1 million
12% Senior Subordinated Notes due 2014
"The Company enjoyed significant progress in the third quarter
with strong increases in Brent priced crude oil production in the
U.K. North Sea. We are focused on and making great progress to
deliver first production at our Rochelle development," said William L. Transier, chairman, chief executive
officer and president. "For health and safety reason,
drilling and infrastructure implementation cannot occur in the same
area simultaneously. By making the difficult decision to suspend
drilling before final completion, we were able to keep our service
contractor on schedule to complete the necessary subsea
infrastructure. This decision preserves the option to achieve first
production at Rochelle in early
2013."
Operational Update
United Kingdom
The contracted rig at Rochelle,
the Diamond Ocean Nomad, completed the drilling on the first of two
planned development wells to the final casing point before moving
the rig off location to allow for the hook-up of the pipelines and
flow-lines to the subsea manifolds. Final drilling and completion
of this first development well will be done by the Transocean
Prospect which is scheduled to arrive in field in December. Due to
the change in the timing of completion of the first well, first
production at the field is now expected in January 2013 assuming the rig arrives as
scheduled. The Rochelle subsea
infrastructure installation has been substantially completed.
Endeavour is the operator of the Rochelle development project and holds a 44%
ownership interest in the Rochelle
development which is comprised of Blocks 15/26b, 15/26c and
15/27.
During the 27th Licensing Round, the U.K. government
awarded the Company seven new licenses, covering ten exploration
blocks located around existing core areas. All the licenses, which
have a traditional four year term, will be operated by the Company
and offer additional growth opportunities in the future. There are
no firm well obligations on any of the licenses and minimal upfront
capital commitments.
United States Onshore
Effective October 1, 2012
Endeavour completed an exchange of assets with co-owner J-W
Operating to trade the Company's Bull Bayou Haynesville and
Willow Springs Cotton Valley
projects for all of J-W's upstream and midstream Marcellus assets
in Pennsylvania. The transaction
adds 15,500 net acres to Endeavour's position in the Marcellus
bringing the total to 31,000 net acres and decreases the Company's
position in the Haynesville/Cotton
Valley by 2,100 net acres and approximately 3.2 MMCFe/d (530
boepd) of net production. Also in the Marcellus, Endeavour has
secured an off-take solution in the key Daniel area of Cameron County for up to an additional 10
mmcf/d of production with a local gatherer by year-end 2013. In
conjunction with the transaction, the Company currently has three
wells drilled and cased in the area waiting on completion with no
additional drilling requirements until 2014.
In the Heath Shale tight oil play, the Company has deferred
horizontal re-entries of its vertical pilot wells until 2013 while
it evaluates results from offset operators and operational
efficiencies. In Colorado, the
Company continues to acquire acreage for Upper Cretaceous targets
and has formed a 23,000 acre Federal unit, where it expects to
drill an initial test in 2013.
There is currently no drilling activity underway in the
Company's U.S. gas fields in the Louisiana, Haynesville or the Pennsylvania Marcellus. Net
daily production averaged 12.9 MMCFe/D for the third quarter and
15.5 MMCFe/D for the first nine months of 2012.
Finance
Operating expenses during the quarter included a non-recurring
expense of approximately $9.7 million
related to the initial purchase price value allocation of inventory
at Alba at the date of acquisition.
In October, Endeavour completed a $54
million addition to its 12% Senior Notes due 2018 at 109% of
principal amount, resulting in a yield of 9.4%. Proceeds of
$58 million were used to fully redeem
$25.1 million of the Company's 12%
Senior Subordinated Notes due 2014. The remaining proceeds will be
used to finance a portion of the construction, improvement and
other capital costs related to its U.S. and U.K oil and natural gas
properties. The redemption of the 12% Senior Subordinated Notes was
an important step in preparing for the syndicated bank revolver
Endeavour expects to put in place in 2013.
In addition, the Company increased the amount available to be
borrowed under the Revolving Credit Facility an additional
$25 million and drew down an
additional $15 million bringing the
outstanding balance to approximately $115
million.
Earnings Conference Call, Thursday,
November 1, 2012 at 9:00 a.m. Central
Daylight Time, 2:00 p.m.
British Time
Endeavour International will host a conference call and web cast
to discuss its 2012 third quarter financial and operating results
on Thursday, November 1, 2012 at
9 a.m. Central Daylight Time,
2 p.m. British Time. To participate
and ask questions during the conference call, dial the local
country telephone number and the confirmation code
2204201. The toll-free numbers are
888-677-8751 in the United
States and 0-808-101-1402 in the United Kingdom. Other international callers
should dial 913-312-0682(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 November 1, 2012
through 12:00 p.m. on November 8, 2012 by dialing toll free
888-203-1112 (U.S.) or 719-457-0820
(international), confirmation code
2204201.
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
|
December
31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Assets
|
Current
Assets:
|
|
|
|
|
|
|
Cash and
cash equivalents
|
$
|
75,722
|
|
$
|
106,036
|
|
Restricted
cash
|
|
178
|
|
|
-
|
|
Accounts
receivable
|
|
16,131
|
|
|
8,649
|
|
Prepaid
expenses and other current assets
|
|
28,047
|
|
|
18,840
|
|
|
Total
Current Assets
|
|
120,078
|
|
|
133,525
|
|
|
|
|
|
|
|
|
Property
and Equipment, Net
|
|
836,369
|
|
|
549,196
|
Goodwill
|
|
258,973
|
|
|
211,886
|
Other
Assets
|
|
51,417
|
|
|
30,384
|
|
|
|
|
|
|
Total
Assets
|
$
|
1,266,837
|
|
$
|
924,991
|
|
|
|
|
|
|
Liabilities and Stockholders'
Equity
|
Current
Liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
$
|
84,744
|
|
$
|
62,275
|
|
Current
maturities of debt
|
|
12,500
|
|
|
12,350
|
|
Accrued
expenses and other
|
|
23,680
|
|
|
20,549
|
|
|
Total
Current Liabilities
|
|
120,924
|
|
|
95,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term
Debt
|
|
812,926
|
|
|
455,028
|
Deferred
Taxes
|
|
111,806
|
|
|
115,759
|
Other
Liabilities
|
|
72,338
|
|
|
61,248
|
|
|
Total
Liabilities
|
|
1,117,994
|
|
|
727,209
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series C
Convertible Preferred Stock
|
|
43,703
|
|
|
43,703
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
105,140
|
|
|
154,079
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity
|
$
|
1,266,837
|
|
$
|
924,991
|
Endeavour International Corporation
Condensed Consolidated Statement of
Operations
(Unaudited)
(Amounts
in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
Third
Quarter
|
|
Nine
Months Ended
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Revenues
|
$
|
83,275
|
|
$
|
10,302
|
|
$
|
121,444
|
|
$
|
43,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
23,973
|
|
|
3,496
|
|
|
34,613
|
|
|
14,888
|
|
Depreciation, depletion and amortization
|
|
23,759
|
|
|
5,372
|
|
|
42,292
|
|
|
18,698
|
|
Impairment
of U.S. oil and gas properties
|
|
11,416
|
|
|
28,793
|
|
|
47,116
|
|
|
28,793
|
|
General
and administrative
|
|
5,026
|
|
|
4,863
|
|
|
15,379
|
|
|
14,525
|
|
Total
Expenses
|
|
64,174
|
|
|
42,524
|
|
|
139,400
|
|
|
76,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(Loss) From Operations
|
|
19,101
|
|
|
(32,222)
|
|
|
(17,956)
|
|
|
(33,445)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gains (losses)
|
|
(1,204)
|
|
|
13,081
|
|
|
(2,178)
|
|
|
11,098
|
|
Interest
expense
|
|
(18,053)
|
|
|
(12,253)
|
|
|
(63,016)
|
|
|
(32,607)
|
|
Loss on
early extinguishment of debt
|
|
-
|
|
|
-
|
|
|
(21,661)
|
|
|
(402)
|
|
Letter of
credit fees
|
|
(9,378)
|
|
|
-
|
|
|
(12,442)
|
|
|
-
|
|
Other
income (expense)
|
|
(2,663)
|
|
|
611
|
|
|
(5,944)
|
|
|
826
|
Total
Other Income (Expense)
|
|
(31,298)
|
|
|
1,439
|
|
|
(105,241)
|
|
|
(21,085)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
Before Income Taxes
|
|
(12,197)
|
|
|
(30,783)
|
|
|
(123,197)
|
|
|
(54,530)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax
Expense (Benefit)
|
|
21,505
|
|
|
32,507
|
|
|
(3,424)
|
|
|
31,820
|
Net
Loss
|
|
(33,702)
|
|
|
(63,290)
|
|
|
(119,773)
|
|
|
(86,350)
|
Preferred
Stock Dividends
|
|
456
|
|
|
466
|
|
|
1,367
|
|
|
1,518
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
to Common Stockholders
|
$
|
(34,158)
|
|
$
|
(63,756)
|
|
$
|
(121,140)
|
|
$
|
(87,868)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
per Common Share:
|
|
|
|
|
|
|
|
Basic and
Diluted
|
$
|
(0.73)
|
|
$
|
(1.63)
|
|
$
|
(2.94)
|
|
$
|
(2.52)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Number of Common Shares Outstanding:
|
|
|
|
|
|
|
|
Basic and
Diluted
|
|
46,555
|
|
|
39,064
|
|
|
41,163
|
|
|
34,854
|
Endeavour International Corporation
Condensed Consolidated Statement of Cash
Flows
(Unaudited)
(Amounts
in thousands)
|
|
|
|
Nine
Months Ended September 30,
|
|
2012
|
|
2011
|
Cash Flows
from Operating Activities:
|
|
|
|
|
|
|
Net
loss
|
$
|
(119,773)
|
|
$
|
(86,350)
|
|
Adjustments to reconcile net loss to net
cash
|
|
|
|
|
|
|
|
provided
by (used in) operating activities:
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
42,292
|
|
|
18,698
|
|
|
Impairment
of U.S. oil and gas properties
|
|
47,116
|
|
|
28,793
|
|
|
Deferred
tax expense (benefit)
|
|
(15,849)
|
|
|
23,052
|
|
|
Unrealized
(gains) losses on derivatives
|
|
2,178
|
|
|
(11,098)
|
|
|
Amortization of non-cash compensation
|
|
3,605
|
|
|
2,733
|
|
|
Amortization of loan costs and discount
|
|
10,536
|
|
|
9,151
|
|
|
Non-cash
interest expense
|
|
7,077
|
|
|
9,306
|
|
|
Loss on
early extinguishment of debt
|
|
21,661
|
|
|
402
|
|
|
Other
|
|
9,692
|
|
|
1,839
|
|
|
Changes in
operating assets and liabilities
|
|
(7,191)
|
|
|
(25,145)
|
Net Cash
Provided by (Used in) Operating Activities
|
|
1,344
|
|
|
(28,619)
|
|
|
|
|
|
|
Cash Flows
From Investing Activities:
|
|
|
|
|
|
|
Capital
expenditures
|
|
(175,597)
|
|
|
(113,137)
|
|
Acquisitions
|
|
(228,437)
|
|
|
(22,898)
|
|
(Increase)
decrease in restricted cash
|
|
(178)
|
|
|
31,726
|
Net Cash
Used in Investing Activities
|
|
(404,212)
|
|
|
(104,309)
|
|
|
|
|
|
|
Cash Flows
From Financing Activities:
|
|
|
|
|
|
|
Repayments
of borrowings
|
|
(247,065)
|
|
|
(97,638)
|
|
Borrowings
under debt agreements, net of debt discount
|
|
595,000
|
|
|
210,000
|
|
Proceeds
from issuance of common stock
|
|
60,805
|
|
|
118,444
|
|
Dividends
paid
|
|
(833)
|
|
|
(1,400)
|
|
Payments
for early extinguishment of debt
|
|
(7,248)
|
|
|
-
|
|
Financing
costs paid
|
|
(28,109)
|
|
|
(11,226)
|
|
Other
financing
|
|
4
|
|
|
511
|
Net Cash
Provided by Financing Activities
|
|
372,554
|
|
|
218,691
|
|
|
|
|
|
|
Net
Increase (Decrease) in Cash and Cash Equivalents
|
|
(30,314)
|
|
|
85,763
|
Cash and
Cash Equivalents, Beginning of Period
|
|
106,036
|
|
|
99,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
Cash Equivalents, End of Period
|
$
|
75,722
|
|
$
|
185,030
|
Endeavour International Corporation
Operating Statistics
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Third
Quarter
|
|
Nine
Months Ended
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
2012
|
|
2011
|
2012
|
|
2011
|
Sales
volume (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and
condensate sales (Mbbls):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
Kingdom
|
|
812
|
|
|
49
|
|
|
1,099
|
|
|
274
|
|
|
United
States
|
|
1
|
|
|
3
|
|
|
2
|
|
|
5
|
|
|
Total
|
|
813
|
|
|
52
|
|
|
1,101
|
|
|
279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas
sales (MMcf):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
Kingdom
|
|
19
|
|
|
-
|
|
|
69
|
|
|
78
|
|
|
United
States
|
|
1,182
|
|
|
1,329
|
|
|
4,234
|
|
|
3,305
|
|
|
Total
|
|
1,201
|
|
|
1,329
|
|
|
4,303
|
|
|
3,383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
equivalent sales (MBOE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
Kingdom
|
|
815
|
|
|
49
|
|
|
1,110
|
|
|
287
|
|
|
United
States
|
|
198
|
|
|
225
|
|
|
708
|
|
|
556
|
|
|
Total
|
|
1,013
|
|
|
274
|
|
|
1,818
|
|
|
843
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
BOE per day
|
|
11,006
|
|
|
2,972
|
|
|
6,635
|
|
|
3,089
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Physical production volume (BOE per day)
(1)
|
|
|
|
|
|
|
|
|
|
|
|
United
Kingdom
|
|
8,573
|
|
|
838
|
|
|
4,474
|
|
|
1,152
|
|
|
United
States
|
|
2,151
|
|
|
2,436
|
|
|
2,585
|
|
|
2,036
|
|
|
Total
|
|
10,724
|
|
|
3,274
|
|
|
7,059
|
|
|
3,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized Price, before and after
derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and
condensate price ($ per Bbl)
|
$
|
99.31
|
|
$
|
106.57
|
|
$
|
101.76
|
|
$
|
108.57
|
|
Gas price
($ per Mcf)
|
$
|
2.16
|
|
$
|
3.59
|
|
$
|
2.19
|
|
$
|
3.88
|
|
Equivalent
oil price ($ per BOE)
|
$
|
82.24
|
|
$
|
37.68
|
|
$
|
66.80
|
|
$
|
51.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
We record
oil revenues using the sales method, i.e. when delivery has
occurred. Actual production may differ based on the timing of
tanker liftings. Physical production may differ from sales volumes
based on the timing of tanker liftings for our 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.
|
|
|
|
(amounts
in thousands)
|
Third
Quarter
|
Nine
Months Ended
|
|
|
|
September
30,
|
September
30,
|
|
|
|
2012
|
2011
|
2012
|
2011
|
Net
loss
|
$
|
(33,702)
|
$
|
(63,290)
|
$
|
(119,773)
|
$
|
(86,350)
|
Impairment
of U.S. oil and gas properties (net of tax) (1)
|
|
11,416
|
|
28,793
|
|
47,116
|
|
28,793
|
Unrealized
(gain) loss (net of tax) (2)
|
|
265
|
|
(13,034)
|
|
58
|
|
(12,245)
|
Loss on
early extinguishment of debt (net of tax)(3)
|
|
-
|
|
-
|
|
17,762
|
|
402
|
Deferred
tax expense related to U.K. tax rate change
|
|
8,393
|
|
25,387
|
|
8,393
|
|
25,387
|
|
|
|
|
|
|
|
|
|
Net
Loss as Adjusted
|
$
|
(13,628)
|
$
|
(22,144)
|
$
|
(46,444)
|
$
|
(44,013)
|
|
|
|
|
|
|
|
|
|
Net
loss
|
$
|
(33,702)
|
$
|
(63,290)
|
$
|
(119,773)
|
$
|
(86,350)
|
Unrealized
loss on derivatives
|
|
1,204
|
|
(13,081)
|
|
2,178
|
|
(11,098)
|
Net
interest expense
|
|
18,005
|
|
12,084
|
|
62,789
|
|
31,832
|
Letter of
credit fees
|
|
9,378
|
|
-
|
|
12,442
|
|
-
|
Loss on
early extinguishment of debt
|
|
-
|
|
-
|
|
21,661
|
|
402
|
Depreciation, depletion and amortization
|
|
23,759
|
|
5,372
|
|
42,292
|
|
18,698
|
Impairment
of U.S. oil and gas properties
|
|
11,416
|
|
28,793
|
|
47,116
|
|
28,793
|
Income tax
expense (benefit)
|
|
21,505
|
|
32,507
|
|
(3,424)
|
|
31,820
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (4)
|
$
|
51.565
|
$
|
2,385
|
$
|
65,281
|
$
|
14,097
|
|
(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) expense of $939 and $(47) and $2,120 and $1,147,
respectively.
|
(3)
|
Net of tax
benefit of $3,899 for the nine months ended September 30,
2012.
|
(4)
|
Includes
operating expenses of approximately $9.7 million for the third
quarter of 2012 and nine months ended September 30, 2012 related to
the initial purchase price value allocation of inventory at Alba at
acquisition date.
|
|
SOURCE Endeavour International Corporation