Endeavour Announces 2013 First Quarter Financial and Operational
Results
HOUSTON, May 9, 2013 -- Endeavour International Corporation (NYSE:
END) (LSE: ENDV) today reported first quarter 2013 net loss, as adjusted of
$12.1 million compared to a net loss, as adjusted of $15.4 million for the same
period in 2012. On a GAAP basis, net loss for the first quarter of 2013 was
$14.0 million as compared to net loss of $35.3 million for the same quarter in
2012.
Sales volumes for the first quarter of 2013 were 7,186 barrels of oil
equivalent per day ("boepd"), compared to 4,174 boepd for the same quarter in
the prior year. First quarter 2013 sales numbers were impacted by the timing of
liftings at the Alba field, where during the period there was only a single
lifting. Physical production for the first quarter of 2013 averaged 9,385 boepd
compared to 3,974 boepd for the same quarter of 2012.
Recent Business Highlights:
* North Sea:
+ Drilling of the West Rochelle well remains on schedule, with first
production expected mid-year 2013
+ The third production well at Bacchus began drilling in March
+ The Alba 2013 in-field drilling program commenced
+ The Centurion South exploration well was drilled to total depth
* Finance:
+ The sale of the $107.5 million
Monetary Production Payment closed on
April 30, 2013
* Strategic Review:
+ Initiated in February, the review process remains on-going
"This quarter has been about execution and keeping our development projects
moving forward. The drilling of our production wells at West Rochelle and
Bacchus continues on schedule. We have worked through a significant number of
the processing issues at Alba and expect to see better production levels from
the field in the second half of the year," said William L. Transier, chairman,
chief executive officer and president. "Our strategic review process remains
on-going. We intend to bring the process to conclusion as soon as a thorough
evaluation of all the options is completed by our Board of Directors."
Operational Update
United Kingdom
In mid-February, the Transocean Prospect rig moved to the West Rochelle field.
Drilling of the production well has reached total measured depth and final
completion of the well is in process. First production from the West Rochelle
well is expected in mid-2013.The subsea pipeline and manifold infrastructure
for the field has been installed and the topside modifications to the Scott
Platform have also been completed. Endeavour has a 44% working interest in the
Rochelle development.
At the Bacchus field, the Rowan Gorilla VII rig arrived in late March to drill
the third planned production well. Production performance from the first two
wells continues to be strong and remains above original expectations. First
production from the third well is expected during the third quarter of 2013.
Endeavour has a 30% working interest in the Bacchus field.
At Alba, the year's drilling campaign commenced with three development wells
planned. The timing of the drilling program has been accelerated into the first
half of the year. The Company expects the drilling, in combination with
improvements in the processing systems, to result in increased production
levels from the field during the second half of the year. During the first
quarter, production at the field was impacted by an unplanned five-day shutdown
and lower than expected production levels due to continuing processing
problems. Endeavour has a 25.68% working interest in the Alba field.
Beginning in March, the Centurion South exploration well was drilled to its
planned total depth. The presence of hydrocarbon bearing Fulmar reservoir sands
was confirmed, although the section was thinner than anticipated. The Company
and its partners are evaluating the results, as well as the overall commercial
viability of the combined Centurion discoveries. The prospect is a satellite to
the Centurion discovery which was drilled in 1984 and flow tested at 5,200
boepd. The well is being plugged and abandoned. Endeavour has a 33.3% working
interested in the block.
Finance
On April 30, Endeavour closed on the sale of a $107.5 million Monetary
Production Payment (the 'MPP') after receiving the required approvals from the
United Kingdom regulators. The MPP will be satisfied out of the production
from
the Alba and Bacchus fields.
Strategic Review Process
In February 2013, the Board of Directors initiated a process to explore a broad
range of strategic alternatives to further enhance shareholder value. Data
rooms were opened in the U.K. and U.S. and the process is on-going. Endeavour
remains focused on executing its operational plans. While the strategic review
is continuing, the Company can provide no assurance that the strategic review
will result in the Company changing its current business plan or completing any
transaction.
Earnings Conference Call, Thursday, May
9, 2013 at 9:00 a.m., Central
Time, 3: 00 p.m. British Summer Time
Endeavour International will host a conference call and web cast to discuss its
2013 first quarter financial and operating results on Thursday, May 9, 2013 at
9 a.m. Central Time, 3 p.m. British Summer 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 3076749. The toll-free numbers are 800-756-4697 in the United
States and 0-808-101-1152 in the United Kingdom. Other international callers
should dial 913-981-5517 (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 May 9, 2013 through 12:00
p.m. on May 16, 2013 by dialing toll free 888-203-1112 (U.S.) or 719-457-0820
(international), confirmation code 3076749.
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,
2013 2012
------------------------
Assets
Current Assets:
Cash and cash equivalents $ 80,781 $ 59,185
Restricted cash 178 178
Accounts receivable 30,173 46,003
Prepaid expenses and other current assets 40,562 20,995
------ ------
Total Current Assets 151,694 126,361
Property and Equipment, Net 1,032,810 1,003,441
Goodwill 259,238 262,764
Other Assets 58,509 49,906
------ ------
Total Assets $ 1,502,251 $ 1,442,472
--------- ---------
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 44,731 $ 60,153
Current maturities of debt - 15,713
Accrued expenses and other 150,948 90,100
------- ------
Total Current Liabilities 195,679 165,966
Long-Term Debt 862,249 843,793
Deferred Taxes 154,354 141,887
Other Liabilities 155,961 147,692
------- -------
Total Liabilities 1,368,243 1,299,338
Commitments and Contingencies
Series C Convertible Preferred Stock 43,703 43,703
Stockholders' Equity 90,305 99,431
------ ------
Total Liabilities and Stockholders' Equity $ 1,502,251 $
1,442,472
--------- ---------
Endeavour International Corporation
Condensed Consolidated Statement of Operations
(Unaudited)
(Amounts in thousands, except per share data)
Three Months Ended
March 31,
-----------
2013 2012
------ ------
Revenues $ 57,672 $ 15,166
Cost of Operations:
Operating expenses 17,490
4,898
Depreciation, depletion and amortization 22,947
7,906
Impairment of oil and gas properties 3,534
15,740
General and administrative 5,482
5,323
----- -----
Total Expenses 49,453 33,867
------ ------
Income (Loss) From Operations 8,219 (18,701)
----- ------
Other Income (Expense):
Derivatives:
Unrealized gains (losses) 1,580 (4,779)
Interest expense (21,438) (19,707)
Letter of credit fees (11,380) -
Interest income and other 9,882
(2,668)
----- -----
Total Other Expense (21,356) (27,154)
------ ------
Loss Before Income Taxes (13,137) (45,855)
Income Tax Expense (Benefit) 909 (10,593)
--- ------
Net Loss (14,046) (35,262)
Preferred Stock Dividends 456 456
--- ---
Net Loss to Common Stockholders $ (14,502) $ (35,718)
---------- ---------
Basic and Diluted Net Loss per Common Share $ (0.31) $
(0.94)
-------- --------
Weighted Average Number of Common Shares
Outstanding:
Basic and Diluted 47,060 37,854
------ ------
Endeavour International Corporation
Condensed Consolidated Statement of Cash Flows
(Unaudited)
(Amounts in thousands)
Three Months Ended March 31,
---------------------------
2013 2012
---- ----
Cash Flows from Operating Activities:
Net loss $ (14,046) $ (35,262)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation, depletion and amortization 22,947
7,906
Impairment of oil and gas properties 3,534
15,740
Deferred tax expense (benefit) 128
(9,014)
Unrealized (gains) losses on derivatives (1,580)
4,779
Amortization of non-cash compensation 832
1,559
Amortization of loan costs and discount 3,439
3,669
Non-cash interest expense 2,274
3,528
Other (4,723)
1,892
Changes in operating assets and liabilities 34,800
(15,950)
------ ------
Net Cash Provided by (Used in) Operating Activities 47,605 (21,153)
Cash Flows From Investing Activities:
Capital expenditures (58,257) (23,242)
Acquisitions (817) (8,017)
Increase in restricted cash -
(493,434)
------ --------
Net Cash Used in Investing Activities (59,074) (524,693)
Cash Flows From Financing Activities:
Repayments of borrowings -
(588)
Borrowings under debt agreements, net of debt - 480,000
discount
Financing costs paid (9,935) (21,005)
Proceeds from issuance of monetary production 43,000 -
payment
Dividends paid - (416)
Other financing - 5
------ -------
Net Cash Provided by Financing Activities 33,065 457,996
Net Increase (Decrease) in Cash and Cash Equivalents 21,596
(87,850) Cash and Cash Equivalents, Beginning of Period
59,185
106,036
------- -------
Cash and Cash Equivalents, End of Period $ 80,781 $ 18,186
--------- ---------
Endeavour International Corporation
Operating Statistics
(Unaudited)
Three Months Ended
March 31,
--------
2013 2012
---- ----
Sales volume (1)
Oil and condensate sales (Mbbls):
United Kingdom 508 96
United States - 1
--- --
Total 508 97
--- --
Gas sales (MMcf):
United Kingdom 11 21
United States 821 1,677
--- -----
Total 832 1,698
--- -----
Oil equivalent sales (MBOE)
United Kingdom 510 100
United States 137 280
--- ---
Total 647 380
--- ---
Total BOE per day 7,186 4,174
----- -----
Physical production volume (BOE per day)(1)
United Kingdom 7,862 893
United States 1,523 3,081
----- -----
Total 9,385 3,974
----- -----
Realized Price, before and after
derivatives
Oil and condensate price ($ per Bbl) $ 108.40 $ 116.99
----------- ----------
Gas price ($ per Mcf) $ 3.13 $ 2.25
--------- ---------
Equivalent oil price ($ per BOE) $ 89.17 $ 39.92
---------- ---------
(1) We record oil revenues using the sales method and use the entitlements
method to account for sale of gas production. 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) First Quarter
March 31,
--------
2013 2012
---- ----
Net loss $ (14,046) $ (35,262)
Impairment of oil and gas properties (net of tax) (1) 3,534 15,740
Unrealized loss on derivatives (net of tax) (2) (1,580) 4,148
----- -----
Net Loss as Adjusted $ (12,092) $ (15,374)
---------- ---------
Net loss $ (14,046) $ (35,262)
Unrealized loss on derivatives (1,580) 4,779
Net interest expense 21,422 19,651
Letter of credit fees 11,380 -
Depreciation, depletion and amortization 22,947 7,906
Impairment of oil and gas properties 3,534 15,740
Income tax expense (benefit) 909 (10,593)
--- ------
Adjusted EBITDA $ 44,566 $ 2,221
------- -----
(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 none and $631, respectively.
SOURCE Endeavour International Corporation
CONTACT: 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