HOUSTON, Aug. 6, 2013 /PRNewswire/ -- Endeavour
International Corporation (NYSE: END) (LSE: ENDV) today reported
second quarter 2013 net loss, as adjusted of $12.6 million compared to a net loss, as adjusted
of $17.4 million for the same period
in 2012. On a GAAP basis, net loss for the second quarter of 2013
was $14.3 million as compared to net
loss of $51.3 million for the same
quarter in 2012.
Sales volumes for the second quarter of 2013 were 14,497 barrels
of oil equivalent per day ("boepd"), compared to 4,677 boepd for
the same quarter in the prior year. Second quarter 2013 sales
numbers were impacted by two liftings at the Alba field during the
period. Physical production for the second quarter of 2013 averaged
9,498 boepd compared to 6,437 boepd for the same quarter of
2012.
Recent Business Highlights:
- North Sea:
- Drilling of the West Rochelle
(W-1) well has been completed. First production is expected in
September 2013
- At East Rochelle, the E-2 well
commenced drilling on July
25th
- At Bacchus, the third production well was completed and flowed
at a rate of 9,600 barrels of oil per day ("bopd")
- North America:
- First vertical pilot well in the Piceance Basin was
successfully drilled, cored and logged
- Finance:
- In March, the Company received a payment of $22.5 million under a Forward Sale agreement. The
Forward Sale commitment has now been fulfilled
- In May, the Company completed the sale of an additional
$17.5 million expansion to the
Monetary Production Payment, bringing the total to $125 million outstanding
- Guidance Update:
- Direct capital expenditures for the year are expected to be
$170 million – $180 million in the U.K. and $10 million – $30
million in the U.S.
- Physical production for the third quarter is expected to be in
the range of 8,000 – 9,000 boepd due to planned shutdown work on
certain U.K. assets during the period
"We remain focused and are making progress on operational
matters related to the commencement of first production at
Rochelle and improved performance
at Alba," said William L. Transier,
chairman, chief executive officer and president. "The
start-up of production from the Bacchus B-1 development is another
achievement for the Company. The performance of this field
continues to be very positive."
Operational Update
North Sea
At the Rochelle development,
the West Rochelle well was
completed and flow tested at the end of June. During a 56-hour flow
test, the well flowed up to 60 million standard cubic feet per day,
which was the limit of the well test equipment on the drilling rig.
Final installation of the subsea pipeline infrastructure has been
completed and the well is connected back to the Scott Platform.
First production from the West
Rochelle well (W-1) is expected in September 2013 following the completion of the
annual maintenance period at the Scott Platform. In addition, the
Transocean Prospect rig returned to the Rochelle field and commenced drilling the E-2
well at East Rochelle on
July 25th. The second well
of the development, E-2, is expected to be on-line during the
fourth quarter. Endeavour has a 44% working interest in the
Rochelle development.
At the Bacchus field, the third planned production well (B-1)
has been completed and flowed at 9,600 bopd. The well logged 2,057
feet net oil pay along a horizontal completion segment in high
quality Jurassic-aged Fulmar sandstone in the field's western fault
block. Production performance from the three wells was over 17,600
bopd gross. The third well was completed ahead of schedule
and below estimated costs. Endeavour has a 30% working interest in
the field.
At Alba, the first of three planned development wells at the
field was completed in June and a second subsea well was drilled
and completed over the past few days. During the planned 28-day
summer maintenance program, both the produced water and
well-related issues will be addressed and production for the field
is expected to improve by year-end. Endeavour has a 25.68% working
interest in the Alba field.
North America
In the Piceance Basin in Northwest
Colorado, Endeavour successfully drilled, cored and logged
its first Wiley federal unit vertical pilot well, targeting the
liquids-rich Niobrara and Frontier formations. The Company is
evaluating the results and will likely drill a horizontal re-entry
later in the year. In this play, Endeavour has accumulated
leasehold and drill-to-earn options totaling about 40,000 gross
acres.
Finance
In March, Endeavour entered into a Forward Sale agreement
receiving a payment of $22.5 million
and effectively hedged a portion of production by locking in
pricing for in excess of 200,000 barrels of oil over a six month
delivery period. During the second quarter, the Company fulfilled
the delivery requirements for the Forward Sale agreement. This had
a positive effect on the Company's realized oil prices
year-to-date.
In May, the Company completed the sale of an additional
$17.5 million expansion to the
Monetary Production Payment (MPP), bringing the total to
$125 million outstanding. The MPP has
a two-year term and will be satisfied out of the production from
the Alba and Bacchus fields. Repayment of the MPP began in
July 2013 under its terms.
Current liabilities were impacted during the quarter due to the
reclassification of the $115 million
Credit Revolver from long-term into short-term liabilities.
Endeavour intends to refinance the Credit Revolver, due in June of
2014, with a new revolving credit facility. Discussions are in
process with a syndicate of financial institutions.
Guidance Update
Direct capital expenditures for the U.K. North Sea are expected
to be in the $170 million –
$180 million range. As disclosed, the
increase from previous capital expenditure estimates are related to
cost overruns on Rochelle,
primarily from an extended drilling duration of the West well(W-1)
and the drilling of the E-2 well at East
Rochelle. Direct capital expenditures for the U.S. remain in
the range of $10 million –
$30 million and are largely
discretionary.
Each year during the third quarter, routine maintenance work is
performed on platforms and infrastructure in the U.K. North Sea.
Due to this planned downtime, physical production levels for the
third quarter are expected to be in the range of 8,000 – 9,000
boepd. With the summer maintenance work at the Alba field, there
are no scheduled liftings during the third quarter. While the lack
of liftings will impact the estimated sales volumes for the third
quarter, the Company continues to receive payments monthly for its
physical production volumes under its existing marketing
agreement.
Earnings Conference Call, Tuesday,
August 6, 2013 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 2013 second quarter financial and operating results
on Tuesday, August 6, 2013 at
9:00 a.m. Central Daylight Time,
3:00 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 8946017. The toll-free
numbers are 800-753-0420 in the United States and
0-808-101-1152 in the United Kingdom. Other international callers
should dial 913-312-0968 (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 August 6, 2013 through
12:00 p.m. on August 13, 2013 by dialing toll free
888-203-1112 (U.S.) or 719-457-0820
(international), confirmation code 8946017.
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)
|
|
|
|
|
|
|
|
June 30,
|
|
December
31,
|
|
2013
|
|
2012
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
130,790
|
|
$
|
59,185
|
Restricted
cash
|
|
178
|
|
|
178
|
Accounts
receivable
|
|
28,434
|
|
|
46,003
|
Prepaid expenses and
other current assets
|
|
33,933
|
|
|
20,995
|
Total Current
Assets
|
|
193,335
|
|
|
126,361
|
|
|
|
|
|
|
Property and
Equipment, Net
|
|
1,054,834
|
|
|
1,003,441
|
Goodwill
|
|
259,238
|
|
|
262,764
|
Other
Assets
|
|
39,065
|
|
|
49,906
|
|
|
|
|
|
|
Total
Assets
|
$
|
1,546,472
|
|
$
|
1,442,472
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
72,212
|
|
$
|
60,153
|
Current maturities of
debt
|
|
115,163
|
|
|
15,713
|
Monetary production
payment, current
|
|
20,833
|
|
|
-
|
Accrued expenses and
other
|
|
96,154
|
|
|
90,100
|
Total Current
Liabilities
|
|
304,362
|
|
|
165,966
|
|
|
|
|
|
|
Long-Term
Debt
|
|
749,894
|
|
|
843,793
|
Deferred
Taxes
|
|
125,146
|
|
|
141,887
|
Other
Liabilities
|
|
238,242
|
|
|
147,692
|
Total
Liabilities
|
|
1,417,644
|
|
|
1,299,338
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Series C Convertible
Preferred Stock
|
|
43,703
|
|
|
43,703
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
85,125
|
|
|
99,431
|
|
|
|
|
|
|
Total Liabilities and
Stockholders' Equity
|
$
|
1,546,472
|
|
$
|
1,442,472
|
|
|
Endeavour
International Corporation
Condensed
Consolidated Statement of Operations
(Unaudited)
(Amounts in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
|
|
June 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Revenues
|
$
|
126,165
|
|
$
|
23,003
|
|
$
|
183,837
|
|
$
|
38,169
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
Operations:
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
38,103
|
|
|
5,742
|
|
|
55,593
|
|
|
10,640
|
Depreciation,
depletion and amortization
|
|
51,923
|
|
|
10,627
|
|
|
74,870
|
|
|
18,533
|
Impairment of oil and
gas properties
|
|
-
|
|
|
19,960
|
|
|
3,534
|
|
|
35,700
|
General and
administrative
|
|
4,882
|
|
|
5,030
|
|
|
10,364
|
|
|
10,353
|
Total
Expenses
|
|
94,908
|
|
|
41,359
|
|
|
144,361
|
|
|
75,226
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) From
Operations
|
|
31,257
|
|
|
(18,356)
|
|
|
39,476
|
|
|
(37,057)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
(Expense):
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains
(losses) on derivatives
|
|
(1,277)
|
|
|
3,805
|
|
|
303
|
|
|
(973)
|
Interest
expense
|
|
(24,447)
|
|
|
(25,256)
|
|
|
(45,885)
|
|
|
(44,963)
|
Loss on early
extinguishment of debt
|
|
-
|
|
|
(21,661)
|
|
|
-
|
|
|
(21,661)
|
Letter of credit
fees
|
|
(7,128)
|
|
|
(3,064)
|
|
|
(18,508)
|
|
|
(3,064)
|
Other income
(expense)
|
|
(1,009)
|
|
|
(611)
|
|
|
8,871
|
|
|
(3,282)
|
Total Other
Expense
|
|
(33,861)
|
|
|
(46,787)
|
|
|
(55,219)
|
|
|
(73,943)
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss Before Income
Taxes
|
|
(2,604)
|
|
|
(65,143)
|
|
|
(15,743)
|
|
|
(111,000)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax Expense
(Benefit)
|
|
11,281
|
|
|
(14,335)
|
|
|
12,189
|
|
|
(24,929)
|
Net Loss
|
|
(13,885)
|
|
|
(50,808)
|
|
|
(27,932)
|
|
|
(86,071)
|
Preferred Stock
Dividends
|
|
456
|
|
|
456
|
|
|
911
|
|
|
911
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss to Common
Stockholders
|
$
|
(14,341)
|
|
$
|
(51,264)
|
|
$
|
(28,843)
|
|
$
|
(86,982)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss per Common
Share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
Diluted
|
$
|
(0.30)
|
|
$
|
(1.31)
|
|
$
|
(0.61)
|
|
$
|
(2.26)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Number of Common Shares Outstanding:
|
|
|
|
|
|
|
|
|
Basic and
Diluted
|
|
47,092
|
|
|
39,020
|
|
|
47,076
|
|
|
38,438
|
|
|
Endeavour
International Corporation
Condensed
Consolidated Statement of Cash Flows
(Unaudited)
(Amounts in
thousands)
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
June 30,
|
|
2013
|
|
2012
|
Cash Flows from
Operating Activities:
|
|
|
|
|
|
Net loss
|
$
|
(27,932)
|
|
$
|
(86,071)
|
Adjustments to
reconcile net loss to net cash
|
|
|
|
|
|
provided by (used in)
operating activities:
|
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
74,870
|
|
|
18,533
|
Impairment of oil and
gas properties
|
|
3,534
|
|
|
35,700
|
Deferred tax
benefit
|
|
(2,457)
|
|
|
(24,008)
|
Unrealized (gains)
losses on derivatives
|
|
(303)
|
|
|
973
|
Amortization of
non-cash compensation
|
|
1,632
|
|
|
3,114
|
Amortization of loan
costs and discount
|
|
8,695
|
|
|
7,311
|
Non-cash interest
expense
|
|
3,454
|
|
|
5,153
|
Loss on early
extinguishment of debt
|
|
-
|
|
|
21,661
|
Other
|
|
(2,444)
|
|
|
4,687
|
Changes in operating
assets and liabilities
|
|
12,562
|
|
|
(15,140)
|
Net Cash Provided by
(Used in) Operating Activities
|
|
71,611
|
|
|
(28,087)
|
|
|
|
|
|
|
Cash Flows From
Investing Activities:
|
|
|
|
|
|
Capital
expenditures
|
|
(107,314)
|
|
|
(116,458)
|
Acquisitions, net of
cash acquired
|
|
(1,472)
|
|
|
(228,105)
|
Increase in restricted
cash
|
|
-
|
|
|
(178)
|
Net Cash Used in
Investing Activities
|
|
(108,786)
|
|
|
(344,741)
|
|
|
|
|
|
|
Cash Flows From
Financing Activities:
|
|
|
|
|
|
Repayments of
borrowings
|
|
-
|
|
|
(244,565)
|
Borrowings under debt
agreements, net of debt discount
|
|
-
|
|
|
580,000
|
Proceeds from issuance
of common stock
|
|
-
|
|
|
61,088
|
Proceeds from issuance
of monetary production payment
|
|
125,000
|
|
|
-
|
Dividends
paid
|
|
(416)
|
|
|
(416)
|
Payments for early
extinguishment of debt
|
|
-
|
|
|
(7,248)
|
Financing costs
paid
|
|
(15,804)
|
|
|
(27,500)
|
Other
financing
|
|
-
|
|
|
3
|
Net Cash Provided by
Financing Activities
|
|
108,780
|
|
|
361,362
|
|
|
|
|
|
|
Net Increase
(Decrease) in Cash and Cash Equivalents
|
|
71,605
|
|
|
(11,466)
|
Cash and Cash
Equivalents, Beginning of Period
|
|
59,185
|
|
|
106,036
|
|
|
|
|
|
|
Cash and Cash
Equivalents, End of Period
|
$
|
130,790
|
|
$
|
94,570
|
|
|
Endeavour
International Corporation
Operating
Statistics
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
June 30,
|
|
|
June 30,
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
Sales volume
(1)
|
|
|
|
|
|
|
|
|
|
|
Oil and condensate
sales (Mbbls):
|
|
|
|
|
|
|
|
|
|
|
United
Kingdom
|
1,205
|
|
|
191
|
|
|
1,713
|
|
|
287
|
United
States
|
1
|
|
|
1
|
|
|
1
|
|
|
2
|
Total
|
1,206
|
|
|
192
|
|
|
1,714
|
|
|
289
|
|
|
|
|
|
|
|
|
|
|
|
Gas sales
(MMcf):
|
|
|
|
|
|
|
|
|
|
|
United
Kingdom
|
15
|
|
|
30
|
|
|
26
|
|
|
51
|
United
States (2)
|
667
|
|
|
1,375
|
|
|
1,489
|
|
|
3,052
|
Total
|
682
|
|
|
1,405
|
|
|
1,515
|
|
|
3,103
|
|
|
|
|
|
|
|
|
|
|
|
Oil equivalent
sales (MBOE)
|
|
|
|
|
|
|
|
|
|
|
United
Kingdom
|
1,207
|
|
|
196
|
|
|
1,717
|
|
|
295
|
United
States (2)
|
112
|
|
|
230
|
|
|
249
|
|
|
510
|
Total
|
1,319
|
|
|
426
|
|
|
1,966
|
|
|
805
|
|
|
|
|
|
|
|
|
|
|
|
Total BOE per
day
|
14,497
|
|
|
4,677
|
|
|
10,862
|
|
|
4,426
|
|
|
|
|
|
|
|
|
|
|
|
Physical
production volume (BOE per day) (1)
|
|
|
|
|
|
|
|
|
|
|
United
Kingdom
|
8,083
|
|
|
3,910
|
|
|
7,973
|
|
|
2,401
|
United
States (2)
|
1,415
|
|
|
2,527
|
|
|
1,454
|
|
|
2,804
|
Total
|
9,498
|
|
|
6,437
|
|
|
9,427
|
|
|
5,205
|
|
|
|
|
|
|
|
|
|
|
|
Realized Price,
before and after derivatives
|
|
|
|
|
|
|
|
|
|
|
Oil and
condensate price ($ per Bbl)
|
102.67
|
|
$
|
104.46
|
|
$
|
104.37
|
|
|
108.67
|
Gas
price ($ per Mcf)
|
3.50
|
|
$
|
2.14
|
|
$
|
3.30
|
|
|
2.20
|
Equivalent oil price ($ per BOE)
|
95.64
|
|
$
|
54.05
|
|
$
|
93.51
|
|
|
47.39
|
|
|
(1)
|
We record oil
revenues when deliveries have occurred and legal ownership of the
oil transfers to the customer. Physical production may differ from
sales volumes based on the timing of tanker liftings for our
international sales.
|
(2)
|
In October 2012, we
completed an exchange with domestic co-venturer, J-W Operating
Company ("J-W"), whereby we exchanged our Bull Bayou Haynesville
and Willow Springs Cotton Valley properties for all of J-W's
upstream and midstream interests in the Pennsylvania Marcellus
area. The transaction added 15,500 net acres to our position in the
Marcellus area, bringing the total to 31,000 net acres, and
decreased our position in the Haynesville area by 2,100 net acres
and approximately 3.2 MMcf equivalent per day (530 BOE per day) of
declining net 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)
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
|
|
June 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Net Loss
|
$
|
(13,885)
|
|
$
|
(50,808)
|
|
$
|
(27,932)
|
|
$
|
(86,071)
|
Impairment of oil and
gas properties (net of tax) (1)
|
|
-
|
|
|
19,960
|
|
|
3,534
|
|
|
35,700
|
Unrealized gains
(losses) on derivatives (net of tax) (2)
|
|
1,277
|
|
|
(4,355)
|
|
|
(303)
|
|
|
(207)
|
Loss on early
extinguishment of debt (net of tax) (3)
|
|
-
|
|
|
17,762
|
|
|
-
|
|
|
17,762
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss as
Adjusted
|
$
|
(12,608)
|
|
$
|
(17,441)
|
|
$
|
(24,701)
|
|
$
|
(32,816)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
$
|
(13,885)
|
|
$
|
(50,808)
|
|
$
|
(27,932)
|
|
$
|
(86,071)
|
Unrealized loss on
derivatives
|
|
1,277
|
|
|
(3,805)
|
|
|
(303)
|
|
|
973
|
Net interest
expense
|
|
24,427
|
|
|
25,134
|
|
|
45,849
|
|
|
44,784
|
Letter of credit
fees
|
|
7,128
|
|
|
3,064
|
|
|
18,508
|
|
|
3,064
|
Loss on early
extinguishment of debt
|
|
-
|
|
|
21,661
|
|
|
-
|
|
|
21,661
|
Depreciation,
depletion and amortization
|
|
51,923
|
|
|
10,627
|
|
|
74,870
|
|
|
18,533
|
Impairment of oil and
gas properties
|
|
-
|
|
|
19,960
|
|
|
3,534
|
|
|
35,700
|
Income Tax Expense
(Benefit)
|
|
11,281
|
|
|
(14,335)
|
|
|
12,189
|
|
|
(24,929)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
82,151
|
|
$
|
11,498
|
|
$
|
126,715
|
|
$
|
13,715
|
|
|
(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
none, $550, none and $1,180 for the three months ended June 30,
2013 and 2012, six months ended June 30, 2013 and 2012,
respectively.
|
(3)
|
Net of tax benefit of
$3,899 for both the three and six months ended June 30,
2012.
|
SOURCE Endeavour International Corporation