HOUSTON, May 7, 2014 /PRNewswire/ -- Endeavour
International Corporation (NYSE: END) (LSE: ENDV) today reported
first quarter 2014 net loss, as adjusted of $27.3 million compared to a net loss, as adjusted
of $12.1 million for the same period
in 2013. On a GAAP basis, net loss for the first quarter was
$44.9 million as compared to net loss
of $14.0 million for the same quarter
in 2013.
Sales volumes for the first quarter of 2014 were 11,134 barrels
of oil equivalent per day ("boepd"), compared to 7,186 boepd for
the same quarter in the prior year. Physical production for
the first quarter of 2014 averaged 9,440 boepd compared to 9,385
boepd for the same quarter of 2013.
Recent Events:
- Refinanced the Revolving Credit Facility and replaced two LC
reimbursement agreements
- Achieved first production from the East Rochelle (E2) well
- Reinstated partial water injection to the southern part of the
Alba field
- Placed the Alba development well A68 on production
- Successfully finished the hydraulic fracture stimulations of
two Pennsylvania Marcellus wells
- Completed a private placement for $30
million
"Despite a challenging quarter, we continue to execute on our
business plan, as evidenced by the list of recent events," said
William L. Transier, chairman, chief
executive officer and president. "The Company is focused on growing
production by achieving more consistent performance from its
assets, maintaining operational margins, reducing G&A,
enhancing liquidity, reducing cost of capital and accelerating
value from our existing portfolio."
Operational Update
North Sea
The Bacchus field continues to perform in line with expectations.
Consistent with the original development plans, the first well
drilled (B3Y) is expected to be turned into a water injector during
the second quarter of 2014 to provide pressure support to help
sustain the field's production rates and increase its overall
recovery. Endeavour has a 30% working interest in the field.
At Rochelle, the second development well East Rochelle (E2) was
completed and tied-in to the production manifold in January. The E2
well commenced first production on February
28, 2014 averaging around 65 million cubic feet of gas per
day with approximately 3,000 boepd of liquids production. The
production was lower than previously anticipated due to gas
compression capacity constraints on the Scott platform, as a result
of unexpectedly high gas production rates from the Telford field
that also produces through Scott. At the end of March, the Scott
Platform experienced an incident requiring a full platform
shutdown. The three fields flowing across the platform, Rochelle,
Scott and Telford were shut-in while an investigation and remedial
action occurred. Production from Rochelle resumed on the
26th of April. Endeavour has a 44% working interest in
the Rochelle development.
At Alba, progress has been made in the Southern part of the
field with partial water injection being reinstated. Permanent
replacement of the pipeline is targeted for late 2014. The first
well of this year's infill drilling program, the A68 well was
brought online in March. A second well, the A69, is currently
drilling and anticipated to be online in June. The partial
reinstatement of a water injection in the Southern part of the
field and the infill drilling program is expected to increase
overall production rates from the field. Endeavour has a 25.68%
working interest in Alba.
North America
In the Pennsylvania Marcellus, Endeavour successfully completed
hydraulic fracture stimulations of the C-14 and C-20 horizontal
wells. The operation included more than double the number of frac
stages on the longest laterals to date, relative to previous wells.
The Endeavour operated activity went smoothly and according to
specifications. The third C-13 well is scheduled for stimulation in
mid-June using the same completion design. The wells will be tied
into a new third-party pipeline being constructed by EQT
Corporation that allows firm capacity of up to 10 million cubic
feet per day, with potential for future expansion.
In the Piceance Basin Rim play in Northwest Colorado, Endeavour has two projects
targeting liquids-rich Niobrara and Frontier objectives. The
Company has formed two federal units and has plans to drill initial
horizontal tests in the Niobrara target zone by late summer or
early fall. Endeavour has leasehold and drilling options on 40,000
gross acres and 27,000 net acres.
Finance
In January 2014, Endeavour closed on
a $255 million senior secured first
lien term loan with an interest rate of 8.25% (Libor + 700 basis
points). The first lien note is a strip facility consisting
of a $125 million Secured Term Loan
and a $130 million LC Procurement
Facility. The Company has used the net proceeds from the
offering to refinance its 13% $115
million Revolving Credit Facility and replace its two
reimbursement agreements ($120
million at 13% and $33 million
at 9%, interest rates, respectively). The facility is due in
November 2017. In late February, the
Company reduced the outstanding balance on the LC Procurement
Facility from $130 million to
$90 million.
In March, the Company completed a private placement of
$12.5 million of common stock and
warrants and $17.5 million of 6.5%
convertible notes. The transaction included the issuance of 2.9
million shares at $4.28 per share and
warrants to purchase 729,000 shares at a strike price of
$5.29 per share. The convertible
notes bear a conversion price of $4.66 per share. In addition, the purchaser has
an option to purchase an additional $25
million of shares, warrants and convertible notes under the
same terms as the original issuance. The option expires at
the end of May and is not expected to be exercised under current
market conditions.
Second Quarter Production Guidance and Third Quarter
Maintenance Downtime
With the unanticipated downtime at the Rochelle field in April
resulting from the incident on the Scott Platform and lower Alba
volumes with continued water injection issues, average daily
production volumes are expected to be in the range of 9,000 –
10,000 boepd for the second quarter of 2014. Also during the second
quarter, it is anticipated that there will not be a lifting at the
Alba field, which will affect sales numbers for the period.
However, under its marketing agreement, Endeavour is paid monthly
for Alba's production.
In the U.K. North Sea, the third quarter is typically the time
for the maintenance shutdowns. During 2014, Endeavour anticipates
that its fields will be modestly impacted relative to the long
programs that occurred on Alba and Rochelle during 2013. At
present, there is a 16 day shut-down on the Forties Pipeline System
planned in August that will affect oil production from Bacchus and
Rochelle. At Alba, where the production is lifted by tanker, a
short shutdown in planned in July.
Earnings Conference Call, Wednesday,
May 7, 2014 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 2014 first quarter financial and operating results on
Wednesday, May 7, 2014 at
9:00 a.m. Central 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 5109885. The toll-free
numbers are 888-690-2874 in the United States and
0-808-101-7548 in the United Kingdom. Other international callers
should dial 913-312-1516 (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 7, 2014 through 12:00 p.m. on May 13,
2014 by dialing toll free 888-203-1112 (U.S.)
or 719-457-0820 (international), confirmation code
5109885.
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 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
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
2014
|
|
2013
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
55,490
|
|
$
|
34,742
|
|
Accounts
receivable
|
|
48,217
|
|
|
65,171
|
|
Prepaid expenses and other
current assets
|
|
82,896
|
|
|
60,318
|
|
Total Current
Assets
|
|
186,603
|
|
|
160,231
|
|
|
|
|
|
|
|
|
Property and Equipment,
Net
|
|
1,053,775
|
|
|
1,072,151
|
|
Goodwill
|
|
259,238
|
|
|
259,238
|
|
Other Assets
|
|
32,997
|
|
|
33,222
|
|
|
|
|
|
|
|
|
Total Assets
|
$
|
1,532,613
|
|
$
|
1,524,842
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders'
Equity
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
$
|
56,199
|
|
$
|
38,033
|
|
Current maturities of
debt
|
|
2,140
|
|
|
-
|
|
Deferred
revenue
|
|
2,152
|
|
|
20,965
|
|
Monetary production
payment, current
|
|
120,833
|
|
|
74,167
|
|
Accrued expenses and
other
|
|
79,219
|
|
|
88,625
|
|
Total Current
Liabilities
|
|
260,543
|
|
|
221,790
|
|
|
|
|
|
|
|
|
Long-Term Debt
|
|
891,829
|
|
|
870,878
|
|
Deferred Taxes
|
|
173,847
|
|
|
146,213
|
|
Other Liabilities
|
|
168,622
|
|
|
223,870
|
|
Total
Liabilities
|
|
1,494,841
|
|
|
1,462,751
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series C Convertible Preferred
Stock
|
|
43,703
|
|
|
43,703
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
(5,931)
|
|
|
18,388
|
|
|
|
|
|
|
|
|
Total Liabilities and
Stockholders' Equity
|
$
|
1,532,613
|
|
$
|
1,524,842
|
|
|
|
|
|
|
|
| |
|
|
|
|
Endeavour
International Corporation
Condensed
Consolidated Statement of Operations
(Unaudited)
(Amounts in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
March
31,
|
|
|
|
2014
|
|
2013
|
|
|
Revenues
|
$
|
94,163
|
|
$
|
57,672
|
|
|
|
|
|
|
|
|
|
|
Cost of Operations:
|
|
|
|
|
|
|
|
Operating
expenses
|
|
27,170
|
|
|
17,490
|
|
|
Depreciation, depletion
and amortization
|
|
44,968
|
|
|
22,947
|
|
|
Impairment of oil and gas
properties
|
|
-
|
|
|
3,534
|
|
|
General and
administrative
|
|
4,849
|
|
|
5,482
|
|
|
Total Expenses
|
|
76,987
|
|
|
49,453
|
|
|
|
|
|
|
|
|
|
|
Income From
Operations
|
|
17,176
|
|
|
8,219
|
|
|
|
|
|
|
|
|
|
|
Other Income
(Expense):
|
|
|
|
|
|
|
|
Unrealized gains on
derivatives
|
|
2,659
|
|
|
1,580
|
|
|
Interest
expense
|
|
(31,477)
|
|
|
(21,438)
|
|
|
Letter of credit
fees
|
|
(3,789)
|
|
|
(11,380)
|
|
|
Loss on early
extinguishment of financing agreements
|
|
(3,543)
|
|
|
-
|
|
|
Litigation settlement
expense
|
|
(19,034)
|
|
|
-
|
|
|
Unrealized gain (loss) on
foreign currency exchange
|
|
(1,273)
|
|
|
9,760
|
|
|
Other income
(expense)
|
|
(2,020)
|
|
|
122
|
|
|
Total Other Expense
|
|
(58,477)
|
|
|
(21,356)
|
|
|
|
|
|
|
|
|
|
|
Loss Before Income
Taxes
|
|
(41,301)
|
|
|
(13,137)
|
|
|
Petroleum Revenue Tax ("PRT")
Expense
|
|
1,725
|
|
|
628
|
|
|
Corporate Tax Expense
|
|
1,844
|
|
|
281
|
|
|
Total Tax Expense
|
|
3,569
|
|
|
909
|
|
|
Net Loss
|
|
(44,870)
|
|
|
(14,046)
|
|
|
Preferred Stock
Dividends
|
|
456
|
|
|
456
|
|
|
|
|
|
|
|
|
|
|
Net Loss to Common
Stockholders
|
$
|
(45,326)
|
|
$
|
(14,502)
|
|
|
|
|
|
|
|
|
|
|
Net Loss per Common
Share:
|
|
|
|
|
|
|
|
Basic and
Diluted
|
$
|
(0.91)
|
|
$
|
(0.31)
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of
Common Shares Outstanding:
|
|
|
|
|
Basic and
Diluted
|
|
49,590
|
|
|
47,060
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Endeavour
International Corporation
Condensed
Consolidated Statement of Cash Flows
(Unaudited)
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
2014
|
|
2013
|
|
Cash Flows from Operating
Activities:
|
|
|
|
|
|
|
Net loss
|
$
|
(44,870)
|
|
$
|
(14,046)
|
|
Adjustments to reconcile
net loss to net cash
|
|
|
|
|
|
|
provided by
operating activities:
|
|
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
44,968
|
|
|
22,947
|
|
Impairment of
oil and gas properties
|
|
-
|
|
|
3,534
|
|
Deferred tax
expense
|
|
1,969
|
|
|
128
|
|
Unrealized
gains on derivatives
|
|
(2,659)
|
|
|
(1,580)
|
|
Amortization
of non-cash compensation
|
|
971
|
|
|
832
|
|
Amortization
of loan costs and discount
|
|
6,705
|
|
|
3,439
|
|
Non-cash
interest expense
|
|
1,883
|
|
|
2,274
|
|
Loss on early
extinguishment of financing agreements
|
|
6,856
|
|
|
-
|
|
Litigation
settlement expense
|
|
19,034
|
|
|
-
|
|
Other
|
|
1,848
|
|
|
(4,723)
|
|
Changes in
operating assets and liabilities
|
|
(9,156)
|
|
|
34,800
|
|
Net Cash Provided by Operating
Activities
|
|
27,549
|
|
|
47,605
|
|
|
|
|
|
|
|
|
Cash Flows From Investing
Activities:
|
|
|
|
|
|
|
Capital
expenditures
|
|
(27,294)
|
|
|
(58,257)
|
|
Acquisitions, net of cash
acquired
|
|
(1,551)
|
|
|
(817)
|
|
Proceeds from sales, net
of cash
|
|
1,352
|
|
|
-
|
|
Increase in restricted
cash
|
|
(2,457)
|
|
|
-
|
|
Net Cash Used in Investing
Activities
|
|
(29,950)
|
|
|
(59,074)
|
|
|
|
|
|
|
|
|
Cash Flows From Financing
Activities:
|
|
|
|
|
|
|
Repayments of
borrowings
|
|
(115,163)
|
|
|
-
|
|
Borrowings under debt
agreements, net of debt discount
|
|
140,625
|
|
|
-
|
|
Proceeds from issuance of
common stock
|
|
12,376
|
|
|
-
|
|
Proceeds from issuance of
monetary production payment
|
|
-
|
|
|
43,000
|
|
Repayments of monetary
production payment
|
|
(5,000)
|
|
|
-
|
|
Financing costs
paid
|
|
(9,273)
|
|
|
(9,935)
|
|
Other financing
|
|
(416)
|
|
|
-
|
|
Net Cash Provided by Financing
Activities
|
|
23,149
|
|
|
33,065
|
|
|
|
|
|
|
|
|
Net Increase in Cash and Cash
Equivalents
|
|
20,748
|
|
|
21,596
|
|
Cash and Cash Equivalents,
Beginning of Period
|
|
34,742
|
|
|
59,185
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents, End
of Period
|
$
|
55,490
|
|
$
|
80,781
|
|
|
|
|
|
|
|
| |
|
|
|
|
Endeavour
International Corporation
Operating
Statistics
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
March
31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
Sales volume:
(1)
|
|
|
|
|
|
|
|
Oil and
condensate sales (Mbbls):
|
|
|
|
|
|
|
|
United Kingdom
|
|
833
|
|
|
508
|
|
|
United States
|
|
-
|
|
|
-
|
|
|
Total
|
|
833
|
|
|
508
|
|
|
|
|
|
|
|
|
|
|
Gas sales
(MMcf):
|
|
|
|
|
|
|
|
United Kingdom
|
|
586
|
|
|
11
|
|
|
United States
|
|
431
|
|
|
821
|
|
|
Total
|
|
1,017
|
|
|
832
|
|
|
|
|
|
|
|
|
|
|
Oil
equivalent sales (MBOE):
|
|
|
|
|
|
|
|
United Kingdom
|
|
930
|
|
|
510
|
|
|
United States
|
|
72
|
|
|
137
|
|
|
Total
|
|
1,002
|
|
|
647
|
|
|
|
|
|
|
|
|
|
|
Total BOE
per day
|
|
11,134
|
|
|
7,186
|
|
|
|
|
|
|
|
|
|
|
Physical production volume (BOE
per day): (1)
|
|
|
|
|
|
|
|
United Kingdom
|
|
8,604
|
|
|
7,862
|
|
|
United States
|
|
836
|
|
|
1,523
|
|
|
Total
|
|
9,440
|
|
|
9,385
|
|
|
|
|
|
|
|
|
|
|
Realized Price, before and after
derivatives :
|
|
|
|
|
|
|
|
United
Kingdom:
|
|
|
|
|
|
|
|
Oil and condensate price
($ per Bbl)
|
$
|
103.54
|
|
$
|
108.40
|
|
|
Gas price ($ per
Mcf)
|
$
|
10.25
|
|
$
|
7.89
|
|
|
Equivalent oil price ($
per BOE)
|
$
|
99.12
|
|
$
|
108.17
|
|
|
|
|
|
|
|
|
|
|
United
States:
|
|
|
|
|
|
|
|
Oil and condensate price
($ per Bbl)
|
$
|
140.50
|
|
$
|
96.77
|
|
|
Gas price ($ per
Mcf)
|
$
|
4.52
|
|
$
|
3.07
|
|
|
Equivalent oil price ($
per BOE)
|
$
|
27.14
|
|
$
|
18.50
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
|
Oil and condensate price
($ per Bbl)
|
$
|
103.54
|
|
$
|
108.40
|
|
|
Gas price ($ per
Mcf)
|
$
|
7.82
|
|
$
|
3.13
|
|
|
Equivalent oil price ($
per BOE)
|
$
|
93.97
|
|
$
|
89.17
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
(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.
|
|
|
|
| |
|
|
|
|
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
|
|
|
March
31,
|
|
|
2014
|
|
2013
|
|
Net loss
|
$
|
(44,870)
|
|
$
|
(14,046)
|
|
Impairment of oil and gas
properties (net of tax) (1)
|
|
-
|
|
|
3,534
|
|
Unrealized gains on derivatives
(net of tax) (2)
|
|
(2,659)
|
|
|
(1,580)
|
|
Loss on early extinguishment of
financing agreements (net of tax) (3)
|
|
1,220
|
|
|
-
|
|
Litigation settlement expense
(net of tax) (1)
|
|
19,034
|
|
|
-
|
|
|
|
|
|
|
|
|
Net Loss as Adjusted
|
$
|
(27,275)
|
|
$
|
(12,092)
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(44,870)
|
|
$
|
(14,046)
|
|
Unrealized gains (losses) on
derivatives
|
|
(2,659)
|
|
|
(1,580)
|
|
Net interest expense
|
|
31,466
|
|
|
21,422
|
|
Letter of credit fees
|
|
3,789
|
|
|
11,380
|
|
Depreciation, depletion and
amortization
|
|
44,968
|
|
|
22,947
|
|
Impairment of oil and gas
properties
|
|
-
|
|
|
3,534
|
|
Loss on early extinguishment of
financing arrangements
|
|
3,543
|
|
|
-
|
|
Litigation settlement
expense
|
|
19,034
|
|
|
-
|
|
Income tax expense
|
|
3,569
|
|
|
909
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
$
|
58,840
|
|
$
|
44,566
|
|
|
|
|
(1)
|
We recognized no tax benefits as
there was no assurance that we could generate any U.S. taxable
earnings.
|
|
(2)
|
Since the unrealized gains on
derivatives were related to liabilities other than the U.K., we
recognized no tax benefits as there was no assurance that we could
generate any taxable earnings..
|
|
(3)
|
Net of tax benefit of $2,323 and
none, respectively.
|
|
|
|
|
|
|
|
|
| |