8 May 2008 07:00
Endeavour Announces Record First Quarter Cash Flow
HOUSTON, May 8 -- Endeavour International Corporation today reported that discretionary cash flow in the first quarter of 2008 increased to $36.3 million from $34.4 million in the first quarter of 2007 and up sequentially from $33.6 million in the fourth quarter. Revenue for the quarter increased 40% to $61.3 million compared to $42.8 million in first quarter last year and $54.5 million in the fourth quarter of 2007. Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) increased to $42.6 million in the first quarter this year from $37.2 million in the first quarter of 2007 and $35.2 million in the fourth quarter of last year.
"The strength in production and commodity prices continued from late last year resulting in very strong financial performance for our company," said William L. Transier, chairman, chief executive officer and president. "The result was record discretionary cash flow for the company. Endeavour is now consistently showing the benefits of its balance between consistent operations, financial strength, quality acquisitions and exploration potential. The strong cash flow from this quarter and looking forward will fund our exploration and development programs and further debt reduction."
Without the effect of non-cash derivative transactions and currency impacts on deferred taxes, net loss for the quarter would have been $2.0 million or $0.02 per share. Included in the 2008 results is a $4.3 million or $0.03 per share non-recurring charge for early retirement of debt. This compares to net income of $3.1 million or $0.03 per share in the first quarter last year. On a GAAP basis, the company reported a net loss to common stockholders for the first quarter of 2008 of $19.5 million or $0.15 per share as compared to a net loss of $6.0 million or $0.05 per share for the year-ago quarter.
Recent significant events include: -- Continued strong production - Production for the first quarter improved to an average of 10,128 barrels of oil equivalent per day (boepd) versus 9,767 boepd in the same quarter last year and compared to 8,180 boepd in the fourth quarter 2007. Sales volumes were 8,796 boepd this quarter compared to 10,148 boepd in the first quarter last year and up from 8,268 boepd in the fourth quarter of 2007. The current lifting schedule indicates sales should exceed production in the second quarter. -- 2008 exploration program began - Drilling operations for the Galtvort well in Norway commenced in April, the first of at least seven exploration wells planned to be drilled during 2008. -- Completed another successful development well in the Brage field - The A-28 well in the Brage field was completed and production began during the quarter. The well is currently producing at a stabilized rate of 14,500 boepd gross. The company has a 4.4% interest in the field. -- Received investment by the Smedvig family - In December the Smedvig family of Norway agreed to invest $40 million in a note convertible at $2.36 per share and committed to an additional $60 million future investment for strategic growth opportunities. The initial transaction closed in January. -- Retired the second-lien term loan - Using existing resources and proceeds from the convertible note, the company retired the $75 million second-lien term loan that carried an interest rate of Libor plus 700 basis points and contained numerous provisions that limited the company's financial flexibility. Guidance on Year 2008 Estimates Remains Unchanged
The table below sets forth estimates of the company's operating statistics for the full year ending December 31, 2008.
Estimated Average Production (A) Daily Production (boepd) 8,600 to 9,000 Differentials (B) Oil ($/bbl) $(4.00) to $(5.00) Gas ($/mcf) $(0.30) to $(0.40) Gas Percentage of Total 50% to 55% Lease operating expense (per barrel) $14.00 to $15.00 (A) Actual results may differ materially from these estimates. (B) For purposes of the estimates, assumptions of price differentials are based on location, quality and other factors, excluding the effects of derivative financial instruments. Gas price differentials are stated as premiums (discounts) from National Balancing Point pricing, and oil price differentials are stated as premiums (discounts) from Dated Brent pricing.
Earnings Conference Call Today, Thursday, May 8, 2008 at 10:00 A.M. Eastern (9:00 A.M. Central, 3:00 P.M. UK)
Endeavour will host an analyst conference call and web cast today to discuss 2008 first quarter results and update operational plans for the year at 10:00 a.m. Eastern Time. To participate and ask questions during the conference call please enter the confirmation code 5321499 after dialing the local country phone number. In the United States dial 1-866-322-8032 (U.S., toll-free), in the United Kingdom dial 0 808 234 4489 (UK, toll-free), in Norway dial 800 198 31 (Norway, toll-free) and all others dial 416-640-3406 (international, tolls apply). To listen only to the live audio web cast access the Investor Relations tab on Endeavour's home page at http://www.endeavourcorp.com. A replay will be available beginning at 12:00 p.m. Central Time on May 9 through 12:00 p.m. Central Time on May 22 by dialing toll free 1-888-203-1112 (U.S.) or 719-457-0820 (international), pass code: 5321499.
Endeavour International Corporation is an international oil and gas exploration and production company focused on the acquisition, exploration and development of energy reserves in the North Sea. For more information, http://www.endeavourcorp.com.
This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements give the company's current expectations or forecasts of future events. They include expected oil and natural gas production and future expenses, projections of future oil and natural gas prices, and statements concerning anticipated business strategy and other plans and objectives for future operations. The company cautions that undue reliance should not be placed on the forward-looking statements, which speak only as of the date of this press release, and the company undertakes no obligation to update this information.
Factors that could cause actual results to differ materially from expected results are described in "Risks related to the company's Business" under "Risk Factors" in Item 1A of the company's annual reports on Form 10-K. These risk factors include, among others, the company's ability to replace reserves and sustain production; the level of indebtedness; the availability of capital on an economic basis to fund reserve replacement costs; uncertainties in evaluating oil and natural gas reserves of acquired properties and associated potential liabilities; unsuccessful exploration and development drilling; and production interruptions that could adversely affect the company's cash flow.
Endeavour International Corporation Comparative Condensed Consolidated Balance Sheets (Unaudited) (Amounts in thousands) March 31, 2008 December 31, 2007 Assets Current Assets: Cash and cash equivalents $20,459 $16,440 Restricted cash 22,000 22,000 Accounts receivable 36,505 33,291 Prepaid expenses and other current assets 53,559 46,516 Total Current Assets 132,523 118,247 Property and Equipment, Net 331,073 335,023 Goodwill 283,324 283,324 Other Assets 9,650 11,029 Total Assets $756,570 $747,623 Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $22,798 $31,036 Accrued expenses and other 59,633 50,013 Total Current Liabilities 82,431 81,049 Long-Term Debt 251,923 266,250 Deferred Taxes 147,942 135,552 Other Liabilities 99,577 69,623 Total Liabilities 581,873 552,474 Commitments and Contingencies Series C Convertible Preferred Stock 125,000 125,000 Stockholders' Equity 49,697 70,149 Total Liabilities and Stockholders' Equity $756,570 $747,623 Endeavour International Corporation Comparative Condensed Consolidated Statement of Operations (Unaudited) (Amounts in thousands, except per share data) Three Months Ended March 31, 2008 2007 Revenues $61,255 $42,790 Cost of Operations: Operating expenses 10,020 10,711 Depreciation, depletion and amortization 21,403 19,213 General and administrative 4,751 5,367 Total Expenses 36,174 35,291 Income From Operations 25,081 7,499 Other Income (Expense): Derivatives: Realized gains (losses) (3,150) 11,072 Unrealized gains (losses) (29,642) (15,696) Interest expense (8,207) (4,773) Interest income 366 604 Other (770) (559) Total Other Income (Expense) (41,403) (9,352) Loss Before Income Taxes (16,322) (1,853) Income Tax Expense (Benefit) 470 1,290 Net Loss (16,792) (3,143) Preferred Stock Dividends 2,695 2,844 Net Loss to Common Stockholders $(19,487) $(5,987) Net Loss Per Common Share - Basic and Diluted $(0.15) $(0.05) Weighted Average Number of Common Shares Outstanding - Basic and Diluted 127,537 120,304 Endeavour International Corporation Comparative Condensed Consolidated Statement of Cash Flows (Unaudited) (Amounts in thousands) Three Months Ended March 31, 2008 2007 Cash Flows from Operating Activities: Net loss $(16,792) $(3,143) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation, depletion and amortization 21,403 19,213 Deferred tax expense (benefit) (3,144) 261 Unrealized (gain) loss on derivatives 29,642 15,696 Amortization of non-cash compensation 544 1,884 Amortization of loan costs and discount 3,156 427 Non-cash interest expense 869 - Other 632 15 Changes in operating assets and liabilities: (7,170) 11,958 Net Cash Provided by Operating Activities 29,140 46,311 Cash Flows From Investing Activities: Capital expenditures (19,581) (13,480) (Increase) decrease in restricted cash - (20,096) Net Cash Used in Investing Activities (19,581) (33,576) Cash Flows From Financing Activities: Repayments of borrowings, net (2,000) (30,000) Financing costs paid (3,294) - Other financing (246) (110) Net Cash Used in Financing Activities (5,540) (30,110) Net Increase (Decrease) in Cash and Cash Equivalents 4,019 (17,375) Effect of Foreign Currency Changes on Cash - 718 Cash and Cash Equivalents, Beginning of Period 16,440 39,814 Cash and Cash Equivalents, End of Period $20,459 $23,157 Endeavour International Corporation Operating Statistics (Unaudited) Three Months Ended March 31, 2008 2007 Sales Volumes: Oil and condensate sales (Mbbl): United Kingdom 265 397 Norway 96 131 Total 361 528 Gas sales (MMcf): United Kingdom 2,035 2,259 Norway 599 54 Total 2,634 2,313 Total sales (MBOE): United Kingdom 604 773 Norway 196 140 Total 800 913 BOE per day 8,796 10,148 Realized Prices: Oil and condensate price ($ per Bbl): Before commodity derivatives $89.84 $53.54 Effect of commodity derivatives $(17.57) $5.96 Realized prices including commodity derivatives $72.27 $59.50 Gas price ($ per Mcf): Before commodity derivatives $10.93 $6.28 Effect of commodity derivatives $1.22 $3.43 Realized prices including commodity derivatives $12.15 $9.71 Equivalent oil price ($ per BOE): Before commodity derivatives $76.53 $46.85 Effect of commodity derivatives $(3.94) $12.12 Realized prices including commodity derivatives $72.59 $58.97 Endeavour International Corporation Reconciliation of GAAP to Non-GAAP Measures (Unaudited)
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, Adjusted EBITDA and discretionary cash flow. The company uses these non-GAAP measures as key metrics for the management of the company and to demonstrate the company's 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.
(in thousands, except per share) Three Months Ended March 31, 2008 2007 Net loss $(16,792) $(3,143) Depreciation, depletion and amortization 21,403 19,213 Deferred tax expense (benefit) (3,144) 261 Unrealized (gain) loss on derivative instruments 29,642 15,696 Amortization of non-cash compensation 544 1,884 Amortization of loan costs and discount 3,156 427 Non-cash interest expense 869 - Other 632 15 Discretionary cash flow $36,310 $34,353 Net income (loss) to common shareholders, as reported $(19,487) $(5,987) Unrealized (gains) losses on derivatives (net of 50% tax) 14,821 7,848 Currency impact of deferred taxes 2,641 1,237 Net income (loss), as adjusted $(2,025) $3,098 Weighted average number of common shares outstanding - basic and diluted 125,537 120,304 Earnings per share, as adjusted $(0.02) $0.03 Net income (loss) to common shareholders, as reported $(19,487) $(5,987) Unrealized (gains) losses on derivatives 29,642 15,696 Net interest expense 7,841 4,169 Depreciation, depletion and amortization 21,403 19,213 Income tax expense (benefit) 470 1,290 Preferred stock dividends 2,695 2,844 Adjusted EBITDA $42,564 $37,225
Discretionary cash flow is equal to cash flow from operating activities before the changes in operating assets and liabilities.
SOURCE Endeavour International Corporation
05/08/2008
/CONTACT: Rusty Fisher of Endeavour - Investor Relations, +1-713-307-8770; or Majid Shafiq of Tristone Capital - UK Broker, +44 (0) 207 355 5800; or Philip Dennis, +44 (0) 207 743 6363, or Lucy Frankland, +44 (0) 203 008 5509, both of Pelham pr - Media, for Endeavour International Corporation/
/Web site: http://www.endeavourcorp.com /
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