ENDV.L Regulatory News (ENDV)

Endeavour Announces 2014 Second Quarter Financial and Operational Results HOUSTON, Aug. 5, 2014 -- Endeavour International Corporation(NYSE: END) (LSE: ENDV) today reported physical production for the quarter thatexceeded the Company's revised guidance range of 10,500 - 11,500 barrels of oilequivalent per day ("boepd") previously announced on June 10, 2014. Physicalproduction for the second quarter of 2014 averaged 12,900 boepd compared to9,500 boepd for the same quarter of 2013. Sales volumes for the second quarterof 2014 were 7,400 boepd, compared to 14,500 boepd for the same quarter in theprior year. The Company did not have a lifting of production at the Alba field during thequarter, so revenues were significantly lower than would have been if based onphysical production. Physical production for the quarter produced but notlifted is recorded as deferred revenue on the balance sheet. Endeavourestimates that there will be three to four liftings per year at the Alba field.The most recent lifting occurred on July 4, 2014 and the associated revenues ofapproximately $50 million will be reflected in the Company's third quarterresults. A similar situation occurred in the third quarter of 2013, when therewas no lifting at the Alba field. The Company reported a second quarter 2014 net loss, as adjusted of $38.7million compared to a net loss, as adjusted of $12.6 million for the sameperiod in 2013. On a GAAP basis, net loss for the second quarter was $36.7million as compared to net loss of $13.9 million for the same quarter in 2013. Recent Events: * Rochelle field fully operational with both wells producing during the quarter * Settled and received $12.6 million in proceeds for the Rochelle E1Y well insurance claim * Executed a forward sale for $22.5 million * Successfully finished the hydraulic fracture stimulation of a third Pennsylvania Marcellus well "During the quarter we were able to establish production from both wells at theRochelle field. We experienced periods during the quarter where productionrates exceeded 100 million cubic feet of gas per day ("mmcfd") and 4,000 boepd.This confirms our confidence in the Rochelle field's potential," said WilliamL. Transier, chairman, chief executive officer and president. "However, wecontinue to be challenged by unexpected downtime and lower productionefficiency rates which are directly attributable to the production facilitieswe do not control. We are working with the operators at Alba and Rochelle toimprove ongoing performance." Operational Update North Sea At Rochelle, the West Rochelle (W1) development well was returned to productionin mid-May. The E2 and W1 wells produced together during the quarter andachieved production rates greater than 100 million cubic feet equivalent perday ("mmcfed") for 32 days during the second quarter. The Scott Platform beganits planned shutdown period on July 27, 2014 and so the Rochelle Field isexpected to be shut-in for three weeks until the Scott Platform goes back intoservice. The shutdown at the Scott Platform is being executed to coincide withthe previously announced maintenance work occurring on the Forties PipelineSystem. Endeavour has a 44% working interest in Rochelle. At Alba, the A69 well is being completed and is expected to start productionthis month. Progress was made in the southern part of the field with partialwater injection being reinstated. Installation of the replacement pipeline isplanned early in the first quarter of 2015, with start-up expected in thesecond quarter. The partial reinstatement of water injection in the southernpart of the field has sustained production throughout the second quarter. WellA69 is expected to increase overall production rates in the third quarter.Endeavour has a 25.68% working interest in Alba. Bacchus continues to perform at rates above the Company's expectations. The B3Ywell has not, as expected, been turned into a water injector because of certaintechnical issues. Future options for the B3Y well continue to be evaluated.Endeavour has a 30% working interest in the field. North America In the Pennsylvania Marcellus, Endeavour successfully completed hydraulicfracture stimulation of the C-13 horizontal well, the third completion thisyear in the Daniel Field. The Company's operated activity included more thandouble the number of frac stages on the longest laterals to date relative toprevious wells. Following these successful well completions, operatorship ofthe Marcellus assets was transferred to Samson Exploration, LLC. Later thisyear, the wells will be tied into a new third-party pipeline being commissionedby EQT Corporation that allows firm capacity of up to 10 mmcfd, with potentialfor future expansion. In the Piceance Basin Rim play in Northwest Colorado, Endeavour has twoprojects targeting liquids-rich Niobrara and Frontier objectives. At present, arig has commenced drilling an initial horizontal Niobrara test at the Company'sWiley prospect. Endeavour has leasehold and drilling options on 40,000 grossacres and 27,000 net acres. Finance In May, Endeavour entered into a third forward sale agreement receiving apayment of $22.5 million. This effectively hedged a portion of production bylocking in pricing for in excess of 200,000 barrels of oil, over a six-monthdelivery period. The forward sale is expected to be fulfilled in November 2014.The first forward sale commitment was fulfilled in June 2013 and the second inMarch 2014. In January of this year, the Company refinanced its revolving credit facility($115 million at 13%) and two reimbursement agreements ($120 million at 13%and $33 million at 9% interest) into a new senior secured first lien term loanwith an interest rate of 8.25% (libor + 700 basis points). During the secondquarter, the first full quarter reflecting the refinancing impact, Endeavourrealized cash interest expense savings of $4 million ($16 million on annualizedbasis). In addition, gross general and administrative expenses were reduced, asa result of the previously announced consolidation of the Company's U.K.offices, headcount reductions and other cost reduction initiatives. Also during the quarter, the Company settled an insurance claim for theRochelle E1Y well, which was damaged in early 2013, for £7.5 million(approximately $12.6 million). The proceeds from the settlement were receivedin June. Third Quarter Production Guidance and Maintenance Downtime In the U.K. North Sea, the third quarter is typically the time to performmaintenance and other tasks on infrastructure. During 2014, Endeavouranticipates that all of its producing fields will be modestly impacted. Theseshutdowns will be less invasive than those experienced in 2013, but will stillhave an impact on third quarter physical production. At present, there is a 16 day shutdown on the Forties Pipeline System plannedin August that will affect oil production from Bacchus and Rochelle. Currentlyunderway is a three week Rochelle shutdown which coincides with the work beingdone at Forties. At Alba during August, a short shutdown of three days isplanned to test the emergency systems. Average daily physical productionvolumes are expected to be in the range of 9,500 - 10,500 boepd for the thirdquarter of 2014. Earnings Conference Call, Tuesday, August 5, 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 its2014 second quarter financial and operating results on Tuesday, August 5, 2014at 9:00 a.m. Central Time, 3:00 p.m. British Summer Time. A supporting slidedeck for the conference call is available on the home page of Endeavour'swebsite at www.endeavourcorp.com and under the Investor Relations section inconjunction with the details for the conference call. To participate and askquestions during the conference call, dial the local country telephone numberand the confirmation code 3569591. The toll-free numbers are 888-221-3886 inthe United States and 0-808-101-7548 in the United Kingdom. Other internationalcallers should dial 913-312-1453 (tolls apply). To listen only to the liveaudio web cast access Endeavour's home page at www.endeavourcorp.com. A replaywill be available beginning at 12:00 p.m. Central Time on August 5, 2014through 12:00 p.m. on August 11, 2014 by dialing toll free 888-203-1112 (U.S.)or 719-457-0820 (international), confirmation code 3569591. Endeavour International Corporation is an oil and gas exploration andproduction company focused on the acquisition, exploration and development ofenergy 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 speakonly as of the date made. Such statements are subject to assumptions, risk anduncertainty. Actual results or events may vary materially. The Securities and Exchange Commission (SEC) permits oil and gas companies, intheir filings with the SEC, to disclose not only proved reserves, but alsoprobable reserves and possible reserves that meet the SEC's definitions forsuch terms, and price and cost sensitivities for such reserves, and prohibitsdisclosure of resources that do not constitute such reserves. We may usecertain terms in our news releases, such as "reserve potential," that the SEC'sguidelines strictly prohibit us from including in filings with the SEC. Theseestimates are by their nature more speculative than estimates of proved,probable and possible reserves and accordingly are subject to substantiallygreater risk of being actually realized. In addition, we do not represent thatthe probable or possible reserves described herein meet the recoverabilitythresholds established by the SEC in its new definitions. Investors are urgedto also consider closely the disclosure in our filings with the SEC, availablefrom our website at www.endeavourcorp.com. Endeavour is also subject to therequirements of the London Stock Exchange and considers the disclosures in thisrelease to be appropriate and/or required under the guidelines of thatexchange. Endeavour International Corporation Condensed Consolidated Balance Sheets (Amounts in thousands) June 30, December 31, 2014 2013 (unaudited) Assets Current Assets: Cash and cash equivalents $ 83,209 $ 34,742 Accounts receivable 46,992 65,171 Prepaid expenses and other current assets 103,550 60,318 Total Current Assets 233,751 160,231 Property and Equipment, Net 1,032,281 1,072,151 Goodwill 259,238 259,238 Other Assets 30,455 33,222 Total Assets $ 1,555,725 $ 1,524,842 Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 32,907 $ 38,033 Current maturities of debt 2,131 - Deferred revenue 57,811 20,965 Monetary production payment, current 125,833 74,167 Accrued expenses and other 94,748 88,625 Total Current Liabilities 313,430 221,790 Long-Term Debt 894,122 870,878 Deferred Taxes 183,501 146,213 Other Liabilities 162,457 223,870 Total Liabilities 1,553,510 1,462,751 Commitments and Contingencies Series C Convertible Preferred Stock 43,703 43,703 Stockholders' Equity (41,488) 18,388 Total Liabilities and Stockholders' Equity $ 1,555,725 $ 1,524,842 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, 2014 2013 2014 2013 Revenues $ 44,857 $ 126,165 $ 139,021 $ 183,837 Cost of Operations: Operating expenses 6,847 38,103 34,017 55,593 Depreciation, depletion and 32,251 51,923 77,220 74,870 amortization Impairment of oil and gas - - - 3,534 properties General and administrative 5,240 4,882 10,089 10,364 Total Expenses 44,338 94,908 121,326 144,361 Income From Operations 519 31,257 17,695 39,476 Other Income (Expense): Unrealized gains (losses) on 2,010 (1,277) 4,669 303 derivatives Interest expense (31,431) (24,447) (62,908) (45,885) Letter of credit fees (2,270) (7,128) (6,059) (18,508) Loss on early extinguishment of - - (3,543) - financing agreements Litigation settlement expense - - (19,034) - Unrealized gain (loss) on (4,511) 1,072 (5,784) 10,831 foreign currency exchange Other expense (1,402) (2,081) (3,423) (1,960) Total Other Expense (37,604) (33,861) (96,082) (55,219) Loss Before Income Taxes (37,085) (2,604) (78,387) (15,743) Petroleum Revenue Tax ("PRT") 2,243 7,012 3,968 7,208Expense Corporate Tax Expense (Benefit) (2,655) 4,269 (811) 4,981 Total Tax Expense (412) 11,281 3,157 12,189 Net Loss (36,673) (13,885) (81,544) (27,932) Preferred Stock Dividends 456 456 911 911 Net Loss to Common Stockholders $ (37,129) $ (14,341) $ (82,455) $ (28,843) Net Loss per Common Share: Basic and Diluted $ (0.72) $ (0.30) $ (1.63) $ (0.61) Weighted Average Number of Common SharesOutstanding: Basic and Diluted 51,580 47,092 50,591 47,076 Endeavour International Corporation Condensed Consolidated Statement of Cash Flows (Unaudited) (Amounts in thousands) Six Months Ended June 30, 2014 2013 Cash Flows from Operating Activities: Net loss $ (81,544) $ (27,932) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation, depletion and amortization 77,220 74,870 Impairment of oil and gas properties - 3,534 Deferred tax benefit (7,951) (2,457) Unrealized gains on derivatives (4,669) (303) Amortization of non-cash compensation 2,123 1,632 Amortization of loan costs and discount 13,376 8,695 Non-cash interest expense 3,812 3,454 Loss on early extinguishment of financing agreements 6,856 - Litigation settlement expense 14,034 - Other 6,605 (2,444) Changes in operating assets and liabilities 30,068 12,562 Net Cash Provided by Operating Activities 59,930 71,611 Cash Flows From Investing Activities: Capital expenditures (39,302) (108,786) Acquisitions, net of cash acquired - - Proceeds from sales, net of cash 1,352 - Proceeds from insurance settlement 12,606 Increase in restricted cash (2,521) - Net Cash Used in Investing Activities (27,865) (108,786) Cash Flows From Financing Activities: Repayments of borrowings (115,699) - Borrowings under debt agreements, net of debt discount 140,625 - Proceeds from issuance of common stock 12,336 - Proceeds from issuance of monetary production payment - 125,000 Repayments of monetary production payment (10,833) - Financing costs paid (9,193) (15,804) Other financing (834) (416) Net Cash Provided by Financing Activities 16,402 108,780 Net Increase in Cash and Cash Equivalents 48,467 71,605 Cash and Cash Equivalents, Beginning of Period 34,742 59,185 Cash and Cash Equivalents, End of Period $ 83,209 $ 130,790 Endeavour International Corporation Operating Statistics (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2014 2013 2014 2013 Sales volume: (1) Oil and condensate sales (mbbls): United Kingdom 255 1,205 1,087 1,713 United States - 1 - 1 Total 255 1,206 1,087 1,714 Gas sales (mmcf): United Kingdom 2,109 15 2,694 26 United States 415 667 846 1,489 Total 2,524 682 3,540 1,515 Oil equivalent sales (mboe): United Kingdom 606 1,207 1,536 1,717 United States 70 112 141 249 Total 676 1,319 1,677 1,966 Total boed 7,424 14,497 9,269 10,862 Physical production volume (boed): (1) United Kingdom 12,079 8,083 10,351 7,973 United States 800 1,415 818 1,454 Total 12,879 9,498 11,169 9,427 Realized Price, before and afterderivatives : United Kingdom: Oil and condensate price ($ per bbl) $ 106.34 $ 102.68 $ 104.19 $ 104.37 Gas price ($ per mcf) $ 7.62 $ 8.19 $ 8.19 $ 8.06 Equivalent oil price ($ per boe) $ 71.17 $ 102.57 $ 88.10 $ 104.23 United States: Oil and condensate price ($ per bbl) $ 97.33 $ 85.46 98.67 88.19 Gas price ($ per mcf) $ 4.07 $ 3.40 $ 4.30 $ 3.22 Equivalent oil price ($ per boe) $ 24.85 $ 20.72 $ 26.01 $ 19.49 Total: Oil and condensate price ($ per bbl) $ 106.32 $ 102.67 $ 104.19 $ 104.37 Gas price ($ per mcf) $ 7.03 $ 3.50 $ 7.26 $ 3.30 Equivalent oil price ($ per boe) $ 66.40 $ 95.64 $ 82.87 $ 93.51 (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, providedbelow are reconciliations of net loss to the following non-GAAP financialmeasures: net income (loss), as adjusted and Adjusted EBITDA. We use thesenon-GAAP measures as key metrics for our management and to demonstrate ourability to internally fund capital expenditures and service debt. The non-GAAPmeasures are useful in comparisons of oil and gas exploration and productioncompanies as they exclude non-operating fluctuations in assets and liabilities. (Amounts in thousands) Three Months Ended Six Months Ended June 30, June 30, 2014 2013 2014 2013 Net loss $ (36,673) $ (13,885) $ (81,544) $ (27,932) Impairment of oil and gas - - - 3,534properties (net of tax) (1) Unrealized gains (losses) on (2,010) 1,277 (4,669) (303)derivatives (net of tax) (2) Loss on early extinguishment offinancing agreements (net of - - 1,220 -tax) (3) Litigation settlement expense - - 19,034 -(net of tax) (1) Net Loss as Adjusted $ (38,683) $ (12,608) $ (65,959) $ (24,701) Net loss $ (36,673) $ (13,885) $ (81,544) $ (27,932) Unrealized gains on derivatives (2,010) 1,277 (4,669) (303) Net interest expense 31,425 24,427 62,892 45,849 Letter of credit fees 2,270 7,128 6,059 18,508 Depreciation, depletion and 32,251 51,923 77,220 74,870amortization Impairment of oil and gas - - - 3,534properties Loss on early extinguishment of - - 3,543 -financing agreements Litigation settlement expense - - 19,034 - Income tax expense (benefit) (412) 11,281 3,157 12,189 Adjusted EBITDA $ 26,851 $ 82,151 $ 85,692 $ 126,715 (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 none, none, $2,323 and none, respectively. CONTACT: Endeavour - Investor Relations, Darcey Matthews, 713.307.8711; orPelham Public Relations - UK Media, Philip Dennis, +44 (0)207 861 3919, orHenry Lerwill, +44 (0)207 861 3169

SOURCE Endeavour International Corporation