ENDV.L Regulatory News (ENDV)

Endeavour Announces 2013 Third Quarter Financial and Operational Results HOUSTON, Nov. 6, 2013 -- Endeavour International Corporation(NYSE: END) (LSE: ENDV) today reported third quarter 2013 net loss, as adjustedof $34.7 million compared to a net loss, as adjusted of $13.6 million for thesame period in 2012. On a GAAP basis, net loss for the third quarter of 2013was $40.3 million as compared to net loss of $34.2 million for the same quarterin 2012. Third quarter 2013 sales and production numbers were impacted by the annualsummer maintenance period in the U.K. North Sea and the timing of liftings atthe Alba field during the period. Sales volumes for the third quarter of 2013were 4,725 barrels of oil equivalent per day ("boepd"), compared to 11,006boepd for the same quarter in the prior year. Physical production for the thirdquarter of 2013 averaged 7,980 boepd compared to 10,724 boepd for the samequarter of 2012. Recent Business Highlights: * First production achieved at Rochelle * Bacchus B1 well commenced production in July * Completion of the summer maintenance at the Alba field * Joint venture in the Pennsylvania Marcellus * Conclusion of the Strategic Review "First production at Rochelle is a major achievement for our Company. Rochellewas part of a package of assets Endeavour purchased in 2006. The field'sevolution from stranded discovery to producing asset is a testament to theperseverance and technical talent of all whom have been involved in theproject," said William L. Transier, chairman, chief executive officer andpresident. "Now with three significant assets and all of our U.K. developmentprojects on-line, we will focus on exploiting the underlying value of ourassets and turn our attention in the near-term to reducing debt and being costefficient." Operational Update North SeaRochelle commenced production on October 23, 2013. Following first production,Rochelle is in a 30-day proving period and the W1 well is being ramped up toits full potential. Current production is 44 MMscf/d with 2,500 barrels of oila day ("bopd") of associated condensate, which is in line with operationalexpectations for the new infrastructure on the Scott Platform. At EastRochelle, the E2 well has been drilled to total depth, completed and aproduction test is due to commence in the next few days. The E2 well isexpected on-line in the fourth quarter. When fully operational, the productionfrom the Rochelle field is expected to exceed the available production capacityat Scott. Endeavour has a 44% working interest in the Rochelle development. At the Bacchus field, the third planned production well (B1) was completed inJuly. The well logged 2,057 feet net oil pay along a horizontal completionsegment in high quality Jurassic-aged Fulmar sandstone in the field's westernfault block. The third well was completed ahead of schedule and below estimatedcosts. Current production at the field is 13,000 bopd gross, in line with theexpected field performance. Endeavour has a 30% working interest in the field. At Alba, the planned 28-day summer maintenance program was completed on timeand the field restarted in the middle of September. The previous waterhandling, turbine and emulsion concerns have been addressed and the field iscurrently ramping back up to full production levels. Production has achievedrates of over 25,000 bopd and the operator is working to maintain consistentproduction rates with on-going operational activities. Two infield wells,drilled earlier in the year, were brought back on-line and another platformwell is scheduled to be on production in early 2014. Endeavour has a 25.68%working interest in the Alba field. As of the fourth quarter of 2013, all the Company's major U.K. oil and gasassets are on production. North AmericaIn Rio Blanco County, Colorado, the Company successfully drilled, cored andlogged its Wiley Federal Unit well. The data indicates liquids-rich gaspotential in both the Niobrara and Frontier formations. The well is beingevaluated for a future horizontal re-entry sometime next year. In a separateoperation in Mesa County, Colorado, Endeavour obtained Niobrara cores in athird party well where the Company has drill-to-earn options, that may beexercised by horizontal drilling in 2014. In total, the Company has leaseholdand drilling options over approximately 40,000 gross acres in this liquids-richCretaceous play. During October in the Pennsylvania Marcellus area, the Company entered into apurchase and sale agreement covering 50% of its upstream and midstream assets.The transaction is expected to deliver the capital necessary for near termjoint development of these assets. Final closing of the agreement isanticipated to occur in the fourth quarter of 2013. Strategic ReviewIn October, the Board of Directors concluded the strategic review process thatstarted in February 2013. During the course of the strategic review, the Boardconsidered the sale of all or parts of the Company and possible joint venturearrangements. As the year progressed, Endeavour achieved several objectivesthat improved the long-term value of the business, including the completion ofBacchus, start-up of production at Rochelle and continued process improvementsat the Alba field. As a result, the Board decided it was in the best interestof shareholders to retain and exploit the asset base. In conjunction with the conclusion of the strategic review, Endeavour decidedto close its London office and consolidate its technical teams in Aberdeen,Scotland. Derek A. Neilson has been promoted to Managing Director of U.K.Operations to head the consolidated team. Mr. Neilson has been with Endeavourfor over six years and has 28 years of experience in the oil and gas industry.Once the consolidation and organizational changes are fully implemented, theCompany expects to achieve annual cash savings of approximately $15 million to$20 million. FinanceIn August, the Company completed the sale of an additional $25 millionexpansion to the Monetary Production Payment (MPP), bringing the total to $150million outstanding. The MPP has a two-year term and will be satisfied out ofthe production from the Alba and Bacchus fields. Repayment of the MPP began inJuly 2013 under its terms. In September, Endeavour entered into a second Forward Sale agreement receivinga payment 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. This has had a positive effect on the Company's realized oilprices year-to-date. The first Forward Sale commitment was fulfilled in June2013. Fourth Quarter Production GuidanceWith Rochelle and Alba ramping up over the course of the fourth quarter,average daily production volumes are expected to be in the range of 12,000 -13,000 boepd for the period. Sales volumes recorded as revenue will be affectedby the number of actual liftings from the Alba field. Currently, one lifting isexpected during the fourth quarter. Earnings Conference Call, Wednesday, November 6, 2013 at 9:00 a.m., CentralTime, 3:00 p.m. British TimeEndeavour International will host a conference call and web cast to discuss its2013 third quarter financial and operating results on Wednesday, November 6,2013 at 9:00 a.m. Central Time, 3:00 p.m. British Time. A supporting slide deckfor the conference call is available on the home page of Endeavour's website atwww.endeavourcorp.com and under the Investor Relations section in conjunctionwith the details for the conference call. To participate and ask questionsduring the conference call, dial the local country telephone number and theconfirmation code 4806271. The toll-free numbers are 888-812-8595 in the UnitedStates and 0-808-101-1152 in the United Kingdom. Other international callersshould dial 913-312-0672 (tolls apply). To listen only to the live audio webcast access Endeavour's home page at www.endeavourcorp.com. A replay will beavailable beginning at 12:00 p.m. Central Time on November 6, 2013 through 12:00 p.m. on November 12, 2013 by dialing toll free 888-203-1112 (U.S.) or719-457-0820 (international), confirmation code 4806271. 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 use 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 (Unaudited) (Amounts in thousands) September 30, December 31, 2013 2012 Assets Current Assets: Cash and cash equivalents $ 60,357 $ 59,185 Accounts receivable 24,496 46,181 Prepaid expenses and other current assets 48,696 20,995 Total Current Assets 133,549 126,361 Property and Equipment, Net 1,078,906 1,003,441 Goodwill 259,238 262,764 Other Assets 36,396 49,906 Total Assets $ 1,508,089 $ 1,442,472 Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 44,802 $ 60,153 Current maturities of debt 115,163 15,713 Deferred revenue 40,691 - Monetary production payment, current 19,167 - Accrued expenses and other 54,422 90,100 Total Current Liabilities 274,245 165,966 Long-Term Debt 752,769 843,793 Deferred Taxes 127,658 141,887 Other Liabilities 263,465 147,692 Total Liabilities 1,418,137 1,299,338 Commitments and Contingencies Series C Convertible Preferred Stock 43,703 43,703 Stockholders' Equity 46,249 99,431 Total Liabilities and Stockholders' Equity $ 1,508,089 $ 1,442,472 Endeavour International Corporation Condensed Consolidated Statement of Operations (Unaudited) (Amounts in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2013 2012 2013 2012 Revenues $ 36,901 $ 83,275 $ 220,738 $ 121,444 Cost of Operations: Operating expenses 16,358 23,973 71,951 34,613 Depreciation, depletion and 18,596 23,759 93,466 42,292amortization Impairment of oil and gas 6,032 11,416 9,566 47,116properties General and administrative 3,913 5,026 14,276 15,379 Total Expenses 44,899 64,174 189,259 139,400 Income (Loss) From Operations (7,998) 19,101 31,479 (17,956) Other Income (Expense): Unrealized gains (losses) on 855 (1,204) 1,158 (2,178)derivatives Interest expense (26,461) (18,053) (72,346) (63,016) Loss on early extinguishment - - - (21,661)of debt Letter of credit fees (7,274) (9,378) (25,782) (12,442) Unrealized foreign currency (10,793) (1,448) 38 (4,186)gains (losses) Other expense (2,544) (1,215) (4,505) (1,758) Total Other Expense (46,217) (31,298) (101,437) (105,241) Loss Before Income Taxes (54,215) (12,197) (69,958) (123,197) Income Tax Expense (Benefit) (14,330) 21,505 (2,141) (3,424) Net Loss (39,885) (33,702) (67,817) (119,773) Preferred Stock Dividends 456 456 1,367 1,367 Net Loss to Common $ (40,341) $ (34,158) $ (69,184) $ (121,140)Stockholders Net Loss per Common Share: Basic and Diluted $ (0.86) $ (0.73) $ (1.47) $ (2.94) Weighted Average Number of Common SharesOutstanding: Basic and Diluted 47,092 46,555 47,082 41,163 Endeavour International Corporation Condensed Consolidated Statement of Cash Flows (Unaudited) (Amounts in thousands) Nine Months Ended September 30, 2013 2012 Cash Flows from Operating Activities: Net loss $ (67,817) $ (119,773) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation, depletion and amortization 93,466 42,292 Impairment of oil and gas properties 9,566 47,116 Deferred tax benefit (17,262) (15,849) Unrealized (gains) losses on derivatives (1,158) 2,178 Amortization of non-cash compensation 2,352 3,605 Amortization of loan costs and discount 15,330 10,536 Non-cash interest expense 5,246 7,077 Loss on early extinguishment of debt - 21,661 Other 10,192 9,692 Changes in operating assets and liabilities 4,872 (7,191) Net Cash Provided by Operating Activities 54,787 1,344 Cash Flows From Investing Activities: Capital expenditures (176,171) (175,597) Acquisitions, net of cash acquired (2,602) (228,437) Increase in restricted cash - (178) Net Cash Used in Investing Activities (178,773) (404,212) Cash Flows From Financing Activities: Repayments of borrowings - (247,065) Borrowings under debt agreements, net of debt discount - 595,000 Proceeds from issuance of common stock - 60,805 Proceeds from issuance of monetary production payment 150,000 - Repayments of monetary production payment (4,167) - Dividends paid (1,249) (833) Payments for early extinguishment of debt - (7,248) Financing costs paid (19,427) (28,109) Other financing 1 4 Net Cash Provided by Financing Activities 125,158 372,554 Net Increase (Decrease) in Cash and Cash Equivalents 1,172 (30,314) Cash and Cash Equivalents, Beginning of Period 59,185 106,036 Cash and Cash Equivalents, End of Period $ 60,357 $ 75,722 Endeavour International Corporation Operating Statistics (Unaudited) Three Months Nine Months Ended Ended September 30, September 30, 2013 2012 2013 2012 Sales volume: (1) Oil and condensate sales (Mbbls): United Kingdom 327 812 2,039 1,099 United States - 1 1 2 Total 327 813 2,040 1,101 Gas sales (MMcf): United Kingdom 9 19 35 69 United States (2) 638 1,182 2,127 4,234 Total 647 1,201 2,162 4,303 Oil equivalent sales (MBOE): United Kingdom 328 815 2,045 1,110 United States (2) 107 198 356 708 Total 435 1,013 2,401 1,818 Total BOE per day 4,725 11,006 8,794 6,635 Physical production volume (BOE perday): (1) United Kingdom 6,824 8,573 7,586 4,474 United States 1,156 2,151 1,354 2,585 Total 7,980 10,724 8,940 7,059 Realized Price, before and afterderivatives : United Kingdom: Oil and condensate price ($ per Bbl) $ 106.82 $ 99.32 $ 104.77 $ 101.78 Gas price ($ per Mcf) $ 7.92 $ 6.80 $ 8.03 $ 7.18 Equivalent oil price ($ per BOE) $ 106.55 $ 99.09 $ 104.60 $ 101.16 United States: Oil and condensate price ($ per Bbl) 106.78 $ 92.93 94.84 96.19 Gas price ($ per Mcf) $ 2.99 $ 2.09 $ 3.15 $ 2.11 Equivalent oil price ($ per BOE) $ 18.29 $ 12.88 $ 19.13 $ 12.95 Realized Price, before and afterderivatives: Oil and condensate price ($ per Bbl) $ 106.82 $ 99.31 $ 104.76 $ 101.76 Gas price ($ per Mcf) $ 3.06 $ 2.16 $ 3.23 $ 2.19 Equivalent oil price ($ per BOE) $ 84.89 $ 82.24 $ 91.95 $ 66.80 (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 income (loss) to the following non-GAAPfinancial measures: net income, 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 Nine Months Ended September 30, September 30, 2013 2012 2013 2012 Net loss $ (39,885) $ (33,702) $ (67,817) $ (119,773) Impairment of oil and gas 6,032 11,416 9,566 47,116properties (net of tax) (1) Unrealized gains (losses) on (855) 265 (1,158) 58derivatives (net of tax) (2) Loss on early extinguishment of - - - 17,762debt (net of tax) (3) Deferred tax expense related to 8,393 8,393U.K. tax rate change Net Loss as Adjusted $ (34,708) $ (13,628) $ (59,409) $ (46,444) Net loss $ (39,885) $ (33,702) $ (67,817) $ (119,773) Unrealized loss on derivatives (855) 1,204 (1,158) 2,178 Net interest expense 26,441 18,005 72,290 62,789 Letter of credit fees 7,274 9,378 25,782 12,442 Loss on early extinguishment of - - - 21,661debt Depreciation, depletion and 18,596 23,759 93,466 42,292amortization Impairment of oil and gas 6,032 11,416 9,566 47,116properties Income tax expense (benefit) (14,330) 21,505 (2,141) (3,424) Adjusted EBITDA $ 3,273 $ 51,565 $ 129,988 $ 65,281 (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, $939, none and $2,120 for the three months ended September 30, 2013 and 2012, nine months ended September 30, 2013 and 2012, respectively. (3) Net of tax benefit of $3,899 for the nine months ended September 30, 2012. SOURCE: Endeavour International Corporation CONTACT: Endeavour - Investor Relations, Darcey Matthews, +1-713-307-8711, orPelham Public Relations - UK Media, Philip Dennis, +44 (0)207 861 3919, orHenry Lerwill +44(0)207 861 3169