ENDV.L Regulatory News (ENDV)

Endeavour Announces 2013 Fourth Quarter and Year-End Financial and Operational Results HOUSTON, March 5, 2014 -- Endeavour International Corporation(NYSE: END) (LSE: ENDV) today reported fourth quarter 2013 net loss, asadjusted of $24.7 million compared to a net loss, as adjusted of $7.7 millionfor the same period in 2012. On a GAAP basis, net loss for the fourth quarterwas $27.7 million as compared to net loss of $6.5 million for the same quarterin 2012. Sales volumes for the fourth quarter of 2013 were 13,648 barrels of oilequivalent per day ("boepd"), compared to 11,541 boepd for the same quarter inthe prior year. Physical production for the fourth quarter of 2013 averaged12,422 boepd compared to 10,300 boepd for the same quarter of 2012.Year-over-year average daily physical production increased 121%. Fourth Quarter highlights include: * Achieved first production at the Rochelle field * Closed on the sale of a 50% interest in the Pennsylvania Marcellus * Completed an additional $25 million of Monetary Production Payment Recent Events: * Refinanced the Revolving Credit Facility and replaced two LC reimbursement agreements * Resolved the stuck valve issue at Rochelle, resuming production at the field * Completed a private placement for $25 million * Amended the Decommissioning Securities Agreement for the Alba field, reducing security requirements * Consolidated the U.K. offices in Aberdeen, Scotland * Announced a capital expenditure budget for 2014 of $60 million - $80 million * Completed the year-end 2013 reserves evaluation "With the Rochelle situation resolved, we will continue our focus on reducingcost of capital and deleveraging our balance sheet. The reorganization andconsolidation of our UK offices completed last year, combined with the reducedcost of capital from our refinancing effort in January, result in over $30million in annual cash savings," said William L. Transier, chairman, chiefexecutive officer and president. "Now with our core assets online in the NorthSea, we should expect improved production and cash flow on a comparative basisso we can move forward prudently in the exploitation of our portfolio for thebenefit of our stakeholders." Operational Update North Sea At Rochelle, the East (E2) and West (W1) development wells at Rochelle, agas-condensate field, were fully completed and tied-in to the productionmanifolds in January. During the restart of production, a valve was discoveredstuck in the 'shut' position on the outlet side of the Rochelle productionmanifold. An attempt to open the valve manually was unsuccessful and theoperator secured an intervention vessel to open the valve. The valve wasreopened on February 26th and the E2 well commenced first production onFebruary 28th. The E2 production is ramping up and the W1 well is expected tobe online in the next few days. When both wells are fully operational, theproduction from the Rochelle field is expected to exceed the availableproduction capacity at the Scott Platform. Endeavour has a 44% working interestin the Rochelle development. The Bacchus field continues to perform in line with expectations. The 2013production exit rate at the field was over 10,000 barrels of oil per day("bopd") gross. Consistent with the original development plans, the first welldrilled (B3Y) is expected to be turned into a water injector during the secondquarter of 2014. This will provide pressure support to help sustain the field'sproduction rate and increase its overall recovery. A new 3D seismic survey wasshot in 2013 and the results are being processed to define additional fielddevelopment opportunities. Endeavour has a 30% working interest in the field. Water handling and other operational issues at the Alba production facilitieswere addressed during the period up to and including the extended shutdownperiod last year. Subsequently, a problem occurred in the subsea waterinjection pipeline supplying pressure to the Southern area of the field. Thishas resulted in a portion of the Southern area being shut-in. The Alba 2013exit rate was 18,500 bopd gross, below the levels expected from the field.Remedial action is currently being taken to reinstate partial water injectionto offset some of this reduction and the permanent replacement of the pipelineis targeted for late 2014. Production will be improved by the first 2014development well, which was recently brought online. An additional twodevelopment wells are scheduled to be drilled during the year. Endeavour has a25.68% working interest in the field. North America During the fourth quarter in the Pennsylvania Marcellus area, the Companyclosed on a purchase and sale agreement covering 50% of its upstream andmidstream assets to Samson Exploration LLC. The transaction provides for thejoint development of the Marcellus assets, including the capital necessary forthe next phase of development in the core Daniel Field area in Cameron County,Pennsylvania. Initially, the partnership plans to complete three previouslydrilled and cased horizontal Marcellus wells. These wells will be tied into anew third-party pipeline being constructed by EQT Corporation that allows firmcapacity of up to 10 MMCF/D, with potential for future expansion. Endeavourwill operate this initial phase of activity, which is expected to be completedby mid-year 2014. In the Piceance Basin Rim play in Northwest Colorado, Endeavour has twoprojects targeting liquids-rich Niobrara and Frontier objectives. The Companyhas formed two federal units and has plans to drill initial horizontal tests inthe Niobrara target zone by mid-year 2014. Endeavour has leasehold and drillingoptions on 40,000 gross acres and 27,000 net acres. Finance In December, the Company completed an additional $25 million expansion to theMonetary Production Payment (MPP), bringing the total to $175 millionoutstanding. The MPP has a two-year term and will be satisfied out of theproduction from the Alba, Bacchus and Rochelle fields. Repayment of the MPPbegan in July 2013 under its terms and the current outstanding balance isapproximately $162 million. In January 2014, Endeavour closed on a $255 million senior secured first lienterm loan with an interest rate of 8.25% (Libor + 700 basis points). The firstlien note is a strip facility consisting of a $125 million Secured Term Loanand a $130 million LC Procurement Facility. The Company has used the netproceeds from the offering to refinance its 13% $115 million Revolving CreditFacility and replace its two reimbursement agreements ($120 million at 13% and$33 million at 9%, interest rates, respectively). The facility is due inNovember 2017. Due to a change in the U.K. tax treatment for decommissioning, Endeavour hasamended its Decommissioning Securities Agreement for the Alba field. The newtax law, which allows companies to treat decommissioning on an after-tax basis(including Petroleum Revenue Tax (PRT)), enables Endeavour to reduce itscurrent Letter of Credit (LC) amount on the Alba field from $120 million toapproximately $55 million. The reduced LC requirements as a result of the newU.K. decommissioning tax treatment, combined with the refinancing activitiesdone in January, is expected to generate an annual cash savings ofapproximately $17 million to the Company. On March 3rd, the Company completed a private placement for $25 million. Thetransaction was comprised of the issuance of 2.9 million shares at $4.28/sharewith the issuance of 729,000 warrants with a strike price of $5.29. Inaddition, the transaction involved the issuance of 6.5% convertible notes, witha conversion price of $4.66. The notes have a four year maturity. Thetransaction also includes an option for an additional $30 million and normalregistration rights. In the fourth quarter, Endeavour completed the consolidation of its U.K.offices in Aberdeen, Scotland. Annual cash savings are anticipated to be in therange of $15 million - $20 million. First Quarter Production Guidance With the unanticipated downtime at the Rochelle field and continued restrictedrates at Alba, average daily production volumes are expected to be in the rangeof 9,000 - 10,000 boepd for the first quarter of 2014. 2014 Capital Expenditure Program Endeavour's direct capital expenditure program in 2014 is expected to be in therange of $60 million - $80 million. Having completed the work on the Company'slarge North Sea development projects, Endeavour expects to spend approximately$45 million in the U.K., the majority on the Alba field for infill drilling, 4Dseismic and the replacement of the subsea water injection line. The capitalspend for the U.S. drilling program is expected to be in the range of $20million - $25 million. Decommissioning costs during the year are expected to be approximately $50million for the IVRR, Renee and Rubie fields. 2013 Reserves Year-over-year, the Company added 1.5MMboe of proved reserves, which representsa reserves replacement ratio of 41%. Oil represented 52% of total provedreserves at December 31, 2013 down slightly from 54% at the end of the prioryear. Net proved and probable reserves (2P) were 40.1 million in 2013 comparedto 47.2 million in the previous year, with oil representing 61% of the total.The reduction in 2P reserves was due to the 2013 production, a slightly shorterAlba field life due to lower SEC pricing, minor revisions in Rochelle reservesfollowing development drilling and lack of new drilling activities in the U.S. Earnings Conference Call, Wednesday, March 5, 2014 at 9:00 a.m., Central Time,3:00 p.m. British Time Endeavour International will host a conference call and web cast to discuss its2013 fourth quarter and year-end financial and operating results on Wednesday,March 5, 2014 at 9:00 a.m. Central Time, 3:00 p.m. British Time. A supportingslide deck 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 5131878. The toll-free numbers are 888-684-1281 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 March 5, 2014 through12:00 p.m. on March 11, 2014 by dialing toll free 888-203-1112 (U.S.) or719-457-0820 (international), confirmation code 5131878. 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 (Unaudited) (Amounts in thousands) December 31, 2013 2012 Assets Current Assets: Cash and cash equivalents $ 34,742 $ 59,185 Accounts receivable 65,171 46,181 Prepaid expenses and other current assets 35,920 20,995 Total Current Assets 135,833 126,361 Property and Equipment, Net 1,072,151 1,003,441 Goodwill 259,238 262,764 Other Assets 33,223 49,906 Total Assets $ 1,500,445 $ 1,442,472 Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 38,033 $ 60,153 Current maturities of debt - 15,713 Deferred revenue 20,965 - Monetary production payment, current 74,167 - Accrued expenses and other 88,625 90,100 Total Current Liabilities 221,790 165,966 Long-Term Debt 870,878 843,793 Deferred Taxes 121,816 141,887 Other Liabilities 223,870 147,692 Total Liabilities 1,438,354 1,299,338 Commitments and Contingencies Series C Convertible Preferred Stock 43,703 43,703 Stockholders' Equity 18,388 99,431 Total Liabilities and Stockholders' Equity $ 1,500,445 $ 1,442,472 Endeavour International Corporation Condensed Consolidated Statement of Operations (Unaudited) (Amounts in thousands, except per share data) Fourth Quarter Year Ended December 31, December 31, 2013 2012 2013 2012 Revenues $ 116,926 $ 97,615 $ 337,664 $ 219,058 Cost of Operations: Operating expenses 33,493 23,924 105,444 58,536 Depreciation, depletion and 49,582 24,272 143,048 66,564amortization Impairment of oil and gas - 5,956 9,566 53,072properties General and administrative 4,847 5,705 19,124 21,085 Total Expenses 87,922 59,857 277,182 199,257 Income From Operations 29,004 37,758 60,482 19,801 Other Income (Expense): Unrealized gains (losses) on (3,001) 7,319 (1,843) 5,141derivatives Interest expense (32,171) (21,105) (104,516) (84,122) Loss on early extinguishment - - - (21,661)of debt Letter of credit fees (7,643) (9,461) (33,425) (21,903) Unrealized foreign currency (3,154) 12,266 (3,116) 8,080gains (losses) Other expense (2,114) (15,579) (6,619) (17,334) Total Other Expense (48,083) (26,560) (149,519) (131,799) Income (Loss) Before Income (19,079) 11,198 (89,037) (111,998)Taxes Income Tax Expense 8,583 17,652 6,442 14,228 Net Loss (27,662) (6,454) (95,479) (126,226) Preferred Stock Dividends 456 456 1,823 1,823 Net Loss to Common $ (28,118) $ (6,910) $ (97,302) $ (128,049)Stockholders Net Loss per Common Share Basic and Diluted $ (0.60) $ (0.15) $ (2.07) $ (3.01) Weighted Average Number of Common SharesOutstanding: Basic and Diluted 47,111 46,613 47,089 42,533 Endeavour International Corporation Condensed Consolidated Statement of Cash Flows (Unaudited) (Amounts in thousands) Year Ended December 31, 2013 2012 Cash Flows from Operating Activities: Net loss $ (95,479) $ (126,226) Adjustments to reconcile net loss to net provided by (used in) operating activities: Depreciation, depletion and amortization 143,048 66,564 Impairment of oil and gas properties 9,566 53,072 Deferred tax benefit (14,255) (17,594) Unrealized (gains) losses on derivatives 1,843 (5,141) Amortization of non-cash compensation 3,294 4,401 Amortization of loan costs and discount 22,359 14,179 Non-cash interest expense 7,082 8,684 Loss on early extinguishment of debt - 21,661 Other 16,329 15,365 Changes in operating assets and liabilities (42,450) 3,648 Net Cash Provided by Operating Activities 51,337 38,613 Cash Flows From Investing Activities: Capital expenditures (223,656) (246,925) Acquisitions, net of cash acquired (2,787) (238,854) Proceeds from sales, net of cash 6,774 1,407 Increase in restricted cash - (178) Net Cash Used in Investing Activities (219,669) (484,550) Cash Flows From Financing Activities: Repayments of borrowings - (274,629) Borrowings under debt agreements, net of debt - 654,023discount Proceeds from issuance of common stock - 60,805 Proceeds from issuance of monetary production 175,000 -payments Repayment of monetary production payments (8,333) - Payments for early extinguishment of debt - (7,248) Financing costs paid (21,198) (32,204) Other financing (1,580) (1,661) Net Cash Provided by Financing Activities 143,889 399,086 Net Decrease in Cash and Cash Equivalents (24,443) (46,851) Cash and Cash Equivalents, Beginning of Period 59,185 106,036 Cash and Cash Equivalents, End of Period $ 34,742 $ 59,185 Endeavour International Corporation Operating Statistics (Unaudited) Fourth Quarter Year Ended December 31, December 31, 2013 2012 2013 2012 Sales volume: Oil and condensate sales (Mbbls): United Kingdom 977 896 3,017 1,994 United States - - 1 3 Total 977 896 3,018 1,997 Gas sales (MMcf): United Kingdom 1,159 22 1,194 91 United States 509 972 2,636 5,207 Total 1,668 994 3,830 5,298 Oil equivalent sales (MBOE): United Kingdom 1,171 899 3,216 2,009 United States 85 163 441 871 Total 1,256 1,062 3,657 2,880 Total BOE per day 13,648 11,541 10,017 7,868 Physical production volume (BOE per day): United Kingdom 11,441 8,533 8,665 5,494 United States 981 1,767 1,257 2,379 Total 12,422 10,300 9,922 7,873 Realized Price, before and afterderivatives : United Kingdom: Oil and condensate price ($ per Bbl) $ 103.70 $ 105.73 $ 104.40 $ 103.56 Gas price ($ per Mcf) $ 12.12 $ 7.95 $ 12.00 $ 7.41 Equivalent oil price ($ per BOE) $ 98.51 $ 105.57 $ 102.39 $ 103.13 United States: Oil and condensate price ($ per Bbl) - $ 44.00 120.00 94.67 Gas price ($ per Mcf) $ 3.04 $ 2.74 $ 3.13 $ 2.23 Equivalent oil price ($ per BOE) $ 18.41 $ 16.63 $ 18.98 $ 13.64 Total: Oil and condensate price ($ per Bbl) $ 103.71 $ 105.76 $ 104.40 $ 103.56 Gas price ($ per Mcf) $ 9.35 $ 2.86 $ 5.89 $ 2.32 Equivalent oil price ($ per BOE) $ 93.09 $ 91.94 $ 92.36 $ 76.07 • We record oil revenues using the sales method, i.e. when delivery has occurred. Actual production may differ based on the timing of tanker liftings. We use the entitlements method to account for sales of gas 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, 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) Fourth Quarter Year Ended December 31, December 31, 2013 2012 2013 2012 Net loss $ (27,662) $ (6,454) $ (95,479) $ (126,226) Impairment of oil and gas - 5,956 9,566 53,072properties (net of tax) (1) Unrealized gains (losses) on 3,001 (7,383) 1,843 (7,326)derivatives (net of tax) (2) Loss on early extinguishment of - - - 17,662debt (net of tax) (3) Deferred tax expense related to - 194 - 8,587U.K. tax rate change Net Loss as Adjusted $ (24,661) $ (7,687) $ (84,070) $ (54,231) Net loss $ (27,662) $ (6,454) $ (95,479) $ (126,226) Unrealized gains (losses) on 3,001 (7,319) 1,843 (5,141)derivatives Net interest expense 32,163 21,083 104,452 83,872 Letter of credit fees 7,643 9,461 33,425 21,903 Loss on early extinguishment of - - - 21,661debt Depreciation, depletion and 49,582 24,272 143,048 66,564amortization Impairment of oil and gas - 5,956 9,566 53,072properties Income tax expense 8,583 17,652 6,442 14,228 Adjusted EBITDA $ 73,310 $ 64,651 $ 203,297 $ 129,933 (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, $64, none, $2,185 for the three months ended December 31, 2013 and 2012, year ended December 31, 2013 and 2012, respectively. (3) Net of tax benefit of $3,899 for the year ended December 31, 2012. Endeavour International Corporation 2013 Reserve Information Endeavour Historical As of December 31, 2011 2012 2013 Net 1P reserves: United Kingdom: Oil (MBbls)(1) 4,060 13,733 12,340 Gas (MMcf)(3) 50,723 56,901 55,398 Oil equivalents (MBOE)(2) 12,514 23,217 21,573 United States: Oil (MBbls)(1) 41 6 3 Gas (MMcf) 60,978 14,690 11,775 Oil equivalents (MBOE)(2) 10,204 2,454 1,965 Total: Oil (MBbls)(1) 4,101 13,739 12,343 Gas (MMcf) 111,701 71,591 67,173 Oil equivalents (MBOE)(2) 22,718 25,671 23,538 Percentage oil 18% 54% 52% Percentage proved developed 23% 32% 49% Net 2P reserves: Total: Oil (MBbls)(1) 14,556 29,208 24,552 Gas (MMcf)(3) 182,989 107,715 93,370 Oil equivalents (MBOE)(2) 45,054 47,161 40,114 Percentage oil 32% 62% 61% (1) Includes natural gas liquids. (2) One Bbl of oil is equal to six Mcfe based on an approximate energy equivalency. This is a physical correlation and does not reflect a value or price relationship between the commodities. (3) Gas prices in the U.K. have been in the range of $9.50 - $11.00 an Mcf during 2013. SOURCE Endeavour International Corporation CONTACT: For further information: Endeavour - Investor Relations, DarceyMatthews, 713.307.8711; or Pelham Public Relations - UK Media, Philip Dennis,+44 (0)207 861 3919, Henry Lerwill, +44(0)207 861 3169