Endeavour Announces 2013 Fourth Quarter and Year-End Financial and Operational Results

Save Story
Leer en español

Estimated read time: 15-16 minutes

This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.





Endeavour Announces 2013 Fourth Quarter and Year-End Financial and

Operational Results

HOUSTON, March 5, 2014 /PRNewswire/ -- Endeavour International

Corporation (NYSE: END) (LSE: ENDV) today reported fourth quarter 2013

net loss, as adjusted of $24.7 million compared to a net loss, as

adjusted of $7.7 million for the same period in 2012. On a GAAP basis,

net loss for the fourth quarter was $27.7 million as compared to net

loss of $6.5 million for the same quarter in 2012.

Sales volumes for the fourth quarter of 2013 were 13,648 barrels of

oil equivalent per day ("boepd"), compared to 11,541 boepd for the

same quarter in the prior year. Physical production for the fourth

quarter of 2013 averaged 12,422 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

reducing cost of capital and deleveraging our balance sheet. The

reorganization and consolidation of our UK offices completed last

year, combined with the reduced cost of capital from our refinancing

effort in January, result in over $30 million in annual cash savings,"

said William L. Transier, chairman, chief executive officer and

president. "Now with our core assets online in the North Sea, we

should expect improved production and cash flow on a comparative basis

so we can move forward prudently in the exploitation of our portfolio

for the benefit of our stakeholders."

Operational Update

North Sea

At Rochelle, the East (E2) and West (W1) development wells at

Rochelle, a gas-condensate field, were fully completed and tied-in to

the production manifolds in January. During the restart of production,

a valve was discovered stuck in the 'shut' position on the outlet side

of the Rochelle production manifold. An attempt to open the valve

manually was unsuccessful and the operator secured an intervention

vessel to open the valve. The valve was reopened on February 26th and

the E2 well commenced first production on February 28th. The E2

production is ramping up and the W1 well is expected to be online in

the next few days. When both wells are fully operational, the

production from the Rochelle field is expected to exceed the available

production capacity at the Scott Platform. Endeavour has a 44% working

interest in the Rochelle development.

The Bacchus field continues to perform in line with expectations. The

2013 production exit rate at the field was over 10,000 barrels of oil

per day ("bopd") gross. 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. This will provide

pressure support to help sustain the field's production rate and

increase its overall recovery. A new 3D seismic survey was shot in

2013 and the results are being processed to define additional field

development opportunities. Endeavour has a 30% working interest in the


Water handling and other operational issues at the Alba production

facilities were addressed during the period up to and including the

extended shutdown period last year. Subsequently, a problem occurred

in the subsea water injection pipeline supplying pressure to the

Southern area of the field. This has resulted in a portion of the

Southern area being shut-in. The Alba 2013 exit rate was 18,500 bopd

gross, below the levels expected from the field. Remedial action is

currently being taken to reinstate partial water injection to offset

some of this reduction and the permanent replacement of the pipeline

is targeted for late 2014. Production will be improved by the first

2014 development well, which was recently brought online. An

additional two development wells are scheduled to be drilled during

the year. Endeavour has a 25.68% working interest in the field.

North America

During the fourth quarter in the Pennsylvania Marcellus area, the

Company closed on a purchase and sale agreement covering 50% of its

upstream and midstream assets to Samson Exploration LLC. The

transaction provides for the joint development of the Marcellus

assets, including the capital necessary for the next phase of

development in the core Daniel Field area in Cameron County,

Pennsylvania. Initially, the partnership plans to complete three

previously drilled and cased horizontal Marcellus wells. These wells

will be tied into a new third-party pipeline being constructed by EQT

Corporation that allows firm capacity of up to 10 MMCF/D, with

potential for future expansion. Endeavour will operate this initial

phase of activity, which is expected to be completed by mid-year 2014.

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 mid-year 2014.

Endeavour has leasehold and drilling options on 40,000 gross acres and

27,000 net acres.


In December, the Company completed an additional $25 million expansion

to the Monetary Production Payment (MPP), bringing the total to $175

million outstanding. The MPP has a two-year term and will be satisfied

out of the production from the Alba, Bacchus and Rochelle fields.

Repayment of the MPP began in July 2013 under its terms and the

current outstanding balance is approximately $162 million.

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.

Due to a change in the U.K. tax treatment for decommissioning,

Endeavour has amended its Decommissioning Securities Agreement for the

Alba field. The new tax law, which allows companies to treat

decommissioning on an after-tax basis (including Petroleum Revenue Tax

(PRT)), enables Endeavour to reduce its current Letter of Credit (LC)

amount on the Alba field from $120 million to approximately $55

million. The reduced LC requirements as a result of the new U.K.

decommissioning tax treatment, combined with the refinancing

activities done in January, is expected to generate an annual cash

savings of approximately $17 million to the Company.

On March 3rd, the Company completed a private placement for $25

million. The transaction was comprised of the issuance of 2.9 million

shares at $4.28/share with the issuance of 729,000 warrants with a

strike price of $5.29. In addition, the transaction involved the

issuance of 6.5% convertible notes, with a conversion price of $4.66.

The notes have a four year maturity. The transaction also includes an

option for an additional $30 million and normal registration 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 the range of $15 million - $20 million.

First Quarter Production Guidance

With the unanticipated downtime at the Rochelle field and continued

restricted rates at Alba, average daily production volumes are

expected to be in the range of 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 the range of $60 million - $80 million. Having completed the

work on the Company's large North Sea development projects, Endeavour

expects to spend approximately $45 million in the U.K., the majority

on the Alba field for infill drilling, 4D seismic and the replacement

of the subsea water injection line. The capital spend for the U.S.

drilling program is expected to be in the range of $20 million - $25


Decommissioning costs during the year are expected to be approximately

$50 million for the IVRR, Renee and Rubie fields.

2013 Reserves

Year-over-year, the Company added 1.5MMboe of proved reserves, which

represents a reserves replacement ratio of 41%. Oil represented 52%

of total proved reserves at December 31, 2013 down slightly from 54%

at the end of the prior year. Net proved and probable reserves (2P)

were 40.1 million in 2013 compared to 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 shorter Alba field

life due to lower SEC pricing, minor revisions in Rochelle reserves

following 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 its 2013 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 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 5131878. The toll-free

numbers are 888-684-1281 in the United States and 0-808-101-7548 in

the United Kingdom. Other international callers should dial

913-312-1453 (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 March 5, 2014

through 12:00 p.m. on March 11, 2014 by dialing toll free 888-203-1112

(U.S.) or 719-457-0820 (international), confirmation code 5131878.

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)

December 31,

2013 2012


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


(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 amortization 49,582 24,272 143,048 66,564

Impairment of oil and gas properties - 5,956 9,566 53,072

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 derivatives (3,001) 7,319 (1,843) 5,141

Interest expense (32,171) (21,105) (104,516) (84,122)

Loss on early extinguishment of debt - - - (21,661)

Letter of credit fees (7,643) (9,461) (33,425) (21,903)

Unrealized foreign currency gains (losses) (3,154) 12,266 (3,116) 8,080

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 Taxes (19,079) 11,198 (89,037) (111,998)

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 Stockholders $ (28,118) $ (6,910) $ (97,302) $ (128,049)

Net Loss per Common Share

Basic and Diluted $ (0.60) $ (0.15) $ (2.07) $ (3.01)

Weighted Average Number of Common Shares Outstanding:

Basic and Diluted 47,111 46,613 47,089 42,533

Endeavour International Corporation

Condensed Consolidated Statement of Cash Flows


(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 discount - 654,023

Proceeds from issuance of common stock - 60,805

Proceeds from issuance of monetary production payments 175,000 -

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


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 after derivatives :

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


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


(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) 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 properties (net of tax) (1) - 5,956 9,566 53,072

Unrealized gains (losses) on derivatives (net of tax) (2) 3,001 (7,383) 1,843 (7,326)

Loss on early extinguishment of debt (net of tax) (3) - - - 17,662

Deferred tax expense related to U.K. tax rate change - 194 - 8,587

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 derivatives 3,001 (7,319) 1,843 (5,141)

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 debt - - - 21,661

Depreciation, depletion and amortization 49,582 24,272 143,048 66,564

Impairment of oil and gas properties - 5,956 9,566 53,072

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


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:


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

-0- 03/05/2014

/CONTACT: For further information: Endeavour - Investor Relations, Darcey Matthews, 713.307.8711; or Pelham Public Relations - UK Media, Philip Dennis, +44 (0)207 861 3919, Henry Lerwill, +44(0)207 861 3169

/Web Site: http://www.endeavourcorp.com



CO: Endeavour International Corporation

ST: Texas




-- DA77087 --

0000 03/05/2014 07:00:00 EDT http://www.prnewswire.com

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Most recent Business stories

Related topics

The Associated Press


    Get informative articles and interesting stories delivered to your inbox weekly. Subscribe to the KSL.com Trending 5.
    By subscribing, you acknowledge and agree to KSL.com's Terms of Use and Privacy Policy.

    KSL Weather Forecast