Endeavour Announces 2012 Third Quarter Financial and Operational Results PR Newswire HOUSTON, Nov. 1, 2012 HOUSTON, Nov. 1, 2012 /PRNewswire/ -- Endeavour International Corporation (NYSE: END) (LSE: ENDV) today reported third quarter 2012 Adjusted EBITDA of $51.6 million compared to $2.4 million for the same quarter of 2011. On a GAAP basis, for the third quarter of 2012 net loss was $33.7 million as compared to net loss of $63.3 million for the same quarter in 2011. Production for the quarter ending September 30, 2012 was up 370% from the comparable quarter in 2011, with U.K. crude oil accounting for 100% of the increase. For the first nine months of 2012 compared to the same period in 2011, sales volumes increased 215% from U.K. crude production. For the third quarter 2012, entitlement production averaged approximately 10,700 barrels of oil equivalent per day ("boepd") compared to actual sales volumes for the period of approximately 11,000 boepd. Business highlights include: *North Sea: *At Rochelle, the installation of subsea pipelines and umbilicals has been completed ahead of schedule *The first of the two planned production wells was drilled to a final casing point *Awarded seven licenses covering ten exploration blocks in the U.K.'s 27th Licensing Round around existing core areas *U.S. Onshore: *Closed an exchange with co-owner J-W Operating to obtain operator status, control of upstream and midstream assets and an additional 15,500 net acres in the Pennsylvania Marcellus *U.S. net production averaged 12.9 million cubic feet of gas equivalent per day (MMCFe/D) for the third quarter *Finance: *Completed an offering of an additional $54 million of 12% Senior Notes due 2018 for net proceeds of $58 million *Fully redeemed the $25.1 million 12% Senior Subordinated Notes due 2014 "The Company enjoyed significant progress in the third quarter with strong increases in Brent priced crude oil production in the U.K. North Sea. We are focused on and making great progress to deliver first production at our Rochelle development," said William L. Transier, chairman, chief executive officer and president. "For health and safety reason, drilling and infrastructure implementation cannot occur in the same area simultaneously. By making the difficult decision to suspend drilling before final completion, we were able to keep our service contractor on schedule to complete the necessary subsea infrastructure. This decision preserves the option to achieve first production at Rochelle in early 2013." Operational Update United Kingdom The contracted rig at Rochelle, the Diamond Ocean Nomad, completed the drilling on the first of two planned development wells to the final casing point before moving the rig off location to allow for the hook-up of the pipelines and flow-lines to the subsea manifolds. Final drilling and completion of this first development well will be done by the Transocean Prospect which is scheduled to arrive in field in December. Due to the change in the timing of completion of the first well, first production at the field is now expected in January 2013 assuming the rig arrives as scheduled. The Rochelle subsea infrastructure installation has been substantially completed. Endeavour is the operator of the Rochelle development project and holds a 44% ownership interest in the Rochelle development which is comprised of Blocks 15/26b, 15/26c and 15/27. During the 27th Licensing Round, the U.K. government awarded the Company seven new licenses, covering ten exploration blocks located around existing core areas. All the licenses, which have a traditional four year term, will be operated by the Company and offer additional growth opportunities in the future. There are no firm well obligations on any of the licenses and minimal upfront capital commitments. United States Onshore Effective October 1, 2012 Endeavour completed an exchange of assets with co-owner J-W Operating to trade the Company's Bull Bayou Haynesville and Willow Springs Cotton Valley projects for all of J-W's upstream and midstream Marcellus assets in Pennsylvania. The transaction adds 15,500 net acres to Endeavour's position in the Marcellus bringing the total to 31,000 net acres and decreases the Company's position in the Haynesville/Cotton Valley by 2,100 net acres and approximately 3.2 MMCFe/d (530 boepd) of net production. Also in the Marcellus, Endeavour has secured an off-take solution in the key Daniel area of Cameron County for up to an additional 10 mmcf/d of production with a local gatherer by year-end 2013. In conjunction with the transaction, the Company currently has three wells drilled and cased in the area waiting on completion with no additional drilling requirements until 2014. In the Heath Shale tight oil play, the Company has deferred horizontal re-entries of its vertical pilot wells until 2013 while it evaluates results from offset operators and operational efficiencies. In Colorado, the Company continues to acquire acreage for Upper Cretaceous targets and has formed a 23,000 acre Federal unit, where it expects to drill an initial test in 2013. There is currently no drilling activity underway in the Company's U.S. gas fields in the Louisiana, Haynesville or the Pennsylvania Marcellus. Net daily production averaged 12.9 MMCFe/D for the third quarter and 15.5 MMCFe/D for the first nine months of 2012. Finance Operating expenses during the quarter included a non-recurring expense of approximately $9.7 million related to the initial purchase price value allocation of inventory at Alba at the date of acquisition. In October, Endeavour completed a $54 million addition to its 12% Senior Notes due 2018 at 109% of principal amount, resulting in a yield of 9.4%. Proceeds of $58 million were used to fully redeem $25.1 million of the Company's 12% Senior Subordinated Notes due 2014. The remaining proceeds will be used to finance a portion of the construction, improvement and other capital costs related to its U.S. and U.K oil and natural gas properties. The redemption of the 12% Senior Subordinated Notes was an important step in preparing for the syndicated bank revolver Endeavour expects to put in place in 2013. In addition, the Company increased the amount available to be borrowed under the Revolving Credit Facility an additional $25 million and drew down an additional $15 million bringing the outstanding balance to approximately $115 million. Earnings Conference Call, Thursday, November 1, 2012 at 9:00 a.m. Central Daylight Time, 2:00 p.m. British Time Endeavour International will host a conference call and web cast to discuss its 2012 third quarter financial and operating results on Thursday, November 1, 2012 at 9 a.m. Central Daylight Time, 2 p.m. British Time. To participate and ask questions during the conference call, dial the local country telephone number and the confirmation code 2204201 . The toll-free numbers are 888-677-8751 in the United States and 0-808-101-1402 in the United Kingdom. Other international callers should dial +1- 913-312-0682 (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 Daylight Time on November 1, 2012 through 12:00 p.m. on November 8, 2012 by dialing toll free 888-203-1112 (U.S.) or +1- 719-457-0820 (international), confirmation code 2204201. 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 use 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 (Unaudited) (Amounts in thousands) September 30, December 31, 2012 2011 Assets Current Assets: Cash and cash equivalents $ 75,722 $ 106,036 Restricted cash 178 - Accounts receivable 16,131 8,649 Prepaid expenses and other current assets 28,047 18,840 Total Current Assets 120,078 133,525 Property and Equipment, Net 836,369 549,196 Goodwill 258,973 211,886 Other Assets 51,417 30,384 Total Assets $ 1,266,837 $ 924,991 Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 84,744 $ 62,275 Current maturities of debt 12,500 12,350 Accrued expenses and other 23,680 20,549 Total Current Liabilities 120,924 95,174 Long-Term Debt 812,926 455,028 Deferred Taxes 111,806 115,759 Other Liabilities 72,338 61,248 Total Liabilities 1,117,994 727,209 Commitments and Contingencies Series C Convertible Preferred Stock 43,703 43,703 Stockholders' Equity 105,140 154,079 Total Liabilities and Stockholders' Equity $ 1,266,837 $ 924,991 Endeavour International Corporation Condensed Consolidated Statement of Operations (Unaudited) (Amounts in thousands, except per share data) Third Quarter Nine Months Ended September 30, September 30, 2012 2011 2012 2011 Revenues $ 83,275 $ 10,302 $ 121,444 $ 43,459 Cost of Operations: Operating expenses 23,973 3,496 34,613 14,888 Depreciation, depletion and amortization 23,759 5,372 42,292 18,698 Impairment of U.S. oil and gas properties 11,416 28,793 47,116 28,793 General and administrative 5,026 4,863 15,379 14,525 Total Expenses 64,174 42,524 139,400 76,904 Income (Loss) From Operations 19,101 (32,222) (17,956) (33,445) Other Income (Expense): Derivatives: Unrealized gains (losses) (1,204) 13,081 (2,178) 11,098 Interest expense (18,053) (12,253) (63,016) (32,607) Loss on early extinguishment of debt - - (21,661) (402) Letter of credit fees (9,378) - (12,442) - Other income (expense) (2,663) 611 (5,944) 826 Total Other Income (Expense) (31,298) 1,439 (105,241) (21,085) Loss Before Income Taxes (12,197) (30,783) (123,197) (54,530) Income Tax Expense (Benefit) 21,505 32,507 (3,424) 31,820 Net Loss (33,702) (63,290) (119,773) (86,350) Preferred Stock Dividends 456 466 1,367 1,518 Net Loss to Common Stockholders $ (34,158) $ (63,756) $ (121,140) $ (87,868) Net Loss per Common Share: Basic and Diluted $ (0.73) $ (1.63) $ (2.94) $ (2.52) Weighted Average Number of CommonShares Outstanding: Basic and Diluted 46,555 39,064 41,163 34,854 Endeavour International Corporation Condensed Consolidated Statement of Cash Flows (Unaudited) (Amounts in thousands) Nine Months Ended September 30, 2012 2011 Cash Flows from Operating Activities: Net loss $ (119,773) $ (86,350) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation, depletion and amortization 42,292 18,698 Impairment of U.S. oil and gas properties 47,116 28,793 Deferred tax expense(benefit) (15,849) 23,052 Unrealized (gains) losses on derivatives 2,178 (11,098) Amortization of non-cash compensation 3,605 2,733 Amortization of loan costs and discount 10,536 9,151 Non-cash interest expense 7,077 9,306 Loss on early extinguishment of debt 21,661 402 Other 9,692 1,839 Changes in operating assets and liabilities (7,191) (25,145) Net Cash Provided by (Used in) Operating Activities 1,344 (28,619) Cash Flows From Investing Activities: Capital expenditures (175,597) (113,137) Acquisitions (228,437) (22,898) (Increase) decrease in restricted cash (178) 31,726 Net Cash Used in Investing Activities (404,212) (104,309) Cash Flows From Financing Activities: Repayments of borrowings (247,065) (97,638) Borrowings under debt agreements, net of debt discount 595,000 210,000 Proceeds from issuance of common stock 60,805 118,444 Dividends paid (833) (1,400) Payments for early extinguishment of debt (7,248) - Financing costs paid (28,109) (11,226) Other financing 4 511 Net Cash Provided by Financing Activities 372,554 218,691 Net Increase (Decrease) in Cash and Cash Equivalents (30,314) 85,763 Cash and Cash Equivalents, Beginning of Period 106,036 99,267 Cash and Cash Equivalents, End of Period $ 75,722 $ 185,030 Endeavour International Corporation Operating Statistics (Unaudited) Third Quarter Nine Months Ended September 30, September 30, 2012 2011 2012 2011 Sales volume (1) Oil and condensate sales (Mbbls): United Kingdom 812 49 1,099 274 United States 1 3 2 5 Total 813 52 1,101 279 Gas sales (MMcf): United Kingdom 19 - 69 78 United States 1,182 1,329 4,234 3,305 Total 1,201 1,329 4,303 3,383 Oil equivalent sales (MBOE) United Kingdom 815 49 1,110 287 United States 198 225 708 556 Total 1,013 274 1,818 843 Total BOE per day 11,006 2,972 6,635 3,089 Physical production volume (BOE per day) (1) United Kingdom 8,573 838 4,474 1,152 United States 2,151 2,436 2,585 2,036 Total 10,724 3,274 7,059 3,188 Realized Price, before and after derivatives Oil and condensate price ($ per Bbl) $ 99.31 $ 106.57 $ 101.76 $ 108.57 Gas price ($ per Mcf) $ 2.16 $ 3.59 $ 2.19 $ 3.88 Equivalent oil price ($ per BOE) $ 82.24 $ 37.68 $ 66.80 $ 51.53 (1) 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. Physical production may differ from sales volumes based on the timing of tanker liftings for our international sales. 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, 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) Third Quarter Nine Months Ended September 30, September 30, 2012 2011 2012 2011 Net loss $ (33,702) $ (63,290) $ (119,773) $ (86,350) Impairment of U.S. oil and gas properties (net of tax) (1) 11,416 28,793 47,116 28,793 Unrealized (gain) loss (net of tax) (2) 265 (13,034) 58 (12,245) Loss on early extinguishment of debt (net of tax)(3) - - 17,762 402 Deferred tax expense related to U.K. tax rate change 8,393 25,387 8,393 25,387 Net Loss as Adjusted $ (13,628) $ (22,144) $ (46,444) $ (44,013) Net loss $ (33,702) $ (63,290) $ (119,773) $ (86,350) Unrealized loss on derivatives 1,204 (13,081) 2,178 (11,098) Net interest expense 18,005 12,084 62,789 31,832 Letter of credit fees 9,378 - 12,442 - Loss on early extinguishment of debt - - 21,661 402 Depreciation, depletion and amortization 23,759 5,372 42,292 18,698 Impairment of U.S. oil and gas properties 11,416 28,793 47,116 28,793 Income tax expense (benefit) 21,505 32,507 (3,424) 31,820 Adjusted EBITDA (4) $ 51.565 $ 2,385 $ 65,281 $ 14,097 (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) expense of $939 and $(47) and $2,120 and $1,147, respectively. (3) Net of tax benefit of $3,899 for the nine months ended September 30, 2012. (4) Includes operating expenses of approximately $9.7 million for the third quarter of 2012 and nine months ended September 30, 2012 related to the initial purchase price value allocation of inventory at Alba at acquisition date. Website: http://www.endeavourcorp.com Contact: Endeavour - Investor Relations, Darcey Matthews, +1-713-307-8711; or Pelham Public Relations - UK Media, Philip Dennis, +44(0)207-861-3919, or Henry Lerwill, +44(0)207-861-3169
Endeavour Announces 2012 Third Quarter Financial and Operational Results
Press spacebar to pause and continue. Press esc to stop.