Endeavour Announces 2012 Third Quarter Financial and Operational Results

   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


       *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

"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.


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

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

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

                   Endeavour International Corporation

                  Condensed Consolidated Balance Sheets


                          (Amounts in thousands)
                                             September 30,    December 31,
                                                 2012             2011
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


                (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):
          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


                           (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
    provided by (used in) operating
    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

                                  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
            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


                           (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
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,
(3) Net of tax benefit of $3,899 for the nine months ended September 30,
(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

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
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