ENDEAVOUR INTERNATIONAL CORP: 1st Quarter Results: Endeavour Announces 2014 Q1 Results

ENDEAVOUR INTERNATIONAL CORP: 1st Quarter Results: Endeavour Announces 2014 Q1 
Results
Endeavour Announces 2014 First Quarter Financial and Operational Results 
HOUSTON, May 7, 2014 -- Endeavour International Corporation (NYSE:
END) (LSE: ENDV) today reported first quarter 2014 net loss, as adjusted of
$27.3 million compared to a net loss, as adjusted of $12.1 million for the same
period in 2013. On a GAAP basis, net loss for the first quarter was $44.9
million as compared to net loss of $14.0 million for the same quarter in 2013. 
Sales volumes for the first quarter of 2014 were 11,134 barrels of oil
equivalent per day ("boepd"), compared to 7,186 boepd for the same quarter in
the prior year.  Physical production for the first quarter of 2014 averaged
9,440 boepd compared to 9,385 boepd for the same quarter of 2013. 
Recent Events: 
* Refinanced the Revolving Credit Facility and replaced two LC reimbursement 
agreements
  * Achieved first production from the East Rochelle (E2) well
  * Reinstated partial water injection to the southern part of the Alba field
  * Placed the Alba development well A68 on production
  * Successfully finished the hydraulic fracture stimulations of two 
Pennsylvania Marcellus wells
  * Completed a private placement for $30 million 
"Despite a challenging quarter, we continue to execute on our business plan, as
evidenced by the list of recent events," said William L. Transier, chairman,
chief executive officer and president. "The Company is focused on growing
production by achieving more consistent performance from its assets,
maintaining operational margins, reducing G&A, enhancing liquidity, reducing
cost of capital and accelerating value from our existing portfolio." 
Operational Update 
North Sea
The Bacchus field continues to perform in line with expectations. 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 to provide
pressure support to help sustain the field's production rates and increase its
overall recovery. Endeavour has a 30% working interest in the field. 
At Rochelle, the second development well East Rochelle (E2) was completed and
tied-in to the production manifold in January. The E2 well commenced first
production on February 28, 2014 averaging around 65 million cubic feet of gas
per day with approximately 3,000 boepd of liquids production. The production
was lower than previously anticipated due to gas compression capacity
constraints on the Scott platform, as a result of unexpectedly high gas
production rates from the Telford field that also produces through Scott. At
the end of March, the Scott Platform experienced an incident requiring a full
platform shutdown. The three fields flowing across the platform, Rochelle,
Scott and Telford were shut-in while an investigation and remedial action
occurred. Production from Rochelle resumed on the 26th of April. Endeavour has
a 44% working interest in the Rochelle development. 
At Alba, progress has been made in the Southern part of the field with partial
water injection being reinstated. Permanent replacement of the pipeline is
targeted for late 2014. The first well of this year's infill drilling program,
the A68 well was brought online in March. A second well, the A69, is currently
drilling and anticipated to be online in June.  The partial reinstatement of a
water injection in the Southern part of the field and the infill drilling
program is expected to increase overall production rates from the field.
Endeavour has a 25.68% working interest in Alba. 
North America
In the Pennsylvania Marcellus, Endeavour successfully completed hydraulic
fracture stimulations of the C-14 and C-20 horizontal wells. The operation
included more than double the number of frac stages on the longest laterals to
date, relative to previous wells. The Endeavour operated activity went smoothly
and according to specifications. The third C-13 well is scheduled for
stimulation in mid-June using the same completion design. The wells will be
tied into a new third-party pipeline being constructed by EQT Corporation that
allows firm capacity of up to 10 million cubic feet per day, with potential for
future expansion. 
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 late summer or early fall. Endeavour has leasehold
and drilling options on 40,000 gross acres and 27,000 net acres. 
Finance
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. In late February, the Company reduced the outstanding balance on
the LC Procurement Facility from $130 million to $90 million. 
In March, the Company completed a private placement of $12.5 million of common
stock and warrants and $17.5 million of 6.5% convertible notes. The transaction
included the issuance of 2.9 million shares at $4.28 per share and warrants to
purchase 729,000 shares at a strike price of $5.29 per share. The convertible
notes bear a conversion price of $4.66 per share. In addition, the purchaser
has an option to purchase an additional $25 million of shares, warrants and
convertible notes under the same terms as the original issuance.  The option
expires at the end of May and is not expected to be exercised under current
market conditions.  
Second Quarter Production Guidance and Third Quarter Maintenance Downtime
With the unanticipated downtime at the Rochelle field in April resulting from
the incident on the Scott Platform and lower Alba volumes with continued water
injection issues, average daily production volumes are expected to be in the
range of 9,000 - 10,000 boepd for the second quarter of 2014. Also during the
second quarter, it is anticipated that there will not be a lifting at the Alba
field, which will affect sales numbers for the period. However, under its
marketing agreement, Endeavour is paid monthly for Alba's production. 
In the U.K. North Sea, the third quarter is typically the time for the
maintenance shutdowns. During 2014, Endeavour anticipates that its fields will
be modestly impacted relative to the long programs that occurred on Alba and
Rochelle during 2013. At present, there is a 16 day shut-down on the Forties
Pipeline System planned in August that will affect oil production from Bacchus
and Rochelle. At Alba, where the production is lifted by tanker, a short
shutdown in planned in July. 
Earnings Conference Call, Wednesday, May 7, 2014 at 9:00 a.m., Central Time, 3:
00 p.m. British Summer Time 
Endeavour International will host a conference call and web cast to discuss its
2014 first quarter financial and operating results on Wednesday, May 7, 2014 at
9:00 a.m. Central Time, 3:00 p.m. British Summer 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 5109885.  The toll-free numbers are 888-690-2874 in the
United States and 0-808-101-7548 in the United Kingdom. Other international
callers should dial 913-312-1516 (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 May 7, 2014 through
12:00 p.m. on May13, 2014 by dialing toll free 888-203-1112 (U.S.) or 
719-457-0820 (international), confirmation code 5109885. 
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)                                  
            
                                                                    
                                                                    
                                           March 31,    December 31,
                                             2014         2013        
                                          (unaudited)              
                                                                    


                                                                
Assets                                                               
                                                                
Current Assets:                                                      
                                                                
Cash and cash equivalents                  $ 55,490     $ 34,742     
                                                                
Accounts receivable                          48,217       65,171     
                                                                
Prepaid expenses and other current assets    82,896       60,318     
                                                                 
Total Current Assets                      186,603      160,231    
                                                                 
                                                                
Property and Equipment, Net                  1,053,775    1,072,151  
                                                                
Goodwill                                     259,238      259,238    
                                                                
Other Assets                                 32,997       33,222     
                                                                 
                                                                
Total Assets                               $ 1,532,613  $ 1,524,842  
                                                                 
                                                                
Liabilities and Stockholders' Equity                                 
                                                                
Current Liabilities:                                                 
                                                                
Accounts payable                           $ 56,199     $ 38,033     
                                                                
Current maturities of debt                   2,140        -          
                                                                
Deferred revenue                             2,152        20,965     
                                                                
Monetary production payment, current         120,833      74,167     
                                                                
Accrued expenses and other                   79,219       88,625     
                                                                 
Total Current Liabilities                 260,543      221,790    
                                                                 
                                                                
Long-Term Debt                               891,829      870,878    
                                                                
Deferred Taxes                               173,847      146,213    
                                                                
Other Liabilities                            168,622      223,870    
                                                                
Total Liabilities                            1,494,841    1,462,751  
                                                                 
                                                                
Commitments and Contingencies                                        
                                                                 
                                                                
Series C Convertible Preferred Stock         43,703       43,703     
                                                                 
                                                                
Stockholders' Equity                         (5,931)      18,388     
                                                                 
                                                                
Total Liabilities and Stockholders' Equity $ 1,532,613  $ 1,524,842  


                                                                    
                                                                            
                     Endeavour International Corporation                        
                        
                Condensed Consolidated Statement of Operations                  
                   
                                 (Unaudited)                                    
                             
                 (Amounts in thousands, except per share data)                  
             
                                                                            
                                                                            
                                                     Three Months Ended     
                                                          March 31,             
                                                                              
                                                     2014        2013       


                                                                        
Revenues                                             $ 94,163    $ 57,672    
                                                                         
                                                                        
Cost of Operations:                                                          
                                                                        
Operating expenses                                     27,170      17,490    
                                                                        
Depreciation, depletion and amortization               44,968      22,947    
                                                                        
Impairment of oil and gas properties                   -           3,534     
                                                                        
General and administrative                             4,849       5,482     
                                                                        
Total Expenses                                         76,987      49,453    
                                                                         
                                                                        
Income From Operations                                 17,176      8,219     
                                                                         
                                                                        
Other Income (Expense):                                                      
                                                                        
Unrealized gains on derivatives                        2,659       1,580     
                                                                        
Interest expense                                       (31,477)    (21,438)  
                                                                        
Letter of credit fees                                  (3,789)     (11,380)  
                                                                        
Loss on early extinguishment of financing agreements   (3,543)     -         
                                                                        
Litigation settlement expense                          (19,034)    -         
                                                                        
Unrealized gain (loss) on foreign currency exchange    (1,273)     9,760     
                                                                        
Other income (expense)                                 (2,020)     122       
                                                                        
Total Other Expense                                    (58,477)    (21,356)  
                                                                         
                                                                        
Loss Before Income Taxes                               (41,301)    (13,137)  
                                                                        
Petroleum Revenue Tax ("PRT") Expense                  1,725       628       
                                                                        
Corporate Tax Expense                                  1,844       281       
                                                                        
Total Tax Expense                                      3,569       909       
                                                                        
Net Loss                                               (44,870)    (14,046)  
                                                                        
Preferred Stock Dividends                              456         456       
                                                                         
                                                                        
Net Loss to Common Stockholders                      $ (45,326)  $ (14,502)  
                                                                         
                                                                        
Net Loss per Common Share:                                                   
                                                                        
Basic and Diluted                                    $ (0.91)    $ (0.31)    
                                                                         
                                                                        
Weighted Average Number of Common Shares Outstanding:                        
                                                                        
Basic and Diluted                                      49,590      47,060    


                                                                            
                                                                               
                     Endeavour International Corporation                        
                    
                Condensed Consolidated Statement of Cash Flows                  
               
                                  (Unaudited)                                   
                                 
                             (Amounts in thousands)                             
                            
                                                                               
                                                                               
                                                        Three Months Ended     
                                                            March 31,           
                                                                                   
                                                        2014         2013      


                                                                           
Cash Flows from Operating Activities:                                           
                                                                           
Net loss                                                $ (44,870)   $ (14,046) 
                                                                           
Adjustments to reconcile net loss to net cash                                   
                                                                            
provided by operating activities:                                            
                                                                            
Depreciation, depletion and amortization               44,968       22,947   
                                                                            
Impairment of oil and gas properties                   -            3,534    
                                                                            
Deferred tax expense                                   1,969        128      
                                                                            
Unrealized gains on derivatives                        (2,659)      (1,580)  
                                                                            
Amortization of non-cash compensation                  971          832      
                                                                            
Amortization of loan costs and discount                6,705        3,439    
                                                                            
Non-cash interest expense                              1,883        2,274    
                                                                            
Loss on early extinguishment of financing agreements   6,856        -        
                                                                            
Litigation settlement expense                          19,034       -        
                                                                            
Other                                                  1,848        (4,723)  
                                                                            
Changes in operating assets and liabilities            (9,156)      34,800   
                                                                           
Net Cash Provided by Operating Activities                 27,549       47,605   
                                                                            
                                                                           
Cash Flows From Investing Activities:                                           
                                                                           
Capital expenditures                                      (27,294)     (58,257) 
                                                                           
Acquisitions, net of cash acquired                        (1,551)      (817)    
                                                                           
Proceeds from sales, net of cash                          1,352        -        
                                                                           
Increase in restricted cash                               (2,457)      -        
                                                                           
Net Cash Used in Investing Activities                     (29,950)     (59,074) 
                                                                            
                                                                           
Cash Flows From Financing Activities:                                           
                                                                           
Repayments of borrowings                                  (115,163)    -        
                                                                           
Borrowings under debt agreements, net of debt discount    140,625      -        
                                                                           
Proceeds from issuance of common stock                    12,376       -        
                                                                           
Proceeds from issuance of monetary production payment     -            43,000   
                                                                           
Repayments of monetary production payment                 (5,000)      -        
                                                                           
Financing costs paid                                      (9,273)      (9,935)  
                                                                           
Other financing                                           (416)        -        
                                                                           
Net Cash Provided by Financing Activities                 23,149       33,065   
                                                                            
                                                                           
Net Increase in Cash and Cash Equivalents                 20,748       21,596   
                                                                           
Cash and Cash Equivalents, Beginning of Period            34,742       59,185   
                                                                            
                                                                           
Cash and Cash Equivalents, End of Period                $ 55,490     $ 80,781   


                                                                               
                                                                    
                   Endeavour International Corporation                          
       
                         Operating Statistics                                   
             
                              (Unaudited)                                       
                  
                                                                    
                                                                    
                                                 Three Months Ended 
                                                    March 31,          
                                                                    
                                                 2014       2013    


                                                                
Sales volume: (1)                                                    
                                                                
Oil and condensate sales (Mbbls):                                    
                                                                
United Kingdom                                   833        508      
                                                                
United States                                    -          -        
                                                                
Total                                            833        508      
                                                                 
                                                                
Gas sales (MMcf):                                                    
                                                                
United Kingdom                                   586        11       
                                                                
United States                                    431        821      
                                                                
Total                                            1,017      832      
                                                                 
                                                                
Oil equivalent sales (MBOE):                                         
                                                                
United Kingdom                                   930        510      
                                                                
United States                                    72         137      
                                                                
Total                                            1,002      647      
                                                                 
                                                                
Total BOE per day                                11,134     7,186    
                                                                 
                                                                
Physical production volume (BOE per day): (1)                        
                                                                
United Kingdom                                   8,604      7,862    
                                                                
United States                                    836        1,523    
                                                                
Total                                            9,440      9,385    
                                                                 
                                                                
Realized Price, before and after derivatives :                       
                                                                
United Kingdom:                                                      
                                                                
Oil and condensate price ($ per Bbl)           $ 103.54  $  108.40   
                                                                
Gas price ($ per Mcf)                          $ 10.25   $  7.89     
                                                                
Equivalent oil price ($ per BOE)               $ 99.12   $  108.17   
                                                                 
                                                                
United States:                                                       
                                                                
Oil and condensate price ($ per Bbl)           $ 140.50  $  96.77    
                                                                
Gas price ($ per Mcf)                          $ 4.52    $  3.07     
                                                                
Equivalent oil price ($ per BOE)               $ 27.14   $  18.50    
                                                                 
                                                                
Total:                                                               
                                                                
Oil and condensate price ($ per Bbl)           $ 103.54  $  108.40   
                                                                
Gas price ($ per Mcf)                          $ 7.82    $  3.13     
                                                                
Equivalent oil price ($ per BOE)               $ 93.97   $  89.17    
                                                                 
                                                                           
(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, 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)                                   Three Months Ended     


                                                             March 31,          
                                                                                   
                                                         2014        2013      


                                                                           
Net loss                                                 $ (44,870)  $ (14,046) 
                                                                           
Impairment of oil and gas properties (net of tax) (1)      -           3,534    
                                                                           
Unrealized gains on derivatives (net of tax) (2)           (2,659)     (1,580)  
                                                                           
Loss on early extinguishment of financing agreements       1,220       -       
(net of tax) (3)                                                                
                                                                           
Litigation settlement expense (net of tax) (1)             19,034      -        
                                                                            
                                                                           
Net Loss as Adjusted                                     $ (27,275)  $ (12,092) 
                                                                            
                                                                           
Net loss                                                 $ (44,870)  $ (14,046) 
                                                                           
Unrealized gains (losses) on derivatives                   (2,659)     (1,580)  
                                                                           
Net interest expense                                       31,466      21,422   
                                                                           
Letter of credit fees                                      3,789       11,380   
                                                                           
Depreciation, depletion and amortization                   44,968      22,947   
                                                                           
Impairment of oil and gas properties                       -           3,534    
                                                                           
Loss on early extinguishment of financing arrangements     3,543       -        
                                                                           
Litigation settlement expense                              19,034      -        
                                                                           
Income tax expense                                         3,569       909      
                                                                            
                                                                           
Adjusted EBITDA                                          $ 58,840    $ 44,566   
                                                                            
                                                                           
(1) We recognized no tax benefits as there was no assurance that we could       
generate any U.S. taxable earnings.                                         
                                                                           
(2) Since the unrealized gains on derivatives were related to liabilities other 


    than the U.K., we recognized no tax benefits as there was no assurance that
    we could generate any taxable earnings..                                   


                                                                           
(3) Net of tax benefit of $2,323 and none, respectively.                        
                                                                            
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 

SOURCE Endeavour International Corporation 
END 
-0- May/07/2014 06:04 GMT
 
 
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