Endeavour Announces 2014 First Quarter Financial and Operational Results

   Endeavour Announces 2014 First Quarter Financial and Operational Results

PR Newswire

HOUSTON, May 7, 2014

HOUSTON, May 7, 2014 /PRNewswire/ --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:

  oRefinanced the Revolving Credit Facility and replaced two LC reimbursement
    agreements
  oAchieved first production from the East Rochelle (E2) well
  oReinstated partial water injection to the southern part of the Alba field
  oPlaced the Alba development well A68 on production
  oSuccessfully finished the hydraulic fracture stimulations of two
    Pennsylvania Marcellus wells
  oCompleted 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 26^th 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             6,856        -
agreements
 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

     We record oil revenues when deliveries have occurred and legal ownership
^(1) 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.
     Since the unrealized gains on derivatives were related to liabilities
^(2) 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.

SOURCE Endeavour International Corporation

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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