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Lone Star Value Issues Open Letter To Endeavour International Shareholders

  Lone Star Value Issues Open Letter To Endeavour International Shareholders  Supports Change at Endeavour International  Announces Intention to Vote in Favor of Talisman Group's Director Nominee and Against the Company's Proposal on Executive Compensation and Incentive Plan  PR Newswire  NEW YORK, May 13, 2014  NEW YORK, May 13, 2014 /PRNewswire/ --Lone Star Value Management, LLC (together with its affiliates and other participants in its solicitation, "Lone Star Value"), a significant shareholder of Endeavour International Corporation ("Endeavour" or the "Company") (NYSE: END), owning 1,050,000 shares of common stock and $7.5 million of convertible securities, today issued an open letter to Endeavour shareholders. Lone Star Value stated its intention to vote in favor of the election of Jason Taubman Kalisman, a director nominee of Talisman Group Investments, L.L.C. and its affiliates, at the upcoming 2014 Annual Meeting of Endeavour's shareholders, against the Company's proposal on executive compensation and against the approval of the Company's 2014 Stock Incentive Plan. The full text of the letter is included below:  May 13, 2014  Endeavour International shareholders:  Lone Star Value Management, LLC is a significant shareholder of Endeavour International Corporation ("Endeavour" or the "Company"), owning 1,050,000 shares of common stock and $7.5 million of convertible securities. As you know, the Annual Meeting of Endeavour's shareholders is just nine days away on May 22, 2014. At this meeting, a fellow shareholder, Talisman Group Investments, L.L.C. (together with its affiliates "Talisman Group"), is seeking to elect its director candidate to the Board of Directors of Endeavour (the "Board").  Lone Star Value is deeply disappointed with Endeavour's long history of poor performance and value destruction. The weak results from Endeavour's first quarter, its recent dilutive equity offering, and the disappointing guidance for the second quarter are merely the most recent examples in a long-running stretch of disappointing news for Endeavour's long-suffering shareholders. The stock market appears to agree with this view – Endeavour's stock price is down 57% year to date and down 35% in the month of May alone (based on the closing price of $2.24 on Friday, May 9^th). We believe Endeavour's management lacks the competence and accountability required for Endeavour to realize its full potential as a company and for us, the shareholders, to realize the full potential of our investment. For these reasons, we strongly support the Talisman Group's efforts to improve the Board and we intend to vote in favor of the election of the Talisman Group's nominee, Jason Taubman Kalisman, at the Annual Meeting.  In our view, the Board and all Endeavour shareholders can significantly benefit from Mr. Kalisman's turnaround and capital market experience and from having shareholder representation on the Board. Lone Star Value also fully agrees with the Talisman Group's position that Endeavour possesses significant upside potential of as much as $10 a share should the Company be competently run and its assets properly managed. Operating delays and missteps, poor cash flow management, and an ineffective CEO and Board have, in our view, led to the current disappointing state of affairs. Yet, rather than hold the CEO accountable, the current Board has generously awarded him with compensation that is not properly tied to Endeavour's performance. As a result, we agree with the Talisman Group and the recommendation of Institutional Shareholders Services ("ISS"), a leading proxy advisory firm, and intend to vote our shares "against" the advisory vote on executive compensation. As Chairman of the Compensation Committee, John Connally III's main responsibility is to design appropriate compensation – both set at the right levels and tied to the right metrics. Mr. Connally is also the Company's Lead Director. Fortunately, he is up for re-election this year and Endeavour's shareholders have an opportunity to have their voices heard by not re-electing him. Not only would voting against Mr. Connally produce a new Board member, but it would also require Endeavour to select a new Chairman of its Compensation Committee and a new Lead Director, which would provide an opportunity for Endeavour to re-evaluate all the Company's compensation practices as well as the independence of its Board.  On the heels of the deeply disappointing quarterly results Endeavour reported last week, there are a number of serious open questions that we believe other shareholders should consider:    1. What has this Board done to address the Company's poor operating results   and have they ensured that shareholders have full and transparent disclosure   of the state of Endeavour's operations? We believe this Board and   management have continuously over-promised and under-delivered and that this   lack of transparency in the Company's disclosure leads us to question   whether the Board is either uninformed on the Company's operations or   deliberately misleading the market and shareholders.    For example, when did Endeavour's management know that the Rochelle field   would be down in April and that Nexen would be favoring production volumes   from a nearby field over production volumes at Rochelle? Why was this not   announced in March or April of this year given that Rochelle was already   offline in January and February?    2. What has this Board done to address the Company's significant and   sustained stock underperformance? Endeavour's stock has performed terribly   on a total return basis under current CEO Bill Transier versus the S&P 500,   Russell 2000 Total Return, and S&P 500 Energy Indices:  Performance from 10/31/2006-5/9/2014: END EQUITY           Endeavor International    -86%      Underperformance SPX INDEX            S&P 500 Index             60%       -147% RTY INDEX            Russell 2000 Index        60%       -146% S5ENRS INDEX         S&P 500 Energy Index      86%       -173% Source: Bloomberg, total returns calculated from 10/31/2006-5/9/2014 closing price.    3. How has the Company's CEO, Bill Transier, deserved his $25.98 million of   cumulative compensation for 2006-2013 and why should he be paid an   additional $7.66 million should he be terminated without cause or should   Endeavour experience a change in control? Lone Star Value strongly   disagrees with paying an underperforming executive officer 23% of the   current market cap of the Company over a 7-year period in which the   Company's share price has fallen from $16.17 to $2.24. (Source: Bloomberg,   closing prices on 10/31/2006 and 5/9/2014 used)      We also note that ISS has repeatedly expressed similar concerns with the     CEO's executive compensation arrangement, stating: "Insufficient goal     rigor has again resulted in pay-for-performance misalignment at the     company, and the CEO's total pay increased while company's TSR continues     to significantly underperform its GICS industry group and market index."–     ISS 2013 Endeavour International Corporation Proxy Advisory      And further: "The company shifted to a full discretionary assessment of     performance for bonus purposes, after citing extraordinary circumstances.     The long-term incentive program raises several structural concerns as     well: a substantial portion of the CEO's long-term awards insulates him     from full exposure to stock price deterioration as each year's reward     opportunity can be set at lower price hurdles, for example, and     TSR-contingent awards do not preclude earnout during periods of negative     TSR."– ISS 2014 Endeavour International Corporation Proxy Advisory    4. How can we have any confidence that the Board is holding management   accountable for its underperformance when the Company's Named Executive   Officers are collectively being paid 7.7% of Endeavour's current market cap   for 2013 ($8.78 million collectively among five executives)? And which   responsibilities and accomplishments of theirs have earned them this high   compensation? According to CEO Bill Transier:      "We don't operate the assets, nor do we control the infrastructure we     produce through" – CEO Bill Transier, 5/8/2014 Endeavour earnings     conference call    5. How can the Board defend what we believe are indefensible corporate   governance deficiencies, such as:      oCombined CEO/Chairman role     oHigh average Board compensation ($219k+)     oPoor executive compensation structure that is not properly tied to       operational performance     oMaterial restrictions on the ability of shareholders to call special       meetings     oNo shareholder right to act by written consent     oLack of independence on the Board (John Seitz serves as a       non-independent member of the Nominating Committee of the Board in       addition to being "overboarded" according to ISS standards which raises       questions as to his ability to focus on Endeavour; in addition, Mr.       Seitz serves on the Board of Gulf United Energy Inc. ("GLFE") whose       Chairman and CEO is John Connally III; we would note that over the last       3 years, GLFE stock is down 99.8% and GLFE currently has an equity       market value of $0.44 million)    6. Why has the Board not addressed ISS' serious and repeated concerns on   corporate governance and CEO performance? In light of its serious concerns,   in 2013 ISS recommended that shareholders withhold their vote from the   re-election of CEO Bill Transier to the Board and voiced serious concerns   regarding the poor corporate governance practices at Endeavour:      "ISS recommends WITHHOLD votes from the CEO, who is the only nominee up     for election at the 2013 annual meeting for a material failure of     governance. In January 2013, the board unilaterally amended the bylaws to     remove shareholders' right to act by written consent and to introduce     material restrictions to the exercise of the right to call special     meetings. The board did not disclose a rationale for the amendments, nor     has it put the amendments to the bylaws on the ballot for shareholder     approval. The board's actions represent a significant impairment of     shareholders' rights." – ISS 2013 Endeavour Corporation Proxy Advisory      And further: "ISS recommended WITHHOLD votes for Transier due to the     unilateral amendment to the company's bylaws which diminished shareholder     rights, and for the continued misalignment between pay and performance at     the company." - ISS 2014 Endeavour International Corporation Proxy     Advisory    7. Can the current Board and management be trusted to reign in the high debt   Endeavour carries, given its continued inability to improve the Company's   performance and financial results? And can we as shareholders of Endeavour   have confidence in the current leadership's abilities to restore our Company   to profitability when the CEO, Mr. Transier, himself appears to have little   confidence in his team's ability to execute such a turnaround, noting just   recently:      "I'm not trying to be evasive but I'm not going to put some number out     there that will disappoint again." – CEO Bill Transier, 5/8/2014     Endeavour earnings conference call  We believe it is simply too late with too much negative evidence for us to assume that Endeavour's behavior and performance will change without changing the personnel in the boardroom. Lone Star Value believes that the addition of a shareholder representative to the Board is a critical first step towards an improved Board, renewed focus on accountability, and a better future for Endeavour. Lone Star Value intends to vote its shares in favor of the election of Mr. Kalisman on the Board and against the approval of the Company's executive compensation or its 2014 Stock Incentive Plan. We are voting for change.  Sincerely,  Jeffrey E. Eberwein,  Lone Star Value Management  About Lone Star Value Management:  Lone Star Value Management, LLC ("Lone Star Value") is an investment firm that invests in undervalued securities and engages with its portfolio companies in a constructive way to help maximize value for all shareholders. Lone Star Value was founded by Jeff Eberwein who was formerly a Portfolio Manager at Soros Fund Management and Viking Global Investors. Lone Star Value is based in Old Greenwich, CT.  Investor contact: Jeffrey Eberwein (203) 542-7020  SOURCE Lone Star Value Management, LLC  
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