HOUSTON, Aug. 5 TX-END-2Q-Earnings
HOUSTON, Aug. 5 /PRNewswire-FirstCall/ -- Endeavour International
Corporation (Amex: END) (LSE: ENDV) today reported discretionary cash flow of
$38.6 million in the second quarter of 2008 that more than doubled from the
$17.8 million reported in the second quarter of 2007 and increased
sequentially from $36.3 million reported in the first quarter. Revenues for
the second quarter, boosted by high sales volumes of 10,222 barrels of oil
equivalent per day (boepd), were up 273 percent to $86.3 million from
$31.6 million in the same period in 2007 and $61.3 million reported in the
first quarter of 2008. Net income as adjusted for the quarter was
$3.0 million, or $0.02 per share, compared to net loss as adjusted of
$3.5 million, or $0.03 per share, in the second quarter last year. Adjusted
earnings before interest, taxes, depreciation and amortization (adjusted
EBITDA) increased to $52.5 million in the second quarter this year from
$19.4 million in the second quarter a year ago and $42.6 million in the first
period of 2008.
"Strong operating and financial performance this quarter generated
discretionary cash flow sufficient to fund an active exploration and
development program while reducing debt by another $15 million," said William
L. Transier, chairman, chief executive officer and president. "The solid
foundation of production and cash flow we have built at Endeavour is a
competitive advantage among peer group companies that are being forced into
the tumultuous capital markets to fund growth activities."
On a GAAP basis, the company reported a net loss to common stockholders
for the second quarter of 2008 of $66.7 million or $0.52 per share as compared
to a net loss of $13.0 million or $0.11 per share for the year-ago quarter.
Highlights of the first half of the year include:
Natural gas discovery and successful appraisal in Norway -- The company's
first well as part of its 2008 exploration campaign discovered natural gas at
the Galvort prospect on production license 348 in the Norwegian North Sea. A
sidetrack further confirmed the discovery encountering a gas column in Middle
to Lower Jurassic reservoir rocks. Geologic evaluations of the data are
continuing. Endeavour Energy Norge AS holds 2.5 percent working interest in
production license 348.
Norwegian exploratory drilling underway -- Two exploration wells are
currently drilling in the Norwegian Continental shelf. The Noatun C, a
prospect in Block 6407/7 north of the Njord field, is nearing its objective
Jurassic target with results expected in late August. Endeavour holds a 2.5
percent interest in the block. The Brage North, an exploration target in
Block 31/4, began drilling in mid-July from the Brage platform to test two
Jurassic reservoirs. The company holds a 4.4 percent working interest in the
block.
Participation in 25th Offshore Oil and Gas Licensing Round -- Endeavour
submitted applications in the largest license round to date with a record
breaking 2,297 blocks or part blocks in United Kingdom waters offered for
exploration. The company applied for 10 full or partial blocks, mostly
located in its focus areas. The results of the round are expected to be
announced toward the end of the year.
Marked production milestone -- The Alba field in Block 16/26 in the
Central North Sea produced its 350 millionth barrel of oil in April. The
asset is on track to produce more than 500 million barrels of oil through
technology and infrastructure improvements. Endeavour holds a 2.25 percent
working interest in the field.
Guidance on Year 2008 Estimates Remains Unchanged
The table below sets forth estimates of the company's operating statistics
for the full year ending December 31, 2008.
Estimated Average Production (A)
Daily Production (boepd)8,600 to 9,000
Differentials (B)
Oil ($/bbl)$(4.00) to$(5.00)
Gas ($/mcf)$(0.30) to$(0.40)
Gas Percentage of Total 50% to 55%
Lease operating expense
(per barrel)$14.00 to$15.00
(A) Actual results may differ materially from these estimates.
(B) For purposes of the estimates, assumptions of price differentials are
based on location, quality and other factors, excluding the effects of
derivative financial instruments. Gas price differentials are stated
as premiums (discounts) from National Balancing Point pricing, and oil
price differentials are stated as premiums (discounts) from Dated
Brent pricing.
Earnings Conference Call and Web Cast, Tuesday, August 5, 2008 at 9:00
A.M. CDT (10:00 A.M. EDT) (3:00 P.M. UK)
Endeavour will host a conference call and web cast tomorrow to discuss
2008 second quarter financial and operational results at 9:00 a.m. Central
Daylight Time, 3:00 p.m. UK time. To participate and ask questions during the
conference call, dial the local country telephone number and enter the
confirmation code 4533858. The toll-free numbers are 888-599-8658 in the
United States, 0 800 051 7166 in the United Kingdom, and 800 191 83 in Norway.
Other international callers should dial 913-981-5589 (tolls apply). To listen
only to the live audio web cast access Endeavour's home page at
http://www.endeavourcorp.com.
Endeavour International Corporation is an international oil and gas
exploration and production company focused on the acquisition, exploration and
development of energy reserves in the North Sea. For more information, visit
http://www.endeavourcorp.com.
This press release includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements give the company's
current expectations or forecasts of future events. They include expected oil
and natural gas production and future expenses, projections of future oil and
natural gas prices, and statements concerning anticipated business strategy
and other plans and objectives for future operations. The company cautions
that undue reliance should not be placed on the forward-looking statements,
which speak only as of the date of this press release, and the company
undertakes no obligation to update this information.
Factors that could cause actual results to differ materially from expected
results are described in "Risks related to the company's Business" under "Risk
Factors" in Item 1A of the company's annual reports on Form 10-K. These risk
factors include, among others, the company's ability to replace reserves and
sustain production; the level of indebtedness; the availability of capital on
an economic basis to fund reserve replacement costs; uncertainties in
evaluating oil and natural gas reserves of acquired properties and associated
potential liabilities; unsuccessful exploration and development drilling; and
production interruptions that could adversely affect the company's cash flow.
For further information:
Endeavour - Investor Relations
Mike Kirksey 713-307-8700
Tristone Capital - UK Broker
Majid Shafiq +44 (0) 207 355 5800
Pelhampr - Media
Philip Dennis +44 (0) 207 743 6363
Mark Antelme +44 (0) 203 178 6242
Endeavour International Corporation
Comparative Condensed Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
20082007
Assets
Current Assets:
Cash and cash equivalents $29,379$16,440
Restricted cash 22,000 22,000
Accounts receivable 39,502 33,291
Prepaid expenses and other current assets 75,083 46,516
Total Current Assets 165,964118,247
Property and Equipment, Net 320,981335,023
Goodwill 284,549283,324
Other Assets 8,909 11,029
Total Assets$780,403 $747,623
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $24,286$31,036
Accrued expenses and other 116,711 50,013
Total Current Liabilities140,997 81,049
Long-Term Debt 238,969266,250
Deferred Taxes 107,617135,552
Other Liabilities182,321 69,623
Total Liabilities669,904552,474
Commitments and Contingencies
Series C Convertible Preferred Stock 125,000125,000
Stockholders' Equity (14,501)70,149
Total Liabilities and Stockholders' Equity $780,403 $747,623
Endeavour International Corporation
Comparative Condensed Consolidated Statement of Operations
(Unaudited)
(Amounts in thousands, except per share data)
Three Months Six Months
Ended June 30, Ended June 30,
2008 2007 2008 2007
Revenues $86,342 $31,621 $147,596 $74,411
Cost of Operations:
Operating expenses 13,9699,728 23,988 20,438
Depreciation,
depletion and
amortization 23,720 15,247 45,123 34,461
General and
administrative 4,8365,1609,587 10,527
Total Expenses42,525 30,135 78,698 65,426
Income (Loss) From
Operations 43,8171,486 68,8988,985
Other Income (Expense):
Derivatives:
Realized gains
(losses)(14,494) 3,943 (17,644) 15,015
Unrealized
losses (130,686) (12,612)(160,328) (28,308)
Interest income325 582 6911,186
Interest expense(5,330) (4,155) (13,536) (8,928)
Other (520) (1,321) (1,291) (1,880)
Total Other Expense (150,705) (13,563)(192,108) (22,915)
Loss Before Income
Taxes(106,888) (12,077)(123,210) (13,930)
Income Tax Benefit (42,864) (1,873) (42,394)(582)
Net Loss (64,024) (10,204) (80,816) (13,348)
Preferred Stock
Dividends 2,7092,8445,4055,688
Net Loss to Common
Stockholders $(66,733)$(13,048)$(86,221)$(19,036)
Basic and Diluted
Loss per Common
Share$(0.52) $(0.11) $(0.68) $(0.16)
Weighted Average Number of Common Shares Outstanding:
Basic and
Diluted: 127,626 123,661 127,581 121,133
Endeavour International Corporation
Comparative Condensed Consolidated Statement of Cash Flows
(Amounts in thousands)
Six Months Ended June 30,
2008 2007
Cash Flows from Operating Activities:
Net loss$(80,816) $(13,348)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation, depletion and amortization45,123 34,461
Deferred tax benefit (58,277) (940)
Unrealized loss on derivatives 160,328 28,308
Amortization of non-cash compensation1,196 2,735
Other7,372933
Net change in operating assets and
liabilities(2,972)26,264
Net Cash Provided by Operating Activities 71,954 78,413
Cash Flows From Investing Activities:
Capital expenditures (32,168) (41,707)
Decrease in restricted cash-(20,133)
Net Cash Used in Investing Activities(32,168) (61,840)
Cash Flows From Financing Activities:
Net repayments of borrowings (17,000) (33,000)
Dividends paid(5,313) -
Financing costs paid (4,282) -
Other financing (252) (157)
Net Cash Used in Financing Activities(26,847) (33,157)
Net Increase (Decrease) in Cash and Cash
Equivalents 12,939(16,584)
Effect of Foreign Currency Changes on Cash - 2,617
Cash and Cash Equivalents, Beginning of Period16,440 39,814
Cash and Cash Equivalents, End of Period $29,379$25,847
Endeavour International Corporation
Comparative Operating Statistics
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Sales volume:
Oil and condensate
sales (Mbbl):
United Kingdom 332 224 598 621
Norway 246 124 342 255
Total 578 348 940 876
Gas sales (MMcf):
United Kingdom 1,6442,0913,6794,351
Norway 467 551,065 109
Total2,1112,1464,7444,460
Total sales (MBOE):
United Kingdom 606 5731,2111,346
Norway 324 133 520 273
Total930 7061,7311,619
BOE per day 10,2227,7589,5098,946
Physical production
volume:
Total production
(MBOE):
United Kingdom 6,1237,4786,6787,840
Norway 2,7911,5692,8431,515
Total8,9149,0479,5219,355
Realized Sales Prices:
Oil and condensate
price ($ per Bbl):
Before commodity
derivatives $105.45 $65.34 $99.44 $58.23
Effect of
commodity
derivatives $(20.57) $0.25 $(19.42) $3.69
Realized prices
including
commodity
derivatives$84.88 $65.59 $80.02 $61.92
Gas price ($ per Mcf):
Before commodity
derivatives$12.01$4.13 $11.41$5.25
Effect of
commodity
derivatives$(1.23) $1.80$0.13$2.64
Realized prices
including
commodity
derivatives$10.78$5.93 $11.54$7.89
Equivalent oil price
($ per BOE):
Before commodity
derivatives$92.82 $44.79 $85.29 $45.95
Effect of
commodity
derivatives $(15.58) $5.59 $(10.20) $9.27
Realized prices
including
commodity
derivatives$77.24 $50.38 $75.09 $55.22
Endeavour International Corporation
Reconciliation of GAAP to Non-GAAP Measures
(Unaudited)
(Amounts in thousands, except per share data)
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, Adjusted EBITDA and
discretionary cash flow. The company uses these non-GAAP measures as key
metrics for the management of the company and to demonstrate the company's
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.
Three MonthsSix Months
Ended June 30, Ended June 30,
2008 2007 2008 2007
Net loss $(64,024)$(10,204)$(80,816)$(13,348)
Depreciation,
depletion and
amortization 23,720 15,247 45,123 34,461
Deferred tax
benefit (55,133) (1,201) (58,277)(940)
Unrealized loss
on derivative
instruments 130,686 12,612 160,328 28,308
Amortization of
non-cash
compensation652 8511,1962,735
Amortization of
loan costs and
discount 1,423 4134,579 840
Non-cash interest
expense 1,174-2,044-
Other117 79 750 93
Discretionary cash
flow (1) $38,615 $17,797 $74,927 $52,149
Net loss to common
shareholders, as
reported $(66,733)$(13,049)$(86,220)$(19,036)
Unrealized losses on
derivatives(2) 69,6266,306 84,234 14,154
Currency impact of
deferred taxes 813,2252,7224,462
Net income (loss),
as adjusted$2,974 $(3,518)$736$(420)
Weighted average number
of common shares
outstanding - basic
and diluted 127,626 123,661 127,581 121,133
Earnings per share,
as adjusted $0.02 $(0.03) $0.01 $(0.00)
Net loss to common
shareholders, as
reported $(66,733)$(13,049)$(86,220)$(19,036)
Unrealized losses
on derivatives130,686 12,612 160,328 28,308
Net interest expense 5,0043,574 12,8457,742
Depreciation,
depletion and
amortization 23,720 15,247 45,123 34,461
Income tax benefit (42,864) (1,873) (42,394)(582)
Preferred stock
dividends 2,7092,8445,4045,688
Adjusted EBITDA$52,522 $19,355 $95,086 $56,581
(1) Discretionary cash flow is equal to cash flow from operating
activities before the changes in operating assets and liabilities.
(2) Net of tax benefits of $61,060, $6,306, $76,094 and $14,154,
respectively.
SOURCE Endeavour International Corporation
