HOUSTON, March 2, 2011 /PRNewswire/ -- Endeavour International Corporation today reported full year 2010 net income, as adjusted of $57.4 million compared to $41.1 million for 2009. Adjusted EBITDA for the full year was $124.8 million compared to $64.6 million last year.

"During 2010 and to date, we have successfully launched an onshore drilling program in the United States, received field development approval at Bacchus and East Rochelle in the United Kingdom and achieved a 419% reserve replacement ratio," said William L. Transier, chairman, chief executive officer and president. "The purchase of the additional interest in Bacchus and the sale of Cygnus allowed us to capture the value imbedded in our portfolio and effectively transfer capital resources, from a longer cycle capital intensive project, to a near term oil project in the North Sea. The Company's achievements in 2010 position us for strong growth in the coming years as we ramp up production from our asset portfolio in the US and UK."

On a GAAP basis, net income was $82.8 million for the fourth quarter of 2010 as compared to ($29.5) million in the same quarter in 2009. Net income was $56.5 million for the year ended December 31, 2010 as compared to a loss of ($41.0) million in the same period in 2009.

Highlights for 2010 and early 2011 are as follows:

Rochelle Development - Endeavour has received approval from the Department of Energy and Climate Change (DECC) for the Rochelle Field Development Plan (FDP), Block 15/27 in the Central North Sea. The approval for Rochelle, now known as East Rochelle, represents phase one of the development of the Greater Rochelle area. The Company is the operator of East Rochelle and holds a 55.6 percent working interest in the project. The current FDP calls for the subsea development to be linked by a 30 kilometer pipeline to production facilities on the Scott Platform. First production is planned for the second half of 2012. The Company is working on integrating West Rochelle, which was discovered in October 2010, into the development plan as phase two with production estimated to begin in 2012.

Sale of Cygnus Reserves in the Southern North Sea - During the fourth quarter, Endeavour received cash proceeds of $110.0 million and booked a gain of approximately $87.0 million from the sale of Cygnus, a southern North Sea gas asset to Bayerngas UK Ltd., the UK oil and gas subsidiary of Bayerngas Norge AS. The Company had previously held a 12.5 percent interest in the project. Significantly, the Company avoided capital commitments approaching $200.0 million that would have been required over the next few years to position Cygnus for production. The transaction closed on October 19, 2010.

Purchase of additional 20 Percent Interest in the Bacchus Development - In November 2010, Endeavour announced that its wholly owned subsidiary Endeavour Energy U.K. Ltd. had signed a definitive agreement to acquire Shell U.K. Limited's 20 percent working interest in the Bacchus development. The transaction closed in February 2011 and adds approximately 3.4 million barrels of oil equivalent (mmboe) of reserves to Endeavour's 2P reserves.

The Bacchus project is a three well subsea development with a tie back to the Forties Alpha platform. The project has received Field Development Plan (FDP) approval and first oil is expected in mid 2011. The project remains on schedule and anticipated to produce approximately 4,000 - 5,000 barrels of oil per day net to Endeavour when fully on production. The recent purchase by Endeavour brings the company's total working interest in Bacchus to 30 percent.

US Operations - During its first full year of operations, Endeavour established a portfolio of onshore resource plays. Year-on-year proved reserves in the US increased nearly 300 percent to 5.4 mmboe and annual production increased over 750 percent to 445 thousand barrels of oil equivalent (mboe) led by a successful drilling effort in the Louisiana Haynesville play.

During 2010, the Company participated in 11 gross wells in northwest Louisiana and East Texas. The primary focus was in the Louisiana Haynesville play in the Woodardville Field area in Red River and Bienville Parishes where several wells were completed with initial production rates (IP's) in excess of 20 million cubic feet of gas per day (mmcfd). Near the end of 2010, Endeavour opened a new project area at the Bull Bayou Field in Red River and DeSoto Parishes where two wells were completed with IP rates at or above 17 mmcfd. The Company currently has two rigs working in the Haynesville area and expects to maintain a measured pace of development that can be adjusted in conjunction with gas price expectations.

In Pennsylvania, Endeavour focused on its acreage in the Daniel Field in Cameron County, where the Company completed one horizontal well in 2010 and is currently drilling two additional horizontal wells to delineate the block. In parallel, the Company is working to expand the local gas gathering infrastructure, including options to connect with one of three major pipelines in Cameron County and expects to ramp up production by the fourth quarter of 2011.

In its Alabama shale gas and Montana shale oil frontier plays, the Company plans to evaluate pilot test wells this year to further define their future potential.

Strong Reserve Replacement - Endeavour reported a 12 percent increase in proved and probable reserves for the year, representing a 419 percent increase in 2P reserve replacement. Proved and probable reserves at year-end 2010 increased to 43.7 mmboe compared to 38.9 mmboe a year ago. Extensions, discoveries, sales, revisions and purchases less production added 6.3 mmboe to 2P reserves during 2010. The upward revisions in 2P reserves are a result of the appraisal well drilled in West Rochelle Block 15/26b, the addition of reserves from the purchase of an additional 20 percent in the Bacchus development and strong results from the Louisiana/Texas Haynesville program.

Projected 2011 Capital Spending of Approximately $150.0 million - Endeavour's projected 2011 capital spending is approximately $150.0 million which will be funded from cash on hand and cash flow generated by operations. The company anticipates that approximately sixty percent of this year's budget will be directed toward its two key initiatives in the U.K. North Sea - Bacchus and Rochelle. The remainder of the capital spend will be in the U.S., focused on bringing forward near-term production in the Haynesville and Marcellus areas. A majority of the estimated capital spending is within the company's control and will be increased or curtailed depending on the availability of capital, progress on developments and other opportunities during the year.

Earnings Conference Call, Wednesday, March 2, 2011 at 9:00 a.m., Central Standard Time, 3:00 p.m. British Time

Endeavour International will host a conference call and web cast to discuss its 2010 fourth quarter financial and operating results on Wednesday, March 2, 2011 at 9 a.m. Central Standard Time, 3 p.m. British Time. To participate and ask questions during the conference call, dial the local country telephone number and the confirmation code 7902719. The toll-free numbers are 888-765-5579 in the United States and 0-808-101-1402 in the United Kingdom. Other international callers should dial 913-312-1397 (tolls apply). To listen only to the live audio web cast access Endeavour's home page at http://www.endeavourcorp.com. A replay will be available beginning at 12:00 p.m. Central Standard Time on March 2 through 12:00 p.m. on March 9 by dialing toll free 888-203-1112 (U.S.) or 719-457-0820 (international), confirmation code 7902719.

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 http://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 of as of the date made. Such statements are subject to assumptions, risk and uncertainty. Actual results or events may vary materially.

As of January 1, 2010, the Securities and Exchange Commission (SEC) changed its rules to permit oil and gas companies, in their filings with the SEC, to disclose not only proved reserves, but also probable reserves and possible reserves. Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geosciences and engineering data, can be estimated with reasonable certainty to be economically producible - from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations - prior to the time at which contracts providing the right to operate expire. Probable reserves include those additional reserves that a company believes are as likely as not to be recovered and possible reserves include those additional reserves that are less certain to be recovered than probable 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. 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 http://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 (Unaudited) (Amounts in thousands) December 31, December 31, 2010 2009 ---- ---- Assets Current Assets: Cash and cash equivalents $99,267 $27,287 Restricted cash 31,776 2,879 Accounts receivable 8,068 14,800 Prepaid expenses and other current assets 8,718 10,118 ---------------------------------- ----- ------ Total Current Assets 147,829 55,084 Property and Equipment, Net 364,677 266,587 Goodwill 211,886 211,886 Other Assets 25,895 5,322 ------------ ------ ----- Total Assets $750,287 $538,879 ------------ -------- -------- Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $32,442 $12,401 Current maturities of debt 21,600 - Accrued expenses and other 22,642 17,798 -------------------------- ------ ------ Total Current Liabilities 76,684 30,199 Long-Term Debt 323,706 223,385 Deferred Taxes 77,200 80,692 Other Liabilities 64,927 85,412 ----------------- ------ ------ Total Liabilities 542,517 419,688 Commitments and Contingencies Series C Convertible Preferred Stock 53,152 59,058 Stockholders' Equity 154,618 60,133 -------------------- ------- ------ Total Liabilities and Stockholders' Equity $750,287 $538,879 ----------------------------------- -------- --------

Endeavour International Corporation Condensed Consolidated Statement of Operations (Unaudited) (Amounts in thousands, except per share data) Fourth Quarter December 31, ------------ 2010 2009 ---- ---- Revenues $16,573 $20,113 Cost of Operations: Operating expenses 4,467 3,321 Depreciation, depletion and amortization 7,604 9,192 Impairment of oil and gas properties - 13,284 General and administrative 5,542 4,925 -------------------------- ----- ----- Total Expenses 17,613 30,722 -------------- ------ ------ Income (Loss) From Operations (1,040) (10,609) ----------------------------- ------ ------- Other Income (Expense): Derivatives: Realized gains (losses) - 6,842 Unrealized gains (losses) 814 (17,143) Interest expense (12,859) (4,575) Gain on sale of reserves in place 87,171 - Interest income and other 19 (552) ------------------------- --- ---- Total Other Income (Expense) 75,145 (15,428) ---------------------------- ------ ------- Income (Loss) Before Income Taxes 74,105 (26,037) Income Tax Expense (Benefit) (8,704) 3,319 ---------------------------- ------ ----- Income (Loss) from Continuing Operations 82,809 (29,356) Income (Loss) from Discontinued Operations - (112) ------------------------------- --- ---- Net Income (Loss) 82,809 (29,468) Preferred Stock Dividends 546 13,150 ------------------------- --- ------ Net Income (Loss) to Common Stockholders $82,263 $(42,618) =========================== ======= ======== Basic Net Income (Loss) per Common Share: Continuing operations $3.34 $(2.27) Discontinued operations - (0.01) ----------------------- --- ----- Total $3.34 $(2.28) ===== ===== ====== Diluted Net Income (Loss) per Common Share: Continuing operations $2.37 $(2.27) Discontinued operations - (0.01) ----------------------- --- ----- Total $2.37 $(2.28) ===== ===== ====== Weighted Average Number of Common Shares Outstanding: Basic 24,647 18,674 ===== ====== ====== Diluted 35,956 18,674 ======= ====== ====== Year Ended December 31, ------------ 2010 2009 ---- ---- Revenues $71,675 $62,293 Cost of Operations: Operating expenses 15,347 17,776 Depreciation, depletion and amortization 28,894 34,020 Impairment of oil and gas properties 7,692 43,929 General and administrative 18,415 16,966 -------------------------- ------ ------ Total Expenses 70,348 112,691 -------------- ------ ------- Income (Loss) From Operations 1,327 (50,398) ----------------------------- ----- ------- Other Income (Expense): Derivatives: Realized gains (losses) (11,753) 35,422 Unrealized gains (losses) 12,291 (55,598) Interest expense (34,592) (16,630) Gain on sale of reserves in place 87,171 - Interest income and other 1,299 (7,483) ------------------------- ----- ------ Total Other Income (Expense) 54,416 (44,289) ---------------------------- ------ ------- Income (Loss) Before Income Taxes 55,743 (94,687) Income Tax Expense (Benefit) (788) (7,158) ---------------------------- ---- ------ Income (Loss) from Continuing Operations 56,531 (87,529) Income (Loss) from Discontinued Operations - 46,534 ------------------------------- --- ------ Net Income (Loss) 56,531 (40,995) Preferred Stock Dividends 2,227 21,211 ------------------------- ----- ------ Net Income (Loss) to Common Stockholders $54,304 $(62,206) =========================== ======= ======== Basic Net Income (Loss) per Common Share: Continuing operations $2.34 $(5.84) Discontinued operations - 2.50 ----------------------- --- ---- Total $2.34 $(3.34) ===== ===== ====== Diluted Net Income (Loss) per Common Share: Continuing operations $1.95 $(4.70) Discontinued operations - 2.50 ----------------------- --- ---- Total $1.95 $(2.20) ===== ===== ====== Weighted Average Number of Common Shares Outstanding: Basic 23,252 18,613 ===== ====== ====== Diluted 28,886 18,613 ======= ====== ======

Endeavour International Corporation Condensed Consolidated Statement of Cash Flows (Unaudited) (Amounts in thousands) Year Ended December 31, ----------------------- 2010 2009 ---- ---- Cash Flows from Operating Activities: Net income (loss) $56,531 $(40,995) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation, depletion and amortization 28,894 38,701 Impairment of oil and gas properties 7,692 43,929 Deferred tax expense (benefit) (3,367) 4,599 Unrealized (gains) losses on derivatives (12,291) 55,598 Gain on sales (87,171) (47,308) Other 20,632 16,835 Changes in operating assets and liabilities 6,099 (15,648) ------------------------------- ----- ------- Net Cash Provided by Operating Activities 17,019 55,711 Cash Flows From Investing Activities: Capital expenditures (92,007) (99,241) Acquisitions (43,726) (32,152) Proceeds from sales, net of cash 108,316 144,653 (Increase) decrease in restricted cash (28,897) 17,860 --------------------------------- ------- ------ Net Cash Provided by (Used in) Investing Activities (56,314) 31,120 Cash Flows From Financing Activities: Borrowings (repayments) of borrowings 109,658 (63,058) Proceeds from issuance of common stock 30,181 - Redemption of preferred stock - (25,000) Dividends paid (2,070) (9,625) Financing costs paid (26,590) - Other financing 96 (17) --------------- --- --- Net Cash Provided by (Used in) Financing Activities 111,275 (97,700) Net Increase (Decrease) in Cash and Cash Equivalents 71,980 (10,869) Cash and Cash Equivalents, Beginning of Period 27,287 38,156 ------------------------------------ ------ ------ Cash and Cash Equivalents, End of Period $99,267 $27,287 --------------------------------- ------- -------

Endeavour International Corporation Operating Statistics (Unaudited) Fourth Quarter Year Ended December 31, December 31, ------------ ------------ 2010 2009 2010 2009 ---- ---- ---- ---- Sales volume (1) Oil and condensate sales (Mbbls): United Kingdom 116 196 545 690 United States 1 3 6 4 ------------- --- --- --- --- Continuing operations 117 199 551 694 Discontinued operations - Norway - - - 310 ------------------------- --- --- --- --- Total 117 199 551 1,004 ----- --- --- --- ----- Gas sales (MMcf): United Kingdom 456 966 3,071 3,743 United States 937 190 2,636 320 ------------- --- --- ----- --- Continuing operations 1,393 1,156 5,707 4,063 Discontinued operations - Norway - - - 686 ------------------------- --- --- --- --- Total 1,393 1,156 5,707 4,749 ----- ----- ----- ----- ----- Oil equivalent sales (MBOE) United Kingdom 192 357 1,057 1,314 United States 157 34 445 58 ------------- --- --- --- --- Continuing operations 349 391 1,502 1,372 Discontinued operations - Norway - - - 425 ------------------------- --- --- --- --- Total 349 391 1,502 1,797 ----- --- --- ----- ----- Total BOE per day 3,800 4,258 4,115 4,923 ----------------- ----- ----- ----- ----- Physical production volume (BOE per day): United Kingdom 2,390 3,651 2,904 3,669 United States 1,708 483 1,221 162 ------------- ----- --- ----- --- Continuing operations 4,098 4,134 4,125 3,831 Discontinued operations - Norway - - - 1,156 ------------------------- --- --- --- ----- Total 4,098 4,134 4,125 4,987 ----- ----- ----- ----- ----- Realized Prices (2) Oil and condensate price ($ per Bbl): Before commodity derivatives $82.56 $71.47 $76.39 $52.15 Effect of commodity derivatives - 14.55 (5.61) 22.51 ------------------- --- ----- ----- ----- Realized prices including commodity derivatives $82.56 $86.02 $70.78 $74.66 ------------------------- ------ ------ ------ ------ Gas price ($ per Mcf): Before commodity derivatives $4.94 $5.09 $5.18 $5.77 Effect of commodity derivatives - 3.41 0.27 2.69 ------------------- --- ---- ---- ---- Realized prices including commodity derivatives $4.94 $8.50 $5.45 $8.46 ------------------------- ----- ----- ----- ----- Equivalent oil price ($ per BOE): Before commodity derivatives $47.41 $51.35 $47.72 $44.44 Effect of commodity derivatives - 17.47 (1.03) 19.71 ------------------- --- ----- ----- ----- Realized prices including commodity derivatives $47.41 $68.82 $46.69 $64.15 ------------------------- ------ ------ ------ ------

(1) We record oil revenues on the sales method, i.e. when delivery has occurred. Actual production may differ based on the timing of tanker liftings. We use the entitlements method to account for sales of gas production. (2) The average sales prices reflect both our continuing and discontinued operations and include realized gains and losses for derivative contracts we utilize to manage price risk related to our future cash flows.

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, Adjusted EBITDA and discretionary cash flow. 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. Fourth Quarter Year Ended December 31, December 31, ------------ ------------ 2010 2009 2010 2009 ---- ---- ---- ---- Net income (loss) $82,809 $(29,468) $56,531 $(40,995) Depreciation, depletion and amortization 7,604 9,192 28,894 38,701 Impairment of oil and gas properties - 13,284 7,692 43,929 Deferred tax expense (benefit) (9,563) 7,868 (3,367) 4,599 Gain on sales (87,171) 112 (87,171) (47,308) Unrealized (gain) loss on derivatives (814) 17,143 (12,291) 55,598 Early termination of commodity derivatives - - 10,201 - Other 6,866 3,257 20,632 16,835 ----- ----- ----- ------ ------ Discretionary Cash Flow (1) $(269) $21,388 $21,121 $71,359 ============== ===== ======= ======= ======= Net income (loss) $82,809 $(29,468) $56,531 $(40,995) Impairment of oil and gas properties (net of tax) (2) - 12,275 7,692 28,263 Unrealized (gain) loss on derivatives (net of tax) (3) (1,750) 10,071 (6,820) 33,702 Currency impact on deferred taxes - 11,979 (51) 20,123 --------------- --- ------ --- ------ Net Income as Adjusted $81,059 $4,857 $57,352 $41,093 ============= ======= ====== ======= ======= Net income (loss) to common shareholders $82,263 $(42,618) $54,304 $(62,206) Unrealized (gain) loss on derivatives (814) 17,143 (12,291) 55,598 Net interest expense 12,813 4,560 34,517 16,420 Depreciation, depletion and amortization 7,604 9,192 28,894 38,701 Impairment of oil and gas properties - 13,284 7,692 43,929 Income tax expense (benefit) (8,704) 3,319 (788) (1,729) Early termination of commodity derivatives - - 10,201 - Gain on sale of discontinued operations - 112 - (47,308) Preferred stock dividends 546 13,150 2,227 21,211 --------------- --- ------ ----- ------ Adjusted EBITDA $93,708 $18,142 $124,756 $64,616 =============== ======= ======= ======== =======

(1) Discretionary cash flow is equal to cash flow provided by operating activities before the changes in operating assets and liabilities, excluding the early termination of commodity derivatives. (2) Net of tax benefits of $(1,009) and $(15,666) for the quarter and year ended December 31, 2009, respectively. (3) Net of tax expense (benefit) of $(936), $(7,073), $5,472 and $(21,896), respectively.