HOUSTON, November 4 /PRNewswire/ --
Endeavour International Corporation (Amex: END) (LSE: ENDV) today reported revenues increased more than 50 percent to US$71.5 million during the third quarter of 2008 reflecting sales volumes of 8,500 barrels of oil equivalent per day. This compares to revenues of US$47.2 million for the same period in 2007. The company reported net income to common stockholders for the third quarter of 2008 of US$75.5 million or US$0.36 per diluted share as compared to a net loss of US$11.7 million or US$0.09 per diluted share for the same period in 2007. Discretionary cash flow for the period grew to US$30.1 million as compared to US$27.2 million reported in the third quarter of 2007.
Net income as adjusted for the quarter was US$5.9 million, or US$0.03 per diluted share, compared to net loss as adjusted of US$1.7 million, or US$0.01 per diluted share, in the third quarter last year. Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) increased to US$47.8 million in the third quarter this year from US$32.4 million in the third quarter a year ago.
It is fair to say that Endeavour is the only company among the small-cap independents in the North Sea that is self-funded with an active and successful drilling program and assets under development which can increase production significantly in 2010, said William L. Transier, chairman and chief executive officer. The company continues to demonstrate strong financial performance and the ability to generate cash flow while reducing debt by another US$15 million for the second quarter in a row. During the quarter, we also extended our run of exploration and appraisal successes to nine wells including sidetracks with two near-field exploration discoveries in Norway.
Operational highlights of the third quarter include:
A string of exploration successes in Norway continues -- Endeavour and its partners have made seven consecutive discoveries in the Norwegian North Sea as part of satellite drilling near the Njord and Brage fields in Norwegian North Sea. A discovery well and sidetrack at the Noatun C prospect in PL107 encountered gas condensate in the targeted Jurassic sandstone with preliminary estimates by the operator Statoil Hydro of recoverable resources between 30 - 50 million barrels oil equivalent. The Noatun wells are potential tiebacks to the Njord field that lies 16 kilometers south. Endeavour holds a 2.5 percent equity interest in the Noatun discovery and Njord field. In addition, Endeavour announced a discovery at the Knockandoo prospect in PL055 with production to begin immediately upon completion from Brage field facilities. The Brage platform well, 31/4-A-01 AT2, found oil in the upper part of the Middle Jurassic Brent Group. Endeavour has 4.44% equity in the well and the Brage field.
The submission of a field development plan for Columbus discovery -- Endeavour and its partners have submitted a Field Development Plan (FDP) for the Columbus field located on Block 23/16f in the United Kingdom sector of the Central North Sea. The plan calls for a multi-phased subsea tieback to link Columbus production to the BP-operated ETAP processing complex located 23 kilometers to the west. First production is forecast to begin in the second half of 2010. The Columbus gas condensate discovery was announced in December 2006 after well 23/16f-11 tested at a rate of 17.5 million cubic feet of gas per day and 1,060 barrels of condensate per day. Two successful appraisal wells drilled during the fourth quarter of 2007 confirmed the field commerciality. Endeavour owns a 25 percent working interest in Block 23/16f.
Upcoming drilling operations -- During the fourth quarter, Endeavour expects to participate in two strategic wells in the United Kingdom sector of the North Sea. The company will operate the drilling of the Rochelle appraisal well scheduled to spud mid-November in Block 15/27 in the Moray Firth Basin. The company holds a 55.6 percent interest in the well. The first appraisal well in Fault Block II at the Cygnus gas discovery made in 2006 on Block 44/11 in the Southern Gas Basin is also slated to begin drilling in late November. Endeavour owns a 12.5 percent interest in the block.
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.
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. (All amounts in US dollars unless otherwise noted) 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, Today, November 4, 2008 at 9:00 A.M. CST (10:00 A.M. EST) (3:00 P.M. UK)
Endeavour will host a conference call and web cast today to discuss 2008 third quarter financial and operational results at 9:00 a.m. Central Standard Time, 3:00 p.m. UK time. To participate during the conference call, dial the local country telephone number and the confirmation code 6134895. The toll-free numbers are +1-888-708-5692 in the United States, +800-051-7166 in the United Kingdom, and +800-191-83 in Norway. Other international callers should dial +1-913-312-0962 (tolls apply). To listen 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.
(All amounts in US dollars unless otherwise noted) Endeavour International Corporation Comparative Condensed Consolidated Balance Sheets (Unaudited) September 30, December 31, 2008 2007 Assets Current Assets: Cash and cash equivalents $25,677 $16,440 Restricted cash 22,000 22,000 Accounts receivable 40,938 33,291 Prepaid expenses and other current assets 38,482 46,516 Total Current Assets 127,097 118,247 Property and Equipment, Net 315,728 335,023 Goodwill 284,549 283,324 Other Assets 8,416 11,029 Total Assets $735,790 $747,623 Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $20,152 $31,036 Accrued expenses and other 75,844 50,013 Total Current Liabilities 95,996 81,049 Long-Term Debt 225,885 266,250 Deferred Taxes 120,480 135,552 Other Liabilities 107,547 69,623 Total Liabilities 594,908 552,474 Commitments and Contingencies Series C Convertible Preferred Stock 125,000 125,000 Stockholders' Equity 60,882 70,149 Total Liabilities and Stockholders' Equity $735,790 $747,623 Endeavour International Corporation Comparative Condensed Consolidated Statement of Operations (Unaudited) (Amounts in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 Revenues $71,475 $47,169 $219,072 $121,580 Cost of Operations: Operating expenses 10,900 9,546 34,887 29,984 Depreciation, depletion and amortization 18,949 21,728 64,073 56,189 General and administrative 4,966 4,096 14,553 14,623 Total Expenses 34,815 35,370 113,513 100,796 Income From Operations 36,660 11,799 105,559 20,784 Other Income (Expense): Derivatives: Realized gains (losses) (13,631) 341 (31,276) 15,356 Unrealized gains (losses) 119,089 (13,032) (41,239) (41,340) Interest income 264 552 956 1,738 Interest expense (4,602) (4,676) (18,138) (13,604) Other 5,810 (1,430) 4,519 (3,310) Total Other Income (Expense) 106,930 (18,245) (85,178) (41,160) Income (Loss) Before Income Taxes 143,591 (6,446) 20,381 (20,376) Income Tax Expense 65,395 2,395 23,001 1,812 Net Income (Loss) 78,196 (8,841) (2,620) (22,188) Preferred Stock Dividends 2,708 2,840 8,113 8,529 Net Income (Loss) to Common Stockholders $75,487 $(11,681) $(10,733) $(30,717) Net Income (Loss) Per Common Share: Basic $0.59 $(0.09) $(0.08) $(0.25) Diluted $0.36 $(0.09) $(0.08) $(0.25) Weighted Average Number of Common Shares Outstanding: Basic 127,810 123,649 127,658 121,981 Diluted 211,811 123,649 127,658 121,981 Endeavour International Corporation Comparative Condensed Consolidated Statement of Cash Flows (Amounts in thousands) Nine Months Ended September 30, 2008 2007 Cash Flows from Operating Activities: Net loss $(2,620) $(22,188) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation, depletion and amortization 64,073 56,189 Impairment of oil and gas properties - - Deferred tax benefit (5,568) (1,414) Unrealized loss on commodity derivatives 41,239 41,340 Amortization of non-cash compensation 2,378 3,973 Amortization of loan costs 6,135 1,275 Other (568) 187 Net change in assets and liabilities: (3,721) 15,827 Net Cash Provided by Operating Activities 101,348 95,189 Cash Flows From Investing Activities: Capital expenditures (46,512) (63,325) Increase in restricted cash - (20,133) Net Cash Used in Investing Activities (46,512) (83,458) Cash Flows From Financing Activities: Net repayments of borrowings (32,000) (40,000) Dividends paid (7,969) - Financing costs paid (5,116) Other (514) (157) Net Cash Used in Financing Activities (45,599) (40,157) Net Increase (Decrease) in Cash and Cash Equivalents 9,237 (28,426) Effect of Foreign Currency Changes on Cash - 4,369 Cash and Cash Equivalents, Beginning of Period 16,440 39,814 Cash and Cash Equivalents, End of Period $25,677 $15,757
Endeavour International Corporation Comparative Operating Statistics (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 Sales Volume: Oil and condensate sales (Mbbl): United Kingdom 235 361 834 982 Norway 204 136 545 391 Total 439 497 1,379 1,373 Gas sales (MMcf): United Kingdom 1,470 2,306 5,149 6,657 Norway 575 72 1,640 181 Total 2,045 2,378 6,789 6,838 Total sales (MBOE): United Kingdom 480 745 1,692 2,092 Norway 300 148 818 421 Total 780 893 2,510 2,513 BOE per day 8,477 9,713 9,162 9,205 Physical production volume: Total production (MBOE): United Kingdom 5,075 7,986 6,064 7,860 Norway 2,763 1,668 2,816 1,561 Total 7,838 9,654 8,880 9,421 Realized Prices: Oil and condensate price ($ per Bbl): Before commodity derivatives $106.22 $70.17 $101.60 $62.55 Effect of commodity derivatives $(23.70) $(3.24) $(20.78) $1.18 Realized prices including commodity derivatives $82.52 $66.93 $80.82 $63.73 Gas price ($ per Mcf): Before commodity derivatives $12.14 $5.16 $11.63 $5.22 Effect of commodity derivatives $(1.58) $0.82 $(0.39) $2.01 Realized prices including commodity derivatives $10.56 $5.98 $11.24 $7.23 Equivalent oil price ($ per BOE): Before commodity derivatives $91.65 $52.79 $87.26 $48.38 Effect of commodity derivatives $(17.48) $0.38 $(12.46) $6.11 Realized prices including commodity derivatives $74.17 $53.17 $74.80 $54.49 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. (in thousands, except per share) Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 Net income (loss) $78,196 $(8,841) $(2,620) $(22,188) Depreciation, depletion and amortization 18,949 21,728 64,073 56,189 Deferred tax (expense) benefit 52,709 (474) (5,568) (1,414) Unrealized (gains) losses on derivative instruments (119,089) 13,032 41,239 41,340 Amortization of non-cash compensation 1,182 1,238 2,378 3,973 Amortization of loan costs and discount 1,556 435 6,135 1,275 Non-cash interest expense 1,209 - 3,252 - Other (4,568) 94 (3,819) 187 Discretionary cash flow (1) $30,144 $27,212 $105,070 $79,362 Net income (loss) to common shareholders, as reported 75,487 (11,681) (10,733) (30,717) Unrealized (gains) losses on commodity derivatives (2) (56,404) 6,516 19,689 20,670 Unrealized (gains) losses on embedded derivatives (6,280) - 1,860 - Currency impact of deferred taxes (6,926) 3,457 (4,203) 7,920 Net income (loss), as adjusted $5,877 $(1,708) $6,613 $(2,127) Weighted average number of common shares outstanding - diluted 211,811 123,649 127,658 121,981 Earnings (loss) per diluted share, as adjusted $0.03 $(0.01) $0.05 $(0.02) Net income (loss) to common shareholders, as reported $75,487 $(11,681) $(10,733) $(30,717) Unrealized (gains) losses on derivatives (119,089) 13,032 41,239 41,340 Net interest expense 4,338 4,124 17,182 11,867 Depreciation, depletion and amortization 18,949 21,728 64,073 56,189 Income tax expense 65,395 2,395 23,001 1,812 Preferred stock dividends 2,709 2,840 8,113 8,529 Adjusted EBITDA $47,789 $32,438 $142,875 $89,020 (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 $56,404, $(6,516), $(19,690) and $(20,670), respectively.
Web site: http://www.endeavourcorp.com
Endeavour - Investor Relations, Mike Kirksey, +1-713-307-8700, or Tristone Capital - UK Broker, Majid Shafiq, +44-(0)-207-355-5800, or Pelham pr - Media, Philip Dennis, +44-(0)-207-743-6363, or Mark Antelme, +44-(0)-203-178-6242, all for Endeavour International Corporation
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