1st Quarter Results: Endeavour Announces 2014 Q1 Results

Endeavour Announces 2014 First Quarter Financial and Operational Results HOUSTON, May 7, 2014 -- 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 sameperiod in 2013. On a GAAP basis, net loss for the first quarter was $44.9million 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 oilequivalent per day ("boepd"), compared to 7,186 boepd for the same quarter inthe prior year. Physical production for the first quarter of 2014 averaged9,440 boepd compared to 9,385 boepd for the same quarter of 2013. Recent Events: * Refinanced the Revolving Credit Facility and replaced two LC reimbursement agreements * Achieved first production from the East Rochelle (E2) well * Reinstated partial water injection to the southern part of the Alba field * Placed the Alba development well A68 on production * Successfully finished the hydraulic fracture stimulations of two Pennsylvania Marcellus wells * Completed a private placement for $30 million "Despite a challenging quarter, we continue to execute on our business plan, asevidenced by the list of recent events," said William L. Transier, chairman,chief executive officer and president. "The Company is focused on growingproduction by achieving more consistent performance from its assets,maintaining operational margins, reducing G&A, enhancing liquidity, reducingcost of capital and accelerating value from our existing portfolio." Operational Update North SeaThe Bacchus field continues to perform in line with expectations. Consistentwith the original development plans, the first well drilled (B3Y) is expectedto be turned into a water injector during the second quarter of 2014 to providepressure support to help sustain the field's production rates and increase itsoverall recovery. Endeavour has a 30% working interest in the field. At Rochelle, the second development well East Rochelle (E2) was completed andtied-in to the production manifold in January. The E2 well commenced firstproduction on February 28, 2014 averaging around 65 million cubic feet of gasper day with approximately 3,000 boepd of liquids production. The productionwas lower than previously anticipated due to gas compression capacityconstraints on the Scott platform, as a result of unexpectedly high gasproduction rates from the Telford field that also produces through Scott. Atthe end of March, the Scott Platform experienced an incident requiring a fullplatform shutdown. The three fields flowing across the platform, Rochelle,Scott and Telford were shut-in while an investigation and remedial actionoccurred. Production from Rochelle resumed on the 26th of April. Endeavour hasa 44% working interest in the Rochelle development. At Alba, progress has been made in the Southern part of the field with partialwater injection being reinstated. Permanent replacement of the pipeline istargeted 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 currentlydrilling and anticipated to be online in June. The partial reinstatement of awater injection in the Southern part of the field and the infill drillingprogram is expected to increase overall production rates from the field.Endeavour has a 25.68% working interest in Alba. North AmericaIn the Pennsylvania Marcellus, Endeavour successfully completed hydraulicfracture stimulations of the C-14 and C-20 horizontal wells. The operationincluded more than double the number of frac stages on the longest laterals todate, relative to previous wells. The Endeavour operated activity went smoothlyand according to specifications. The third C-13 well is scheduled forstimulation in mid-June using the same completion design. The wells will betied into a new third-party pipeline being constructed by EQT Corporation thatallows firm capacity of up to 10 million cubic feet per day, with potential forfuture expansion. In the Piceance Basin Rim play in Northwest Colorado, Endeavour has twoprojects targeting liquids-rich Niobrara and Frontier objectives. The Companyhas formed two federal units and has plans to drill initial horizontal tests inthe Niobrara target zone by late summer or early fall. Endeavour has leaseholdand drilling options on 40,000 gross acres and 27,000 net acres. FinanceIn January 2014, Endeavour closed on a $255 million senior secured first lienterm loan with an interest rate of 8.25% (Libor + 700 basis points). The firstlien note is a strip facility consisting of a $125 million Secured Term Loanand a $130 million LC Procurement Facility. The Company has used the netproceeds from the offering to refinance its 13% $115 million Revolving CreditFacility and replace its two reimbursement agreements ($120 million at 13% and$33 million at 9%, interest rates, respectively). The facility is due inNovember 2017. In late February, the Company reduced the outstanding balance onthe LC Procurement Facility from $130 million to $90 million. In March, the Company completed a private placement of $12.5 million of commonstock and warrants and $17.5 million of 6.5% convertible notes. The transactionincluded the issuance of 2.9 million shares at $4.28 per share and warrants topurchase 729,000 shares at a strike price of $5.29 per share. The convertiblenotes bear a conversion price of $4.66 per share. In addition, the purchaserhas an option to purchase an additional $25 million of shares, warrants andconvertible notes under the same terms as the original issuance. The optionexpires at the end of May and is not expected to be exercised under currentmarket conditions. Second Quarter Production Guidance and Third Quarter Maintenance DowntimeWith the unanticipated downtime at the Rochelle field in April resulting fromthe incident on the Scott Platform and lower Alba volumes with continued waterinjection issues, average daily production volumes are expected to be in therange of 9,000 - 10,000 boepd for the second quarter of 2014. Also during thesecond quarter, it is anticipated that there will not be a lifting at the Albafield, which will affect sales numbers for the period. However, under itsmarketing agreement, Endeavour is paid monthly for Alba's production. In the U.K. North Sea, the third quarter is typically the time for themaintenance shutdowns. During 2014, Endeavour anticipates that its fields willbe modestly impacted relative to the long programs that occurred on Alba andRochelle during 2013. At present, there is a 16 day shut-down on the FortiesPipeline System planned in August that will affect oil production from Bacchusand Rochelle. At Alba, where the production is lifted by tanker, a shortshutdown in planned in July. Earnings Conference Call, Wednesday, May 7, 2014 at 9:00 a.m., Central Time, 3:00 p.m. British Summer TimeEndeavour International will host a conference call and web cast to discuss its2014 first quarter financial and operating results on Wednesday, May 7, 2014 at9:00 a.m. Central Time, 3:00 p.m. British Summer Time. A supporting slide deckfor the conference call is available on the home page of Endeavour's website atwww.endeavourcorp.com and under the Investor Relations section in conjunctionwith the details for the conference call. To participate and ask questionsduring the conference call, dial the local country telephone number and theconfirmation code 5109885. The toll-free numbers are 888-690-2874 in theUnited States and 0-808-101-7548 in the United Kingdom. Other internationalcallers should dial 913-312-1516 (tolls apply). To listen only to the liveaudio web cast access Endeavour's home page at www.endeavourcorp.com. A replaywill be available beginning at 12:00 p.m. Central Time on May 7, 2014 through12:00 p.m. on May13, 2014 by dialing toll free 888-203-1112 (U.S.) or719-457-0820 (international), confirmation code 5109885. Endeavour International Corporation is an oil and gas exploration andproduction company focused on the acquisition, exploration and development ofenergy 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 speakonly as of the date made. Such statements are subject to assumptions, risk anduncertainty. Actual results or events may vary materially. The Securities and Exchange Commission (SEC) permits oil and gas companies, intheir filings with the SEC, to disclose not only proved reserves, but alsoprobable reserves and possible reserves that meet the SEC's definitions forsuch terms, and price and cost sensitivities for such reserves, and prohibitsdisclosure of resources that do not constitute such reserves. We may usecertain terms in our news releases, such as "reserve potential," that the SEC'sguidelines strictly prohibit us from including in filings with the SEC. Theseestimates are by their nature more speculative than estimates of proved,probable and possible reserves and accordingly are subject to substantiallygreater risk of being actually realized. In addition, we do not represent thatthe probable or possible reserves described herein meet the recoverabilitythresholds established by the SEC in its new definitions. Investors are urgedto also consider closely the disclosure in our filings with the SEC, availablefrom our website at www.endeavourcorp.com. Endeavour is also subject to therequirements of the London Stock Exchange and considers the disclosures in thisrelease to be appropriate and/or required under the guidelines of thatexchange. 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 agreements 6,856 - 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 (1) We record oil revenues when deliveries have occurred and legal ownership 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, providedbelow are reconciliations of net income (loss) to the following non-GAAPfinancial measures: net income, as adjusted and Adjusted EBITDA. We use thesenon-GAAP measures as key metrics for our management and to demonstrate ourability to internally fund capital expenditures and service debt. The non-GAAPmeasures are useful in comparisons of oil and gas exploration and productioncompanies 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. (2) Since the unrealized gains on derivatives were related to liabilities 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. CONTACT: Endeavour - Investor Relations, Darcey Matthews, +1-713-307-8711, orPelham Public Relations - UK Media, Philip Dennis, +44 (0)207 861 3919, orHenry Lerwill +44 (0)207 861 3169

SOURCE Endeavour International Corporation