Endeavour Announces 2014 First Quarter Financial and Operational Results

HOUSTON, May 7, 2014 /PRNewswire/ -- 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 same period in 2013. On a GAAP basis, net loss for the first quarter was $44.9 million 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 oil equivalent per day ("boepd"), compared to 7,186 boepd for the same quarter in the prior year.  Physical production for the first quarter of 2014 averaged 9,440 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, as evidenced by the list of recent events," said William L. Transier, chairman, chief executive officer and president. "The Company is focused on growing production by achieving more consistent performance from its assets, maintaining operational margins, reducing G&A, enhancing liquidity, reducing cost of capital and accelerating value from our existing portfolio."

Operational Update

North Sea
The Bacchus field continues to perform in line with expectations. Consistent with the original development plans, the first well drilled (B3Y) is expected to be turned into a water injector during the second quarter of 2014 to provide pressure support to help sustain the field's production rates and increase its overall recovery. Endeavour has a 30% working interest in the field.

At Rochelle, the second development well East Rochelle (E2) was completed and tied-in to the production manifold in January. The E2 well commenced first production on February 28, 2014 averaging around 65 million cubic feet of gas per day with approximately 3,000 boepd of liquids production. The production was lower than previously anticipated due to gas compression capacity constraints on the Scott platform, as a result of unexpectedly high gas production rates from the Telford field that also produces through Scott. At the end of March, the Scott Platform experienced an incident requiring a full platform shutdown. The three fields flowing across the platform, Rochelle, Scott and Telford were shut-in while an investigation and remedial action occurred. Production from Rochelle resumed on the 26^th of April. Endeavour has a 44% working interest in the Rochelle development.

At Alba, progress has been made in the Southern part of the field with partial water injection being reinstated. Permanent replacement of the pipeline is targeted 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 currently drilling and anticipated to be online in June.  The partial reinstatement of a water injection in the Southern part of the field and the infill drilling program is expected to increase overall production rates from the field. Endeavour has a 25.68% working interest in Alba.

North America
In the Pennsylvania Marcellus, Endeavour successfully completed hydraulic fracture stimulations of the C-14 and C-20 horizontal wells. The operation included more than double the number of frac stages on the longest laterals to date, relative to previous wells. The Endeavour operated activity went smoothly and according to specifications. The third C-13 well is scheduled for stimulation in mid-June using the same completion design. The wells will be tied into a new third-party pipeline being constructed by EQT Corporation that allows firm capacity of up to 10 million cubic feet per day, with potential for future expansion.

In the Piceance Basin Rim play in Northwest Colorado, Endeavour has two projects targeting liquids-rich Niobrara and Frontier objectives. The Company has formed two federal units and has plans to drill initial horizontal tests in the Niobrara target zone by late summer or early fall. Endeavour has leasehold and drilling options on 40,000 gross acres and 27,000 net acres.

Finance
In January 2014, Endeavour closed on a $255 million senior secured first lien term loan with an interest rate of 8.25% (Libor + 700 basis points).  The first lien note is a strip facility consisting of a $125 million Secured Term Loan and a $130 million LC Procurement Facility.  The Company has used the net proceeds from the offering to refinance its 13% $115 million Revolving Credit Facility and replace its two reimbursement agreements ($120 million at 13% and $33 million at 9%, interest rates, respectively). The facility is due in November 2017. In late February, the Company reduced the outstanding balance on the LC Procurement Facility from $130 million to $90 million.

In March, the Company completed a private placement of $12.5 million of common stock and warrants and $17.5 million of 6.5% convertible notes. The transaction included the issuance of 2.9 million shares at $4.28 per share and warrants to purchase 729,000 shares at a strike price of $5.29 per share. The convertible notes bear a conversion price of $4.66 per share. In addition, the purchaser has an option to purchase an additional $25 million of shares, warrants and convertible notes under the same terms as the original issuance.  The option expires at the end of May and is not expected to be exercised under current market conditions. 

Second Quarter Production Guidance and Third Quarter Maintenance Downtime
With the unanticipated downtime at the Rochelle field in April resulting from the incident on the Scott Platform and lower Alba volumes with continued water injection issues, average daily production volumes are expected to be in the range of 9,000 – 10,000 boepd for the second quarter of 2014. Also during the second quarter, it is anticipated that there will not be a lifting at the Alba field, which will affect sales numbers for the period. However, under its marketing agreement, Endeavour is paid monthly for Alba's production.

In the U.K. North Sea, the third quarter is typically the time for the maintenance shutdowns. During 2014, Endeavour anticipates that its fields will be modestly impacted relative to the long programs that occurred on Alba and Rochelle during 2013. At present, there is a 16 day shut-down on the Forties Pipeline System planned in August that will affect oil production from Bacchus and Rochelle. At Alba, where the production is lifted by tanker, a short shutdown in planned in July.

Earnings Conference Call, Wednesday, May 7, 2014 at 9:00 a.m., Central Time, 3:00 p.m. British Summer Time 
Endeavour International will host a conference call and web cast to discuss its 2014 first quarter financial and operating results on Wednesday, May 7, 2014 at 9:00 a.m. Central Time, 3:00 p.m. British Summer Time. A supporting slide deck for the conference call is available on the home page of Endeavour's website at www.endeavourcorp.com and under the Investor Relations section in conjunction with the details for the conference call. To participate and ask questions during the conference call, dial the local country telephone number and the confirmation code 5109885.  The toll-free numbers are 888-690-2874 in the United States and 0-808-101-7548 in the United Kingdom. Other international callers should dial 913-312-1516 (tolls apply).  To listen only to the live audio web cast access Endeavour's home page at www.endeavourcorp.com.  A replay will be available beginning at 12:00 p.m. Central Time on May 7, 2014 through 12:00 p.m. on May 13, 2014 by dialing toll free 888-203-1112 (U.S.) or 719-457-0820 (international), confirmation code 5109885.

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

The Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose not only proved reserves, but also probable reserves and possible reserves that meet the SEC's definitions for such terms, and price and cost sensitivities for such reserves, and prohibits disclosure of resources that do not constitute such reserves.  We 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. These estimates are by their nature more speculative than estimates of proved, probable and possible reserves and accordingly are subject to substantially greater risk of being actually realized.  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 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.