Endeavour Announces Record Financial and Operational Results for 2008

HOUSTON, March 12 /PRNewswire-FirstCall/ -- Endeavour International Corporation (NYSE-Alt: END) (LSE: ENDV) today reported net income to common stockholders for 2008 increased to $45.7 million or $0.32 per diluted share as compared to a loss of $60.3 million or $0.49 per diluted share in 2007. Revenues in 2008 increased more than 47 percent to $260.4 million from $176.1 million in 2007. The company reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $176.5 million from $124.1 million in 2007. Discretionary cash flow for the year was $120.8 million.

For the fourth quarter 2008, net income to common stockholders was $56.4 million or $0.29 per diluted share as compared to a net loss of $29.6 million or $0.23 per diluted share for the same period in 2007. Revenues for the quarter were $41.4 million reflecting sales of 7,900 barrels of oil equivalent per day (boepd) compared to revenues of $54.5 million from sales of 8,300 boepd in the prior period in 2007. Adjusted EBITDA was $33.7 million, a decrease from $35.2 million in the same quarter in 2007.

"This past year was a breakthrough period for us as we achieved both significant financial and operational success," said William L. Transier, chairman and chief executive officer. "We met our forecasted production goals and that combined with our hedging strategy resulted in cash flow that funded our growth activities and allowed us to significantly pay down debt. The company recorded an uncommon industry feat with 100 percent technical success for the seven exploratory and appraisal wells drilled during the year. As we move forward, Endeavour is involved in three significant development projects that are expected to more than double our production by the end of 2010. All of this was accomplished in a highly volatile and challenging marketplace."

Endeavour also reported a reserve replacement rate of 175 percent of 2008 production. Proved and probable reserves at year-end 2008 increased to 32.2 million barrels of oil equivalent (mmboe) compared to 29.8 mmboe a year ago (see Table). Extensions, discoveries and upward revisions to prior estimates added 5.6 mmboe, more than replacing production of 3.2 mmboe or approximately 8,800 boepd during 2008.

                                          Net Reserves at December 31, 2008

                                           Oil      NGL      Gas  Equivalents
                                          (mbl)    (mbl)    (mcf)    (mboe)
    Proved Developed
      Producing                           1,811     320    11,496    4,047
      Non-Producing                         618      27       416      714
    Proved Undeveloped                      773       6    20,886    4,260
      Proved (1P)                         3,202     353    32,798    9,021
    Probable                              8,128     435    87,503   23,147
      Proved + Probable (2P)             11,330     788   120,301   32,168
    Possible                             14,736     489   113,125   34,079
      Proved + Probable + Possible (3P)  26,066   1,277   233,426   66,247

    Source: Netherland, Sewell and Associates, Inc.

Other highlights for the fourth quarter and the year are as follows:

Drilled two highly successful appraisal wells -- Endeavour participated in the drilling of two strategic appraisal wells in the United Kingdom sector of the North Sea both of which significantly extended the potential of previous discoveries.

• Rochelle - The commerciality of the undeveloped Rochelle discovery in Block 15/27 was confirmed when the Rochelle 15/27-11 well was drilled to a total depth of 10,369 feet and tested at flow rates of 41 million cubic feet of gas per day and 2,300 barrels of oil condensate per day. Endeavour holds a 55.6 percent interest in the well and is the operator for the block.
• Cygnus - The Cygnus 44/12a-3 appraisal well in the Southern Gas Basin established the presence of recoverable gas reserves in a second fault block near the 2006 discovery well in Block 44/11. The well was drilled to a total depth of 12,433 feet and flow tested at rates up to 32 million cubic feet of gas per day. Endeavour holds a 12.5 percent interest in the Cygnus field area spread over two United Kingdom blocks, 44/11a and 12a.

Launched onshore exploration program in the United States -- An initiative to develop a production base in the United States resulted in a commercial natural gas discovery and first production in late 2008.

• Garwood prospect - Production began from the Cochran #1 well in the Garwood prospect in Colorado County, Texas at an initial rate of 170 boepd net during December 2008. Endeavour has a 20 percent equity interest and approximately a 15 percent net revenue interest in the well.
• Alligator Bayou prospect - Endeavour holds a 10 percent equity interest and seven percent net revenue interest in the Alligator Bayou prospect. The first well to be drilled, the Armour Runnels ST #1 well in Matagorda County, Texas, reached a total depth of 23,830 feet. Flow tests are underway for multiple deep zones.

Conducted successful exploratory activities in Norway -- During 2008, the company made three discoveries in satellite drilling near producing fields in the Norwegian Continental Shelf. The Galvort prospect in production license 348 and the Noatun C prospect in production license 107 were drilled as satellites to the Njord field and both encountered natural gas reservoirs. Endeavour holds a 2.5 percent equity interest in the two discoveries and the Njord field. In the Brage field, an oil discovery was made at the Knockandoo prospect in production license 055 that flowed during testing at 18,000 gross (800 net) barrels of oil per day and began producing in December. Endeavour holds a 4.44 percent equity interest in the Brage field.

Established capital budget of up to $90 million -- Endeavour will continue to fund its planned capital spending from cash flow generated by its operations. A significant portion of the budget will be directed toward moving its three major development projects in the United Kingdom toward first production. Approximately $12 - $15 million will be spent for infield drilling and facilities improvements to maintain production levels. Endeavour will continue its ongoing exploration campaign in the North Sea and South Texas based on internal cash availability with plans for seven to nine wells, two of which will be fully carried.

    Guidance for Year 2009
    The table below sets forth estimates of the company's operating statistics
     for the full year ending December 31, 2009.

    Estimated Average Production (A)
      Daily Production (boepd)              6,500  to  7,500

    Differentials (B)
      Oil ($/bbl)                          $(4.50) to $(5.50)
      Gas ($/mcf)                          $(0.10) to $(0.20)

    Gas Percentage of Total                    45% to     50%
    Lease operating expense (per barrel)   $11.00  to $13.00

      (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 Today, Thursday, March 12, 2009 at 9:00 a.m., Central Daylight Time, 2:00 p.m. Greenwich Mean Time

Endeavour will host an analyst conference call and web cast today on Thursday, March 12, 2009 to discuss 2008 fourth quarter and full-year results and update operational plans at 9 A.M. Central Daylight Time. To participate and ask questions during the conference call, dial the local country telephone number and the confirmation code 5204926. The toll-free numbers are 888-708-5692 in the United States, 0 800 051 7166 in the United Kingdom, and 800 191 83 in Norway. Other international callers should dial 913-312-0962 (tolls apply). To listen only to the live audio webcast, access Endeavour's home page at http://www.endeavourcorp.com. A replay will be available beginning at 12:00 p.m. Central Daylight Time on March 12 through 12:00 p.m. Central Daylight Time on March 18 by dialing toll free 888-203-1112 (U.S.) or 719-457-0820 (international), confirmation code 5204926.

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 press release are forward-looking and are based upon Endeavour's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Endeavour plans, expects, believes, projects, estimates, or anticipates will, should or may occur in the future, including future production of oil and gas, future capital expenditures and drilling of wells and future financial or operating results are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include the timing and extent of changes in commodity prices for oil and gas, operating risks and other risk factors as described in Endeavour's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission (SEC). Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Endeavour's actual results and plans could differ materially from those expressed in the forward-looking statements.

The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We may use certain terms such as probable and possible reserves that the SEC's guidelines strictly prohibit us from including in our filings with the SEC. These estimates are by their nature more speculative than estimates of proved reserves and accordingly are subject to substantially greater risk of being actually realized by Endeavour. 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. Factors affecting ultimate recovery include oil and gas pricing, the scope of our ongoing drilling program, which will be directly affected by the availability of capital, drilling and production costs, availability of drilling services and equipment, drilling results, transportation constraints, regulatory approvals and other factors; and actual drilling results, including geological and mechanical factors affecting recovery rates. Investors are urged to consider closely the disclosure in our Form 10-K and each of our Form 10-Qs, available free of charge on our internet site (http://www.endeavourcorp.com). You can also obtain these forms from the SEC on the SEC's internet site (http://www.sec.gov) or by calling 1-800-SEC-0330.

                      Endeavour International Corporation
                Comparative Condensed Consolidated Balance Sheets
                                 (Unaudited)
                            (Amounts in thousands)

                                                           December 31,
                                                          2008      2007

                                  Assets
    Current Assets:
      Cash and cash equivalents                          $38,156   $16,440
      Restricted cash                                     20,739    22,000
      Accounts receivable                                 26,884    33,291
      Prepaid expenses and other current assets           47,626    46,516
        Total Current Assets                             133,405   118,247

    Property and Equipment, Net                          312,957   335,023

    Goodwill                                             281,943   283,324
    Other Assets                                           9,165    11,029

    Total Assets                                        $737,470  $747,623

                   Liabilities and Stockholders' Equity
    Current Liabilities:
      Accounts payable                                   $42,348   $31,036
      Current maturities of debt                          13,000         -
      Accrued expenses and other                          55,155    50,013
        Total Current Liabilities                        110,503    81,049

    Long-Term Debt                                       214,855   266,250
    Deferred Taxes                                       104,127   135,552
    Other Liabilities                                     65,014    69,623
        Total Liabilities                                494,499   552,474

    Commitments and Contingencies

    Series C Convertible Preferred Stock                 125,000   125,000

    Stockholders' Equity                                 117,971    70,149

    Total Liabilities and Stockholders' Equity          $737,470  $747,623



                      Endeavour International Corporation
            Comparative Condensed Consolidated Statement of Operations
                                  (Unaudited)
                  (Amounts in thousands, except per share data)

                                          Three Months           Year
                                      Ended December 31,   Ended December 31,
                                        2008       2007      2008      2007

    Revenues                           $41,370   $54,484  $260,441  $176,064

    Cost of Operations:
        Operating expenses              11,689    11,060    46,576    41,044
        Depreciation, depletion and
         amortization                   17,661    20,661    81,734    76,850
        Impairment of oil and gas
         properties                     36,970         -    36,970         -
        General and administrative       5,083     5,256    19,636    19,878
      Total Expenses                    71,403    36,977   184,916   137,772

    Income (Loss) From Operations      (30,033)   17,507    75,525    38,292

    Other Income (Expense):
        Derivatives:
          Realized gains (losses)        2,697    (3,309)  (28,578)   12,048
          Unrealized gains (losses)    117,905   (47,792)   76,666   (89,132)
        Interest expense                (4,410)   (5,137)  (22,548)  (18,742)
        Other                            6,680       850    12,154      (723)

    Total Other Income (Expense)       122,872   (55,388)   37,694   (96,549)

    Income (Loss) Before Income Taxes   92,839   (37,881)  113,219   (58,257)
    Income Tax Expense (Benefit)        33,728   (10,992)   56,729    (9,180)

    Net Income (Loss)                   59,111   (26,889)   56,490   (49,077)
    Preferred Stock Dividends            2,696     2,709    10,809    11,238

    Net Income (Loss) to Common
     Stockholders                      $56,415  $(29,598)  $45,681  $(60,315)


    Net Income (Loss) Per Common Share:
        Basic                            $0.44    $(0.23)    $0.36    $(0.49)
        Diluted                          $0.29    $(0.23)    $0.32    $(0.49)

    Weighted Average Number of
     Common Shares Outstanding:
        Basic                          128,148   126,492   128,312   123,118
        Diluted                        212,661   126,492   178,312   123,118



                      Endeavour International Corporation
            Comparative Condensed Consolidated Statement of Cash Flows
                                   (Unaudited)
                              (Amounts in thousands)

                                                       Year Ended December 31,
                                                           2008      2007
    Cash Flows from Operating Activities:
      Net income (loss)                                  $56,490  $(49,077)
      Adjustments to reconcile net loss to net
       cash provided by operating activities:
        Depreciation, depletion and amortization          81,734    76,850
        Impairment of oil and gas properties              36,970         -
        Deferred tax expense (benefit)                    17,682   (12,925)
        Unrealized (gain) loss on derivative instruments (76,666)   89,132
        Amortization of non-cash compensation              3,226     4,968
        Foreign currency exchange (gain) loss on
         non-operating liabilities                       (10,508)    1,078
        Other                                             11,879     2,948
      Changes in working capital                          12,373    15,532
    Net Cash Provided by Operating Activities            133,180   128,506

    Cash Flows From Investing Activities:
      Capital expenditures                               (66,370)  (88,007)
      (Increase) decrease in restricted cash and
        other investing activities                         1,519   (20,133)
    Net Cash Used in Investing Activities                (64,851) (108,140)

    Cash Flows From Financing Activities:
      Net repayment of borrowings                        (32,000)  (40,000)
      Payment of preferred dividends                     (10,625)   (2,656)
      Financing costs paid                                (3,538)     (263)
      Other financing activities                            (450)     (821)
    Net Cash Provided by (Used in) Financing Activities  (46,613)  (43,740)

    Net Increase (Decrease) in Cash and Cash Equivalents  21,716   (23,374)
    Cash and Cash Equivalents, Beginning of Period        16,440    39,814

    Cash and Cash Equivalents, End of Period             $38,156   $16,440



                      Endeavour International Corporation
                             Operating Statistics
                                   (Unaudited)

                                           Three Months Ended  Year Ended
                                              December 31,     December 31,
                                             2008     2007     2008    2007
    Sales Volume:
      Oil and condensate sales (Mbbl):
        United Kingdom                         198      291    1,032   1,274
        Norway                                 181      129      726     519
        Total                                  379      420    1,758   1,793

      Gas sales (MMcf):
        United Kingdom                       1,383    1,899    6,532   8,556
        Norway                                 681      147    2,322     328
        Total                                2,064    2,046    8,854   8,884

      Total sales (MBOE):
        United Kingdom                         429      608    2,121   2,700
        Norway                                 294      153    1,113     574
        Total                                  723      761    3,234   3,274

      BOE per day                            7,859    8,268    8,835   8,969

    Physical Production Volume:
      Total production (BOE per day)
        United Kingdom                       5,059    6,981    5,804   7,660
        Norway                               3,680    1,732    3,033   1,608
        Total                                8,739    8,713    8,837   9,268

    Realized Prices:
      Oil and condensate price ($per Bbl):
        Before commodity derivatives        $50.23   $82.03   $90.53  $67.11
        Effect of commodity derivatives      $8.35  $(12.98) $(14.50) $(2.13)
        Realized prices including
         commodity derivatives              $58.58   $69.05   $76.03  $64.98

      Gas price ($per Mcf):
        Before commodity derivatives        $10.82    $9.80   $11.44   $6.27
        Effect of commodity derivatives     $(0.23)   $1.05   $(0.35)  $1.79
        Realized prices including
         commodity derivatives              $10.59   $10.85   $11.09   $8.06

      Equivalent oil price ($per BOE):
        Before commodity derivatives        $57.22   $71.63   $80.54  $53.78
        Effect of commodity derivatives      $3.73   $(4.35)  $(8.84)  $3.68
        Realized prices including
         commodity derivatives              $60.95   $67.28   $71.70  $57.46



                      Endeavour International Corporation
                  Reconciliation of GAAP to Non-GAAP Measures
                                  (Unaudited)
                             (Amounts in millions)

    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 Months Ended     Year Ended
                                            December 31,       December 31,
                                           2008      2007    2008      2007
    Net income (loss) to common
     shareholders, as reported             $56.4    $(29.6)  $45.7    $(60.3)
    Impairment of oil and gas
     properties (net of 50% tax)            18.5         -    18.5         -
    Unrealized (gains) losses on
     derivatives (net of 50% tax)          (59.3)     23.9   (37.7)     44.6
    Currency impact of deferred taxes      (16.5)     (3.1)  (20.8)      4.8

    Net income (loss) as adjusted          $(0.9)    $(8.8)   $5.7    $(10.9)

    Net income (loss) to common
     shareholders, as reported             $56.4    $(29.6)  $45.7    $(60.3)
    Unrealized (gains) losses on
      derivatives                         (117.9)     47.8   (76.7)     89.1
    Net interest expense                     4.2       4.6    21.3      16.4
    Depreciation, depletion and
     amortization                           17.6      20.7    81.7      76.9
    Impairment of oil and gas properties    37.0         -    37.0         -
    Income tax expense (benefit)            33.7     (11.0)   56.7      (9.2)
    Preferred stock dividends                2.7       2.7    10.8      11.2

    Adjusted EBITDA                        $33.7     $35.2  $176.5    $124.1

    Net income (loss)                      $59.1    $(26.9)  $56.5    $(49.1)

    Depreciation, depletion and
     amortization                           17.6      20.7    81.7      76.9
    Impairment of oil and gas properties    37.0         -    37.0         -
    Deferred tax expense (benefit)          23.3     (11.5)   17.7     (12.9)
    Unrealized (gains) losses on
     derivatives                          (117.9)     47.8   (76.7)     89.1
    Amortization of non-cash compensation    0.8       1.0     3.2       5.0
    Other                                   (4.2)      2.5     1.4       4.0

    Discretionary cash flow                $15.7     $33.6  $120.8    $113.0

    Discretionary cash flow is equal to cash flow from operating activities
    before the changes in operating assets and liabilities.

SOURCE Endeavour International Corporation

RELATED LINKS
http://www.endeavourcorp.com