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Endeavour International Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 6, 2009 07:03PM
Endeavour International Corp. (END) filed Quarterly Report for the period ended 2009-03-31. 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. Endeavour International Corp. has a market cap of $170.5 million; its shares were traded at around $1.31 with a P/E ratio of 131 and P/S ratio of 0.7.
Highlight of Business Operations:
On April 2, 2009, we signed a definitive agreement to divest our Norwegian subsidiary, Endeavour Energy Norge AS, to Verbundnetz Gas AG for cash consideration of $150 million (the Norway Sale). The transaction is subject to certain government approvals and regulatory compliance processes that are expected to be completed by the end of May 2009. We expect to recognize a gain upon closing the Norway Sale of approximately $47 million, after the allocation of $68 million of goodwill to the assets sold.
Our revenues and cash flows from operating activities are very sensitive to changes in prices received for our products. Market prices for both oil and natural gas have significantly declined since the beginning of 2008 as a result of the global economic decline. Accordingly, revenues have decreased from $45.8 million in the first three months of 2008 to $16.3 million in the same period of 2009. With our various oil and gas derivative instruments, discretionary cash flow did not drop as precipitously as revenue. Discretionary cash flow was $23.4 million for the first three months of 2009 as compared to $36.3 million for the same period in 2008.
Our net income can be significantly affected by various non-cash items, such as unrealized gains and losses on our commodity derivatives, impairment of oil and gas properties, currency impact of long-term liabilities and deferred taxes. Net loss to common shareholders for the first three months of 2009 was $19.5 million, or $0.15 per share. For the first three months of 2008, net loss to common shareholders was $19.5 million, or $0.15 per share. The net loss for 2009 reflects a smaller unrealized loss on the mark-to-market of commodity derivatives and an impairment of oil and gas properties of $29.4 million. Net loss as adjusted for 2009 would have been $2.2 million without the effect of derivative transactions, impairment of oil and gas properties and currency impacts of deferred taxes as compared to net loss as adjusted of $4.7 million in 2008. Adjusted EBITDA decreased to $17.9 million in 2009 from $31.7 million in
During the three months ended March 31, 2009, we realized $12 million in gains on the settlement of commodity derivatives, compared to $3 million in losses for the same period in 2008. In the first quarter of 2009, we also recognized $0.4 million in gains on the mark-to-market of our commodity derivatives versus a loss of $30.3 million for the same period in 2008.
Operating expenses decreased to $6.2 million during the first quarter of 2009 as compared to $7.3 million in the first quarter of 2008, primarily as a result of fewer liftings in 2009 due to timing. While operating expenses decreased, the lower volumes due to production declines at Goldeneye and the suspension of production at IVRRH, Renee and Rubie caused operating expenses per BOE to increase from $12.14 per BOE in the first quarter of 2008 to $16.84 per BOE in the first quarter of 2009.
G&A expenses remained relatively flat from $3.8 million during the first quarter of 2009 as compared to $3.7 million for the corresponding period in 2008. The material components of G&A expenses for these periods are as follows:
Stocks Discussed: END,