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Endeavour International Corp. Reports Operating Results (10-Q)

November 05, 2010 | About:
10qk

10qk

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Endeavour International Corp. (END) filed Quarterly Report for the period ended 2010-09-30.

Endeavour International Corp. has a market cap of $206.3 million; its shares were traded at around $1.26 with and P/S ratio of 3.2. END is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Net loss to common shareholders for the nine months ended September 30, 2010 was $28.0 million, or $0.17 per share. For the nine months ended September 30, 2009, net loss to common shareholders was $19.6 million, or $0.15 per share. In connection with the August 2010 issuance of the Senior Term Loan, we settled all outstanding commodity derivatives, which covered a portion of production through the end of 2011, and recorded a realized loss of $10.2 million for the third quarter and nine months ended September 30, 2010.

For the nine months ended September 30, 2010, discretionary cash flow was $11.2 million as compared to $50.0 million for the same period in 2009. For the third quarter of 2010, discretionary cash flow was $6.1 million as compared to $7.6 million for the same period in 2009. The decline in discretionary cash flow reflects the effects of commodity derivatives, increased interest expense related to additional debt issuances and increased current tax expense, partially offset by lower operating expenses. In addition, our discontinued operations had discretionary cash flow of approximately $10 million for the nine months ended September 30, 2009, which was fully offset by the capital expenditures for these operations. Our oil derivatives in 2009 had a higher average price than our oil derivatives in 2010. This decrease in average price is primarily due to oil collars with a floor of $100.00 per barrel that expired at the end of 2009.

Adjusted EBITDA decreased to $31.0 million for the nine months ended September 30, 2010 from $46.5 million for the same period in 2009, primarily due to the decrease in realized prices after the effects of commodity derivatives discussed above. For the third quarter of 2010, Adjusted EBITDA decreased slightly to $8.2 million as compared to $8.7 million for the same period in 2009. For definitions of Net Income (Loss) as Adjusted, Adjusted EBITDA and Discretionary Cash Flow, and a reconciliation of each to the nearest comparable GAAP measure, please see Reconciliation of Non-GAAP Accounting Measures.

Depreciation, depletion and amortization (DD&A) expense increased to $7.7 million for the third quarter of 2010 compared to $5.6 million for the third quarter of 2009, and decreased to $21.3 million from $24.8 million for the nine months ended September 30, 2010 and 2009, respectively, reflecting a decrease in our DD&A rate per BOE after the reserve additions and impairments recorded in 2009.

G&A expenses increased slightly to $4.2 million during the third quarter of 2010 as compared to $4.1 million for the corresponding period in 2009 and $12.9 million during the nine months ended September 30, 2010 as compared to $12.0 million for the corresponding period in 2009. The increase primarily resulted from higher compensation expense due to expanding U.S. operations and increased consulting, accounting, and legal fees that pertain to our expanding U.S. operations and the strategic review of our U.K. assets, substantially offset by increased capitalized G&A expenses. Components of G&A expenses for these periods are as follows:

Interest expense increased by $6.6 million to $10.5 million for the third quarter ending September 30, 2010 as compared to $3.9 million for the corresponding period in 2009. Interest expense increased by $9.6 million to $21.7 million for the nine months ended September 30, 2010 as compared to $12.1 million for the corresponding period in 2009. We have had several changes in our outstanding debt obligations since late 2009 that are responsible for these increases in interest expense.

Read the The complete Report

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10qk
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