Endeavour International Corp. has a market cap of $217.9 million; its shares were traded at around $1.36 with a P/E ratio of 11.4 and P/S ratio of 3.5. END is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:Our revenues and cash flows from operating activities are very sensitive to changes in prices received for our products. Market prices for natural gas have significantly declined since 2009 as a result of the global economic decline, impacting our revenues, which have decreased from $16.3 million in the three months ended March 31, 2009 to $13.7 million in the same period of 2010. Discretionary cash flow was $4.1 million for the three months ended March 31, 2010 as compared to $23.4 million for the same period in 2009. The declines in revenues and discretionary cash flow reflect decreases in sales volumes due to delays in oil tanker liftings and realized prices after the effects of commodity derivatives.
Our net income can be significantly affected by various non-cash items, such as unrealized gains and losses on our derivatives, impairment of oil and gas properties, currency impact of long-term liabilities and deferred taxes. Net loss to common shareholders for the three months ended March 31, 2010 was $15.8 million, or $0.11 per share. For the three months ended March 31, 2009, net loss to common shareholders was $19.5 million, or $0.15 per share. Net loss as adjusted for the three months ended March 31, 2010 would have been $7.0 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 $3.9 million for the same period in 2009. Adjusted EBITDA decreased to $9.7 million for the three months ended March 31, 2010 from $25.4 million for the same period in 2009. For definitions of Adjusted EBITDA and Discretionary Cash Flow, and a reconciliation of Adjusted EBITDA to net income as adjusted, please see Reconciliation of Non-GAAP Accounting Measures.
During the three months ended March 31, 2010, we realized $0.2 million in gains on the settlement of commodity derivatives, compared to $11.9 million in gains for the same period in 2009.
For the three months ended March 31, 2010, operating expenses decreased to $2.8 million as compared to $6.2 million for the same period in 2009. Operating costs per BOE decreased from $16.84 per BOE for the three months ended March 31, 2009 to $9.77 per BOE for the three months ended March 31, 2010. The decrease in operating expenses from 2009 to 2010 is primarily due to the suspension of production at the IVRRH and Rubie fields, which were our fields with the highest operating costs. These fields were suspended at the end of the first quarter of 2009.
Depreciation, depletions and amortization (DD&A) expense decreased to $5.7 million from $11.3 million for the first quarter of 2010 and 2009, respectively, reflecting the lower sales volumes and the decrease in our DD&A rate per BOE after the reserve additions and impairments recorded in 2009.
Interest expense increased by $1.7 million to $5.6 million for the three months ended March 31, 2010 as compared to $3.9 million for the corresponding period in 2009 due to interest related to the $50 million Subordinated Notes issued in the fourth quarter of 2009 and the new Junior Facility issued in the first quarter of 2010.
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