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Endeavour International Corp. Reports Operating Results (10-K/A)

August 17, 2010 | About:

Endeavour International Corp. (END) filed Amended Annual Report for the period ended 2009-12-31.

Endeavour International Corp. has a market cap of $187.1 million; its shares were traded at around $1.15 with and P/S ratio of 3. END is in the portfolios of Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

2007 to $170.8 million in 2008, however, the subsequent decrease in commodity prices and normal declines in our production during 2009 led to a material reduction in our revenues to $62.3 million for the year. In addition, we had revenues for our Norwegian assets included in discontinued operations of $17.6 million, $89.7 million and $40.2 million for the year ended December 31, 2009, 2008 and 2007, respectively. We sold our Norwegian assets in May 2009.

Net income can be significantly affected by various non-cash items, such as unrealized gains and losses on our commodity derivatives, currency impact of long-term liabilities and deferred taxes. Cash flow provided by (used in) operations was $55.7 million in 2009 versus $133.2 million in 2008 and $128.5 million in 2007. Discretionary cash flow was $71.4 million in 2009 compared to $120.8 million in 2008 and $113.0 million in 2007.

Net loss to common stockholders was $62.2 million for 2009, representing $(0.48) per diluted share and reflecting a gain on the sale of our discontinued operations, an impairment of oil and gas properties, significant unrealized losses on the mark-to-market of commodity derivatives and a non-cash preferred stock dividend upon the valuation of the redemption and modification of a portion of our Series C Preferred Stock. Net income to common stockholders was $45.7 million for 2008, or $0.32 per diluted share, reflecting an impairment of oil and gas properties and significant unrealized gains on the mark-to-market of commodity derivatives. Net loss to common stockholders for 2007 was $60.3 million, or $0.49 per share, reflecting the significant unrealized loss on the mark-to-market of commodity derivatives.

For 2009, operating expenses decreased to $17.8 million as compared to $32.3 million for 2008. Operating costs per BOE decreased to $12.97 per BOE for 2009 from $14.40 per BOE for 2008. In general, the changes in operating costs reflect the increase in fuel costs in 2008 at a non-operated facility which gathered the production from the IVRRH, Renee and Rubie and then the absence of those costs when we suspended production from those fields in 2009.

In 2008, we recorded $37.0 million in impairment of oil and gas properties, pre-tax, through the application of the full cost ceiling test at year-end. The prices used to determine the impairment were $36.55 per barrel for oil and $8.70 per Mcf for gas. While our commodity derivatives had a fair value of $31.0 million at December 31, 2008, these derivatives were not included in the calculation of the full cost ceiling test as the derivatives are not accounted for as cash flow hedges.

The decrease in interest expense from $23.0 million in 2008 to $16.6 million in 2009 reflects the partial repayment of outstanding balances under our senior bank facility with a portion of the proceeds from the sale of our Norwegian operations. Interest expense increased to $23.0 million in 2008 primarily as a result of $4.3 million in expenses, including $2.1 million in cash, related to the early repayment of the second lien term loan.

Read the The complete Report

About the author:

Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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