Endeavour Reports 1Q Financial, Operational Results
Endeavour reported operational and financial results for the first quarter of 2010.
"The quarter was highlighted by successful appraisal drilling in our North Sea Cygnus field that confirmed the discovery as one of the largest ever in the Southern Gas Basin and added reserves that more than replaced expected 2010 production. We also began drilling our first exploratory wells in U.S. gas shale plays as part of our U.S. initiative to balance the longer cycle time activities in the North Sea and increase current production," said William L. Transier, chairman, chief executive officer and president. "Our excellent operational results were offset by lower production volumes related to unexpected downtime and timing of deliveries that caused weaker financial
performance for the quarter."
Discretionary cash flow for the first quarter of 2010 was $4.1 million compared to $23.4 million in the first quarter of 2009. Net loss, as
adjusted, was $7.0 million for the first quarter of 2010 compared to $3.9 million in the same period last year. On a GAAP basis, net loss was $15.2 million for the first quarter of 2010 as compared to $16.9 million in the same quarter in 2009. These GAAP basis amounts for the first quarter of 2010 and 2009 include non-cash charges resulting primarily from mark-to-market accounting for derivatives and asset impairments totaling $8.8 million and $15.6 million, respectively, as outlined on the attached reconciliation schedule.
Highlights for the first quarter are as follows:
Launched strategic alternative review of North Sea assets - Endeavour is in the process of evaluating a full range of options for unlocking the value of its North Sea assets that may include selling specific assets or the entire UK business, entering a joint venture to accelerate North Sea activities or continuing the current operations plan. The decision was announced in response to the continued dislocation between the company's stock price and the underlying asset value of its United Kingdom assets. The results will be announced once a course of action is selected.
Further extended size of Cygnus gas field in the North Sea with drilling of latest successful appraisal well - Results from the 44-11a appraisal well drilled during the quarter have led to preliminary estimates of reserves and resources that are significantly increased to make the Cygnus field one of the largest gas fields ever discovered in the Southern North Sea. The appraisal well was drilled to a depth of 12,207 feet, encountering a high quality, gas-saturated Leman sand reservoir with a sand thickness of 130 feet gross and 85 feet net. The well flow tested at a rate of 28 million cubic feet of gas per day. The rig then moved south to spud another Cygnus appraisal well, the 44/12a-5, at the end of April 2010.
Participating in six wells as part of a growing U.S. drilling initiative - In early 2010, the company acquired interests in 526,000 gross acres (165,000 net acres) in four resource plays in the Haynesville and Marcellus gas shale plays and frontier plays in Alabama and Montana where the company is one of the first participants. During the first quarter, Endeavour and its partner, Cohort Energy, participated in the drilling of two joint venture wells and four low-working interest third-party-operated horizontal wells in northern Louisiana and East Texas. Completion results for all six wells are expected in the second quarter of 2010.
Completed two financing transactions for $45 million to accelerate U.S. shale initiative - In February, Endeavour successfully closed a $25 million lending facility with the Bank of Scotland PLC and a $20.5 million private placement of common stock sold primarily to existing investors. The proceeds from the transactions are being used primarily to accelerate the company's 2010 U.S. onshore gas shale drilling program.
- Endeavour Halts Drilling Ops at East Rochelle (Feb 14)
- Endeavour: Transocean Semisub Mobilized to Rochelle Field (Jan 07)
- Endeavour CFO Resigns (Oct 29)