Endeavour Announces 2007 Second Quarter Results

Endeavour International reported financial results for the second quarter of 2007 that included a four fold increase in revenues of $31.6 million as compared to $7.6 million during the same period in 2006. The improvement reflects the ongoing positive impact of the acquisition of producing properties in the United Kingdom at the end of 2006 and the company's transition to a balanced oil and gas company.

We are reaping the benefit of the steps that we took at the end of last year to build a solid foundation of production from which to grow our company," said William L. Transier, chairman, chief executive officer and president. "Cash flow from operations through the first half of the year is $78 million, a dramatic increase from the $14 million used during the same period a year ago and better than our expectations. We continue to manage our business effectively by paying down $33 million of debt and generating more cash flow than our capital expenditures. We remain extremely confident in our ability to increase shareholder value through our North Sea-focused exploration and development activities."

Without the effect of a pre-tax unrealized loss of $12.6 million in the change in fair market value of oil and gas derivative contracts, net loss for the second quarter 2007 would have been $6.7 million or $0.05 per diluted share. Actual loss for the period was $13.0 million or $0.11 per diluted share as compared to loss of $10 million or $0.13 per diluted share in the same quarter in 2006. Production for the period averaged 8,800 barrels of oil equivalent per day (boepd) and sales were 7,800 boepd at an average realized price of $50.38 per barrel. The difference between production and sales reflects when revenues are recognized for reporting purposes based on the timing of tanker liftings.

Highlights of the first half of the year include:

Completion of development project at Enoch field - Initial production began from the Enoch field located in Block 16/13a in the North Sea at the end of May. On July 31, 2007, the field was producing an estimated 1,100 boepd net to Endeavour. The company holds an eight percent interest in the development.

Continued progress on moving two discoveries in the United Kingdom toward development - Endeavour and its partners have committed to drill the first appraisal well at the Columbus discovery on Block 23/16f in the Central North Sea in the third quarter. The SEDCO 704 semi-submersible has been contracted to drill a well to the north of the discovery. The discovery well was drilled in late 2006 and tested at stabilized flow rates of 17.5 million cubic feet of gas and 1,060 barrels of condensate per day from the Paleocene Forties Formation. Endeavour holds a 25 percent interest in the license. The company and its partners are also discussing a development plan for the Cygnus discovery drilled on Block 44/12-2 in the Southern Gas Basin of the North Sea. The discovery well drilled in the second quarter of 2006 encountered a number of gas bearing zones in the Rotliegendes and Carboniferous intervals. Endeavour holds a 12.5 percent interest in the block.

Realigned interests in two Norwegian blocks and assumed operatorship of Agat natural gas discovery - The company has entered into an agreement with RWE Dea Norge AS to align interests in two contiguous production licenses PL270 and PL426 in the northern North Sea. Endeavour will become operator of PL270, the location of the Agat discovery, and increase its interest to 85 percent from the current 49 percent interest. In exchange, Endeavour will transfer 15 percent of its interest in PL426 to RWE Dea Norge AS and fund certain costs through the first appraisal well planned for 2008. The production licenses contain estimated risk resources in excess of 500 billion cubic feet of gas equivalent. The agreement is subject to approval by government authorities.

Participation in two wells in the Norwegian North Sea - Drilling began in early July on the North West Flank Prospect on PL 6407/7 in the Haltenbanken Basin that will test the middle to lower Jurassic section in two fault blocks. The company holds a 2.5 percent working interest in the well. Drilling also continues on the Brage development well 31/4-A-40-A that is expected to be completed and start production from the Sognefjord formation at the end of this month. Endeavour holds a 4.4 percent interest in the Brage field.

Revised Guidance on Year 2007 Estimates

The table below sets forth revised estimates of the company's operating statistics for the full year ending December 31, 2007. With current production now averaging more than 10,000 boepd, the company is raising its production guidance to 9,000 - 9,400 boepd for the year. This reflects the full year impact of the acquisition of United Kingdom producing assets at the end of 2006 and initial sales of production from the Enoch field. Gas production is expected to represent 40 percent of total production. The company has also revised its annual capital budget downward from $92 million to approximately $80 million, of which $41 million has been spent during the six months ending June 30, 2007.

    2007 Estimated Average Production (A)

    Daily Production (boepd)              9,000 to 9,400

    Differentials (B)
           Oil ($bbl)                         $(4.25)
           Gas ($mcf)                         $(0.30)

    Gas Percentage of Total                       40%
    Lease operating expense (per barrel)       $12-13

    (A) Actual results may differ materially from these estimates.

    (B) For purposes of the 2007 estimates, assumptions of price differentials
        are based on location, quality and other factors, excluding the
        effects of derivative financial instruments.  Gas price differentials
        are stated as premiums (discounts) from National Balancing Point
        pricing, and oil price differentials are stated as premiums
        (discounts) from Dated Brent pricing.

Company: Endeavour International Corporation more info
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