Endeavour Divests Norwegian Subsidiary
Endeavour has signed a definitive agreement to divest its Norwegian subsidiary, Endeavour Energy Norge AS ("EEN"), to Verbundnetz Gas AG ("VNG") for cash consideration of US $150 million. The transaction is subject to certain government approvals and regulatory compliance processes that are expected to be completed within 60 days.
"We believe the sale of EEN is in the best interest of Endeavour and its stockholders as it gives the company the financial flexibility and strength to capitalize on its drilling success in the United Kingdom and to actively pursue its growth strategy of shorter-cycle, lower-cost opportunities in the United States," said William L. Transier, chairman and chief executive officer.
"In a short period of time, we built a high-quality technical and commercial team which has developed an investment portfolio that firmly positions EEN for future growth. We are pleased that VNG recognizes this talent base and will use it as a foundation for its upstream business in Norway."
The decision to enter the transaction represents a strategic shift for the company that recognizes the following factors:
- The significant disparity between asset values, particularly for oil and gas reserves in the North Sea, and equity values -- The pending sale demonstrates the implied shareholder value underlying the company's remaining asset portfolio.
- The production potential of its three major United Kingdom field developments -- The transaction provides the capital to aggressively move the company's Rochelle, Cygnus and Columbus fields to first production. Collectively, these projects will increase post-divestment production levels by 2011 to more than 20,000 barrels of oil equivalent per day.
- The financial flexibility and strength to pursue longer-term growth strategies -- The proceeds from the sale substantially reduce net debt and enhance financial flexibility which will ensure that the company's capital structure remains balanced and manageable. After the transaction, Endeavour will have net debt of approximately $50 million.
- The new focus on the development of a portfolio of assets in the United Kingdom and the United States -- The sale will allow the reallocation of capital resources to near-term development projects in the United Kingdom complemented by lower cost growth opportunities being created in the U.S.
- Endeavour Halts Drilling Ops at East Rochelle (Feb 14)
- Endeavour: Transocean Semisub Mobilized to Rochelle Field (Jan 07)
- Endeavour CFO Resigns (Oct 29)