Endeavour International Corporation (NYSE:END) signed a definitive agreement to sell its interest in the Cygnus gas field in the Southern Gas Basin of the United Kingdom sector of the North Sea to Bayerngas UK Ltd., the UK oil and gas subsidiary of Bayergas Norge AS, for a cash consideration of $110 million.
"The sale of our Cygnus asset and the recent completion of the financing transaction places Endeavour in a fully funded position to execute our North Sea and United States opportunities and achieve near-term production and cash flow growth," said William L. Transier, chairman, chief executive officer and president. "Our successful US initiative has already increased current daily production for the company to nearly 6,000 barrels of oil equivalent per day with approximately half from the US."
The company will use the proceeds from this sale and the recently completed financing transaction to focus on its Rochelle and Bacchus development projects in the UK North Sea and onshore Haynesville shale gas play in the US. A well at West Rochelle, in the block adjacent to Rochelle, is scheduled to spud in the next week and represents an opportunity to double the size of the Rochelle development.
"The Cygnus transaction brings to close the strategic review process regarding our North Sea assets and exemplifies the underlying value of our remaining portfolio in the UK and our long-term ability to build value for our investors," said Transier. "This sale allows us to reallocate resources to nearer term growth projects and take execution risk out of our business model."
Endeavour holds a 12.5 percent interest in blocks 44/11a and 12a and 17.24 percent in blocks 44/11b and 44/12b. License participants are GDF Suez E&P, the operator, and Centrica.
The cash proceeds will not be burdened by any current taxes payable. The transaction has been approved by the boards of directors of both companies and is subject only to certain government and joint venture partner approvals. Closing is expected to be completed within 60 days.