Endeavour announces acquisition of U.K. oil producing assets

Source: Endeavour

Endeavour International Corporation (NYSE: END) (LSE: ENDV.L) today announced that its subsidiary, Endeavour Energy UK Limited, has entered into a purchase and sale agreement to acquire ConocoPhillips' interest in three producing U.K. oil fields in the Central North Sea for $330 million , including approximately $94 million of tax attributes.

Current net production from this asset group is approximately 10,000 boepd. Endeavour estimates of proved and probable reserves ("2P reserves") as of June 30, 2011 are in excess of 33 mmboe.

"This acquisition increases our current ownership interest in the Alba Field, a late Eocene reservoir that has been producing since 1994. Additionally, we add ownership interests in the MacCulloch and Nicol fields. We believe these fields have valuable upside potential," said William L. Transier , chairman, chief executive officer and president. "The production from these Central North Sea fields is almost 100% oil, which will generate a large increase in cash flow to Endeavour and provides a mechanism to accelerate the recognition of our current U.K. tax benefits of almost $300 million after this acquisition. This transaction, which our team has been working on since the beginning of this year, adds significantly to our two existing U.K. development projects, which are estimated to start production during 2012. Upon completion of this transaction and after the start-up of Bacchus and the Greater Rochelle development projects, Endeavour will become one of the largest independent producers in the U.K. North Sea." 

The producing assets to be purchased include the following net interests:

Field Name Block Operator Working Interest
Alba 16/26a Chevron 23.43%(1)
MacCulloch 15/24/b ConocoPhillips (2) 40.00%
Nicol 15/25a Premier 18.00%

(1) Endeavour's aggregate working interest in the Alba field would be 25.68% following the closing of the acquisition.

(2) Endeavour anticipates assuming operatorship, subject to final partner agreement.

Pro forma for the acquisition, Endeavour's proved plus probable reserves would increase to almost 80 mmboe from 44 mmboe at December 31, 2010 . Production would increase from current levels of approximately 4,500 boepd to in excess of 20,000 boepd with the start up of Bacchus and Greater Rochelle anticipated in 2012 and the closing of the acquisition.

Endeavour expects to close this transaction in the first half of 2012, with an effective date of January 1, 2011 . In addition to customary closing conditions, the purchase is subject to approval of normal governmental regulatory authorities and partner consents.

The Company has obtained a $500 million senior secured financing commitment from Citigroup Global Markets Inc. to fund the purchase price and retire the Company's existing Senior Term Loan, if needed. Endeavour plans to pursue permanent financing for the transaction and the retirement of the Senior Term Loan before the transaction closes in 2012 through an issuance of high-yield notes.

Supporting materials for the transaction can currently be found on the Company's website, www.endeavourcorp.com in the Investor Relation's section and under the "Presentations" tab.

Conference Call Wednesday, January 4, 2012 at 9:00am CST / 3:00pm U.K. time

The company will host a conference call at 9:00am CST / 3:00pm U.K. time on Wednesday, January 4, 2012 to discuss this transaction and bring investors and interested parties up-to-date on operational matters.

To participate or ask questions during the conference call, the toll-free numbers are 800-575-5790 in the United States and 0-808-101-1147 in the United Kingdom . Other international callers should dial 719-457-2647 (tolls apply). The Pass Code for all dial in numbers is 6475577. To listen only to the live audio web cast access Endeavour's home page at www.endeavourcorp.com.

A replay of the conference call will be available beginning at 12:00pm Central Standard Time on January 4, 2012 through 12:00pm January 11, 2012 by dialing toll free 888-203-1112 (U.S.) or 719-457-0820 (international), Pass Code 6475577.

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