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Endeavour International (END)

Q4 2012 Earnings Call

March 06, 2013 10:00 am ET


K. Darcey Matthews - Director of Investor Relations and Corporate Communications

William L. Transier - Executive Chairman, Chief Executive Officer and President

Catherine L. Stubbs - Chief Financial Officer and Senior Vice President

Carl D. Grenz - Executive Vice President of International

James J. Emme - Executive Vice President of North American Operations


Welles W. Fitzpatrick - Johnson Rice & Company, L.L.C., Research Division

Steven Karpel - Crédit Suisse AG, Research Division

Neal Dingmann - SunTrust Robinson Humphrey, Inc., Research Division

Stephen F. Berman - Canaccord Genuity, Research Division

Philip L. Dodge - Tuohy Brothers Investment Research, Inc.

Michael Kelly - Global Hunter Securities, LLC, Research Division

Hassan Jawed Ahmad - Imperial Capital, LLC, Research Division

Rehan Rashid - FBR Capital Markets & Co., Research Division

Ravi S. Kamath - Global Hunter Securities, LLC, Research Division

Amy Stepnowski



Good day, and welcome to this Endeavour International Corporation's Year End Fourth Quarter Earnings Conference Call and Webcast. Today's conference is being recorded. At this time, for opening remarks and introductions, I would like to turn the conference over to Ms. Darcey Matthews, Director of Investor Relations. Please go ahead, ma'am.

K. Darcey Matthews

Thank you, Kyle. Good morning. Good afternoon, everyone, and thank you for joining us today for Endeavour's 2012 Fourth Quarter and Year End Earnings Conference Call. Joining us today, we have our Chief Executive Officer, Bill Transier; our Chief Financial Officer, Cathy Stubbs; Carl Grenz, Executive Vice President for International Operations; and Jim Emme, Executive Vice President for North American Operations.

Before we begin, I'd like to let everybody know that there is a slide deck supporting today's call that management will be speaking to available on our home page at, and also under the IR section as part of today's webcast details.

Also let me remind everyone that our comments today reflect our current information and understanding. There are a number of factors, however, that can cause actual results to differ materially from what we present here today.

For the risk factors associated with our business, please read our full disclosures in our latest 10-Ks and 10-Qs, and the annual 10-K expected to be filed in the next couple of weeks.

Now for some opening comments, I'll turn the call over to Bill.

William L. Transier

Thank you. Good morning, everyone. We see that there's a lot of interest this morning, and we certainly expected that, glad to have you with us.

As you can see from the press release that we put out overnight, we've had a lot of progress in the last 3 weeks since we made some news events back then.

But before I talk about recent events, let me do a brief review of some of the 2012 accomplishments as we're here to talk about fourth quarter and year end 2012.

First of all, you can see from the numbers that production more than doubled in 2012, with the run rate at the end of the year 2012, almost triple what it was the year before that.

Proved reserves were up 186% in the U.K.. And overall they were up, even though we had to move a fair amount of our U.S. reserves from proved to contingent resources because of weaker average North American natural gas prices.

During the course of 2012, we turned on 2 development wells at our Bacchus field in the North Sea. This asset has had a continued strong performance, actually better than originally expected. We completed the acquisition of an additional 23.43% interest in our Alba field in the U.K. North Sea. Alba, as many of you know, is currently our largest producing asset. And along the way, we spent a lot of time and made a lot of progress, albeit didn't get the production turned on at Rochelle, but got it very close to that towards the end of the year. And we'll talk more about that as the day rolls on.

Since the end of 2012, our production has stayed basically steady and consistent with what you saw in the fourth quarter. We're very pleased with crude oil prices in Europe, and European natural gas prices have remained strong, so we're anxious to get our Rochelle project turned on and take advantage of that.

Just 3 weeks ago, we announced a new Chief Financial Officer, we also told you about weather-related issues with our East Rochelle production well and further delays to that first production there. And we also announced a strategic review process for the company. We will get into all of these matters as we go throughout the day.

In the last 2 days, we have announced the series of transactions that have added $350 million of near-term liquidity to our company and cushion our ability to finish the development work at Rochelle and complete a thoughtful and disciplined strategic review process.

Let me address each of these matters in a little more detail before I turn it over to the team to give you all the details about the quarter. First, with respect to naming Cathy Stubbs as our Chief Financial Officer. The board concluded their search and determined the best candidate for Endeavor was Cathy. I actually endorsed that strongly. A complement to her that the Board made this selection after going through a detailed search process. Cathy has been with our company since its beginning. I've also worked with Cathy in several situations since she graduated with her masters degree from the University of Texas over 20 years ago. She is a highly skilled professional with a very strong accounting foundation from her years at KPMG. She is very knowledgeable, frankly, the most knowledgeable person about our capital structure and our capital investors. And she has stepped into this new role and doing a fantastic job. The liquidity that was created here in just the last few days and weeks for the company, in a large part, is due to Cathy's strong efforts after stepping into this role as Chief Financial Officer. You'll get to know her as we go forward. And I think you'll get to appreciate the strength that she brings to our team as we head down this path.

With respect to the strategic review process announced a few weeks ago, the Board will be considering a full range of alternatives, including a sale of specific assets, sale of joint venture of partnership in respect to the company's activities in either the North Sea or in the U.S., a sale or merger of the company or we may, as things unfold, continue to execute on the company's operational plans as they now are in place.

As you saw, we've hired 2 advisors: Tudor, Pickering, Holt and Lambert Energy Advisors out of the U.K. Each of these advisors, in my view, was selected for their experience, their reputation, and importantly, their relationships with parties that we think would be interested in the process that we're about to go through. They are a formidable team for us, and they're doing a fantastic job together to make this process good for our Board of Directors. Our objective of the process is to accelerate the deleveraging of our balance sheet and to unlock what we believe is the underlying value of the company's assets. We cannot really give you any guidance on the timing. Other than for obvious reasons, we expect to move through the various alternatives thoughtfully and expeditiously.

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