Endeavour International (END)
Q2 2013 Earnings Call
August 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
Carl D. Grenz - Executive Vice President of International
James J. Emme - Executive Vice President of North America
Catherine L. Stubbs - Chief Financial Officer and Senior Vice President
Neal Dingmann - SunTrust Robinson Humphrey, Inc., Research Division
Welles W. Fitzpatrick - Johnson Rice & Company, L.L.C., Research Division
Rehan Rashid - FBR Capital Markets & Co., Research Division
Stephen F. Berman - Canaccord Genuity, Research Division
Steven Karpel - Crédit Suisse AG, Research Division
Michael Kelly - Global Hunter Securities, LLC, Research Division
Philip L. Dodge - Tuohy Brothers Investment Research, Inc.
David Epstein - CRT Capital Group LLC, Research Division
Ravi S. Kamath - Global Hunter Securities, LLC, Research Division
Previous Statements by END
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K. Darcey Matthews
Thank you, Marquetta. Good morning, good afternoon, everyone, and thank you for joining us today. On the call, we have Bill Transier, our Chief Executive Officer; Cathy Stubbs, our Chief Financial Officer; Carl Grenz, Executive Vice President for International Operations; And Jim Emme, Executive Vice President for North American Operations.
Before we begin, I would like to let everybody know that there is a slide deck supporting this call available at our webpage at endeavourcorp.com.
And 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-K and 10-Q. Our quarterly 10-Q is expected to be filed by the end of this week.
And for now, I'll turn the call over to Bill for some opening comments.
William L. Transier
Good morning, everyone. Happy to have you with us here this morning. Just a few quick comments and we'll get right into the update from our call here just a few weeks ago. First of all, you saw from the press release this morning, we had the startup of production from the B1 well at our Bacchus development project, and that added really good performance to the field, which Carl will talk about in a few minutes. Just comment, even though this project was a year late coming on production, the cash-on-cash returns on this asset have just been extraordinary for the company. At Rochelle, we have started drilling of the second development well, which we call the E-2 well, which should be finished before the winter heating season. Our U.S. team has successfully completed the first vertical test in the Piceance Basin. We are really encouraged by the first analysis of the core and log data we have obtained. Jim will talk more about that in a second. The U.K. government on July 17, 2013, through the royal assent has now made it law with regards to providing certainty in relation to tax relief in regards to decommissioning obligations. This is an extremely positive step in support of the industry, and once fully implemented, will have an equally positive effect on the future activities in the North Sea for all of us. Our key business drivers remain the same. We are focused on first production at Rochelle and improving our production rates at Alba. We comment in the release that third quarter physical production levels will be affected by the planned shutdowns at, frankly, all of our major assets during this quarter. Once we get through that, we should see how these assets can perform on a full-time basis going from there. We've done a pretty decent job of protecting our liquidity, as you can see from the numbers today in the press release. But liquidity will remain a concern until we get all of our assets on production and past the heavy capital spending time for the company. We actually expect that to occur by the end of the third quarter. Until then, we will continue to watch our liquidity very carefully and do what makes sense to capture the good commodity price environment that we find ourselves in today. With that, I want to turn it over to, first, Carl to talk about the U.K. update, then Jim to give you an update on what we're doing in the U.S., and then Cathy will run through all the numbers for you before we come and wrap it up with Q&A. So, Carl, shall I turn it over to you?
Carl D. Grenz
Thank you, Bill, and good day to everybody on the call. Today, I'll give you a further update on our U.K. operations, and I'll start off with Rochelle. Well, as was stated in the release today, the West well W-1 has been successfully drilled, completed and flow tested, and this well is now connected to the pipeline infrastructure all the way back to the Scott Platform. So Rochelle is essentially now ready to produce. The Scott Platform started its planned maintenance shutdown right on schedule on the 11th of July and will run for a duration of approximately 6 to 8 weeks. Now we understand that the planned work is being completed to schedule right now, so we expect startup of Rochelle production during September. Meanwhile, as Bill said, the second Rochelle well, E-2, was spudded on July 25 and the 13 38 section has been drilled, cased and cemented. Accordingly, drilling operations on this well are currently on schedule, and we anticipate production from it will start during the fourth quarter. Our P&A activity is currently proceeding on the E-1 well that was suspended earlier in the year.
So now we move on to Bacchus, and we continue to see better-than-expected performance from the first 2 production wells on Bacchus, and the third production well, B1, has now been successfully drilled ahead of schedule and put on production on the 27th of July. Performance from B1 is at the higher end of our expectations and is producing over 9,600 barrels a day, and gross production from the field has now reached over 17,600 barrels a day, and that's 5,300 net to Endeavour. And this exceeds our previous guidance of 4,000 to 5,000 barrels a day net, and we continue to see exceptional uptime efficiency at Bacchus at over 90%.