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| 8-K - FORM 8-K - ENDEAVOUR INTERNATIONAL CORP | d420995d8k.htm |
 Credit Suisse
High Yield Conference
October 4 -
5, 2012
Exhibit 99.1 |
 2
This is an oral presentation which is accompanied by slides. Investors are urged
to review our SEC filings. This presentation contains certain
forward-looking statements regarding various oil and gas
discoveries,
oil
and
gas
exploration,
development
and
production
activities,
anticipated
and
potential
production
and
flow
rates;
anticipated
revenues;
the
economic
potential
of
properties
and
estimated
exploration costs. Accuracy of the projections depends on assumptions about events
that change over time and is thus susceptible to periodic change based on
actual experience and new developments. Endeavour cautions readers that it
assumes no obligation to update or publicly release any revisions to the
projections in this presentation and, except to the extent required by applicable law, does not intend to
update or otherwise revise the projections. Important factors that might cause
future results to differ from these projections include: variations in the
market prices of oil and natural gas; drilling results; access to equipment
and oilfield services; unanticipated fluctuations in flow rates of producing wells related to
mechanical,
reservoir
or
facilities
performance;
oil
and
natural
gas
reserves
expectations;
the
ability
to
satisfy future cash obligations and environmental costs; and general exploration
and development risks and hazards.
The Securities and Exchange Commission permits oil and gas companies in their
filings with the SEC to disclose
only
proved
reserves
that
a
company
has
demonstrated
by
actual
production
or
conclusive
formation tests to be economically and legally producible under existing economic
and operating conditions.
SEC
guidelines
prohibit
the
use
in
filings
of
terms
such
as
“probable,”
“possible,”
P2
or
P3
and
“non-proved”
reserves,
reserves
“potential”
or
“upside”
or
other
descriptions
of
volumes
of
reserves
potentially
recoverable
through
additional
drilling
or
recovery
techniques.
These
estimates
are
by
their
nature more speculative than estimates of proved reserves and accordingly are
subject to greater risk of being actually realized by the company. Certain
statements should be regarded as “forward-looking” statements
within the meaning of the securities laws. These statements speak only as of the date made.
Such statements are subject to assumptions, risk and uncertainty. Actual results
or events may vary materially.
The
estimates
of
recoverable
resources
per
well
and
completed
well
costs
included
herein
are
based upon other typical results in these shale plays and may not be indicative of
actual results. |
 3
Endeavour At A Glance
Near-term growth through lower risk development activities
•
Growing cash flow from U.K. development projects
•
Exposure to Brent crude oil and European gas
•
Increasing liquids production near-term
Balanced Strategy
•
Oil and Gas
•
U.K. and U.S.
•
Conventional and unconventional
•
Short and long-term production opportunities
Near-Term Potential Catalysts
•
Acquisition
of
MacCulloch
and
Nicol
from
ConocoPhillips
–
U.K.
•
Rochelle
field
development
in
execution
phase
–
U.K.
•
Heath
Oil
Shale
proof
of
concept
–
U.S.
* Market capitalization as of 10/1/12 with common shares outstanding and those
securities in the money. ** Reserves are pro forma for the acquisition of
MacCulloch and Nicol. Stock Symbol
New York Stock Exchange
END
London Stock Exchange
ENDV
Market Capitalization*
$498.4 million
Diluted Shares Outstanding
50.8 million
Proved & Probable Reserves **
76.0 MMBOE
Key Figures |
 Significant Production Growth –
Acquisition and Near-Term Projects
10,000 –
11,000 boepd
14,000 –
18,000 boepd
Current Production
Pro forma Production and
MacCulloch & Nicol Fields
UK Oil
US Gas
UK Gas
Pro forma Production -
Rochelle
20,000 –
25,000 boepd
4
57%
30%
13%
(1)
(2)
(3)
71%
29%
86%
14%
(1)
As of March 31, 2012, pro forma for additional Alba interests acquired on May 31,
2012 and two producing wells from Bacchus. (2)
Assumes the closing of acquisition of MacCulloch and Nicol fields expected in early
4Q 2012. (3)
Rochelle
production
expected
in
4Q
2012
and
3
Bacchus
well
expected
in
2013.
rd |
 Our
Growing Resource Base (1)
Pro forma for reserves of assets acquired and to be acquired in the North Sea
Acquisition. Reserve Growth
5 |
 $2,467
$1,288
$810
$715
$0
$500
$1,000
$1,500
$2,000
$2,500
2P PV-10
1P PV-10
Total Debt
Net Debt
6
Reserve Valuation
Net Asset Valuation
(1) Pre-tax PV-10 as of December 31, 2011 pro forma for the acquisition of
assets in the North Sea per NSAI audited reserve reports for respective assets.
(1)
(1) |
 Reserves Value Make-Up and Migration
Reserves
Migrate
from
Probable
to
Proved
from
Known
Fields,
with
Little
Capital
Investment
7
$0
$500
$1,000
$1,500
$2,000
$2,500
1P PV-10
1P PV-10
Over Time = 2P
Rochelle
Bacchus
Alba
Other |
 Overview of Endeavour’s U.K. Assets
8
* On 12/27/11, END announced the acquisition of three ConocoPhillips assets
in the North Sea,
including
an
increased
working
interest
in
Alba
and
two
new
assets
–
MacCulloch
and
Nicol. Alba acquisition closed on May 31, 2012. MacCulloch and Nicol expected to
close in early 4Q 2012.
Current Production
Development Projects
Bacchus
Enoch
Columbus
Bittern
Alba
MacCulloch
Nicol
Renee
Rubie
Ivanhoe /
RobRoy
Rochelle |
 Expected 2012 Exit Position of Endeavour
9
GDF Suez
Premier
EnQuest
DONG Energy
Hess Corporation
OMV
RWE Dea
Dyas
Canadian Natural Resources
E.ON Ruhrgas
Marathon
ATP Oil & Gas
Perenco
Ithaca Energy
Wintershall
Nautical Petroleum
Fairfield Energy
Sterling Resources
Itochu
BHP Billiton
Murphy Oil
JX Nippon Oil & Energy
Corp
Xcite Energy
Tullow Oil
EnCore Oil
Marubeni
Noble Energy
Bayerngas
EOG Resources
Valiant Petroleum
Chrysaor
Agora Oil & Gas
First Oil
Bridge Energy
DEO Petroleum
KNOC
Endeavour UK
Endeavour UK +
Bacchus/Rochelle
and Acquisition
0
20
40
60
80
100
0
5
10
15
20
25
30
35
40
Production (kboe/d)
Source: Woodmac |
 Bacchus -
Block 22/06a Central North Sea
10
First two wells on production, initial rate
~13,000 boepd gross
Reservoir is formed by shallow marine
Fulmar sandstones of Upper Jurassic age
Oil exported to Forties Pipeline System
END WI:
30%
Operator:
Apache (50% WI)
Partner:
First Oil (20% WI)
Bacchus
Forties
B3Y
B2 |
 Project in execution phase
•
The first of two planned development wells spud on
August 1, 2012
•
Installation of the pipe and manifolds commenced
•
Pipe laying operations underway
•
Modifications at Scott platform substantially
completed
Off-take capacity at the Scott Platform is 100
mmcf/d in year one ramping up to 120 mmcf/d in
the second year
Reservoir Development
•
2 x 500m horizontal development wells
•
High potential wells at 100 mmcf/d per well
•
Gravel pack with pre-drilled liner
•
5 ½”
completion with permanent downhole
pressure/temperature gauges
Rochelle -
Blocks 15/26b, 15/26c and 15/27
11
Operator:
Endeavour (44% WI)
Partners:
Nexen (41% WI), Premier Oil (15% WI)
FDP Approved:
February 2011
Online:
Q4 2012
Rochelle
Renee
Rubie
Ivanhoe /
RobRoy
Goldeneye |
 Rochelle Field -
Development Status
12
•
Pipeline
section
fabrication
completed
2012
Achievements
•
Commenced
full
pipeline
completed
•
Deliveries
on
target
•
Beds
on
the
platform
allocated
•
Regulatory
consents
in
place
•
Drilling
commenced
on
August
1,
2012
•
Pipe
laying
operations
underway
•
Rochelle
first
gas
in
4Q |
 Alba
Field Overview - Block 16/26a
450ft water depth
Late Eocene reservoir at ~6,200ft depth
•
Massive homogeneous unconsolidated
sands with excellent quality
35 Platform and subsea wells
Three well infill drilling program planned
for 2012
Oil exported by tanker
13
END WI:
25.68%
Operator:
Chevron (23.37% WI)
Partners:
Statoil (17% WI)
BP (13% WI)
Total (12.65% WI)
CIECO/Itochu (8% WI)
Discovered/1st
Production
1984/1994
Alba
MacCulloch
Nicol
Britannia |
 Alba
Field - Future Development
Sustain current production and increase reserves
through continued development drilling
Cumulative production to date
•
~373 MMbbls gross
Infill drilling since 2009 has largely sustained
Continuation of infill drilling program
•
2012 campaign extended from 6 to 9 months
•
Continuation of drilling included in operator’s business
plan
•
Large basket of further drilling opportunities identified
•
Addition to current reserves
•
Low economic threshold
•
Short payback time
14
production |
 MacCulloch Field Overview -
Block 15/24b
490ft water depth
Paleocene reservoir at ~6,200ft depth
•
Large and extensive natural aquifer pressure
support
5 active wells
FPSO off-take solution
Currently operated by ConocoPhillips.
15
END WI:
40% WI*
Partners:
ENI(40% WI)
Noble Energy (14% WI)
Talisman (6% WI)
Discovered/1st
Production
1990/1997
Alba
MacCulloch
Nicol
Britannia
* On 12/27/11, END announced the acquisition of three ConocoPhillips assets
in the North Sea. MacCulloch is expected to close in early Q4 2012.
|
 MacCulloch Field -
Details
Cumulative production to date
•
114 MMbbl gross
Plan to assume operatorship from
ConocoPhillips on completion of
acquisition
•
Plans to perform a detailed asset performance
review:
•
Evaluation of infill / near field potential
•
Opportunity to return shut-in wells to production
•
Optimization of gas lift rates and distribution
•
Debottlenecking, improvement to compressor
performance and availability
•
Improve operational efficiency
•
Manage offshore duty holder (NSPC) to
implement operational improvements
•
Subject to partner and DECC approval
16 |
 17
Overview of Endeavour’s US Assets
Heath Shale Oil Play -
MT
Marcellus Play -
PA
Haynesville Play –
LA/ E. TX
Cretaceous Plays -
CO
US Q2 2012
542,000 gross / 146,000 net acres
15.4 MMCFe/D net production |
   Heath
Shale ‘Tight Oil’ Play in Central Montana
25% joint venture with two independent
Montana producers
430,000+ gross acres primarily in Garfield and
Rosebud Counties (94,000 net to END)
Re-entry
of
1
vertical
planned
in
the
coming
months. Currently in process of securing a rig
to drill the Zeus 1H-13 in Rosebud country
Robust activity with more than 20 drilling
permits around Endeavour’s acreage
‘Bakken-like’
play, but shallower
(4000-
5500 ft. depth)
A proven petroleum system ~ 137 MMBO
cumulative production (Heath Shale is the
primary source rock)
Rich, oil-prone source rock, up to 20%
total organic carbon content, light oil
Heath Play Attributes
Heath Play, END Activity
18
END
CMR
Cirque
Cabot
Fidelity Heath sourced oil fields
Schmidt
44-27h
IP
248
boepd
Rock Happy 33-3H
IP 271 boepd
END/CMR
Zeus1H-13
st |
 The
Haynesville and Marcellus Plays 19
Low cost entry with limited drilling
requirements
Endeavour’s Marcellus and Haynesville
acreage largely held by production
•
No wells currently drilling
Future capex is at Endeavour’s discretion,
enabling the Company to wait for a gas
price recovery prior to development
Haynesville Shale Play
Marcellus play developing around
Endeavour’s core HBP acreage
•
14,900 gross acres (6,750 net to END)
•
Strategic leasehold in HBP status
34,500 gross acres (15,800 net to END)
Solid well results in adjacent areas on trend
with southern McKean and Cameron
counties |
 20
Financial Philosophy
Maintain disciplined, conservative approach to capital spending
•
Allocate capital to optimize and grow our asset base, making appropriate
adjustments in sustained periods of lower commodity prices
•
Capital budget is expected to be fully funded from operations
•
Focus on assets that have controllable capex requirements and low cost abandonment
obligations
•
General approach is to protect downside and keep upside potential
Improve credit profile each year
Enter into a bank revolver for working capital and lower cost of
capital
during 2013
Continue non-speculative hedging policy to minimize cash flow volatility
|
 $10
$10
$14
$135
$500
$100
$63
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
2012
2013
2014
2015
2016
2017
2018
21
Debt Maturity Profile
($ in millions)
(1)
Subordinated Notes due 2014
Convertible Notes due 2016 ($18.51 per share conversion price)
Convertible Bonds due 2016 ($16.52 per share conversion price)
Senior Notes due 2018
Revolving Credit Facility due 2013 *
* Being replaced by a new bank syndicate in 2013.
$110
$198
$500 |
 Capital Structure
22
($ mm)
December 31,
March 31,
June 30,
2011
2012
2012
Cash and Deposits
106.0
$
511.6
$
94.7
$
Senior Term Loan, 12% plus 3% PIK, due 2013
240.3
241.6
Revolving Credit Facility, 13%, due 2013
-
-
100.0
Senior Notes, 12%, due 2018, net
-
480.3
481.1
Convertible Bonds, 11.5%, due 2016 @ $16.52, net
60.0
62.2
63.9
Convertible Senior Notes, 5.5%, due 2016 @ $18.51
135.0
135.0
135.0
Subordinated Notes, 12%, due 2014
32.0
32.2
29.8
Total Net Debt
361.3
$
439.6
$
715.0
$
Series C Preferred Stock, convertible @ $8.75
37.0
37.0
37.0
Stockholders' Equity
154.1
120.0
137.7
Equity Component
191.1
$
157.0
$
174.7
$
Shares Outstanding - assuming all converted
June 30, 2012
Common Stock
46.6
Series C Preferred Stock, convertible @ $8.75
4.2
Convertible Bonds, 11.5%, due 2016 @ $16.52
4.0
Convertible Senior Notes, 5.5%, due 2016 @ $18.51
7.3
Options, warrants and stock-based compensation
2.9
65.1
|
 2012
Capital Plan by Project - $175mm to $200mm
2012 is About Turning On and Maintaining North Sea Production
Note: Capital Plan is pro forma for the North Sea Acquisition
23
$0
$20
$40
$60
$80
$100
$120
Rochelle
Bacchus
UK Other
US |
 Key
Credit Highlights 24
Balanced business strategy based on the low risk exploitational development of
proven petroleum systems with current technology
North Sea acquisition has significantly increase production and cash flow
Significant production growth expected in 2013 from known developments
Production is primarily exposed to premium Brent crude oil (57%)
and UK natural
gas (30%) commodity pricing
Opportunity in 2013 to improve the credit profile and capital structure
Low cost option on North American portfolio |
 Corporate Focus
25
North Sea Asset Acquisition
•
Closed acquisition of Alba interests on May 31, 2012
•
Closing on the acquisition of MacCulloch and Nicol field interests expected
in early 4Q
Bacchus Development On-line
•
First two wells on production with field performance at 13,000 boepd gross and
above expectations
Rochelle in Execution Phase:
•
Drilling by the Diamond Ocean Nomad commenced on August 1, 2012
•
Subsea installation of pipe-in-pipe structure started in September
•
First gas in 4Q 2012
2013 Focus
•
Generate
cash,
improve
cost
of
capital,
pay
down
debt
and
pursue
the
existing
portfolio of assets |
 LSE:ENDV
NYSE:END
www.endeavourcorp.com
Mike Kirksey
Chief Financial Officer
713.307.8788 / +44.207.451.2381
mike.kirksey@endeavourcorp.com
Darcey Matthews
Director of Investor Relations
713.307.8711
darcey.matthews@endeavourcorp.com
INVESTOR CONTACTS: |