Attached files
| file | filename |
|---|---|
| 8-K - 8-K - ENDEAVOUR INTERNATIONAL CORP | d801703d8k.htm |
| EX-99.6 - EX-99.6 - ENDEAVOUR INTERNATIONAL CORP | d801703dex996.htm |
| EX-99.1 - EX-99.1 - ENDEAVOUR INTERNATIONAL CORP | d801703dex991.htm |
| EX-99.4 - EX-99.4 - ENDEAVOUR INTERNATIONAL CORP | d801703dex994.htm |
| EX-99.2 - EX-99.2 - ENDEAVOUR INTERNATIONAL CORP | d801703dex992.htm |
| EX-99.3 - EX-99.3 - ENDEAVOUR INTERNATIONAL CORP | d801703dex993.htm |
 Project North
October 2, 2014
Reorganization Considerations
Exhibit 99.5
Confidential
Subject to FRE 408 |
 Confidential
Subject to FRE 408
Project North
Blackstone
Weil
1
Disclaimer
This presentation (the “Presentation”) regarding Endeavour International Corporation
and its subsidiaries (the “Company”) has been prepared by Blackstone Advisory
Partners L.P. (“Blackstone”) and Weil, Gotshal & Manges LLP (“Weil”) solely for informational purposes using certain
information provided by the Company and publicly available information (collectively, the
“Sources”). This presentation is illustrative, does not represent a proposal,
and is subject to FRE 408. Blackstone and Weil make no representation or warranty, express or implied, as to the accuracy
or completeness of the information obtained from the Sources, and nothing contained herein is,
or should be relied on as a promise or representation, whether as to the past or the
future. Blackstone and Weil have not independently verified information obtained from the Sources.
The Presentation is not a proposal or a solicitation and is non-binding on all parties.
The Presentation includes certain statements, estimates, and projections
prepared and provided by the Sources with respect to, among other things, the
anticipated operating performance of the Company. Such statements, estimates, and projections reflect various assumptions by the
Sources concerning anticipated results that are inherently subject to significant economic,
competitive, and other uncertainties and contingencies and have been included solely
for illustrative purposes. Blackstone and Weil have relied on the truth, accuracy and completeness of certain
representations of the Sources and disclaims any liability for any misrepresentations or
omissions that may be contained herein based on such statements or contained in the
information referenced above. No representations, express or implied, are made as to the accuracy or
completeness of such statements, estimates, or projections or with respect to any other
materials herein. Actual results may vary materially from the estimates and projected
results contained herein. By accepting the Presentation, each recipient agrees
that Blackstone and Weil shall have no liability on any basis (including, without limitation, in
contract, tort, under United States or other countries’ federal or state securities laws
or otherwise) for any representations, express or implied, contained in, or for any
omissions from, the Presentation or any other written or oral communications transmitted to the recipient by or on behalf
of Weil or Blackstone in the course of the recipient’s evaluation of the Presentation.
The information contained herein has been prepared to assist the recipients in making
their own evaluation and does not purport to be all-inclusive or to contain all of the information that may be material.
The information and data contained herein are confidential and may not be divulged to any
person or entity or reproduced, disseminated, or disclosed, in whole or in part, except
as required by applicable law or regulation, as requested by regulatory authorities, or with the consent of
Blackstone and Weil.
This Presentation is not intended to furnish regulatory, tax, accounting, investment or other
advice to any recipient. This Presentation should be reviewed by each recipient and its
regulatory, tax, accounting, investment and other advisors. Recipients should not regard it as a substitute for
the exercise of their own judgment. |
 Confidential
Subject to FRE 408
Project North
Blackstone
Weil
2
Agenda
U.K. Opportunities and Business Strategy
Restructuring Goals
Debt Capacity Considerations
Potential Compromise Structure
1
2
3
4 |
 Project North
Blackstone
Weil
3
U.K. Opportunity and Business Strategy
U.K. North Sea presents large remaining reserves with undeveloped and undiscovered volumes
across the region
•
Stable region with low geopolitical risk
•
Geologically
well
understood
with
decades
of
experience
drilling
in
the
region
•
Significant infrastructure in-place to support economics of development for new
production Governmental
and
regulatory
support
for
exploration,
development
and
production
•
Attractive fiscal terms by global standards and improving regulatory environment (Wood
Report) •
After-tax treatment of decommissioning
•
Access to infrastructure
Larger players seeking to re-shape or exit their North Sea positions
•
Increasing availability of personnel
•
Rig market softening
•
Assets on the market
Limited
competition
in
the
small/mid
cap
space
–
20k
boe/d
threshold
•
Private equity entering the market
1
The U.K. North Sea presents significant opportunity today for a full-cycle E&P business
properly capitalized, with adequate scale and core producing assets.
Confidential
Subject to FRE 408 |
 Confidential
Subject to FRE 408
Project North
Blackstone
Weil
4
U.K. Opportunity and Business Strategy (Cont’d)
1.
Maximize production from existing North Sea assets and pursue realization of upsides
a)
Collaborate with JV partners
b)
Infill drilling opportunities at Alba
c)
Increase Scott platform capacity
d)
Utilize existing tax assets
2.
Explore, develop and monetize contingent resources
a)
Track record of successfully finding new oil and gas reserves more efficiently than any other
independent b)
Pursue new opportunities (Rossini, Mabry, other contingent resources)
c)
Partner through farm-ins to reduce capital need while receiving carry
d)
Share sub surface technical team with business development and operation teams
3.
Opportunistic acquisition of producing North Sea reserves
a)
Diversify portfolio and reduce well concentration
b)
Seek out producing assets with minimal development costs or decommissioning exposure and 3P
upside c)
Potential to buy assets at attractive prices
4.
Monetize selected assets and redeploy proceeds to core
a)
Consider sale of U.S. assets to reduce investment needs and capex costs
b)
Potential opportunities to sell selected U.K. assets
Endeavour is well positioned as a leading pure-play U.K. independent producer. The
Company’s proposed strategy is anchored in existing U.K. assets and aimed at
balancing production and lower- risk growth.
Confidential
Subject to FRE 408
Project North
Blackstone
Weil
4 |
 Project North
Blackstone
Weil
5
Indicative
Capital to
Realize
Alba
Rochelle
Bacchus
Columbus
Bittern
Enoch
$30 -
$50
million
per year
(1)
________________________________________________
(1)
Based on analysis of the 6/30/14 reserve report.
Mature Low Risk
Assets
The opportunity in the North Sea related to the Endeavour platform presents significant value as
a going concern.
Accelerate drilling at Alba
Potentially debottleneck
Scott Platform
Accelerate drilling at
Rochelle
Indicative
Capital to
Realize
Rossini
Mabry
Rochelle
Jurassic
$10
-
$15
million
per year
Clear Upside with
Limited Risk
Indicative
Capital to
Realize
Centurion North
Centurion South
Ravel
Mostyn
Buffalo
Rogers
Others
$10
-
$15
million
per year
Other Contingent
Resources
Endeavour successfully
developed Rochelle, Cygnus,
and other prospects in the
North Sea
Rossini exploration /
appraisal well with partner
(2015)
Mabry exploration well (late
2015 or 2016)
Create value by derisking
existing portfolio of
prospects
Opportunity to farm down
to partially monetize once
derisked
Long term could create
significant value in the
portfolio
Indicative
Capital to
Realize
Various Assets
$30
-
$40
million
per year
M&A
Majors pulling back
H1 2014 activity implies a
low $/boe for already
producing assets
U.K. Opportunity and Business Strategy (Cont’d)
1
Confidential
Subject to FRE 408 |
 Project North
Blackstone
Weil
6
Restructuring Goals
1.
Protect Company assets during restructuring
2.
Minimize restructuring costs
3.
Design new capital structure to maximize business value
4.
Reduce debt service to permit capex to maintain and grow cash flows
5.
Maximize recovery to all creditors
2
Confidential
Subject to FRE 408 |
    Confidential
Subject to FRE 408
Project North
Blackstone
Weil
7
________________________________________________
(1)
Reflects netting of LC cash collateral that is expected to increase to $105mm on
12/1/14. (2)
Assumes refinancing of existing UK debt facility in 12 months.
(3)
Cash change driven primarily by $12mm of UK interest, $26mm of capex/decommissioning, net of
operating cash flow. I) Pro Forma Capital Structure Summary
Illustrative
($ in millions)
Principal
Current Rate
PF Rate
Amort
UK Bank Debt
$440.0
11.0%
8.0%
(2)
10.0%
New Notes
200.0
12.0%
8.5%
NA
Total Debt
$640.0
Total Debt Excluding LC
(1)
$535.0
II) Bridge to Starting Cash
Amount
9/30/14 Aprox. Consolidated Cash
$60.0
New UK Facility Liquidity
36.0
Incremental Q4 L/C Need
(15.0)
Q4 Cash Use
(3)
(33.0)
Emergence Costs
(15.0)
Projected Cash at Emergence (Illustrative 12/31/14)
$33.0
Confidential
Subject to FRE 408
Project North
Blackstone
Weil
7
Debt Capacity Considerations – Compromise Scenario Assumptions |
  Confidential
Subject to FRE 408
Project North
Blackstone
Weil
8
Debt
Capacity
Considerations
(Cont’d)
–
Compromise
Scenario
Illustrative
Forecast
3
($ in millions)
Business Plan
Illustrative Run Rate
2014E
2015E
2016E
2017E
2018E
UK EBITDA
$221.0
$281.6
$275.8
$250.0
$250.0
Less: PRT
11.5
(28.1)
(51.0)
(35.6)
(35.6)
Less: CT Taxes
-
-
-
-
-
Less: SCT Taxes
-
-
-
(21.2)
(40.5)
Less: Capex
(68.3)
(71.7)
(45.2)
(80.0)
(80.0)
Less: Abandonment
(59.8)
(56.4)
(37.9)
-
-
Less: Provision for LCs
(15.0)
(15.0)
(15.0)
(15.0)
(15.0)
Less: Contingency
-
-
-
-
-
UK Unlevered FCF
89.4
$110.4
$126.7
$98.2
$79.0
UK Bank Debt Interest
($48.4)
($33.4)
($29.9)
($26.4)
UK Bank Debt Amortization
-
(44.0)
(44.0)
(44.0)
Cash Flow to US
$62.0
$49.3
$24.3
$8.6
US Unlevered Cash Flow
($10.0)
$ –
$ –
$ –
New Note Interest
(17.0)
(17.0)
(17.0)
(17.0)
Total Free Cash Flow
$35.0
$32.3
$7.3
($8.4)
Beginning Cash
$33.0
$68.0
$100.3
$107.5
Total Cash Flow
35.0
32.3
7.3
(8.4)
Ending Cash
$33.0
$68.0
$100.3
$107.5
$99.1
Total Debt
$640.0
$640.0
$596.0
$552.0
$508.0
Total Debt/ UK EBITDA
2.9x
2.3x
2.2x
2.2x
2.0x
Total Debt Excl. LCs
535.0
535.0
491.0
447.0
403.0
Adj. Debt / UK EBITDA
2.4x
1.9x
1.8x
1.8x
1.6x
CT NOL Ending Balance
$629.5
$569.5
$478.2
$390.7
$299.7
SCT NOL Ending Balance
358.4
212.8
60.1
–
– |
 Confidential
Subject to FRE 408
Project North
Blackstone
Weil
9
Debt
Capacity
Considerations
(Cont’d)
–
U.K.
2P
Reserve
Report
Metrics
________________________________________________
Source: Interim Reserve Report (Q2 2014 Roll-Forward).
3
Production (mboe)
Capital Expenditures ($ in millions)
Adequate capital spend is necessary to maintain and grow production, otherwise existing reserves
will deplete and future production will decline.
Confidential
Subject to FRE 408
Project North
Blackstone
Weil
9
$0
$25
$50
$75
$100
$125
$150
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
0
1,000
2,000
3,000
4,000
5,000
6,000
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025 |
 Confidential
Subject to FRE 408
Project North
Blackstone
Weil
10
Debt
Capacity
Considerations
(Cont’d)
–
Rationale
For
Illustrated
Leverage
Provides
cash
flow
for
investment
to
replace
naturally
declining
asset
base
and
take
advantage
of
lower
risk growth opportunities
Positions
the
company
as
an
attractive
investment
opportunity
to
take
advantage
of
U.K.
North
Sea
dynamics
Without
investment,
a
simple
“blow
down”
of
the
existing
reserves
will
not
allow
the
company
to
amortize or retire debt
Without investment, any new equity unlikely to have long-term value
Without a cash cushion, business will be run sub-optimally and at significant risk of
unplanned downtime 3 |
 Confidential
Subject to FRE 408
Project North
Blackstone
Weil
11
Debt
Capacity
Considerations
(Cont’d)
–
Comparable
Company
Credit
Metrics
($ in millions)
________________________________________________
Source: Company filings, Capital IQ, and Company estimates.
Note: Market data as of 9/30/14.
(1)
Endeavour LTM EBITDA as of Q1 2014.
3
Sample Peer Group
Illustrative Endeavour
EnQuest
Ithaca Energy
Iona Energy
Mean
$200mm US
$445mm US
Market Capitalization
$1,382
$619
$94
Debt
$942
$769
$265
$535
$780
Unrestricted Cash
(216)
(61)
(26)
TEV
$2,108
$1,309
$334
Metrics
LTM EBITDA
(1)
$631
$309
$77
$217
$217
2014E EBITDA
$511
$311
NM
$222
$222
2015E EBITDA
$673
$494
NM
$293
$293
Credit Metrics
Debt / LTM EBITDA
1.5x
2.5x
3.4x
2.5x
2.5x
3.6x
Debt / 2014E EBITDA
1.8x
2.5x
NM
2.2x
2.4x
3.5x
Debt / 2015E EBITDA
1.4x
1.6x
NM
1.5x
1.8x
2.7x
Debt / Market Capitalization
68%
124%
282%
158% |
 Appendix |
  Confidential
Subject to FRE 408
Project North
Blackstone
Weil
13
Existing Capital Structure
________________________________________________
Note: Debt balances as of 9/30/14.
(1)
Excludes $105mm LC Facility.
(2)
As of 9/30/14.
($ in mm)
Terms
Maturity
Interest Rate
Principal
Price
(2)
Market Value
Term Loan
(1)
Jan-17
L+1000
$ 440.0
100.0
$ 440.0
Total EEUK Debt and Claims
$ 440.0
$ 440.0
First Priority Notes
Mar-18
12.0%
404.0
72.0
290.9
Second Priority Notes
Jun-18
12.0%
150.0
21.0
31.5
Total Secured Debt
$ 994.0
$ 762.4
Convertible Unsecured Notes
Jul-16
5.5%
$ 135.0
6.0
8.1
Convertible Unsecured Bonds
Nov-17 (Oct-15)
6.5%
17.5
8.3
1.4
Convertible Unsecured Bonds
Jan-16
7.5%
82.9
NA
NA
Total Debt
$ 1,229.4
NA
Series C Preferred
4.5%
$ 37.0
NA
NA
Series B Preferred
4.5%
3.9
NA
NA
Common: $0.30 per share as of 09/30/14
15.1
15.1
Total Capitalization
$ 1,285.4 |
 Confidential
Subject to FRE 408
Project North
Blackstone
Weil
14
(2)
Corporate Structure
________________________________________________
$40.9mm Series B & C Preferred
Equity
U.S.-Based Debt
$404.0mm March 2018
12% Notes
$150.0mm June 2018
12% Notes
$135.0mm 5.5% 2016 Converts
$82.9mm 7.5% 2016
Convertible Notes
Endeavour Energy U.K. Limited
(English/Welsh Corp.)
Endeavour International
Corporation (NV)
Endeavour North Sea Limited
(English/Welsh Corp.)
Endeavour Energy
Luxembourg S.à
r.l. (Lux. Corp.)
$440.0mm EEUK Term Loan
Europe-Based Debt
Endeavour Energy North Sea,
L.P. (DE)
Intercompany
Note
($500.0mm)
(2)
Intercompany Note ($82.9mm)
Endeavour Operating
Corporation (DE)
(65% Pledge of Capital Stock)
Secured Issuer/Borrower
Unsecured Issuer/Borrower
Unsecured Guarantor
Lien
Claim Type
Equity
Secured Guarantor
Endeavour International
Holding B.V. (Netherlands)
Intercompany
Note
($440.0mm)
Endeavour Colorado Corp.
(DE)
$17.5mm 6.5% 2017 Converts
End Finco LLC (DE)
Endeavour Energy New
Ventures Inc. (DE)
END Management Company
(DE)
Endeavour Energy North Sea
LLC (DE)
Endeavour Energy Netherlands
B.V. (Netherlands)
99.9%
LP
0.1%
GP
(1)
This chart is for illustrative purposes only. Nothing in the chart is intended to
or shall be construed as an admission as to the validity of any claim against
Endeavour or a waiver of any of Endeavour’s or any party’s rights to dispute
the amount of, basis for, or validity of, any claim against Endeavour.
The guarantee from EOC on account of the EEUK Term Loan excludes the 65% Pledge of Capital
Stock of EIHBV, the $500.0mm intercompany note, and the cash, cash equivalents,
and bank accounts of EOC. The $500.0mm Intercompany Note is
subject to payment subordination in favor of the EEUK Term Loan.
Note: Dollar amounts represents face value as of 9/30/14 and excludes any accrued interest or
OID. (1)
|
 Confidential
Subject to FRE 408
Project North
Blackstone
Weil
15
Structure
$440mm term loan to EIHBV
Refinances $365mm existing UK debt
Tenor
Matures January 1, 2017
Pricing
L+1,000; 1.0% floor (11.0%)
2% OID ($8.8mm)
Guarantors / Collateral
US & UK
Does not include US cash
Amortization
None
Pre-Payment
During
year
1
MWC
equal
to
interest
due
after
1
anniversary
until
maturity
plus
1%
After year 1 101%
Covenants / Other
2.75x leverage
1.0x 2P asset coverage ($16 / boe) (e.g. 38.1mboe x $16 = $610mm)
Transfer of $55mm and $19mm cash to US in years 1 and 2 permitted, restrictions on use of
cash in US
Min cash in UK of $10mm to transfer cash to the US
$440mm UK Term Loan Refinancing Summary
st |