Endeavour International Corporation (END) Q1 2010 Earnings Call Transcript May 6, 2010 10:00 am ET Executives Mike Kirksey – EVP and CFO Bill Transier – Chairman, President and CEO John Williams – EVP, Exploration Jim Emme – EVP, North America Analysts Thomas Martin – Thomas Weisel Partners Michael Bodino – Global Hunter Securities Al Shams – Midsouth Capital Jon Evans – Edmunds White Partners Tamera Alabum [ph] – Terry Hill Capital [ph] Presentation Operator
Previous Statements by END
» Endeavour International Corporation Q3 2009 Earnings Call Transcript
» Endeavour International Corporation Wall Street Analyst Forum's 20th Annual Institutional Investor Conference Transcript
» Endeavour International Corporation Q4 2008 Earnings Call Transcript
Bill TransierThanks. I, like Mike, would like to welcome you to the call this morning, and what you can expect in the next few minutes from us is a number of things. Obviously you know we have had a lot of progress during this quarter. We completed two financings early in the quarter that helped us kick-start our activity in the US. We will bring you up-to-date on the US activities, and I think you will see that we have a lot of things going on and a lot of things that will impact our second quarter. We did have a very successful appraisal well that we announced earlier from Cygnus in the Southern Gas Basin of the UK North Sea. Because of all the activity that we have going on in the US, we notified Caza this quarter that we would no longer continue our joint venture relationship and that has moved on to a different direction. We did announce a little over a month ago that we were going to take a strategic review of our UK business because of what we believe is a dislocation between the underlying value of the assets and our stock price. And I will bring you up-to-date on that process as we go through the call. All of our development projects that are ongoing in the UK North Sea have had positive movement during the quarter and I will try to bring you up-to-date on those. And really offsetting some of the good news was what we would classify as less-than-expected financial performance. That was primarily a result of lower production. Specifically, it was unplanned shutdowns and timing of some of the liftings that will shift production from first quarter into the second and third quarter. Mike will walk you through the quarterly financials and bring you up-to-date on the capital items, and so, I am going to turn it over to him and then I will come back and bring you up-to-date on the operating results.
Mike KirkseyThanks Bill. As Bill said, production and sales volumes experienced an unfortunate timing in the first quarter. Our largest gas producer Goldeneye was closed for an extended period in January because of a fire at the onshore facilities, resulting in production in sales from Goldeneye being down 20%. The operator shale was able to take some advantage of the time and performed some maintenance activities that were planned later in the year, which should allow us to recapture some of this during the normal third quarter downtime periods. Our oil liftings that drive sales and cash flow were very low in the first quarter. Timing and scheduling of tankers obviously affect this part of our sales. Several liftings have already happened in April with more schedules in the second quarter and this will result in second quarter liftings being 60% to 70% ahead of the first quarter. While overall production for Q1 was 3,700 barrels a day oil equivalent, production in the second quarter from our existing producing assets is expected to be back in the range of 4,000 to 4,500 barrels a day and sales obviously more than that with the delayed liftings in the 4,500 to 5,000 barrels range. US production is small right now, but we look forward to what the US drilling will add here in the near future. So, while we like production sales to continue in a consistent predictable manner, it doesn’t always happen that way. A similar situation occurred last year in the third quarter and the fourth quarter results demonstrated that this catch-up of financial results. Covering a little more of the details now, first quarter had an average Brent oil price of about $76, up slightly from the fourth quarter, resulting in average price when you include natural gas liquids in our production of about $70. Average gas prices also increased from about $4.25 in the fourth quarter to $5.50 in the first quarter. Our hedge program for 2010 was a slight profit in the first quarter. We made money on our $10.50 gas hedges, but our average price was reduced by our $69 oil hedges. Read the rest of this transcript for free on seekingalpha.com