Endeavour International 8-K/A Report of independent auditors

Exhibit 99.2

Unaudited pro forma condensed combined
financial statements

The following unaudited pro forma condensed combined financial statements have been derived by applying pro forma adjustments to the historical audited and unaudited combined financial statements of Endeavour International Corporation. The terms “Endeavour,” “we,” “our,” or “us” refer to Endeavour International Corporation and its subsidiaries. The unaudited pro forma combined statements of operations give effect to the issuance of 35 million shares of common stock for proceeds of $77.3 million, net of estimated expenses of $4.9 million, as if it had occurred on January 1, 2005. The unaudited pro forma condensed combined balance sheet gives effect to the offering of 35 million shares of our common stock as if it had occurred on June 30, 2006. The unaudited pro forma combined statements of operations and the unaudited pro forma condensed combined balance sheet have been additionally adjusted to reflect the following as if they had occurred on January 1, 2005 and June 30, 2006, respectively:

•  the purchase of Talisman Expro Limited from Talisman for approximately $414 million in cash, before adjustments (the “Acquisition”);

•  borrowings of $146 million under our anticipated $225 million senior bank facility (which has an anticipated initial borrowing base of approximately $195 million) and $75 million under our anticipated second lien term loan; and

•  proceeds of $121.4 million that we expect to receive from the issuance of the Series A Convertible Preferred Stock, net of $3.6 million in estimated expenses. The Series A Convertible Preferred Stock has a 10.0% annual dividend (compounded quarterly) if dividends are paid in cash and a 10.42% annual dividend (compounded quarterly) if dividends are paid in stock. The annual dividend rate will be reduced to 8.92% (compounded quarterly) if the dividend is paid in stock or 8.5% (compounded quarterly) if the dividend is paid in cash if our stockholders approve the exchange of the Series A Convertible Preferred Stock for a new series of the convertible preferred stock which is identical to the Series A Convertible Preferred Stock except for the inclusion of additional antidilution provisions. The reduced dividend rate will be retroactive to the date of issuance if stockholder approval is obtained within 120 days of the issuance.

The pro forma information presented is based on preliminary estimates of the fair values of assets to be acquired and liabilities to be assumed, available information and assumptions and will be revised as additional information becomes available. The actual adjustments to our historical combined financial statements upon the closing of the Acquisition will depend on a number of factors, including additional information available and completion of the appraisal for our net assets on the closing date of the Acquisition. Therefore, the actual adjustments will differ from the pro forma adjustments, and the differences may be material.

During the periods presented, the Acquisition assets were not accounted or operated as a separate division by Talisman. Certain costs, such as depreciation, depletion and amortization, interest, accretion, general and administrative expenses, and corporate income taxes were not allocated to all the individual properties. Accordingly, full separate financial statements prepared in accordance with generally accepted accounting principles do not exist and are not practicable to obtain in these circumstances. Revenues and direct operating expenses included in the accompanying unaudited pro forma condensed combined financial information represent our net working interest in the properties to be acquired for the periods prior to the respective closing dates and are presented on the accrual basis of accounting.

1

The pro forma and further adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances. The unaudited pro forma condensed combined financial information is presented for informational purposes only and does not purport to represent what our results of operations or financial condition would have been had the Acquisition actually occurred on the dates indicated or project our results of operations or financial condition for any future period or as of any future date.

2

Unaudited pro forma condensed combined balance sheet
as of June 30, 2006

												Pro forma			Pro forma
(amounts in thousands)	Endeavour			Offering		Pro forma			Acquisition			adjustments			combined
				(A)					(B)
Current assets:
Cash	$	38,581		$	77,315	$	115,896		$	(388,786	)	$	311,471	(C), (D), (E), (F)	$	38,581
Receivables		6,267					6,267			12,582						18,849
Other current assets		28,697					28,697			6,284						34,981
Total current assets		73,545			77,315		150,860			(369,920	)		311,471			92,411
Property and equipment, net		87,655					87,655			242,853						330,508
Goodwill		27,795					27,795			273,213				��		301,008
Other assets		8,772					8,772			—			4,065	(D)		12,837
Total assets	$	197,767		$	77,315	$	275,082		$	146,146		$	315,536		$	736,764
Current Liabilities:
Accounts payable	$	10,426				$	10,426		$	36,350					$	46,776
Accrued expenses and other current liabilities		35,556					35,556									35,556
Total current liabilities		45,982					45,982			36,350						82,332
Long-term debt		81,250					81,250			—			221,000	(C)		302,250
Deferred taxes		22,586					22,586			83,894						106,480
Other liabilities		9,090					9,090			25,902						34,992
Total liabilities		158,908					158,908			146,146			221,000			526,054
Stockholders’ equity:
Common stock, preferred stock and paid in capital		161,740			77,315		239,055			—			121,375	(F)		360,430
Other equity		(4,104	)				(4,104	)		—						(4,104	)
Accumulated deficit		(118,777	)				(118,777	)		—			(26,839	)(E)		(145,616	)
Total stockholders’ equity		38,859			77,315		116,174			—			94,536			210,710
Total liabilities and stockholders’ equity	$	197,767		$	77,315	$	275,082		$	146,146		$	315,536		$	736,764

3

Unaudited pro forma condensed combined
statement of operations

for the six months ended June 30, 2006

(amounts in thousands,												Pro Forma			Pro Forma
except per share data)	Endeavour			Offering		Pro Forma			Acquisition			Adjustments			Combined
				(A)
Revenues	$	16,121				$	16,121		$	101,307	(G)				$	117,428
Expenses:
Operating expenses		5,156					5,156			14,079	(G)		375	(H)		19,610
Depletion and amortization		4,527					4,527			—			26,063	(I)		30,590
Impairment of oil and gas properties		849					849			—						849
General and administrative		10,749					10,749			—						10,749
Total expenses		21,281					21,281			14,079			26,438			61,798
Income (loss) from operations		(5,160	)				(5,160	)		87,228			(26,438	)		55,630
Other (income) expense:
Interest income		(1,169	)				(1,169	)		—						(1,169	)
Interest expense		2,343					2,343			—			10,359	(C),(D)		12,702
Other (income) expense		4,082					4,082			—						4,082
Total other (income) expense		5,256					5,256			—			10,359			15,615
Income (loss) before income taxes		(10,416	)				(10,416	)		87,228			(36,797	)		40,015
Income tax expense		6,832					6,832						27,618	(J)		34,450
Net income (loss)		(17,248	)				(17,248	)		87,228			(64,415	)		5,565
Preferred stock dividends		(79	)				(79	)		—			(6,513	)(F)		(6,592	)
Net income (loss) to common stockholders	$	(17,327	)			$	(17,327	)	$	87,228		$	(70,928	)	$	(1,027	)
Net income (loss) per share:
Basic	$	(0.22	)			$	(0.15	)							$	(0.01	)
Diluted	$	(0.22	)			$	(0.15	)							$	(0.01	)
Weighted average number of common shares outstanding:
Basic		78,687			35,000		113,687						6,236	(K)		119,923
Diluted		78,687			35,000		113,687						6,236	(K)		119,923

4

Unaudited pro forma condensed combined
statement of operations
for the year ended December 31, 2005

(Amounts in thousands,												Pro Forma			Pro Forma
except per share data)	Endeavour			Offering		Pro Forma			Acquisition			Adjustments			Combined
				(A)
Revenues	$	38,656				$	38,656		$	170,358	(G)				$	209,014
Expenses:
Operating expenses		11,990					11,990			26,072	(G)		750	(H)		38,812
Depletion and amortization		9,337					9,337			—			59,186	(I)		68,523
Impairment of oil and gas properties		27,116					27,116			—						27,116
General and administrative and other		18,302					18,302			—						18,302
Total expenses		66,745					66,745			26,072			59,936			152,753
Income (loss) from operations		(28,089	)				(28,089	)		144,286			(59,936	)		56,261
Other (income) expense:
Interest income		(2,605	)				(2,605	)		—						(2,605	)
Interest expense		4,322					4,322			—			20,717	(C),(D)		25,039
Gain on sale of oil and gas assets		(14,966	)				(14,966	)		—						(14,966	)
Litigation settlement expense		5,265					5,265			—						5,265
Other (income) expense		(263	)				(263	)		—						(263	)
Total other (income) expense		(8,247	)				(8,247	)		—			20,717			12,470
Income (loss) before income taxes and minority interest		(19,842	)				(19,842	)		144,286			(80,653	)		43,791
Minority interest		(470	)				(470	)								(470	)
Income (loss) before income taxes		(20,312	)				(20,312	)		144,286			(80,653	)		43,321
Income tax expense		11,061					11,061						25,109	(J)		36,170
Net income (loss)		(31,373	)				(31,373	)		144,286			(105,762	)		7,151
Preferred stock dividends		(158	)				(158	)		—			(13,026	)(F)		(13,184	)
Net income (loss) to common stockholders	$	(31,531	)			$	(31,531	)	$	144,286		$	(118,788	)	$	(6,033	)
Net loss per share:
Basic	$	(0.42	)			$	(0.29	)							$	(0.05	)
Diluted	$	(0.42	)			$	(0.29	)							$	(0.05	)
Weighted average number of common shares outstanding:
Basic		74,433			35,000		109,433						2,079	(K)		111,512
Diluted		74,433			35,000		109,433						2,079	(K)		111,512

5

(A)	To record the offering by the issuance of 35 million shares of common stock for proceeds of $77.3 million, net of estimated expenses of $4.9 million.
(B)	To record the acquisition of Talisman Expro Limited for approximately $414 million in cash. The preliminary purchase price allocation is determined as follows:

Cash paid	$	414,000
Purchase price adjustments, including estimated cash flows from Acquisition assets from economic date of January 1, 2006 to closing		(30,000	)
Estimated expenses		4,786
Preliminary purchase price	$	388,786
Allocation of purchase price:
Current assets	$	18,866
Property, plant and equipment		242,853
Goodwill		273,213
Current liabilities		(36,350	)
Deferred taxes		(83,894	)
Other long-term liabilities		(25,902	)
Total	$	388,786

	The purchase price allocation set forth above and reflected in the pro forma financials is preliminary and subject to change based on the fair value of the Acquisition cash flows from the economic date, working capital and other liabilities on the effective date and the actual transaction expenses incurred.
(C)	To record the issuance of $146 million in borrowing base debt and $75 million under the second lien term loan, assuming a weighted average interest rate of 9.1%.
(D)	To record $4.1 million of deferred financing fees capitalized in connection with the issuance of the borrowing base debt and second lien term loan and amortization over the life of the debt, which is five years for each facility.
(E)	To reflect estimated fees for unutilized debt and equity commitments. These fees are expected to be expensed during the fourth quarter of 2006.
(F)	To record the issuance of $121.4 million of proceeds of convertible preferred stock, net of $3.6 million in estimated expenses. The convertible preferred stock has an annual dividend, payable in cash or stock. For purposes of these pro forma financial statements, the dividend rate is 10.42% per annum. Although the dividend rate will be 10.0% per annum if the dividend is paid in cash, we have assumed for these pro forma financial statements that the dividend will be paid in stock. In addition, the annual dividend rate will be reduced to 8.92% per annum if the dividend is paid in stock or 8.5% per annum if the dividend is paid in cash if our stockholders approve the exchange of the Series A Convertible Preferred Stock for a new series of convertible preferred stock which is identical to the Series A Convertible Preferred Stock except for the inclusion of additional antidilution provisions. The reduced dividend rate will be retroactive to the date of issuance if stockholder approval is obtained within 120 days of the issuance. Please see “The Acquisition—Financing—Series A Convertible Preferred Stock.”
(G)	To record the historical revenues and direct operating expenses of the Acquisition.

6

(H)	To record estimated additional operating expenses for the Acquisition.
(I)	To record depletion and amortization after giving affect to the purchase price allocation under the full cost method of accounting for oil and gas properties. The depletion and amortization rate of $15.52 per equivalent barrel is estimated based on proved reserves at June 30, 2006. Endeavour’s historical impairment of oil and gas properties has not been adjusted for the Acquisition.
(J)	To record the income tax effect of the Acquisition on a combined basis with our UK operations and petroleum revenue tax.
(K)	To reflect the payment, in common stock, of dividends on the convertible preferred stock. The dividends are payable quarterly beginning three months after issuance of the convertible preferred stock.

7